CIArb’s latest update from UNCITRAL - February 2022

Between 14 to 18 February 2022, CIArb attended the 42nd session of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III as observers. Delegations considered the establishment of a standing Multilateral Investment Court (MIC) and the draft Code of Conduct for adjudicators in investor-State Dispute Settlement (ISDS).

The session began with discussions on draft articles 1 to 7 on the establishment of the MIC, relating to jurisdiction, governance, tribunal members as well as nomination of candidates. Many States pointedly expressed their view that these discussions were “without prejudice” to their final position on the establishment of the MIC. It is crucial to highlight that the creation of the MIC is a response to the pressing issues that are present in the current ISDS system. 

Major questions were raised with respect to, how the MIC would be funded, where it would be located and what impact such a tribunal would have on the current ISDS regime. At times State delegations had opposing views on the same draft provision. This was demonstrated where some tendered the view that the current draft provision on jurisdiction permitted any type of dispute to fall under the provision, while others offered the view that they preferred the wide scope of the provision.

Particularly notable, were the perspectives articulated on the qualifications of potential tribunal members of the MIC. Numerous qualification requirements were proposed, which led to a concern being raised that these requirements would substantially limit the pool of eligible candidates for the tribunal. This is contrary to the notion that the MIC would resolve the issue of diversity which is a problem within the present ISDS regime.

The views submitted on the MIC during the session were far from cohesive, with differing views offered on many of the draft provisions. Due to the concerns raised and the suggestions provided, draft provisions 1 to 7 will be redrafted.  Therefore, it remains to be seen whether the establishment of a standing MIC is at all feasible, since many of the views advanced were done so without prejudice.

The remainder of the session focused on draft articles 9 to 11 of the Code of Conduct, pertaining to adjudicator fees and expenses, disclosure obligations and lastly compliance with the Code.

With regards to fees and expenses, views were expressed about the need for adjudicators to be transparent about the fees of tribunal secretaries. The disclosure obligations of adjudicators were deliberated at length, with the phrase “in the eyes of the disputing parties” proving rather contentious. Some regarded this wording as too subjective, not according with the standard set by existing regulatory instruments, such as the UNCITRAL Model Law, and common practice embodied in soft law instruments such as the IBA Guidelines on Conflicts of Interest. It was suggested that more objective wording should be used in the provision. No intervention was made by CIArb on this point, as state delegates clearly expressed the desirability of an objective standard of disclosure. However, our delegation noted, with concern, that the proposed inclusion might not be consistent with the standard for disclosure contained in our own Code of Professional and Ethical Conduct of creating reasonable doubt as to an arbitrator’s impartiality and independence.

There was some consensus on a 5-year time limit for any such disclosure. In relation to compliance with the Code, different types of sanctions were proposed for non-compliance.

As a result of the deliberations, the Code will be redrafted as a fourth iteration for further consideration.