On 18 October 2017, the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (New York, 2014) (the “Mauritius Convention on Transparency”) will enter into force. Current signatories include Australia as well as many of Australia’s major European investment partners, as well as the United States.
What is the Mauritius Convention?
The Mauritius Convention, as its name suggests, is designed to ensure transparency in the investor-state arbitration process (not any other types of arbitration, such as international commercial arbitration).
The Convention (or more accurately, the UNICITRAL Rules adopted by the convention) is ground-breaking because it represents a major shift away from the traditional model of arbitration being a private, confidential process. Like most forms of arbitration, investor-state arbitration has previously been undertaken predominately in private, with no guarantees of public access to information about the dispute, the arguments, or even the award and reasons. While this may be understandable in the case of private arbitration between commercial parties, the nature of investor state arbitration is different. Because of the nature of the dispute – a disagreement about the treatment of a foreign investor by a host state – there are generally important issues of public policy at stake.
For example, many Australians first heard of investor-state arbitration following an ultimately unsuccessful claim against Australia by Philip Morris (Asia) via an investment agreement between Australia and Hong Kong, seeking compensation for the impact of Australia’s plain label packaging laws. In other cases, investor-state disputes have arisen as a result of environmental measures, public health measures, and even anti-discrimination provisions in post-Apartheid South Africa. As a result, investor-state dispute resolution has received quite a lot of negative publicity, and many states are retreating from the system of investor-state arbitration by terminating international agreements.
The Convention operates by giving ‘teeth’ to the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration. These Rules, although they do contain exceptions, provide three main types of transparency in arbitrations to which they apply:
- Open hearings: Hearings are to be made public, with the arbitral tribunal to make arrangements to facilitate public access to hearings.
- Amicus curiae/third party submissions: formalising the right of arbitral tribunals to receive relevant amicus curiae and other third party submissions.
- Publication: Submissions and awards must be made public.
When does it apply to Australia?
The entry into force of the Mauritius Convention has taken place pursuant to Article 9 of the Convention – six months after the ratification of three signatories. However at the present time, the convention only applies to disputes between Canada, Mauritius and Switzerland. In Australia, implementing legislation is currently before Parliament. However, in time, most signatories can be expected to complete the ratification process according to their domestic laws. However even prior to ratification, parties to an Investor-State arbitration can still agree to the voluntary application of the provisions.
A Watershed for Arbitration?
To those used to the context of domestic litigation, these sound like trivial changes, but they represent a great leap forward for transparency in investor state dispute settlement. Some commentators have even considered that the convention may lead to a change of culture in relation to arbitration more broadly.