01 Aug 2013

Transparency is the new black in investor-state arbitration: UNCITRAL's New Transparency Rules

by Mark Gillard, Louise Dargan

For many investors, the increased levels of transparency in investor-state arbitration will constitute an advantage.

New transparency rules recently adopted by the United Nations Commission on International Trade Law (UNCITRAL) will have important implications for Investor-State arbitration conducted under International Investment Agreements (IIAs) concluded after 1 April 2014.

In contrast with the tradition of arbitration as a confidential and private means of dispute resolution, the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (Transparency Rules) provide that:

  • certain information about the dispute is to be made available to the public; and
  • non-parties be permitted to attend the hearing and, in some cases, make submissions to the arbitral tribunal.

Investor-State arbitration

Investor-State arbitration is a dispute resolution process for disputes arising out of an IIA. IIAs are entered into by two or more States seeking to promote and protect foreign investment in their respective territories. IIAs generally seek to protect foreign investment by setting minimum standards of protection for investors of one State-party (Home State) when making an investment in another State-party (Host State). Importantly, IIAs usually give investors of the Home State the ability to enforce rights under the treaty directly against the Host State through Investor-State arbitration.

Application of the Transparency Rules

The Transparency Rules will apply to all Investor-State arbitrations initiated under the UNCITRAL Arbitration Rules pursuant to an IIA concluded after 1 April 2014, unless the State parties to the IIA have agreed otherwise. In addition, the Transparency Rules may be adopted in arbitrations administered under rules other than the UNCITRAL Arbitration Rules.

The Transparency Rules may also apply to arbitrations under IIAs concluded prior to 1 April 2014 if the parties to an arbitration (ie. the investor and the Host State) agree to their application. Alternatively, the Transparency Rules may apply if:

  • the contracting parties to the IIA (ie. the States); or
  • in the case of a multilateral investment treaty, the Home State and the Host State,

agree after 1 April 2014 to their application to disputes under the relevant IIA.

Transparency in Investor-State arbitration versus confidentiality in international commercial arbitration

It is important to note that the Transparency Rules only apply to Investor-State arbitration under an IIA and not to international commercial arbitration between private parties. In other words, the Transparency Rules will not disturb two key hallmarks of international commercial arbitration – the confidentiality and privacy of arbitral proceedings.

Confidential and private arbitral proceedings are attractive to commercial parties who may wish to keep the details of their disputes out of the public domain. However, Investor-State arbitrations are not disputes between two private parties, but between an investor and a host State. Where a host State is being sued for breach of its international investment commitments, different policy considerations apply.

Importantly, transparency and public awareness of host State contraventions are necessary preconditions of accountability. The introduction of transparency measures will assist potential investors to assess more accurately the real risk to their investment in different host States.

Key provisions

Key features of the Transparency Rules include:

  • Publication of information: The parties' pleadings and written submissions must be published (Art 2). The parties and the arbitral tribunal are required to forward information to the body nominated by UNCITRAL for publication. The arbitral tribunal is also required to submit the award for publication.
  • Non-party submissions: The arbitral tribunal has the discretion to allow submissions from persons who are not parties to the arbitration (Arts 4 and 5). Such persons include a party to the relevant treaty who is not a party to the arbitration (eg. a non-disputing State in a multilateral treaty). The arbitral tribunal may also permit other third persons to make submissions, if it considers the person to have an interest in the proceedings and considers that the submissions will assist in the arbitral tribunal's determination of the legal or factual issues in dispute.
  • Public hearings: Hearings shall be public and the arbitral tribunal is obliged to make the logistical arrangements to facilitate public access to hearings (Art 6).

In these respects, the Transparency Rules go further than other arbitration rules for investment treaty disputes. For example, the Rules of the International Centre for the Settlement of Investment Disputes (ICSID) require the parties' consent for third parties to attend a hearing and for the publication of an award. There are no like provisions in ICSID's rules for the publication of the parties' pleadings and other information.


The Transparency Rules are subject to some exceptions:

  • Confidential or protected information is not to be made public (Art 7) and the arbitral tribunal can hold hearings concerning confidential or protected information in private (Art 6). Confidential or protected information is defined to include business confidential information, information protected under the treaty, and information protected by the law of the State against whom the proceedings are brought (Art 7).
  • Integrity of the arbitral process: The arbitral tribunal may exclude or delay the publication of information where publication could hamper the collection or production of evidence, lead to intimidation of witnesses, lawyers or the tribunal, or in other comparable and exceptional circumstances.

The arbitral tribunal also has the power to adapt any of the specific provisions of the Transparency Rules to suit the particular case, provided it does so in a manner consistent with their transparency objective (Art 3).

Implications for investors

For many investors, the increased levels of transparency will constitute an advantage – proceedings against States under particular IIAs will be visible and the publication of the award will assist other investors in determining their rights (and thereby assess the merits of commencing arbitration) if governed by the same treaty. Publication may also encourage consistent decisions and reasoning in arbitral awards.

However, as stated above, the scope of the application of the Transparency Rules is limited because it does not apply to IIAs concluded prior to 14 April 2014 (to date States have entered into well over 3,000 IIAs). For disputes arising under these pre-April 2014 instruments, the investor is dependent upon the agreement of the contracting State parties to be bound.

Where an investor does wish for a dispute to be resolved in private the investor should consider whether, under the applicable IAA, it is able to choose which arbitration rules will govern the dispute. If a choice is permitted, the investor may elect not to submit the dispute to arbitration pursuant to the UNCITRAL Arbitration Rules and seek to have the dispute arbitrated in accordance with a different regime, such as the ICSID Convention, or by another arbitral institution whose rules protect privacy and confidentiality, such as the Australian Centre for International Commercial Arbitration (ACICA).

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.