Investment arbitration and the rule of law: the role of transparency in domestic accountability

Vassileva, Radosveta ORCID: https://orcid.org/0000-0001-7118-3949 (2022) Investment arbitration and the rule of law: the role of transparency in domestic accountability. In: From Assignments to Unfair Terms in Commercial Contracts and Arbitration. Heidemann, Maren and Andenas, Mads, eds. LCF Studies Commercial and Financial Law . Springer Nature. . [Book Section] (Accepted/In press)

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Abstract

Realising its role in developing international law and enhancing legal certainty, the International Centre for Settlement of Investment Disputes (ICSID) has been at the forefront of promoting transparency both at the pre-award and post-award stages within the limits of the ICSID Convention. Despite these efforts, however, ICSID can still be criticised from a rule of law standpoint. There seems to be a mismatch between what information about arbitration proceedings ICSID’s current rules allow to be made public and what information civil society expects to access. Even after the major amendments of 2022, ICSID’s rules contain loopholes that allow states acting in bad faith to deceive the public about the outcome in ICSID proceedings. This is regrettable since violations of investors’ rights may involve deliberate wrongdoings by governments and public officials. Meanwhile, states compensate investors for such breaches with taxpayers’ money. Because of the limited access to information, civil society cannot exercise its role in checks and balances – namely, holding those responsible for the wrongdoing accountable and pushing for legislative changes that can prevent similar abuses of power in the future. After showcasing three concrete examples that illustrate how states have taken advantage of the loopholes in ICSID’s rules to hide the true outcome in ICSID proceedings, this chapter makes concrete recommendations about what reforms are necessary to curtail such bad faith behaviour in the future.

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