The UNCITRAL Rules on Transparency in Treaty-based investor-State Arbitration stipulated by The United Nations Commission on International Trade Law (“UNCITRAL”) will be effected on April 1, 2014. The promulgation of the rules will have significant effect on the investment treaty arbitration practice.

Treaty resolving the disputes between investor and nation in international investment treaty is to establish a system of dispute resolution, rendering investor of one contracting party submit the dispute caused by another party’s violation of treaty obligation to international arbitration. Investment Treaty Arbitration refers to the arbitrations under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States Done at Washington (“Washington Convention”) signed in 1965 and other arbitrations between investing host state and foreign investor under bilateral or multilateral treaties. Investment Treaty Arbitration is one of the fastest developing are in international dispute resolution.

The conventional wisdom is that confidentiality is one of the important characteristics different from the arbitration court proceedings; also it is one of the advantages of arbitration. Based on this, almost all arbitration rules stipulate the principle of confidentiality. But since investment arbitration treaty suddenly rises, whether arbitrations in all fields shall keep secrets has become a hot topic.

UNCITRAL finally drafted the Transparency Rules after five years discussion based on widely collecting opinions from international organizations, governments and arbitration institutions. This Rules consists of a complete set of procedural rules, regulating the possibility to open to public and transparency on the basis of treaty arbitration between investor and nations.

The Transparency Rules makes breakthroughs of arbitration’s confidentiality in the following respects:

  1. Set central database to publicize arbitration information
  2. Publicize arbitration information to the public upon the start of arbitration
  3. Arbitration documents are widely publicized
  4. Allow third party to submit materials
  5. Hearing should be open to public
  6. The exemption of the Transparency Rules is confidential information and protected information

As for the application of the Transparency Rules, the Rules on Transparency apply in relation to disputes arising out of treaties concluded prior to 1 April 2014, when Parties to the relevant treaty, or disputing parties, agree to their application. The Rules on Transparency apply in relation to disputes arising out of treaties concluded on or after 1 April 2014 (“future treaties”), when investor-State arbitration is initiated under the UNCITRAL Arbitration Rules, unless the parties otherwise agree. The Rules on Transparency are also available for use in investor-State arbitrations initiated under rules other than the UNCITRAL Arbitration Rules, and in ad hoc proceedings.

Given the link between the UNCITRAL Arbitration Rules and the application of the Rules on Transparency, a new version of the UNCITRAL Arbitration Rules (with new article 1, paragraph 4 as adopted in 2013) (the “UNCITRAL Arbitration Rules 2013″), will also come into effect on 1 April 2014. Such a revision (namely, the inclusion of a new paragraph 4 of article 1) ensures that the Rules on Transparency are clearly incorporated into the latest version of the UNCITRAL Arbitration Rules.

UNCITRAL Transparency Rules is the arbitration rules which provide highest transparency to investment treaty arbitration until now. Its detail and transparency surpass the regulations of 1965 Washington Convention and other international, regional investment treaties. Given the success and influence of past rules, it is predictable that this Transparency Rules will cause a new round of revisions and completions of investment treaty arbitration rules.

China has acceded the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States Done at Washington in 1992, and thus having the obligation to resolve above disputes according to the Convention. The investment protection agreements between China and other countries also have clauses which can apply UNCITRAL’s arbitration rules to resolve disputes through ad hod arbitration. Although the investment dispute arbitration on the basis of treaties rarely happens, the possibility that such disputes will increase in the future cannot be excluded. Therefore, the application of the Transparency Rules to China is inevitable. Strengthening the research on the Transparency Rules of UNCITRAL is very necessary. China’s arbitration institutions also face historic opportunity of accepting investment treaty arbitration case.

If you want to further understand the Transparency Rules of UNCITRAL, please read the “UNCITRAL Makes the Transparency Rules of Investment Treaty Arbitration” of the series of “Hui Zhong Arbitration Guideline” on our website.

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