August 19, 2023
The final rendition of the Investor-State Dispute Settlement (ISDS) provisions are currently under review at the UN Commission on International Trade Law (UNCITRAL), where one category of provisions further envisages the conduct of arbitrators. This 56th Session, which concluded in Vienna earlier in July, further contemplate the nature of manner and process pertaining to arbitrators.
For arbitrators in ISDS, the nature of ethical instructions to be undertaken during proceedings is key. Formulated specifically to address and uphold the integrity and credibility of the arbitral process, the finalised UNCITRAL Code of Conduct for Arbitrators in International Investment Dispute Resolution is an essential tool in this field. Thus far, in the field of international arbitration,conflicts of interest have frequently eclipsed their value in ISDS. These provisions elaborate on the scope of the disclosure requirements, affirm the obligations of independence and impartiality, and aim to control the issue of ‘double hatting’. The Code is further supplemented with a commentary that aims to guide practitioners and other actors in adhering to these principles.
The ideas in the UNCITRAL Code of Conduct have immense importance, as they have been integrated by numerous arbitral institutions into their policies and practices, particularly those that handle investment arbitrations. This widespread acceptance is in spite of the fact that the Code is not a legally enforceable document. The overarching purpose of this document is to promote harmonisation and improve the uniformity of dispute resolutions in handling ethical concerns across different forums. It has thus inadvertently and considerably improved the legality and credibility of this process. This is pertinently done through fostering trust between investors and states by ensuring transparency and contributes to another goal of stimulating foreign investment and economic expansion. The impact of such negotiated and finalised provisions beyond UNCITRAL member states, to include other nations and regions that have incorporated it into their own investment arbitration-related policies, is a manifestation of its envisaged value.
As for the trajectory of the provision, UNCITRAL had initially ratified the Code of Conduct for Arbitrators vis-a-vis ISDS in 2004. Since then, worries grew regarding independence, impartiality, and conflicts of interest in investment arbitration, warranting revisions and considerations by UNCITRAL. Moreover, the absence of a clear set of ethical criteria in the original text was seen as a factor of potential damage to the validity of the entire process itself, as previously mentioned. Thus, UNCITRAL began a thorough review of the procedural aspects involving professionals and state parties to create a new uniform code of conduct for arbitrators.
There have been several iterations of the Code of Conduct since the 37th session of UNCITRAL in April 2019, where Working Group III requested that the Secretariat begin preliminary work on a code of conduct in collaboration with the International Centre for Settlement of Investment Disputes (ICSID) Secretariat. In 2022, the draft was deliberated as per United Nations General Assembly (UNGA) Resolution No. A/CN.9/WG.III/WP.216, and several adjustments were made to definitions as well as provisions for further refinement. The Code included provisions for both arbitrators and judges while specifying, when necessary, that the article or the paragraphs within apply only to arbitrators or only to judges. This is as the Working Group agreed to evaluate provisions relevant to both arbitrators and judges in parallel. Eventually, it was decided that efforts would be made towards presenting two separate texts, where the 56th session in Vienna and other sessions of 2023, thus deliberated a separate code of conduct for arbitrators for adoption, as documented in UNGA Resolution No. A/CN.9/1124. The separated code of conduct was drafted by April 2023,as seen in UNGA Resolution No. A/CN.9/1148, and the accompanying supplementary text is captured in the same document.
The steps towards the finalisation of these texts were seen in July 2023, and apart from all that is previously mentioned, is an important development in the general policy paradigm of dispute resolution. Through the revisions and ethical considerations, it fundamentally creates an equal footing for the parties in investment arbitration, making it a robust alternative process for settling conflicts and encouraging global relations. In conclusion, the UNCITRAL Code of Conduct for Arbitrators in International Investment Dispute Resolution is a significant step towards creating and sustaining ethical standards, where its drafting background, relevance, and provisions all serve to further the principles of justice and integrity, generating reliability in the international investment dispute resolution. In years to come, it could encourage a wide variety of actors to undertake arbitration with the ISDS paradigm.
Working Group III: Investor-State Dispute Settlement Reform | UnitedNations Commission On International Trade Law
UNCITRAL Working Group III completes a draft Code of Conduct forArbitrators
UN Member States Adopt ICSID and UNCITRAL Code of Conduct forArbitrators in International Investment Disputes | ICSID
UNCITRAL completes first steps in investor-State dispute settlementreform project | ArbitrationLinks | Blogs | Insights | Linklaters