Transparency, internet and the international investment law

A ‘small history’ was recently made in the field of international investment law when, for the first time ever, the proceedings of a certain investor-state dispute (Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12) – Public Hearing (“Pac Rim Cayman dispute”)) were webcasted live to the general public.[1] These webcasts are now available on the International Centre for Settlement of Investment Disputes’ (ICSID) website, where visitors can entertain themselves with over 12 hours of recorded legal proceedings (including recess).[2] It is asserted in this entry that by using the online webcast technology, the parties to the Pac Rim Cayman dispute introduced a new standard of transparency into the field of international investment law. Whether this standard will be taken up by future disputants remains to be seen.

The investor-state dispute resolution process has been a long standing target for critics. Many of these critics concentrate on the lack of transparency demonstrated in the system; Indeed investor-state dispute resolution proceedings are often held in a confidential manner, where not only the public cannot follow or participate in the proceedings, but also, at least on some occasions, viewing the awards granted in these disputes is not permitted. The importance of such a webcast therefore lies first and foremost in the enhanced transparency it provides. It is, after all, only fair that the public be allowed (and able) to follow any legal proceedings in which tax payers’ money is on the line. Furthermore, investment disputes in the past have dealt with important issues such as the supply of drinking water, the enlargement of nature reserves, the disposal of toxic waste and the regulation of polluting gasoline additives. The public’s interest in following these legal proceedings is obvious.

It is important to note however, that as the proverb says, one swallow doesn’t make a summer. First, this is merely one case. Whether it will become a ‘trend’ is yet to be seen. Secondly, the specific webcasted proceedings were governed by the Dominican Republic – Central American Free Trade Agreement (CAFTA-DR), a rather unique agreement[3] in which Article 10.21 stipulates that hearings shall be open to the public. Most investment agreements do not include such provisions. Furthermore, it could also be argued that the novelty of this case is purely technological, as the instruction to conduct open hearings is not new in itself.

There is however, some level of importance in this new development. First, the legal text of the CAFTA-DR (like the text existing in the U.S. and Canada model treaties) is ‘passive’ by nature: the hearings need only be ‘open to the public’. Nothing in this text’s language requires the parties to actively ‘deliver’ the hearings to the public’s homes. An active approach, such as the one presented by the parties to the Pac Rim Cayman dispute, does not only passively permit the public to attend the hearings, but also actively makes the hearings readily accessible to the general public, wherever it may be. The parties’ decision to allow such an active approach could possibly serve as precedence, a creation of a new standard with regard to transparency in investment disputes, one that others may decide to adopt in future disputes.

Secondly, introducing states to such a possibility may lead to the future adoption of ‘active’ transparency obligations in international investment treaties. If the usage of webcasting technology becomes an accepted ‘trend’, receives positive feedback from the public and can be easily (and cheaply) implemented, states may choose to include similar requirements in their future investment treaties.

Thirdly, the use of such technology by international investment tribunals might help to improve the somewhat damaged reputation of the investor-state dispute resolution system. While it is not clear how many people are likely to actually use this newly acquired possibility (it would be interesting to know how many people actually listened to these 12 hours of recorded legal proceedings), having the option to do so remains crucial. As mentioned above, the field of international investment law is under heavy criticism. Many consider it to be a closed, western, commercially oriented system. Some even named it “the law of greed”.[4] Several states have denounced the ICSID convention (Bolivia, Ecuador), while others may intend to do so (Venezuela). Besides its above mentioned effects, the use of online streaming could serve in this respect as a ‘PR tool’, a visible step toward the alleviation of these critiques. The public image of the investor-state dispute resolution system would only gain from such a trend, and so would the legitimacy of this system.

There seems little doubt that adopting the webcasts technology in investment disputes can, at least potentially, bring about some benefits. It is important to note, however, that increasing the system’s publicity could also be used in order to create political pressure upon both arbitrators and parties.[5] State parties, for example, can engage public opinion to bring pressure on arbitrators in environmental cases. This, in the long term, would create unfavourable investment climate.

By webcasting an investment dispute to the open public, the investor-state dispute resolution system is distancing itself from the closed and secretive reputation it has gained. It will be interesting to see the full effects this change will carry – whether this enhanced publicity will be used in order to politicize disputes, whether it will affect the system’s reputation and legitimacy, or whether it will have no influence at all. After all, who in his right mind would like to watch 12 hours of legal proceedings?

[2] Though some technical problems currently exist. See online: ICSID http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=OpenPage&PageType=AnnouncementsFrame&FromPage=Announcements&pageName=Announcement60

[3] Similar provisions can be found in Article 19 of the Norwegian Draft Model BIT, Article 38 of the Canadian Model BIT, Article 29 of the U.S.A Model BIT.

[4] M. Sornarajah, “A Law for Need or a Law for Greed?: Restoring the Lost Law in the International Law of Foreign Investment” (2006) 123 Int. Environ. Agreements 329.

[5] See concerns made in this respect by Ives Fortier, “Investment Protection and the Rule of Law: Change or Decline?” Lecture given by L. Yves Fortier on March 17th 2009 at the British Institute of International and Comparative Law, online: ICCA <http://www.arbitration-icca.org/media/0/12392785460140/0732_001.pdf>at 15.

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