In a recent article in IBA Global Insight entitled International arbitration: a time of change, Head of International Arbitration Philippa Charles spoke about some of the issues around the investor-state dispute settlement (ISDS) system of dispute resolution between a company and a country, and the transparency within arbitration that is coming with it.
Below is an extract from the article:
“‘There is a concern the process is skewed in favour of corporate interests,’ says Philippa Charles, Head of International Arbitration at Stewarts. ‘Many high-profile arbitrators are also partners in multinational law firms, which may have client relationships with those corporate interests. This has led to a rash of challenges to arbitrators in ISDS cases, but also to a pervasive concern that the process by which decisions are made is too opaque.’ This is particularly a concern ‘in cases where a state’s … legislative business may be deemed to result in liability to a foreign corporate interest,’ she says.”
Philippa is also quoted later in the article:
“Transparency initiatives should enable participants in arbitration to point to the data obtained about the case, to reassure those who have concerns about the security and legitimacy of the process. However, many in the arbitrator community are concerned that such initiatives could become a form of ‘Tripadvisor for Arbitrators’, with the attendant risks that disgruntled users may provide disobliging commentary on their performance. ‘However, it can only be in the interests of arbitration as a process for more information to be made available,’ says Charles, ‘particularly to those [who are] not part of one of the sophisticated large arbitration practices that have in-house knowledge of arbitrator candidates.’”
“One concern for those practising in international commercial arbitration, says Charles, is that the issues raised about the transparency of the ISDS mechanism will begin to affect the perceived legitimacy of commercial arbitration, too.”
“‘However,’ says Charles, ‘as most tribunal appointments are in the hands of party counsel, the efforts made by institutions to grow the pool of arbitrators are reaching their limits: further progress will require more from law firms and clients.’”
The article was first published in IBA Global Insight, October/November 2017, [available at www.ibanet.org ] and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.
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