A push by some governments to shed more light on the international processes used to adjudicate FDI disputes has yielded decidedly mixed results – despite several years of negotiations at the United Nations.

Over the past decade, the international arbitration of disputes between foreign investors and their host countries has grown in leaps and bounds – thanks, in large part, to many hundreds of bilateral investment protection treaties that grant investors protection against expropriation (and various other types of mistreatment), as well as the right to sue host countries before international tribunals.


Many of these investment treaties let investors take their disputes to the World Bank or to arbitrate them in an 'ad-hoc' fashion by using a set of procedural rules drafted by the UN Commission on International Trade Law (Uncitral). The problem with the Uncitral option, however, is that those rules permit arbitrations to play out with little or no publicity. (The World Bank, by contrast, keeps a public registry of all cases arbitrated there, and it is common for the outcomes of such case to be disclosed to the public.)

To the extent that investors opt for the Uncitral arbitration option, high-stakes controversies arising out of tax, regulatory or other legislative measures may be arbitrated without publicity. Other governments and investors are thereby robbed of the ability to know how arbitrators are interpreting and applying the basic legal rules contained in these now-ubiquitous international investment treaties.

Some governments, led by the US and Canada have argued for years that the Uncitral arbitration rules should be updated so that disputes between investors and governments play out in the open – much as domestic legal processes do – with hearings opened to outsiders (including the media), and mandatory publication of decisions rendered by arbitral tribunals.

However, the push for transparency has been an uphill slog. Some governments have joined the fight, but others – including some whose own domestic legal systems leave much to be desired in terms of transparency and good governance – are not fans of the push for greater openness.

In February of this year, a working group of the Uncitral, comprised of dozens of member governments, signed off on a new set of state-of-the-art transparency guidelines that reflect a compromise between the two divergent camps. (The rules still need to be ratified by the Uncitral at its annual meeting later this year, but their shape is now largely set in stone.)

On a positive note, any future investment treaties negotiated by governments that allow for Uncitral-type arbitration will be assumed to take on board the newly concluded transparency guidelines – unless the new treaty explicitly states otherwise.

However, in a notable setback, these new transparency strictures will not apply automatically to the thousands of old treaties – some dating back to the 1970s or earlier – that allow for Uncitral arbitration. Instead, governments will need to take further steps – such as a time-consuming amendment of those older treaties or an exchange of diplomatic letters – in order to confirm that they wish for the new transparency guidelines to be read into those older treaties.

While not ideal, the upshot of the recent struggle at the UN is that investors and states will learn more about at least some of the dozens of international arbitrations that are quietly conducted each year under the auspices of those little-noticed UN rules.

Luke Eric Peterson is the editor of InvestmentArbitrationReporter.com, an online reporting service tracking FDI disputes between foreign investors and states.