CONFIDENTIALITY AND TRANSPARENCY IN INTERNATIONAL ARBITRATION: FINDING THE RIGHT BALANCE Submitted in partial fulfilment of the requirements of the Bachelor of Laws Degree, Strathmore University Law School By Ibrahim Benazir 101450 Prepared under the supervision of Ms Balla Galma February 2021 Word count: 12,796 Table of Contents ACKNOWLEDGEMENTS 5 ................................................................................................ DECLARATION 6 ........................................................................................................ LIST OF ABBREVIATIONS 7 .............................................................................................. LIST OF CASES 8 ....................................................................................................... LIST OF LEGAL INSTRUMENTS 10 ....................................................................................... 1.INTRODUCTION 1 ................................................................................................... 1.1.BACKGROUND 1 ................................................................................................... 1.2.STATEMENT OF THE PROBLEM 3 ................................................................................... 1.3.SIGNIFICANCE OF THE STUDY 4 ................................................................................... 1.4.HYPOTHESIS 4 .................................................................................................... 1.5.RESEARCH QUESTIONS 5 ........................................................................................... 1.6.RESEARCH OBJECTIVES 5 .......................................................................................... 1.7.THE RATIONALE OF THE STUDY 5 .................................................................................. 1.7.1.Procedural justice 6 .................................................................................... 1.7.2.Social theory contract 6 ................................................................................ 1.8.LITERATURE REVIEW 7 ............................................................................................ 1.9.RESEARCH METHODOLOGY 11 ..................................................................................... 1.10.DELIMITATION OF THE STUDY 11 ................................................................................. 1.11.CHAPTER BREAKDOWN 11 ....................................................................................... 2.DEFINING CONFIDENTIALITY IN INTERNATIONAL ARBITRATION 13 ....................................... 2.1.INTRODUCTION 13 ................................................................................................ 2.2.CONFIDENTIALITY IN ICA 14 ...................................................................................... 2.2.1.Municipal law 15 ........................................................................................ 2.3.ARBITRAL RULES OF INTERNATIONAL INSTITUTIONS 19 ............................................................ 2.3.1.International Chamber of Commerce 19 ............................................................ 2.3.2.London Court of International Arbitration 20 ...................................................... 2.3.3.Hong Kong International Arbitration Centre 20 .................................................... 2.4.CONFIDENTIALITY IN ISDS 21 ..................................................................................... 2.5.CONCLUSION 23 .................................................................................................. 3.THE PARAMETERS OF TRANSPARENCY IN INTERNATIONAL ARBITRATION 25 ............................ 3.1.INTRODUCTION 25 ................................................................................................ 3.2.TRANSPARENCY IN ICA AND ITS BENEFITS 26 ...................................................................... 3.2.1.Public interest 26 ....................................................................................... 3.2.2.Predictability and consistency of arbitral awards 27 ............................................. 3.2.3.Holding Arbitrators accountable 28 .................................................................. 3.2.4.Choice of Arbitral Seat 29 ............................................................................. 3.3.TRANSPARENCY IN ISDS 29 ....................................................................................... 3.3.1.Public interest 30 ....................................................................................... 1 3.3.2.Foreign investors benefit 32 .......................................................................... 3.3.3.Accountability 33 ........................................................................................ 3.3.4.Public confidence 33 .................................................................................... 3.4.THE UNCITRAL TRANSPARENCY RULES 34 ....................................................................... 3.4.1.The facets of transparency in the rules 35 ......................................................... 3.5.THE MAURITIUS CONVENTION ON TRANSPARENCY 37 .............................................................. 3.6.CONCLUSION 38 .................................................................................................. 4.RECONCILIATION OF TRANSPARENCY AND CONFIDENTIALITY IN INTERNATIONAL ARBITRATION 40 4.1.INTRODUCTION 40 ................................................................................................ 4.2.RECONCILIATION MEANS THROUGH INSTITUTIONAL RULES 41 ....................................................... 4.3.LEGITIMATE INTERESTS OF THE PARTIES 44 ........................................................................ 4.4.THE ‘WORK-PRODUCT’ DOCTRINE 45 ............................................................................. 4.5.CONCLUSION 47 .................................................................................................. 5.RECOMMENDATIONS AND CONCLUSION 49 .................................................................... 5.1.INTRODUCTION 49 ................................................................................................ 5.2.FINDINGS 49 ...................................................................................................... 5.2.1.The place of confidentiality 49 ....................................................................... 5.2.2.The parameters of transparency 50 .................................................................. 5.2.3.The dire need for their reconciliation 50 ........................................................... 5.3.RECOMMENDATIONS 51 ............................................................................................ 5.3.1.Reconciliation through the ‘work-product’ doctrine 51 .......................................... 5.3.2.Reconciliation through the approach provided by the ICSID and UNCITRAL Rules on Transparency Institutional Rules 51 ........................................................................ 5.3.3.Reconciliation through the 'legitimate interest' test 52 .......................................... 5.3.4.Harmonization of the approach to confidentiality across several jurisdictions 52 ........... 5.3.5.Application of the UNCITRAL RULES to ICA 52 ...................................................... 5.4.CONCLUSION 53 .................................................................................................. BIBLIOGRAPHY 54.................................................................................................... 2 ABSTRACT Confidentiality and Transparency are both cardinal principles of International Arbitration. They are both vital aspects that are required in order to ensure the procedural integrity of the arbitral process is upheld. However, they are seen as opposing principles within the arbitration realm. Confidentiality is seen as one of the main reasons why arbitration is attractive especially to private parties as opposed to litigation. This is due to several reasons such as the need to protect the reputation of businesses, reducing public posturing, protecting sensitive information and several others. There are areas where confidentiality is very necessary and should be upheld so as to ensure the procedural integrity of the arbitral process and the interests of the parties are guaranteed. However, confidentiality in some cases, leads to grave injustices especially when matters of public interest are involved. In such cases, the issue of transparency comes up. Transparency ensures that the arbitral process upholds cardinal principles like public policy, fairness, justice, fairness and predictability in the process. However, transparency has disadvantages as well. For example, it can make the process costly thus disadvantaging smaller investors. In addition, it can make the process timely, and it can also turn away private parties using the process especially since their sensitive information will not be protected. Therefore, both these principles have advantages and disadvantages that should be keenly assessed before purporting to uniformly apply either of them. Thus, there is need to find the delicate balance between confidentiality and transparency. Any balance found would need to be under constant review because of the ever-shifting nature of the world. The balance has to be constantly tipped one way or the other to provide for a proactive system that accounts for both judicial realism, and changes in the law and practice of international arbitration. This dissertation purports to do that by offering means and methods to balance these two principles. The means and methods proposed include the use of Institutional rules, the use of the legitimate interest test, the use of work-product doctrine and the extension of the UNCITRAL Rules on Transparency to ICA. The dissertation, however, acknowledges that there is no need to find the perfect balance between transparency and confidentiality. Indeed, a quest to achieve this, if possible, would be short lived as the line of actual contact and equilibrium between the two principles is a moving one. Both principles must respond as active principles based on the context and the 3 kind of proceedings before the arbitral tribunal, the subject matter at issue, and the relevant facts inherent to the relevant proceeding. 4 Acknowledgements I would like to express my deepest gratitude to my supervisor, Ms Balla Galma, for all her guidance and insights afforded to me throughout this dissertation process. Her invaluable patience during the writing of this dissertation will not be forgotten. I would also like to extend my sincere appreciation to Mdathir Timamy, my friend. Her passionate encouragement and support through the many late nights working on this research is greatly appreciated. My heartfelt gratitude is also extended to my friends Eugene Kanyugo and Suhaila Adan who at different stages in the writing of this dissertation, helped me conceptualise and redefine my research by listening to and challenging my ideas. Finally, I would like to thank my family for all their support during this journey. 5 Declaration I, Ibrahim Benazir, do hereby declare that this research is my original work and that to the best of my knowledge and belief, it has not been previously, in its entirety or in part, been submitted to any other university for a degree or diploma. Other works cited or referred to are accordingly acknowledged. Signed: .......................................................................... Date: .......................................................................... This dissertation has been submitted for examination with my approval as UniversitySupervisor. Signed: Supervisor Name: Balla Galma 6 List of Abbreviations IA International Arbitration ICA International Commercial Arbitration UNCITRAL United Nations Commission on International Trade Law ICSID International Centre for the Settlement of Investment Disputes NAFTA North American Free Trade Agreement ICC International Chamber of Commerce LCIA London Court of International Arbitration HKIAC Hong Kong International Arbitration Centre 7 List of Cases United Kingdom Ali Shipping Corporation V. Shipyard Trogir. [1998] 1 Lloyd's Rep. 643. L Associated Electric and Gas Insurance Services Ltd. (AEGIS) v. European Reinsurance Co. of Zurich, [2003] 1 W.L.R. 1041 (P.C.) Department of Economic Policy & City of Moscow v. Bankers Tr. (2004) EWCA (Civ) 314. Dolling-Baker v Merrett and others [1991] 2All E.R.890. Hassneh Ins. V. Steuart J. Mew (1993) 2 Lloyd's Rep. 243 (K.B.). France Aita v Ojjeh, Cour d'appel [CA] [regional court of appeal] Paris, 4 Revue De L'arbitrage 584, Feb. 18, 1986. Nafimco v Foster Wheeler Trading Company AG, Cour d'appel [CA] [regional court of appeal] Paris, le ch., Jan. 22, 2004 Société True North et Société FCB International v Bleustein, Tribunal de commerce [commercial court] Paris, 2003 Revue De L'arbitrage 189, Sept. 17, 1999 Sweden Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc, NYH Juridiskt Arkiv [NJA] [Supreme Court] 2000 ref. T1881-99. Singapore Myanma Yaung Chi Oo Co. v. Win Win Nu and another [2003] 2 S.L.R. 547. United States Hickman v. Taylor, 329 U.S. 495, 1947. International Centre for Settlement of Investment Disputes (ICSID) Cases Aguas del Tunari SA v. Republic of Bolivia, ICSID, Case No ARB/02/3, 21 Oct. 2005. Amco Asia Corp. v. Repub. of Indonesia, Decision on Request for Provisional Measures in ICSID Case No. ARB/81/1 of 9 December 1983, XI Y.B. Comm. Arb. 159, 161 (1986) 8 Biwater Gauff (Tanzania) Ltd United Republic of Tanzania, Procedural Order No.3 in ICSID Case No. ARB/05/22 of 29 September 2006, 114. Metalclad Corporation v United Mexican States, Award in ICSID Case No. ARB(AF)/97/1 (NAFTA) of 30 August 2000 Methanex Corporation v United States, Final Award on Jurisdiction and Merits, (2005) Myers Inc v Government of Canada, NAFTA Procedural Order No.16 of 13 May 2000. Philip Morris Asia Limited v. Australia, ICSID Case No ARB/05/22, 24 July 2008. Piero Foresti v. Republic of South Africa, ICSID Case No ARB(AF)/07/1, 4 Aug. 2010. Sociedad Anonima Eduardo Vieira v. Republica de Chile, ICSID Case No ARB/04/7, 21 Aug. 2007. Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A.) v. Argentine Republic (II) (ICSID Case No. ARB/03/19) The Government of Sudan/The Sudan People’s Liberation Movement/Army (Abyei Arbitration), Public Hearing in PCA Case of 18-23 April 2009. The Government of Sudan/The Sudan People’s Liberation Movement/Army (Abyei Arbitration), Public Hearing in PCA Case of 18-23 April 2009, The Loewen Group v. U.S.A., Decision on Competence and Jurisdiction in ICSID Case No. ARB(AF)/98/3 (NAFTA) of 5 January 2001, 26. 9 List of Legal Instruments UNCITRAL Model Law on International Commercial Arbitration, 10 June 1958. ICSID Arbitration Rules (2003). UNCITRAL Transparency Rules NAFTA Rules ICC Rules HKIAC Rules LCIA Rules Mauritius Convention on Transparency Rules 10 1. INTRODUCTION 1.1.Background International arbitration (IA) is a conflict resolution mechanism through which parties agree to refer a conflict to an arbitrator to reach a final and binding solution. IA can be carried out 1 either under institutional rules or ad hoc rules. Institutional regulations provide for pre- existing arbitration regulations and an appointing authority to form an arbitral tribunal and supervise other procedural matters. Ad hoc international arbitration is subject to arbitration 2 arrangements between the parties and the relevant national arbitration legislation. 3 International commercial arbitration (ICA) resulting from trade relations between private parties, and investor-state arbitration (ISDS) resulting from multilateral or bilateral investment treaties between nations, are the two categories of IA discussed in this dissertation. Under both means of arbitration, confidentiality remains a vital element of the proceedings. 4 Confidentiality can be defined as the parties' right to ensure that their dispute and the information about it will not be disclosed to anyone other than the arbitrating parties. Confidentiality extends to; the issues discussed, the evidence submitted, the hearings conducted, and the awards issued. It is one of the hallmarks of arbitration as many parties 5 opt for arbitration as a means for resolving disputes due to its confidential nature. The rationale for upholding confidentiality in IA is that it is believed that parties who submit their disputes to arbitrators and not courts, deserve to have their wish to keep their matter withheld from the public eye respected. As was held by an English Judge, ‘The concept of private [or 6 Zhao M, ’Transparency in International Commercial Arbitration: Adopting a Balanced Approach’ Virginia 1 Journal of International Law 59, 2019, 178. Zhao M, ‘Transparency in International Commercial Arbitration: Adopting a Balanced Approach,’ 178.2 Zhao M, ‘Transparency in International Commercial Arbitration: Adopting a Balanced Approach,’ 179.3 Zhao M, ‘Transparency in International Commercial Arbitration: Adopting a Balanced Approach,’ 179.4 Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 5 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 2. Laverde S, ‘Analysis of the Principle of Transparency with Special Reference to Its Implications for the 6 Procedure of International Investment Arbitration’, 109. 1 confidential] arbitration derives simply from the fact that the parties have agreed to submit to particular arbitration disputes arising between them and only between them.’ 7 Confidentiality offers a myriad of advantages. For example, confidentiality reduces the chances of permanently damaging the continuing business relationships. It ensures trade secrets are protected, parties can make arguments or submit documents that they would have been hesitant to if the case was before the court. Additionally, confidentiality is generally recognised to facilitate settlement of a dispute effectively and within a short period as it minimises the role of public posturing in the case. In the subject matter of Investor-State 8 arbitration the main advantage is maintaining national security, as such arbitration’s duty of confidentiality comes in handy. Over the years, confidentiality has suffered high-level 9 attacks as a body of opinion looking to restrict or deny its presence in IA is slowly building up. This is because as much as confidentiality is a vital acolyte of arbitration, it can be very problematic in some cases. For example, what happens when the matter involves a state, a 10 state entity or a state instrumentality? Or when public interest is at stake? Should confidentiality be an element in this type of arbitration? Confidentiality in these cases becomes inherently problematic because the outcome of arbitration that involves the state or the adjudication of a dispute involving public interest matters could lead to adverse effects on the general public. Therefore, applying the same confidentiality standards in cases where 11 states are parties to the dispute becomes troublesome. Furthermore, confidentiality leads to a high degree of uncertainty in the arbitral processes because there is no consistency in interpreting the law. Since arbitration awards are rarely published there is no uniform way 12 the law is applied in these cases. Oxford Shipping Co. Ltd. v. Nippon Yusen Kaisha, (The "EasternSaga"), (1984) Queen's Bench Division.7 Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 8 Arbitration’ 2019. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 9 Arbitration’ 2019. Andrew N & Axelle L, ‘Should Amici Curiae Participate in Investment Treaty Arbitrations?’ 22.10 Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 11 Arbitration’ 2019. Zhao M,’Transparency in International Commercial Arbitration: Adopting a Balanced Approach,’ 189.12 2 These facts have resulted in high demand for transparency within IA, especially where the state is involved. In our day and age, the unwillingness to become more transparent has increasingly been met with sinister suspicions of wrongdoing and equated with a reluctance of individuals and institutions to assume responsibility for their decisions. Transparency has 13 not been correctly defined within the international law corpus. However, it is widely agreed that transparency is an information-centric concept which relies on openness and access to information. Transparency is seen to lead to a more accountable, more democratic and more 14 legitimate system of global governance. In IA transparency implies access to the hearings, notice of the arbitral proceedings, disclosure of documents, participation of third parties in the proceedings and access to the awards. There are several benefits of transparency in IA. 15 For example, it legitimizes the process by increasing public confidence. It increases the accountability of arbitrators as they know they are under scrutiny and ensures that there are coherence and consistency of the law's interpretation. Both confidentiality and transparency are essential to the arbitral process. Thus, this dissertation seeks to discuss both concepts to propose a way to reconcile both concepts in the arbitral process. 1.2.Statement of the problem Confidentiality is one of the main characteristics of arbitration and one of the most important reasons arbitration is such a popular choice for solving commercial disputes. It keeps disputes between private parties discrete, reducing the possibility of a damaging effect by disclosing the dispute to the public or disclosing other commercially sensitive information. It is clear 16 that confidentiality is an enormous asset for parties when choosing arbitration to solve their Andrea M, Piercing the Veil of Confidentiality: The Recent Trend Towards Greater Public Participation and 13 Transparency in Investor-State Arbitration in Arbitration Under International Investment Agreements: A Guide to the Key Issues, Oxford university Press, 2010, 20. Andrea M, Piercing the Veil of Confidentiality: The Recent Trend Towards Greater Public Participation and 14 Transparency in Investor-State Arbitration in Arbitration Under International Investment Agreements: A Guide to the Key Issues, 20. David V, ‘Confidentiality in International Commercial Arbitration: Mourner or a Cornerstone’ Harmonius: 15 Journal of Legal and Social Studies in South East Europe, 2019, 350. Zhao M, ‘’Transparency in International Commercial Arbitration: Adopting a Balanced Approach,’ 189.16 3 issues. On the hand, transparency offers many advantages to the arbitration process, such as enabling the public to be informed of arbitration cases that affect their interests, ensuring accountability of the arbitrators, and improving consistency and uniformity in legal issues under evaluation in arbitration etc. Therefore, making room for confidentiality in arbitral 17 proceedings, arbitrators and the international community are side-lining a fundamental concept that could ensure justice and equity are upheld in arbitration. Thus, balancing the two principles is vital. 1.3.Significance of the Study Confidentiality in IA is critical to the arbitral proceedings. This is because it offers excellent advantages to the arbitral proceedings. It is even considered the most valuable arbitration asset as it is what draws most disputants from litigation to arbitration. However, as the years have gone by, it is evident that confidentiality cannot prevail in all arbitration cases. This is because shrouding the arbitration proceedings in secrecy leads to a lack of scrutiny of the arbitral proceedings which in turn causes a myriad of problems such as the inability to hold the arbitrators accountable, the lack of public participation in the process, the inconsistencies in the awards given and the failure to grow the arbitration case law realm. These disadvantages led to the demand for greater transparency in the arbitration proceedings. Transparency is a fundamental concept that seeks to ensure accountability, equity and justice prevail in the proceedings. 1.4.Hypothesis 1. Confidentiality is a vital aspect of IA and still affirmed by many courts and arbitral tribunals. 2. The parameters of transparency have not been expressly delaminated in IA, and different institutions apply inconsistent standards. 3. There needs to be a reconciliation between transparency and confidentiality to ensure that both principles are upheld in arbitral proceedings. Zhao M, ’Transparency in International Commercial Arbitration: Adopting a Balanced Approach,’ 189.17 4 1.5.Research questions 1. What is the place and role of confidentiality in IA? 2. What are the parameters of transparency are and who does it apply to in IA? 3. After explaining the two concepts, what are the best reconciliation methods to ensure justice and equity prevail in the arbitral process while upholding the disputants' private interests? 1.6.Research objectives 1. To understand the place of confidentiality in IA proceedings and how different jurisdictions and arbitral institutions have applied the concept. 2. To analyse the parameters of transparency in IA and its benefits to the arbitration process. 3. To determine how to conduct arbitral proceedings in a manner that balances transparency and confidentiality to ensure the two principles work together to enable the tribunal to resolve disputes effectively. 1.7.The rationale of the study Transparency and confidentiality are currently seen as two competing principles in IA. On the one hand, transparency seeks to uphold equity and justice in the arbitration proceedings by calling for these proceedings' openness. On the other hand, arbitrating parties submit their disputes to arbitration to keep their dispute confidential. This is one of the main reasons why several commercial parties gravitate towards arbitration. Both of these concepts are thus invaluable to the arbitral proceedings. Therefore, none can be entirely side-lined for the other. Thus, it is essential to reconcile the two principles and find the right balance to ensure arbitration's efficacy as a dispute resolution method. This study aims to solve this conundrum and offer valuable insight to the debate. 5 1.7.1.Procedural justice According to Rawls, justice as the truth of thinking systems is the primary value of social intentions. Rawls understands that justice is fair, preconceived for equal opportunity and 18 freedom while explaining the Aristotle concept of retributive justice. The procedural justice 19 principle clarified the procedural fairness, which guarantees that the case's resolution is appropriate to both sides. So, even if people lose, when they experience fairness, they feel better. Procedural justice fosters legitimacy by allowing individuals to speak and respect neutrally and trustworthily. In Galligan's view, just proceedings made known to and acceptable by the parties’ lead, even if the result does not favour one of the parties, to fair and satisfactory results. 20 In relation to this study, the procedural justice theory provides that the procedure to be used when hearing and determining arbitral disputes should be fair. To ensure this, it is mandatory to avail the proceedings and awards to the public. This will ensure that the people who are greatly affected by these decisions have a say at how these proceedings occur. It is very unfair to lock out the public when these decisions affect their daily lives, environment, economy, etc. Procedural justice is also based on the premise that all interested parties' perspectives and concerns are considered. This means that this theory presupposes that the public (who are relevant stakeholders) should be considered and involved in the proceedings. This can be done by ensuring that transparency is regarded as an essential concept in arbitration proceedings. 1.7.2.Social theory contract Rousseau enunciates that the solution to the problem of legitimate authority is the “social contract where citizens come together for their mutual preservation.” This act of association 21 Aristotle, The Nicomachean Ethics, translated by J A Thompson, London, Penguin Books Ltd, 1976, 741.18 Aristotle, The Nicomachean Ethics, translated by J A Thompson, London Penguin Books Ltd, 1976, 741.19 Aristotle, The Nicomachean Ethics, translated by J A Thompson, London Penguin Books Ltd, 1976, 741.20 Lori Wallach, Beachy B, ‘Occidental v Ecuador Award Spotlights Perils of Investor State System: Tribunal 21 Fabricated a Proportionality Test to Further Extend the FET Obligation and Used “Egregious” Damages Logic to Hit Ecuador with $ 2.4 Billion Penalty in Largest Ever ICSID’ Public Citizen, 21 November 2012, -https:// www.citizen.org/sites/default/files/oxy-v-ecuador-memo.pdf- on 23 September 2017. 6 https://www.citizen.org/sites/default/files/oxy-v-ecuador-memo.pdf https://www.citizen.org/sites/default/files/oxy-v-ecuador-memo.pdf creates the body called the “sovereign”. The sovereign’s duty is to promote the common good. The common good is that which is in the best interests of a society in its entirety. It is 22 what the social contract aims to achieve. This study demands that states come together and 23 draw up conventions that aim to increase transparency in IA disputes to enable the public to have a say in the parties' awards when it directly affects them. This responsibility is on the States because under this social contract theory; they must promote the common good and champion society's best interests. 1.8.Literature review In supporting the study, a wide array of literature proves and disproves the paper's questions and hypothesise. This section will discuss these authors in their contribution to the problem. Azaham acknowledges the importance of confidentiality in IA but believes it is preposterous to use the same procedural rules in arbitration cases between private parties and ones which a state is involved. He highlights that the current arbitration practice has started to depart 24 from its earlier position as it has reversed the obligations of confidentiality and shifted towards transparency and openness. Effectively, this is in line with the argument that this 25 paper makes on the need for greater transparency in IA. The author further adds that arbitral 26 tribunals should carefully weigh transparency and the need for confidentiality because such balancing will significantly benefit the international community. The arguments he puts 27 Lori Wallach, Beachy B, ‘Occidental v Ecuador Award Spotlights Perils of Investor State System: Tribunal 22 Fabricated a Proportionality Test to Further Extend the FET Obligation and Used “Egregious” Damages Logic to Hit Ecuador with $ 2.4 Billion Penalty in Largest Ever ICSID’ Public Citizen, 21 November 2012, -https:// www.citizen.org/sites/default/files/oxy-v-ecuador-memo.pdf- on 23 September 2017. The Gradesaver, ‘The Social Contract’ -http://www.gradesaver.com/the-social-contract/study- guide/23 summary- accessed on 10 February 2018. Azaham P, ‘Transparency and Confidentiality Requirements in Investment Treaty Arbitration, Indian Institute 24 of Technology Kharagpur (Kharagpur, India), 2018 7. Azaham P, ‘Transparency and Confidentiality Requirements in Investment Treaty Arbitration, Indian Institute 25 of Technology Kharagpur (Kharagpur, India), 2018 7. Azaham P, ‘Transparency and Confidentiality Requirements in Investment Treaty Arbitration, Indian Institute 26 of Technology Kharagpur (Kharagpur, India), 2018 10. Azaham P, ‘Transparency and Confidentiality Requirements in Investment Treaty Arbitration, Indian Institute 27 of Technology Kharagpur (Kharagpur, India), 2018 10. 7 https://www.citizen.org/sites/default/files/oxy-v-ecuador-memo.pdf https://www.citizen.org/sites/default/files/oxy-v-ecuador-memo.pdf http://www.gradesaver.com/the-social-contract/study-%2520guide/summary http://www.gradesaver.com/the-social-contract/study-%2520guide/summary forth are relevant to this study because it highlights the immediate need for greater transparency in the arbitral proceedings that involve states. Monique also begins her paper by acknowledging the rationale behind confidentiality in IA disputes. She explains that the rationale for enforcing confidentiality is private parties who 28 have specifically contracted to resolve commercial disputes arising between them in a private forum, deserve to have their desire to withhold the matter from public scrutiny respected. 29 She also acknowledges that many private investors opt for arbitration because it helps save their public image. If they opted to address their issues through litigation, all their ‘dirty 30 laundry’ would be aired out, and they may lose customers, business deals etc. Additionally, many private companies and individual investors hold very highly profitable trade secrets they would like to keep away from the public. If they use more open dispute resolution 31 mechanisms, they could be exploited by people who would ‘steal’ their trade secrets and thus incur severe losses. Monique argues that even if confidentiality is a fundamental principle of arbitration, it is essential for States to realise that this secrecy is not serving its citizens, as it is unfair to lockout citizens from these proceedings, yet these decisions significantly affect their day-to-day lives. Monique further goes onto argue that it is essential for amicus curiae 32 to be present during these proceedings. This way, civil societies, human rights group etc. 33 can participate and ensure that their voices are heard. Monique’s work is relevant to this 34 study as it effectively lays down the argument for increased transparency in IA. This Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 28 Arbitration’ 2019, 2. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 29 Arbitration’ 2019, 2. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 30 Arbitration’ 2019, 2. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 31 Arbitration’ 2019 3. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 32 Arbitration’ 2019 3. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 33 Arbitration’ 2019 3. Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 34 Arbitration’ 2019. 8 dissertation is going a step further by analysing how to find a balance of confidentiality and transparency in IA cases involving states to understand the parameters correctly. Poorooye and Feehily acknowledge that confidentiality and transparency have a strenuous relationship within the arbitration realm. They highlight the need to develop a balance that 35 guarantees to attract commercial parties to arbitration and the concurrent need for equity and justice. The authors argue that although confidentiality and transparency have been described as competing values but can coexist in practice. According to their study confidentiality 36 encourages a comprehensive investigation of the issues without the invasion of privacy. Still, it also provides the parties with their best chance to save the underlying business relationship. They further argue that the disparity in the jurisdictional treatment of 37 confidentiality and transparency should be managed to increase predictability, which can be achieved by States adopting and applying the UNCITRAL Transparency Rules. On the 38 other hand, the study is criticised for not recognising the gaps left by the UNICTRAL Transparency Rules such as the fact that it has an opt-out clause which enables parties to easily exclude the application of the rules from their arbitration proceedings. Ondrej begins by stating it has been universally acknowledged that more transparency and participation in the proceedings can enhance IA's acceptability and credibility. The author's 39 paper is based on the argument that although significant progress has been made in recent years in transparency by the UNCITRAL Transparency Rules and the Mauritius Transparency Convention, there are many continuing gaps and challenges be overcome to Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 35 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 6. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 36 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 6. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 37 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 8. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 38 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 8. Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 39 Electronic Journal, 2017. 9 achieve a transparent in IA. The first key issue he discusses is applying transparency 40 standards to “old” treaties via the broadly accepted Transparency Convention. Despite all visible effort at international fora and public declarations of state representatives and officials, the current number of state parties or only signatories to this treaty are very few. 41 Ondrej further discusses several other problems such as the Energy Charter Treaty whose changes are under current unimaginable conditions as the high expectations associated with both documents broadly supported by various states in the Working Group II and subsequently at the General Assembly of the United Nations remain hitherto unfulfilled. 42 The study uses the findings and arguments put forward by Ondrej in portraying confidentiality, as opposed to transparency, as the prevailing principle in the IA. Feliciano appreciates confidentiality and transparency as competing interests and seeks to show confidentiality weighs more than the need for greater transparency in some instances and vice versa. To illustrate this, the author gives examples including ICA proceedings 43 involving construction dispute regarding specifications of materials accorded a larger scope of confidentiality. While on the other hand, IA between a private party and the host State 44 presents a different context. The author argues that public funds portray public interest. 45 Therefore, due to the use of public funds the need for transparency practices - such as access to documents and other evidence of potential criminal acts or corrupt practices, and the ability to use such records and evidence in separate proceedings brought by the host State or Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 40 Electronic Journal, 2017. Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 41 Electronic Journal, 2017. Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 42 Electronic Journal, 2017, 4. Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 43 Electronic Journal, 2017, 6. Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 44 Electronic Journal, 2017, 7. Ondrej S, ‘Current State of Transparency in Investment Arbitration: Progress Made But Not Enough’ SSRN 45 Electronic Journal, 2017, 7. 10 third parties is clear and pressing. Therefore, these two different realms of IA should not be 46 treated the same. 1.9.Research methodology The research will begin by debunking the duty of confidentiality entails, the study will use a comparative analysis from international arbitral institutions. The study then moves on to demarcating the significance of transparency within ICA, using a doctrinal approach. This will serve as the normative framework in striking a balance been the duty of confidentiality and transparency. The paper can balance the two by borrowing from primary and secondary resources supplementing both the normative and theoretical framework, which will enable the paper to come up with a test in chapter 4. 1.10.Delimitation of the study IA is a vast area that is shaped by, among other things, several treaties, domestic legal orders and arbitral case law. Thus, giving a complete insight into the area is not possible. Both international investment law and the law governing ICA are intensively discussed on many different levels, and there are firm positions on many issues. Trying to cover all these positions and examine every critical argument against the IA law regime would be impossible. This dissertation has, therefore limited the studies to specifically the lack of transparency in the system. I will also be limiting my research to the effects of a lack of transparency in IA to the Global South. 1.11.Chapter breakdown Chapter one: Introduction to the study. This chapter gives a brief background of the study. Chapter two: Explanation of how different jurisdictions and arbitration institutions treat confidentiality to understand the concept properly. Florentino P, ‘The Ordre Public Dimensions of Confidentiality and Transparency in International Arbitration: 46 Examining Confidentiality in the Light of Governance Requirements in International Investment and Trade Arbitration’, Phil. L.J, 2012. 11 Chapter three: Brief definition of “transparency” as the term is used in IA discussions. It then outlines the principal normative arguments that explain the recent drive for increased transparency in IA. Chapter four: the chapter aims to reconcile the principle of transparency and confidentiality in developing a test to strike a balance between the two. Chapter five: Recommendations and conclusions. 12 2. DEFINING CONFIDENTIALITY IN INTERNATIONAL ARBITRATION 2.1.Introduction Inherently, ICA is a creature of contractual relationships. By deciding to subject their disputes to arbitral proceedings, parties believe that they will benefit from these proceedings' confidential nature. However, on the other hand, investor-state arbitration generally stems 47 from treaties. This difference here plays a significant role in how each regime treats 48 confidentiality. Before the late 1980s, there existed an unspoken and undisputed assumption that the private nature of arbitral proceedings required all participants to adhere to strict confidentiality rules without examining whether confidentiality was grounded in any obligation or legal right within the issue presented before the arbitrator. Due to this 49 advantage, arbitration became very attractive to parties seeking to settle their disputes. Although the assumption that confidentiality is absolute in arbitral proceedings has eroded over the years, confidentiality remains a vital aspect of IA. There are numerous advantages it offers to the arbitral proceedings. Therefore, this paper does not seek to eliminate 50 confidentiality in the sphere of IA, instead; it aims to establish that confidentiality in arbitral proceedings that affords disputants a comprehensive shield to keep their information completely undisclosed must be first qualified. This is because confidentiality, in many 51 instances, clashes with crucial public interest matters and ideals that are now being embraced in the IA sphere, such as mandatory disclosure requirements to interested parties. 52 Steve K, ‘Confidentiality: Is International Arbitration Losing One of Its Major Benefits?’ Kluwer Law 47 International, 2005, 127. Kenny W, 'Transparency in Investor State Arbitration', Journal of International Arbitration, 2016, 472.48 Steve K, ‘Confidentiality: Is International Arbitration Losing One of Its Major Benefits?’12749 Hans B, ‘Confidentiality: A Fundamental Principle in International Arbitration?’ Kluwer Law International, 50 2001, 243. Hans B, ‘Confidentiality: A Fundamental Principle in International Arbitration?’243.51 Monique P, ‘Confidentiality and the Public Interest Exception: Considerations for Mixed International 52 Arbitration’ 3. 13 Due to these conflicting interests between confidentiality and public interest matters that require a greater degree of transparency, courts and arbitration tribunals are starting to offer varying degrees of confidentiality application. In England, courts stated that there would be an implied duty of confidentiality in the absence of express provision excluding confidentiality from arbitral proceedings, whether due to the inherently private nature of arbitral proceedings or by operation of a set number of laws. This can be seen through the 53 Australian High Court's approach in the Esso v Plowman case where public interest was considered an exception to this implied confidentiality. United States and Sweden have 54 decided only to recognize a duty of confidentiality where there is an express provision requiring its application. The debates of confidentiality further find itself on the 55 international sphere when one analyses how the different arbitration institutions apply it. Furthermore, the New York Convention's success has led to arbitration being the leading option between parties seeking to resolve disputes while in different jurisdictions. This led 56 to numerous arbitrations taking place under endless modifications of arbitral jurisdictions, procedural rules, and substantive laws, making it very hard to make a general assumption on the application of confidentiality in these cases. 57 2.2.Confidentiality in ICA In ICA, a higher degree of confidentiality is accorded to the parties. This is because ICA cases largely involve two private parties whose dispute has little to no interest to the public. There are three main approaches to confidentiality by national courts. These three approaches are an implied duty to confidentiality, an express duty of confidentiality and a statutory approach. Dolling-Baker v Merrett and others [1991] 2All E.R.890.53 Esso Australia Resources Ltd. and others v. Plowman (Minister for Energy and Minerals) and others (1995) 54 183 C.L.R. 10. Steve K, ‘Confidentiality: Is International Arbitration Losing One of Its Major Benefits?’128.55 Kenny W, 'Transparency in Investor State Arbitration', 482.56 Kenny W, 'Transparency in Investor State Arbitration', 482.57 14 2.2.1.Municipal law 2.2.1.1.The English Approach England Courts acknowledge an implied duty to maintain confidentiality in arbitral proceedings with exceptions applied on a case-to-case basis in varying degrees. The mode in which the duty arises is subject to an extensive debate by courts and scholars ranging from the private nature of arbitration, business efficacy and arbitral customs, and the law's operation. The practice of confidentiality in England can be effectively analysed using three 58 leading cases analysed below. In Dolling-Baker v. Merrett, the Court held that the documents presented during the arbitral proceedings could not be discovered in subsequent court proceedings by the parties involved. The court ruled on this stance because of the private nature of the arbitration. The court 59 believed that when parties voluntarily consent to present their dispute to arbitration, there is an implied assumption that they want their case to be only between the two of them. 60 Therefore, both parties are obligated not to disclose any documents produced in the arbitral proceedings except with the parties' consent or pursuant to an order by a court of law. 61 Furthermore, the court held that confidentiality was not tied to the information in the documents prepared to be used for the proceedings but to the facilitation and promotion of the arbitration proceedings' confidential nature. So, this implied obligation stands whether 62 or not the material can be considered confidential. In Hassneh Insurance Co. of Israel v. Mew, the Court extended confidentiality to the arbitral award offered. Therefore, not only were the documents prepared for the proceedings confidential but also the arbitral award. According to the court, disclosing the materials 63 Vijay B, ‘Confidentiality and Integrity in International Commercial Arbitration Practice, Arbitration Law 58 Journal, 2009, 11. Dolling-Baker v Merrett and others [1991] 2All E.R.890.59 Dolling-Baker v Merrett and others [1991] 2All E.R.890.60 Dolling-Baker v Merrett and others [1991] 2All E.R.890.61 Dolling-Baker v Merrett and others [1991] 2All E.R.890.62 Hassneh Ins. V. Steuart J. Mew (1993) 2 Lloyd's Rep. 243 (K.B.).63 15 presented during arbitral proceedings would be similar to opening the closed proceedings to third parties and thus violating the sanctity of the arbitration's private nature. 64 In Ali Shipping Corporation v Shipyard Trogir, the Court generally buttressed the rulings in Dolling-Baker and Hassneh by holding that there is an implied obligation of confidentiality in arbitration proceedings as a matter of law and not based on just custom or business efficacy. Furthermore, the court held that all parties' confidentiality duty emerges due to the private arbitration proceedings' private nature. The Court’s judgment reinforced the above cases by emphasizing that parties who submit their arbitration issue want their issue to remain only between them and the arbitrator. The Court proposed that there should be a broad general obligation to maintain confidentiality in arbitration proceedings. So, in England there is an implied duty to confidentiality as it is inherent in arbitration. 2.2.1.2.The French Perspective French Courts recognize that the duty of confidentiality is a vital element of an arbitration agreement. In Aita v. Ojjeh, the Paris of Court of Appeal declined to invalidate an arbitral award that had been delivered. The court held that annulling the arbitral proceedings would lead to disclosing confidential documents used during the proceedings and violate the arbitration's private nature. This case was highly criticized for failing to delineate why 65 confidentiality was considered intrinsic to arbitration proceedings properly. Furthermore, the court was unable to delineate exceptions to this broad duty of confidentiality they purported. This decision seemed to put France and England on the same side as they both 66 believed that confidentiality is intrinsic to arbitration. Therefore, there is an implied obligation by all parties to uphold this duty of confidentiality. This was buttressed in Société True North et Société FCB International v Bleustein where the court found the breaching party responsible by holding that unilaterally disclosing the information presented in arbitration proceedings was a breach of confidentiality initially Hassneh Ins. V. Steuart J. Mew (1993) 2 Lloyd's Rep. 243 (K.B.).64 Aita v Ojjeh, Cour d'appel [CA] [regional court of appeal] Paris, 4 Revue De L'arbitrage 584, Feb. 18, 1986.65 Aita v Ojjeh, Cour d'appel [CA] [regional court of appeal] Paris, 4 Revue De L'arbitrage 584, Feb. 18, 1986.66 16 anticipated by the parties when they decided to arbitrate their dispute even though the parties did not agree to keep the proceedings confidential. 67 2.2.1.3.The Swedish perspective The Swedish court in Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc. ruled that confidentiality and privacy were not inherent to the arbitration proceedings. In this case, AI Trade had disclosed an arbitral award to a well-known international law journal that published an article on it for all their subscribers to see. Furthermore, AI gave the copy of 68 the article to the arbitral chairman who, in turn, gave it to his former colleague who happened to now be a judge. This judge further quoted the article that contained details of the award in one of his judgements. Bulgarian Foreign Trade then took AI trade to court claiming that they breached their duty of confidentiality by disclosing the documents to third parties that were not parties to the arbitration proceedings. The Court ruled in favour of Bulgarian Foreign 69 Trade and held that they did not violate any confidentiality duty because there was no confidentiality clause in their arbitration agreement. According to the Court, the starting 70 point for analysing whether or not confidentiality is a principle in the arbitration proceeding is whether it was included in the contract. This is because neither the Swedish Arbitration Act nor the chosen arbitral rules made confidentiality an integral part of arbitration proceedings. 71 Furthermore, the court noted that there was no resolved international view on the duty of confidentiality and its exact terms. So, the court took a different approach from France and England and held that unless there is an express provision for confidentiality in an arbitration Société True North et Société FCB International v Bleustein, Tribunal de commerce [commercial court] Paris, 67 2003 Revue De L'arbitrage 189, Sept. 17, 1999 Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc, NYH Juridiskt Arkiv [NJA] [Supreme Court] 68 2000 ref. T1881-99. Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc, NYH Juridiskt Arkiv [NJA] [Supreme Court] 69 2000 ref. T1881-99. Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc, NYH Juridiskt Arkiv [NJA] [Supreme Court] 70 2000 ref. T1881-99. Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc, NYH Juridiskt Arkiv [NJA] [Supreme Court] 71 2000 ref. T1881-99. 17 proceeding, there is no duty on the parties not to disclose the documents presented during the arbitral proceedings. 72 2.2.1.4.The Australian Perspective Australia’s approach to confidentiality in the beginning years was similar to England’s approach. This means that courts would imply a duty of confidentiality on the parties in an 73 arbitration proceeding, whether or not there was an express clause in the agreement providing for this. However, Australia is now considered one of the most fervent allies of an express duty of confidentiality. This shift from implied to express duty of confidentiality came as a seismic shock to the IA community. In Esso Australia Resources Ltd. v Plowman, the Australian Minister instituted proceedings against Esso and BHP. Esso and BHP had a contract with two state-owned utility companies to supply natural gas in Australia. While performing their contract, they had a dispute arising out of the price review clause. To settle this dispute pursuant to the arbitration clause in their contract, they submitted the arbitration tribunal issue. The Minister then instituted proceedings in the Court of Appeal 74 and the High Court to stop the information and documents given to the two-state owned utilities from being confidential. His argument was based on the premise of public interest. 75 This case ruling was considered a landmark as the Australian High Court held that the parties were under no general duty to uphold confidentiality without an express confidentiality clause in the arbitration agreement. 76 The court held that arbitration's private nature did not establish confidentiality as an indispensable trait of the arbitration proceedings. The Court argued that if confidentiality is a matter that can be expressly agreed upon by the parties, it cannot be presumed to be inherent Bulgarian Foreign Trade Bank Ltd v. A.I. Trade Finance Inc, NYH Juridiskt Arkiv [NJA] [Supreme Court] 72 2000 ref. T1881-99. Steve K, ‘Confidentiality: Is International Arbitration Losing One of Its Major Benefits?’132.73 Esso Australia Resources Ltd. and others v. Plowman (Minister for Energy and Minerals) and others (1995) 74 183 C.L.R. 10. Esso Australia Resources Ltd. and others v. Plowman (Minister for Energy and Minerals) and others (1995) 75 183 C.L.R. 10. Esso Australia Resources Ltd. and others v. Plowman (Minister for Energy and Minerals) and others (1995) 76 183 C.L.R. 10. 18 to the arbitration process. You can presume its existence in the arbitration agreement, not indispensable. The court acknowledged the benefits of confidentiality in arbitration and 77 how it helps to ensure business efficacy. However, it pointed out that confidentiality is merely a consequential benefit attached to choosing arbitration if the parties expressly agree to it. 78 2.3.Arbitral Rules of International Institutions 2.3.1.International Chamber of Commerce The ICC Rules of Arbitration do not outrightly provide for a duty of confidentiality. 79 Therefore, it does not directly impel the parties or the other participants like the witnesses or experts to maintain the arbitration proceedings' confidence. This omission's main reason is that the drafters found it too difficult to include it in 1988 and 1998 rules. As illustrated above, there is no consensus on confidentiality and its exceptions by countries and the international community. Furthermore, the ICC is the most preferred institution for ICA and 80 therefore, many countries and individuals use it. Thus, the drafters shied away from 81 including specific guidance on the issue of confidentiality in arbitral proceedings. However, 82 some provisions in the ICC Rules discuss privacy and confidentiality briefly. Article 21(3) of the ICC Rules provides that arbitration hearings shall be held in private. It further requires the tribunal to take appropriate measures to protect trade secrets and confidential information. 83 Parties that seek to ensure that their proceedings remain confidential are needed to make an order indicating such. This shows that the ICC rules reject the idea of an implied duty of confidentiality, and parties are required to ensure that they draft a specific clause providing for confidentiality if the principle is to apply. Esso Australia Resources Ltd. and others v. Plowman (Minister for Energy and Minerals) and others (1995) 77 183 C.L.R. 10. Esso Australia Resources Ltd. and others v. Plowman (Minister for Energy and Minerals) and others (1995) 78 183 C.L.R. 10. Kenny W, 'Transparency in Investor State Arbitration', Journal of International Arbitration, 2016, 482.79 Kenny W, 'Transparency in Investor State Arbitration', Journal of International Arbitration, 2016, 482.80 Queen Mary University of London, 2010 International Arbitration Survey: Choices in International 81 Arbitration, 2010, 23. Kenny W, 'Transparency in Investor State Arbitration', Journal of International Arbitration, 2016, 482.82 Article 21, ICC Rules, 2012.83 19 2.3.2.London Court of International Arbitration Unlike the ICC, the LCIA has codified confidentiality requirements. The confidentiality topic is divided into three main parts: the parties' undertaking to the proceedings, the tribunal’s considerations and finally, the publication of the arbitral award. The rules provide for the 84 confidentiality of the tribunal’s deliberations during the proceedings. Furthermore, the award cannot be published without both parties' consent, whether there was an express confidentiality clause in the arbitration agreement or not. These strict confidentiality 85 requirements are rooted in the English law approach to confidentiality. Thus, the LCIA provides for an implied duty of confidentiality that requires a broad duty of confidentiality in all cases regardless of the arbitration agreement or the subject matter of the case. This, as 86 explained above, is a very problematic approach to confidentiality as it impedes the progress towards finding the right balance between transparency and confidentiality. Furthermore, the categorization of confidentiality into three individual components as listed above shows that different confidentiality ambits should all be treated differently depending on the case's circumstances, especially when analysing the case's subject matter. Article 30.1 of the rules 87 lists several exceptions to the confidentiality rules in arbitration proceedings. So, 88 confidentiality will not apply where disclosure is mandatory to protect a party's legal right or to enforce or challenge an award before a court. 2.3.3.Hong Kong International Arbitration Centre The HKIAC can be seen to offer a greater level of confidentiality than even LCIA. In line with the Hong Kong Arbitration Ordinance’s that provides for an implied confidentiality duty, the HKIAC Rules prohibits the parties to an arbitration proceeding from disclosing 89 that the arbitration exists and any information and documents relating to the arbitration or Article 30, LCIA Rules, 2012.84 Article 30, LCIA Rules, 2012.85 Article 30, LCIA Rules, 2012.86 Article 30, LCIA Rules, 2012.87 Article 30, LCIA Rules, 2012.88 Section 18, Arbitration Ordinance, Cap. 609.89 20 awards. Furthermore, HKIAC places a high threshold of confidentiality regarding the 90 publication of documents and awards. The publication must be commenced by a written request from the party that seeks to publicize the proceedings' details. The approval of all the parties must then be sought. After this, all necessary redactions must be done before it can be publicized. 91 2.4.Confidentiality in ISDS There are differences between how confidentiality is handled in ICA and ISDS consistent with ICSID, NAFTA and other investment treaties. This difference in this treatment is due 92 to less significant matters than they might appear to be. The grounds for treating these two avenues of IA differently are less compelling than otherwise being purported. In the beginning, state-to-state arbitration was often considered ‘public’ as the agreements often permitted public access to the hearing, arbitral submissions, awards and the considerations behind those awards. This practice seen in state-to-state arbitration influenced by the 93 approach taken when it comes to ISDS. Many of the investment arbitration agreements shy away from affirmatively, including arbitration a confidentiality duty in the arbitral proceedings. Some of the instruments even go a step further expressly stating that 94 confidentiality should not be a principle in these ISDS. The mechanisms contained in Chapter 11 of NAFTA do not lay out a duty of confidentiality in the proceedings. NAFTA goes a step further to explicitly exclude the majority of confidentiality obligations about arbitrations under Chapter 11. The parties to NAFTA released a statement trying to propound the meaning of Chapter 11 and how it approached the issue of confidentiality. The parties’ report stated that there is no duty of confidentiality on 95 Article 42.1, HKIAC Rules, 2013. 90 Article 42.1, HKIAC Rules, 2013.91 Gary B, ‘Confidentiality in International Arbitration' Kluwer Law International, 2014, 15.92 The Government of Sudan/The Sudan People’s Liberation Movement/Army (Abyei Arbitration), Public 93 Hearing in PCA Case of 18-23 April 2009, Gary B, ‘Confidentiality in International Arbitration' Kluwer Law International, 2014, 15.94 Gantz, ‘The Evolution of the FTA Investment Provisions: From NAFTA to the United States-Chile Free Trade 95 Agreement’ Journal of International Law, 2004, 679. 21 the parties to an arbitration proceeding commenced under Chapter 11. Furthermore, they 96 provided that Chapter 11 placed no restrictions on parties seeking to release their arbitration documents and awards submitted to a Chapter 11 tribunal. Arbitral tribunals formed about 97 Chapter 11 of NAFTA have emphasized that there lacks a duty of confidentiality in these arbitration proceedings; thus, the submissions before the tribunal and awards delivered can be publicized by the parties or the tribunal. However, the tribunals have noted that the actual 98 proceedings may not be open to third parties. Some documents may contain sensitive information that third parties or the general public should not access. This largely due to the 99 tremendous public interest matters in the case. 100 The second investment arbitration instrument discussed herein is ICSID Rules. ICSID tribunals have usually held no general rule that places a duty of confidentiality on the parties to an arbitration proceeding. The tribunals have used the restricted express confidentiality 101 provisions. The rules state that: (a) there is a presumptive exclusion of third parties from arbitral proceedings, however, they can be admitted if both parties agree to (b) the ICSID 102 Centre itself is prohibited from publicizing the awards without obtaining the parties’ consent first (c) there is no prohibition on the parties disclosing the award and the documents used 103 during the arbitration proceedings if all the parties wish to do so. 104 Using these rules that seek to delineate the duty of confidentiality under ICSID arbitration, the tribunals have sought to differentiate how confidentiality is applied to ISDS and ICA. In Myers Inc v Government of Canada, the tribunal stated an implied duty of confidentiality Fracassi F, ‘Confidentiality and NAFTA Chapter 11 Arbitration’, 213.96 Fracassi F, ‘Confidentiality and NAFTA Chapter 11 Arbitration’, 213.97 Fracassi F,’Confidentiality and NAFTA Chapter 11 Arbitration’, 213.98 Gantz, ‘The Evolution of the FTA Investment Provisions: From NAFTA to the United States-Chile Free Trade 99 Agreement’ 679. Gantz, ‘The Evolution of the FTA Investment Provisions: From NAFTA to the United States-Chile Free 100 Trade Agreement’ 679. Amco Asia Corp. v. Repub. of Indonesia, Decision on Request for Provisional Measures in ICSID Case No. 101 ARB/81/1 of 9 December 1983, XI Y.B. Comm. Arb. 159, 161 (1986) Rule32(2), ICSID Rules, 2006.102 Rule32(2), ICSID Rules, 2006.103 Rule 30, ICSID Rules, 1986.104 22 under ICA that stems from an arbitration agreement between the two parties. According to 105 the tribunal in this case, once parties agree between each other to settle their dispute in arbitration and not in open court, there is an implied agreement between the two that they do not want third parties in their business. However, this same assumption cannot be implied 106 in ISDS because of the public nature of the disputes involved. Another ICSID Tribunal deliberated on this matter and put it more directly. In Biwater Gauff (Tanzania) Ltd v United Republic v Tanzania, the tribunal stated a clear difference between how confidentiality was treated in the realm of ICA and investment arbitration. The tribunal acknowledged a 107 greater tendency to work towards transparency in investment arbitration and limiting the broad confidentiality duty seen in ICA. In Metalclad Corp. v. United Mexican States, the same sentiment was expressed. In this case, the tribunal recognized no general principle of confidentiality that sought to prohibit public discussions of the parties' arbitral proceedings. Furthermore, there is no provision in 108 NAFTA or in the ICSID rules that expressly restrict the parties' freedom to discuss the case's details and information publicly. However, the Tribunal considered it advantageous to limit the case's public discussions to a minimum to ensure that the arbitral proceedings occur in an orderly manner and a conducive environment. This brief discussion of ISDS cases shows a general trend towards less and less confidentiality. 2.5.Conclusion In conclusion, it is important to note that the differences people use to try and ensure a balance between confidentiality in ISDS and not in ICA can be insignificant in some cases. For example, the public interest exception used to ensure greater transparency in ISDS also exists in ICA. States are also involved in many contractual obligations with businesses, and Myers Inc v Government of Canada, NAFTA Procedural Order No.16 of 13 May 2000.105 Myers Inc v Government of Canada, NAFTA Procedural Order No.16 of 13 May 2000.106 Biwater Gauff (Tanzania) Ltd United Republic of Tanzania, Procedural Order No.3 in ICSID Case No. ARB/107 05/22 of 29 September 2006, 114. Metalclad Corporation v United Mexican States, Award in ICSID Case No. ARB(AF)/97/1 (NAFTA) of 30 108 August 2000. 23 the route they use to settle these disputes is more often than that ICA. Furthermore, it is not 109 persuasive to state that ISDS is under a treaty while ICA stems from a contractual agreement between the parties. This is because it is primary that an ISDS stems from an investor’s 110 acceptance to an offer from the host state to arbitrate the dispute. Thus, this acceptance gives rise to an arbitration agreement similar to one in ICA. Therefore, these arguments used to continue upholding high confidentiality in one sphere and not the other does not sound very convincing; thus, they should not deny transparency in ICA. Gary B, ‘Confidentiality in International Arbitration' 17.109 Gary B, ‘Confidentiality in International Arbitration' 17.110 24 3. The Parameters of Transparency in International Arbitration 3.1.Introduction Transparency, though frequently invoked in the international realm, has not been defined. Transparency relies heavily on the idea of openness and access to information by the public. The international community has been pushing for more transparency because the 111 concept is viewed to lead to a more accountable, more legitimate and more democratic system of global governance. In IA, transparency deals with how much the public knows 112 about the existence of the said dispute, the parties involved, the issues being arbitrated, the arbitrators’ appointment process, the selected arbitrators, the evidence presented, and lastly what the arbitral award was. The main argument for increased transparency in IA is that the 113 arbitrated issues do not just affect the two parties in the case. This is because most 114 decisions arrived at by the arbitral tribunal may involve other stakeholders and not only the two parties before it. The lack of transparency in IA is rooted in the belief that if parties submit their disputes to an arbitrator or an arbitral tribunal then that dispute is solely between them and no one else has the right to know of it or be involved in the said case. This argument is now continuously 115 being shunned in the IA realm because the implications of arbitral awards on the public are being seen. However, not all stages of an arbitration proceeding should be transparent as 116 there is no concrete reason why the public should be informed on the said information. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 111 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 282. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 112 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 282. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 113 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 282. Srishti K and Raghavendra P, ‘Transparency and Confidentiality in International Commercial Arbitration’ 114 Kluwer Law International, 2020, 472. Srishti K and Raghavendra P, ‘Transparency and Confidentiality in International Commercial Arbitration’ 115 472. Srishti K and Raghavendra P, ‘Transparency and Confidentiality in International Commercial Arbitration’ 116 472. 25 Therefore, it is essential to delineate transparency parameters to ensure that the arbitration process does not lose its intricate value. This principle has garnered more support in the ISDS realm. This is because it involves more issues of public interest, and it always involves states. However, it is hazardous to overlook that these public interest issues also arise in ICA. Thus, the imperative need for 117 transparency in realms of IA cannot be overlooked. This Chapter will be divided into two parts to discuss why transparency is needed and its importance in both realms. 3.2.Transparency in ICA and its benefits Confidentiality in ICA is one of the core reasons why many disputants opt for it as a means of dispute resolution. Furthermore, confidentiality is generally an accepted implicit requirement of this type of arbitration. However, there are many valid reasons for the increasing 118 demand to make these proceedings transparent as discussed below. 3.2.1.Public interest There are a lot of public interest matters in ICA. This is because big multi-national companies' indemnification claims or between two private companies can severely affect human rights and the environment. Furthermore, ICA can significantly impact a state’s 119 public policy on infrastructure, generation of power, water, etc. This is because it is usually 120 private multi-national companies that play vital roles in providing these services to the public. Furthermore, public health and market competition issues are also heavily 121 arbitrated ICA that might raise a significant public interest concern. Besides, disputes involving essential products such as medicine can also increase prices, affecting the public. Srishti K and Raghavendra P, ‘Transparency and Confidentiality in International Commercial Arbitration’ 117 473. Srishti K and Raghavendra P, ‘Transparency and Confidentiality in International Commercial Arbitration’ 118 473. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 119 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 312. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 120 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 312. Matthew C, Overturning the Presumption of Confidentiality: Should the UNCITRAL Rules on Transparency 121 be applied to International Commercial Arbitration? International Trade Law Journal, 2016, 157. 26 Furthermore, if the dispute between the tribunal involves a harmful good sold to the public, the public needs to have this information to know precisely what went wrong with the product. Lastly, the funds used to settle these disputes when a state is involved usually comes from the taxpayers. For example, in The Secretary of State for the Home Department v. Raytheon Systems Ltd., where an arbitral award required the British government to pay 228 million pounds to Raytheon Systems led to a public outcry how big the award was. Still, no details were released on what went wrong with the contract. Chapter 2 discussed a mirage 122 of different commercial arbitration cases where public interest was an issue such as the Esso Australia Resources Case, the Hassaneh Insurance case, and several others. Therefore, although ICA claims do not raise public interest concerns as much as in ISDS, it would be false to state that ICA does not give rise to public interest issues. Therefore, this present system that enables commercial disputes that affect critical public policies to be resolved away from the public eye, thus, not providing room for review or scrutiny is flawed. 3.2.2.Predictability and consistency of arbitral awards Many proponents of transparency in ICA have espoused the numerous advantages of publication of reasoned arbitral awards. This is because absolute confidentiality has hindered the growth of arbitral jurisprudence as reasoned awards that could aid in developing this legal body are kept highly confidential and cannot be accessed by the community's public. Julian 123 Lew recognized the benefits that can be garnered through transparency and publication of these arbitral awards as early as 1982. The most important advantage he realized is that transparency leads to legal certainty and predictability in the arbitration realm. This is 124 because developing a legal body of arbitration and an official case law docket would lead to greater consistency in the awards offered and promote the commercial world’s knowledge and acceptance of the tribunals’ rules and principles. Matthew C, Overturning the Presumption of Confidentiality: Should the UNCITRAL Rules on Transparency 122 be applied to International Commercial Arbitration? 157. Anjanette H, ‘Confidentiality in a Forum of Last Resort: Is the Use of Confidential Arbitration a Good Idea 123 for Business and Society? ‘International Law Journal, 486, 2005. Anjanette H, ‘Confidentiality in a Forum of Last Resort: Is the Use of Confidential Arbitration a Good Idea 124 for Business and Society? 486. 27 Such a body of knowledge will additionally aid the businessmen when negotiating in the commercial world. It will also help influence their decisions and help them make effective 125 ones, especially when deciding whether to arbitrate a matter or not as they can make informed guesses about their chances of winning in an arbitration process and avoid unnecessary dispute. 126 3.2.3.Holding Arbitrators accountable If the arbitral proceedings are confidential, it is impossible to know how arbitrators perform in their roles. The arbitrators have such essential duties that it is paramount for the global community to understand how they perform these duties. This helps to ensure 127 accountability and rationality in a rather arbitrary process. Arbitrators who decide not to give full effect to the law while rendering awards are not held accountable because the arbitral awards are sealed due to confidentiality. If the awards can be accessed by interested 128 parties, arbitrators who render haphazard awards can be held responsible by denying further opportunities to arbitrate disputes as disputants will not choose them. Secondly, the publication of the awards will help to ensure that arbitrators render quality awards. This is 129 due to the pressure from the public, academics and legal community that will see and dissect these decisions. Lastly, by having access to arbitral awards rendered by individual arbitrators, the parties will have more knowledge and insight into who they can entrust their legal Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 125 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 313. Poorooye A and Feehily R, ‘Confidentiality and Transparency in International Commercial Arbitration: 126 Finding the Right Balance’ 22 Harvard Negotiation Law Review 275, 2017, 313. Klaus P, ‘International Arbitration Practice and the Unidroit Principles of International Commercial 127 Contracts’, American Journal of Comparative Law, 1998, 149. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 128 Commercial Arbitration: To Have or Not to Have?’ 83. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 129 Commercial Arbitration: To Have or Not to Have?’ 83. 28 dispute. Furthermore, because other interested parties can access the proceedings, the 130 arbitrators will ensure that they conduct the proceedings with the law's utmost fidelity. 131 3.2.4.Choice of Arbitral Seat Multi-national corporations spend substantial amounts of money and time creating arbitration clauses to protect their commercial interests. The arbitration seat is significant when choosing where to arbitrate. Such a decision is influenced mainly by choice of law, the parties' convenience, and political climate. Transparency will help businesses have enough 132 information regarding how a State operates and its laws, making informed choices when choosing an arbitral seat. 133 In conclusion, transparency in ICA is starting to gain attention from the legal community. From the benefits discussed above, it is clear why this is happening. However, currently, no convention has tried to incorporate transparency uniformly in the arbitration process. 3.3.Transparency in ISDS Unlike in ICA, ISDS has taken significant steps to integrate transparency through the formal adoption United Nations Convention on Transparency in Treaty-based Investor-State Arbitration. This development was due to the need to consider the public interest concerns 134 in this type of arbitration. This need finds its source in international law areas such as 135 human rights and environmental law, which necessitated the general public's inclusion and Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 130 Commercial Arbitration: To Have or Not to Have?’ 83. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 131 Commercial Arbitration: To Have or Not to Have?’ 83. Kimberley C, ‘Emerging Issues and Trends in International Arbitration’ California Western International 132 Law Journal, 2012, 77. Kimberley C, ‘Emerging Issues and Trends in International Arbitration’ California Western International 133 Law Journal, 2012, 77. Kimberley C, ‘Emerging Issues and Trends in International Arbitration’ California Western International 134 Law Journal, 2012, 77. Laurence B and Rukia B, ‘Transparency in Investor-State Arbitration: An Incremental Approach’ BCDR 135 International Arbitration Review’ 2015, 67. 29 input. The matters discussed required their knowledge. The disputes handled under this 136 type of arbitration involve states regarding activities performed for the public's sake. Therefore, transparency is seen as a way to enhance accountability by making public members access documents and hearings while also allowing them to make submissions where it is deemed acceptable. 3.3.1.Public interest Public interest is one of the main features of investment disputes. This has, therefore made transparency more welcome in ISDS. Public interest has not been defined in any law or rules of arbitration, and no convention or arbitration rules make a reference to it. The concept 137 has, however, been examined by arbitral tribunals in several investment disputes. In the Methanex dispute, the tribunal held that where a public interest matter was present in the case, the arbitration process could not be treated as one between private commercial parties. Similarly, In Vivendi v Argentine Republic (II), the tribunal stated that the reason 138 the case had a public interest matter was that the dispute was centred on water distribution and sewage systems in the city of Buenos Aires and surrounding municipalities. The systems provide essential public services to millions of people and, therefore, result in questions on human rights and environmental considerations. Hence, any decision the tribunal may come to would affect those specific infrastructures' operations and thereby, the public they serve. 139 In Aguas Provinciales de Santa Fe v Argentina, the tribunal took a similar approach to the Vivendi II tribunal by holding that the case in question was one that was of public interest because the decision of the tribunal would potentially directly or indirectly affect members of Laurence B and Rukia B, ‘Transparency in Investor-State Arbitration: An Incremental Approach’ BCDR 136 International Arbitration Review’ 2015, 67. Dimitrios K ‘Transparency in International Investment Arbitration: From the Current towards the Future 137 Normative Framework’ Published LLM Thesis, International Hellenic University, Greece, 2014, 4. Methanex Corporation v United States, Final Award on Jurisdiction and Merits, (2005)138 Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A.) v. Argentine Republic (II) 139 (ICSID Case No. ARB/03/19) 30 the public who were not involved in the case as the dispute was centred on the distribution of water and sewage systems in urban centres. 140 Public interest necessitates transparency because, first, in most cases, the State is usually involved in the case in its capacity as a sovereign government democratically elected by the public to serve their interest. Thus, in cases where the State is acting in this capacity, the public is interested in the case. Second, ISDS usually involves accusations of wrongdoing 141 by the State. The public, thus, has a right to know what government officials do wrong 142 during these proceedings to hold these state officials implicated accountable effectively. Third, the arbitration may involve the interests of nationals and residents of the relevant State regarding regulations and policies put in place. Many ISDS involve opposition to laws 143 regulations and policies directly affecting natural resources, human rights, public health, cultural heritage etc. all the said State. Examples of cases illustrating the public character of ISDS include Aguas del Tunari SA case and Biwater Gauff case which pertained to the 144 145 drinking water supply system in Bolivia and Tanzania respectively and Methanex Corporation case , which related to the prohibition of the use of an additive in gasoline in 146 California. Fourth, the costs incurred by the government in defending such claims and the sums awarded to the investor, if any, will ultimately be borne by the public. As the sums at stake in this arbitration class could be quite substantial, the impact that satisfying such awards may have Dimitrios K ‘Transparency in International Investment Arbitration: From the Current towards the Future 140 Normative Framework’ Published LLM Thesis, International Hellenic University, Greece, 2014, 4. Enuma U, ‘The Quest for Transparency in Investor-State Arbitration: Are the Transparency Rules and the 141 Mauritius Convention Effective Instruments of Reform?’ 165. Enuma U, ‘The Quest for Transparency in Investor-State Arbitration: Are the Transparency Rules and the 142 Mauritius Convention Effective Instruments of Reform?’ 165. Enuma U, ‘The Quest for Transparency in Investor-State Arbitration: Are the Transparency Rules and the 143 Mauritius Convention Effective Instruments of Reform?’ 165. Aguas del Tunari SA v. Republic of Bolivia, ICSID, Case No ARB/02/3, 21 Oct. 2005.144 Biwater Gauff (Tanzania) Ltd v. United Republic of Tanzania, ICSID Case No ARB/05/22, 24 July 2008.145 Methanex Corporation v United States, Final Award on Jurisdiction and Merits, (2005). 146 31 on the citizenry's welfare attracts public interest. The public needs to know whether these 147 costs are proportionate to the benefits that flow from investment treaties. In 2012, an investment arbitration tribunal required Ecuador to pay over 1.7 billion USD to Occidental, an oil company. This accounted for 55% of her annual budget for education and 135% of her yearly healthcare budget. The highest sum to be paid by a Respondent State to an 148 aggrieved investor is 50 Billion USD. In this case, Russia was ordered to pay the said amount the former owners of the Russian oil giant, Yukos. Therefore, because the public is affected by these arbitrations' outcomes, it is only fair that they are allowed to receive requisite information. 149 3.3.2.Foreign investors benefit Transparency offers a lot of benefits to foreign investors as well. When information regarding investor-state arbitration is published online and made available to the general public, other investors interested in investing in a particular State will be better positioned to understand better their rights and how to best work with the said State. This is because the investors 150 can access the previous arbitration cases between the Respondent State and other investors. They can also view the publication of the awards in those cases to determine their rights and the merits of commencing arbitration proceedings. Foreign investors can also use these previous arbitration cases to determine which States respect the rule of law and which ones do not appear when deciding where to invest. Therefore, through transparency, investors can better assess the risk to their investment in states. Enuma U, ‘The Quest for Transparency in Investor-State Arbitration: Are the Transparency Rules and the 147 Mauritius Convention Effective Instruments of Reform?’ 165. Enuma U, ‘The Quest for Transparency in Investor-State Arbitration: Are the Transparency Rules and the 148 Mauritius Convention Effective Instruments of Reform?’ 165. Enuma U, ‘The Quest for Transparency in Investor-State Arbitration: Are the Transparency Rules and the 149 Mauritius Convention Effective Instruments of Reform?’ 165. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency In International 150 Commercial Arbitration: To Have Or Not To Have?’ 83. 32 3.3.3.Accountability Transparency further aids in improving the quality of decision-making. In Scott v Scott's leading case, Lord Shaw quoted the philosopher, Jeremy Bentham, ‘Publicity is the very soul of justice. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial.’ Therefore, if an arbitrator knows that 151 their decisions will be subjected to critical review and scrutiny, they will be motivated to conduct the arbitration to uphold the rule of law and give good quality decisions. Also, 152 because they know that the awards that they offer will be published, they will ensure that it is free from error. This is because publicity is usually seen to translate to accountability. Therefore, transparency will ensure that ISDS is appropriately conducted, and arbitrators are held to higher standards. 3.3.4.Public confidence ISDS is seen to be undergoing a legitimacy crisis as the years go by. Legitimacy here is used to mean acceptance of the decisions and awards given by the ISDS institutions. This 153 acceptance helps instil public confidence in the institutions, which then enhance compliance by both arbitrating parties. They believe that the rules and institutions operate in conformity with the principle of the right process. If the international community does not believe that 154 the ISDS processes are not legitimate, the public will not have any confidence. This will, in turn, render this dispute settlement method ineffective. 155 This legitimacy problem can be cured by justification and acceptance of the general public's arbitral tribunals’ decisions. This can be done through increased transparency in the dispute Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency In International 151 Commercial Arbitration: To Have Or Not To Have?’ 83. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency In International 152 Commercial Arbitration: To Have Or Not To Have?’ 84. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 153 Commercial Arbitration: To Have Or Not To Have?’ 83. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 154 Commercial Arbitration: To Have Or Not To Have?’ 83. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 155 Commercial Arbitration: To Have Or Not To Have?’ 83. 33 resolution process by involving the public during the treaty negotiation stage, opening the hearings to them, allowing third-party submissions from Civil rights groups in the country, and publishing the award. By enabling the public to participate in these processes, they 156 will stop viewing ISDS tribunals as secret trade courts that are only out there to serve investors' interests. 157 3.4.The UNCITRAL Transparency Rules Article 1(4) added into the 2010 UNCITRAL Arbitration Rules explicitly include the Transparency in ISDS proceedings. This amendment was put in place to ensure transparency was a guaranteed phenomenon in ISDS due to the international community's uproar because of the lack of transparency in the arbitration proceedings. This amendment states that the UNICTRAL Rules on arbitration will incorporate Transparency Rules expressly in ISDS following any treaty agreed upon on or after April 2014 unless the parties to that specific Treaty made it clear that they are opting out of the transparency rules by for example referring to the use of a different version of the UNICTRAL Arbitration Rules in the concluded Treaty. The Rules will also not apply to treaties agreed upon before April 1, 2014, unless the parties expressly agree on this. They will also not apply to treaties where the parties’ express reference to an older version of the UNICTRAL Rules unless the parties decide to opt-in to the new Transparency Rules. However, to ensure that parties do not unnecessarily derogate from the new Transparency Rules, Article 1(3)(a) states that parties can only opt-out of the Transparency Rules unless the Treaty concluded the two parties expressly provides for it. The Rules present an opportunity to improve transparency in 158 ISDS immensely. They have successfully enforced transparency as the default in ISDS. Sherlin T and Brian L, ‘The Arbitrator and the Arbitration Procedure, More Transparency in International 156 Commercial Arbitration: To Have Or Not To Have?’ 83. Jennings M, ‘The international investment regime and investor-state dispute settlement: States bear the 157 primary responsibility for legitimacy’17 Business Law International (2016), 132. Article 1(3), UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014. 158 34 3.4.1.The facets of transparency in the rules The adoption of the Transparency Rules is a clear reflection of the significance of transparency in ISDS. To best address transparency, the Rules effectively addresses four aspects of transparency relevant to how arbitration proceedings are carried out. 159 3.4.1.1.Open hearings Article 6 of the Transparency Rules provides that by default, all hearings should be public. This means that allowing the general public to attend the hearings is crucial for the Transparency Rules. Thus, unless explicitly agreed upon by the parties, all hearings shall be accessible to the public attend. However, this rule should be subjected to the critical need to protect confidential information or the arbitral tribunal's integrity. This is to ensure that the arbitration process is fair and effective. The arbitral tribunal is left to decide whether a 160 hearing should be held in camera on a case-by-case basis. It is best placed to balance the public interest with countervailing interests such as the need to ensure that the hearings remained manageable and avoid the dispute's aggravation. 161 3.4.1.2.Notification of New Arbitration Proceedings The Transparency Rules provide for the mandatory and prompt disclosures of any new arbitrations under Article 2. The disputing parties should transmit a notice of arbitration to 162 the UNCITRAL Transparency Registry, the central repository for the publication of information and documents in treaty-based ISDS. Upon receipt of the notice of arbitration 163 and evidence that the respondent has been sent the message of arbitration, the repository is required to promptly disclose names of the disputing parties, relevant economic sector, and Treaty under which the claim is being made. Article 1(3), UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014. 159 Article 6, UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014. 160 Article 6, UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014. 161 Article 2, UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014. 162 Article 2, UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014. 163 35 3.4.1.3.Third-party Submissions Third-party submissions are essential because they enhance transparency by enabling interested third parties to make submissions and participate in the proceedings. These third parties (mainly NGOs and Civil Rights Groups) will be able to access the documents related to the dispute, including notices of intent and arbitration, pleadings, memorials, and briefs. This will enable them to be able to scrutinize the case, thus enhancing transparency. 164 Concerning third-party submissions, the Transparency Rules draw a distinction between Third Persons and a Non-Disputing Party to the Treaty. The first type which is discussed under Article 4 refers to any third-party that has an interest in contributing to the solution of the dispute. The application for submitting must be in writing. It must provide relevant details of the Third Person, including its legal status and activities, connections it has with a disputing party, information on any financial assistance received in preparing the submission or for its overall operations, the nature of its interest in the arbitr