Fixing the Transparency Problem in State-Investor Arbitration: A Multi-Layered Affair
Dr. Judith Spiegel
Assistant Professor of Public International Law
Kuwait International Law School
State-Investor arbitration is not – or should not be – the same as commercial arbitration for the simple reason that the State is not a normal party but a sovereign instead, who is to be held accountable by the public. Investments, and thus disputes about them, involve the State acting as a sovereign in relation to public interests in key areas such as health, safety, environmental protection, land use and planning, access to water and natural resources management.
Furthermore, investment arbitration usually has important financial implications for the government; just think about the 2.2 billion USD the State of Kuwait had to pay to Dow Chemical in 2012. These kinds of monetary penalties are essentially penalties paid by the people, whether that is taxpayer’s money or oil money. Despite these significant public interests at stake, until recently neither the public nor the press had the right to access to the information produced in investment arbitration. Things are finally changing though. The question however is whether this change is fast and wholeheartedly enough.
This paper deals with that question. It explores the rights at stake here: the right of access to information and the right to a public hearing. Insofar these transparency rights apply to investment arbitration, the question is whether investment arbitration is up to speed when it comes to transparency.
This can only be properly answered through a multi-layered approach, because it involves more than one instrument: individual investment contracts, bilateral investment treaties and the arbitration rules to which these contracts and treaties refer. This paper deals with all of these instruments. It also deals with situations in which more than one instrument applies at the same time, inviting parties to treaty shopping.
Finally, this paper concludes with a finding on the current – not very reassuring status – on transparency in investment arbitration and recommendations for improvement.
Key words: investment arbitration, transparency, human rights, bilateral investment treaties, arbitration rules.