By Ian A. Laird
The recent adoption in July 2013 by the United Nations Commission on International Trade Law (UNCITRAL) of the Rules on Transparency in Treaty-based Investor-State Arbitration marks an important milestone in the development of international investor-state arbitration. In the early days of this type of arbitration in the late 1990s, tribunals like those formed under Chapter 11 of the North American Free Trade Agreement (NAFTA) were subject to criticisms that the process was “secret’ and thus not legitimate.
The new Transparency Rules respond to many of these old critiques and UNCITRAL can be applauded for the result of its significant efforts. In particular, the Transparency Rules include provisions addressing: the free publication of information and documents submitted in an arbitration (Articles 2-3), the submission of amicus briefs (Article 4), submissions by non-disputing treaty Parties (Article 5), open hearings (Article 6), and the protection of confidential information (Article 7).
However, despite the good news, there is a counter-tension in the transparency debate in investor-state arbitration in favor of secrecy and the protection of government information. A default to confidentiality and privacy has its historical origin in the commercial arbitration roots of the UNCITRAL Arbitration Rules, but was also evident in more recent statements by the UNCITRAL members in the negotiations that resulted in the new rules.
The tension was made most evident in Article 7 of the Transparency Rules, titled “Exceptions to transparency”, and specifically in subparagraph (2) where the critical definition of “confidential or protected information” is set out. Although subparagraph (3) of the article makes clear that a tribunal has the authority to determine whether a document is confidential or protected, this is undermined by subparagraph (2)(c) which states that information of the respondent State party to the arbitration designated as protected is determined by the law of the respondent State. This is in contrast to earlier negotiation text versions of Article 7(2)(c) where such determinations would have been determined by the tribunal.
In effect, by making domestic law the governing law concerning the designation of documents as confidential, the ultimate authority to determine whether documents should be made public is effectively taken out of the hands of a tribunal. In well-developed systems of access to government information, such as with the Freedom of Information Act (FOIA) in the United States, or the Access to Information Act (ATIP) in Canada, this may not be problematic as there are domestic remedies for when government officials err too far on the side of secrecy.
The problem will be that, with States that have no such due process mechanisms, and a policy default to secrecy, Article 7 could well force tribunals to apply laws that are contrary to the very transparency objectives of the new Transparency Rules. The domino effect of this approach is that State respondents may apply the same restrictive approach to the production of documents to the arbitration itself – thus impeding transparency and potentially violating the new rules.
Some members of the UNCITRAL negotiating group believed the approach which was ultimately included in Article 7(2)(c) could be “open to abuse”. Specifically the view was offered in the October 2012 session of the UNCITRAL Working Group that “providing for mandatory application by a State of its national law in relation to information provided by it would permit a State to circumvent the object of the rules by introducing legislation precluding the disclosure of all information in investor-State disputes. In response, unanimous support was expressed for the proposition that it was not permissible for a State to adopt UNCITRAL rules on transparency and then use its domestic law to undermine the spirit (or the letter) of such rules.”
The compromise that occurred leading to the final version of the Transparency Rules Article 7(2)(c) was the inclusion of provisions in Article 1 relating to the “discretion and authority of the tribunal” to promote the transparency objectives of the new rules and provide a mechanism for balancing confidentiality and transparency. As stated in Article 1(6): “In the presence of any conduct, measure or other action having the effect of wholly undermining the transparency objectives of these rules, the arbitral tribunal shall ensure that those objectives prevail.”
It begs the question: what if a respondent State only partially undermines the transparency objectives of the rules? How such a provision will be applied in future by tribunals in the face of a respondent State intent on maintaining secrecy will be an important test of the effectiveness of the new UNCITRAL Transparency Rules.
Ian A. Laird is a Partner in the Washington, DC office of Crowell & Moring LLP and the Co-Founder and Editor-in-Chief of Investment Claims, an online law resource from Oxford University Press. He is also an Adjunct Professor at Columbia Law School and Georgetown University Law Center.
Investment Claims is a regularly updated collection of materials and analysis used for research in international investment law and arbitration. It contains fully searchable arbitration awards and decisions, bilateral investment treaties, multilateral treaties, journal articles, monographs, arbitration laws, and much more, all linked and cross-referenced via the Oxford Law Citator.
Subscribe to the OUPblog via email or RSS.
Subscribe to only law articles on the OUPblog via email or RSS.
The post Transparency in investor-state arbitration appeared first on OUPblog.
By Michael Dear
Not long ago, I passed a roadside sign in New Mexico which read: “Es una frontera, no una barrera / It’s a border, not a barrier.” This got me thinking about the nature of the international boundary line separating the US from Mexico. The sign’s message seemed accurate, but what exactly did it mean?
On 2 February 1848, a ‘Treaty of Peace, Friendship, Limits and Settlement’ was signed at Guadalupe Hidalgo, thus terminating the Mexican-American War. The conflict was ostensibly about securing the boundary of the recently-annexed state of Texas, but it was clear from the outset that US President Polk’s ambition was territorial expansion. As consequences of the Treaty, Mexico gained peace and $15 million, but eventually lost one-half of its territory; the US achieved the largest land grab in its history through a war that many (including Ulysses S. Grant) regarded as dishonorable.
In recent years, I’ve traveled the entire length of the 2,000-mile US-Mexico border many times, on both sides. There are so many unexpected and inspiring places! Mutual interdependence has always been the hallmark of cross-border communities. Border people are staunchly independent and composed of many cultures with mixed loyalties. They get along perfectly well with people on the other side, but remain distrustful of far-distant national capitals. The border states are among the fastest-growing regions in both countries — places of economic dynamism, teeming contradiction, and vibrant political and cultural change.
A small fence separates densely populated Tijuana, Mexico, right, from the United States in the Border Patrol’s San Diego Sector.
Yet the border is also a place of enormous tension associated with undocumented migration and drug wars. Neither of these problems has its source in the borderlands, but border communities are where the burdens of enforcement are geographically concentrated. It’s because of our country’s obsession with security, immigration, and drugs that after 9/11 the US built massive fortifications between the two nations, and in so doing, threatened the well-being of cross-border communities.
I call the spaces between Mexico and the US a ‘third nation.’ It’s not a sovereign state, I realize, but it contains many of the elements that would otherwise warrant that title, such as a shared identity, common history, and joint traditions. Border dwellers on both sides readily assert that they have more in common with each other than with their host nations. People describe themselves as ‘transborder citizens.’ One man who crossed daily, living and working on both sides, told me: “I forget which side of the border I’m on.” The boundary line is a connective membrane, not a separation. It’s easy to reimagine these bi-national communities as a ‘third nation’ slotted snugly in the space between two countries. (The existing Tohono O’Odham Indian Nation already extends across the borderline in the states of Arizona and Sonora.)
But there is more to the third nation than a cognitive awareness. Both sides are also deeply connected through trade, family, leisure, shopping, culture, and legal connections. Border-dwellers’ lives are intimately connected by their everyday material lives, and buttressed by innumerable formal and informal institutional arrangements (NAFTA, for example, as well as water and environmental conservation agreements). Continuity and connectivity across the border line existed for centuries before the border was put in place, even back to the Spanish colonial era and prehistoric Mesoamerican times.
Do the new fortifications built by the US government since 9/11 pose a threat to the well-being of borderland communities? Certainly there’s been interruptions to cross-border lives: crossing times have increased; the number of US Border Patrol ‘boots on ground’ has doubled; and a new ‘gulag’ of detention centers has been instituted to apprehend, prosecute and deport all undocumented migrants. But trade has continued to increase, and cross-border lives are undiminished. US governments are opening up new and expanded border crossing facilities (known as ports of entry) at record levels. Gas prices in Mexican border towns are tied to the cost of gasoline on the other side. The third nation is essential to the prosperity of both countries.
So yes, the roadside sign in New Mexico was correct. The line between Mexico and the US is a border in the geopolitical sense, but it is submerged by communities that do not regard it as a barrier to centuries-old cross-border intercourse. The international boundary line is only just over a century-and-a-half old. Historically, there was no barrier; and the border is not a barrier nowadays.
The walls between Mexico and the US will come down. Walls always do. The Berlin Wall was torn down virtually overnight, its fragments sold as souvenirs of a calamitous Cold War. The Great Wall of China was transformed into a global tourist attraction. Left untended, the US-Mexico Wall will collapse under the combined assault of avid recyclers, souvenir hunters, and local residents offended by its mere presence.
As the US prepares once again to consider immigration reform, let the focus this time be on immigration and integration. The framers of the Treaty of Guadalupe Hidalgo were charged with making the US-Mexico border, but on this anniversary of the Treaty’s signing, we may best honor the past by exploring a future when the border no longer exists. Learning from the lives of cross-border communities in the third nation would be an appropriate place to begin.
Michael Dear is a professor in the College of Environmental Design at the University of California, Berkeley, and author of Why Walls Won’t Work: Repairing the US-Mexico Divide (Oxford University Press).
Subscribe to the OUPblog via email or RSS.
Subscribe to only American history articles on the OUPblog via email or RSS.
The post “Third Nation” along the US-Mexico border appeared first on OUPblog.
