European Union Embraces the Mauritius Convention on Transparency for Investor-State Dispute Settlement an overview

 European Union Embraces the Mauritius Convention on Transparency for Investor-State Dispute Settlement

In a major step towards enhancing transparency in international arbitration, the Council of the European Union has authorized the signing of the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration, widely referred to as the Mauritius Convention on Transparency. On July 2, 2024, this historic decision represents a significant stride towards increased public access to documents and hearings, as well as the involvement of civil society in disputes initiated by investors against states under investment treaties.

The Mauritius Convention on Transparency was adopted to extend the applicability of the United Nations Commission on International Trade Law (UNCITRAL) Rules on Transparency to investment treaties concluded before April 1, 2014. The UNCITRAL Rules on Transparency are designed to enhance the openness and accessibility of treaty-based investor-state arbitrations. They require the publication of documents, the holding of public hearings, and the allowance for submissions from interested parties, such as civil society organizations.

The Convention applies the Rules on Transparency to any investor-state arbitration under treaties concluded before the cut-off date if both the respondent's state and the claimant's state are parties to the Convention, and neither has made reservations to disapply the rules. For treaties signed after April 1, 2014, the transparency rules apply by default unless the parties agree otherwise.

Key Provisions of the Mauritius Convention

Public Access to Documents

Under the Mauritius Convention, disputing parties are obligated to publish certain key information about the dispute. This includes the names of the parties, the economic sector involved, and the treaty under which the claim is being made. Documents such as written submissions, tribunal awards, expert reports, and witness statements must also be made available to the public upon request to the tribunal. This ensures that the proceedings are transparent and that the public has access to crucial information.

Public Hearings

The Convention mandates that hearings for the presentation of evidence or oral arguments should be held in public. This is a significant departure from the traditional confidentiality of arbitration proceedings, reflecting the importance of public scrutiny and accountability in disputes that often involve significant public interest.

Participation of Civil Society

The Mauritius Convention also allows for greater participation from civil society. It permits third parties, who are neither disputing parties nor non-disputing parties to the treaty, to file written submissions regarding matters within the scope of the dispute. Additionally, non-disputing parties to the treaty may make submissions on issues of treaty interpretation. This inclusion of civil society organizations helps ensure that a broader range of perspectives is considered in the arbitration process.

Confidentiality Safeguards

While promoting transparency, the Convention also recognizes the need to protect certain types of confidential information. Exceptions are made for information that could jeopardize the integrity of the arbitral process or that is commercially sensitive. This balance aims to protect legitimate interests while ensuring that the arbitration process remains open and accountable.

The European Union's Commitment to Transparency

The European Union’s signature of the Mauritius Convention underscores its commitment to increasing transparency in investor-state dispute settlement (ISDS). This move aligns with the EU's broader objectives of enhancing accountability and public participation in international arbitration. Approximately 1,200 agreements involving EU Member States fall under the scope of the Convention, including the Energy Charter Treaty, which is the only treaty covered at the EU level.

Implications for EU Member States

Following the EU's signature, Member States can proceed with national ratification of the Convention. This process will bring pre-2014 treaties between ratifying EU Member States or their nationals and other Convention states or their nationals within the scope of the UNCITRAL Rules on Transparency. The integration of these rules into existing treaties is expected to significantly enhance the transparency and accountability of ISDS proceedings.

Financial Support for Transparency Initiatives

The EU has also committed to providing financial support for the Transparency Registry, which is maintained by the UNCITRAL secretariat. The Transparency Registry serves as a central repository, providing the public with free access to ISDS cases and related documents. The EU's financial backing ensures the continued operation of the Registry and promotes the UNCITRAL Transparency Standards. This support reflects the EU's dedication to fostering an open and transparent arbitration environment.

Broader Implications and Future Reforms

The Mauritius Convention on Transparency is part of a broader movement towards reforming ISDS. Since its entry into force on October 18, 2017, the Convention has paved the way for ongoing efforts within the UNCITRAL framework to enhance the fairness and efficiency of investor-state arbitration.

Working Group III on ISDS Reform

The work of Working Group III on ISDS reform, initiated in 2017, builds on the principles established by the Mauritius Convention. The group has already finalized several texts, including the UNCITRAL Code of Conduct for Arbitrators and Judges in International Investment Dispute Resolution, and guidelines on mediation for international investment disputes. These efforts aim to address various aspects of ISDS reform, including the conduct of arbitrators and the prevention and mitigation of disputes.

Future Developments

In the coming months, the Working Group is expected to continue its consideration of a draft statute for a standing mechanism and provisions on procedural and cross-cutting issues. A first draft of a multilateral instrument on ISDS reform, modeled on the Mauritius Convention, will also be presented for consideration. These initiatives represent significant steps towards a more transparent, fair, and efficient system for resolving investor-state disputes.

Conclusion

The European Union's signature of the Mauritius Convention on Transparency is a landmark development in the field of international arbitration. By embracing the principles of transparency and public participation, the EU is setting a new standard for investor-state dispute settlement. The Convention not only enhances the accountability of ISDS proceedings but also ensures that a broader range of voices, including civil society, can be heard. As the EU and its Member States move towards ratification, the broader implications for global ISDS reform are profound, promising a more open and just system for resolving investment disputes.