The Court of Arbitration at the International Chamber of Commerce (ICC) has been resolving business disputes for almost 90 years. As part of a recent update of the ICC’s rules of arbitration, the Paris-based institution is seeking to promote itself as a venue for resolving foreign investment disputes.
To be sure, the ICC is no stranger to investment disputes. Some 10% of nearly 800 cases brought to it in 2010 involved a state or state-owned enterprise. A number of these disputes arose out of foreign investments such as oil fields, mining concessions, financial institutions or traditional manufacturing.
The ICC hopes to increase its market-share of these investment disputes, and in a series of worldwide events marking the adoption of the new ICC rules of arbitration, it has been touting certain investment-friendly rule changes.
Among the changes is a modest decision to remove the term 'business disputes' from the arbitration rules text. This should make it clearer that the rules are appropriate for investment or political risk disputes.
The ICC has also responded to concerns expressed by some states that the nomination of arbitrators should not be delegated to 'national committees' of business representatives or chambers of commerce. It was feared that such committees may be too sympathetic to the investor interests at stake in any legal clash between an investor and a state. In future, when the ICC is called upon to nominate an arbitrator in a case involving a state, its Court of Arbitration – a supervisory body of lawyers and arbitrators – will handle this task.
However, when it comes to the hot-button issue of transparency – with many clamouring for more disclosure about multi-million dollar arbitration lawsuits that may affect public policy or the state treasury – the ICC has elected to do nothing.
At a recent conference in New York, Michael Schneider, an ICC commission vice-president who adopted the new arbitration rules, noted that the question of transparency is a divisive one. According to Mr Schneider, some states and stakeholders push for more disclosure, while others welcome a system that permits disputes to be resolved away from prying eyes.
Mr Schneider noted that the ICC approach – where cases are not publicly disclosed by the operational arm of ICC, the Paris-based Secretariat – may offer a 'real alternative' to other well-known (and more open) forums such as the World Bank’s International Centre for Settlement of Investment Disputes.
It remains to be seen whether these modest changes in the ICC rules will be enough to attract more investors and states. Indeed, one cloud on the horizon has been the Brussels-based European Commission, which is currently considering what forums should be provided for the resolution of investment disputes under a new generation of economic agreements that the EU will negotiate with countries such as China, India, Singapore and Canada.
Winning the EU’s blessing is important, because Brussels is set to take over the negotiation of external investment agreements on behalf of the 27 EU member-states, which had formerly negotiated their own bilateral pacts – and sometimes provided the ICC as a dispute resolution option.
In an internal discussion paper prepared by officials at the European Commission earlier this year, concerns were voiced about the 'legitimacy' of private dispute resolution bodies such as the ICC. Over the coming months, the ICC is likely to direct a charm offensive at Brussels in the hopes of persuading sceptical European bureaucrats that the self-proclaimed 'world business organisation' is an appropriate umbrella under which to resolve often politically sensitive crossborder investment disputes.
Luke Eric Peterson is the editor of InvestmentArbitration Reporter (www.iareporter.com), an online news service dedicated to foreign investment law and policy.