News Update Arbitration
Netherlands-seated investment arbitration – strictly confidential? Not necessarily
4 六月 2021
4 June 2021
Investment arbitration, as a mechanism for dispute resolution between States and foreign investors, has developed over the past 20 years into a relatively popular alternative to local judicial proceedings.As the home of the Permanent Court of Arbitration in The Hague, the Netherlands is a popular choice for seat of (non-ICSID) investment arbitrations due to its pro-arbitration legal climate and long history as the site of international legal institutions such as the International Court of Justice and the International Criminal Court.
Confidentiality and the privacy of arbitral proceedings are among the well-known and traditionally perceived advantages when compared to litigation before State courts. Although investment arbitration proceedings are similar procedurally to commercial arbitration (and indeed investment arbitration procedures have largely developed from commercial arbitration procedures and/or by individuals that also practice commercial arbitration), there are also a plethora of differences between the two. One such difference is the basis for and degree of confidentiality. Whereas commercial arbitration is a matter of contract between private parties, investment arbitration involves a State and its direct regulatory powers, thereby implicating public interests and – often – public law obligations related to transparency, oversight and accountability. In this article, we will discuss the issue of confidentiality as it pertains to Netherlands-seated investment arbitration proceedings.
Confidentiality or transparency of arbitral proceedings depend on several factors, including (1) the law of the seat of the arbitration (i.e., the lex arbitri), (2) the terms of the arbitral agreement, including the incorporation of any applicable arbitration rules, and (3) any specific agreements on confidentiality between the disputing parties or procedural orders rendered by the tribunal if there is a lack of such agreement.
These elements of the regulatory puzzle are briefly discussed below in the context of Netherlands-seated investment arbitrations.
Lex arbitriThe Dutch Arbitration Act as lex arbitri does not provide an explicit rule on confidentiality in arbitrations. From the Parliamentary History of the (new, ca. 2015) Dutch Arbitration Act (the "Parliamentary History") it follows that confidentiality of commercial arbitration is a matter of principle in Dutch arbitration law that according to the legislator did not need to be codified. According to the same Parliamentary History, however, this principle does not extend to arbitrations with an explicit public law component involving public interests; investment arbitrations being chief among such situations. However, even though the principle of confidentiality does not extend to investment arbitrations, there remains no explicit provision mandating transparency and/or the non-confidentiality of investment arbitration proceedings. This lack of any explicit mandatory rule requiring non-confidentiality of investment arbitration thereby leaves the disputing parties free to deviate by agreement or by reference to procedural rules that provide for confidentiality. For example, although the UNCITRAL Arbitration Rules do not provide a general duty of confidentiality, they only permit an award's disclosure with both parties' consent to the dispute. (See, e.g., Art. 32(5) of the 1976 Rule and Art. 34(5) of the 2010 Rules). Confidentiality of the arbitral award is therefore the default position under these rules.
Applicable arbitration rules and arbitration agreementThe Parliamentary History refers to the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration. Pursuant to Art. 1(1) of the Transparency Rules, they apply to investment arbitrations under UNCITRAL Arbitration Rules pursuant to investment treaties concluded on or after 1 April 2014 unless the State parties to the relevant treaty have opted out. Alternatively, the disputing parties can agree to the application of the Transparency Rules to their dispute. On 18 October 2017, the UN Convention on Transparency in Treaty-based Investor-State Arbitration (the "Mauritius Convention") came into force. Under Mauritius Convention, a State can express its consent to apply the UNCITRAL Transparency Rules to disputes arising under all investment treaties concluded by that State prior to 1 April 2014 regardless of whether the arbitration proceeds under the UNCITRAL Arbitration Rules or any other set of rules, including ICSID. The Transparency Rules will only be applicable, however, if both States to the relevant investment treaty have ratified the Mauritius Convention. If only a respondent State has ratified the Mauritius Convention without providing a reservation under Art. 3(1), the Transparency Rules will be applicable to the dispute if a claimant investor explicitly agrees to that.
The Transparency Rules provide for a higher degree of transparency than even that of proceedings before Dutch courts. The UNCITRAL website will publish the following documents in a central repository: documents exchanged in the proceedings, including (i) all written statements and written submissions by the parties, (ii) hearing transcripts and (iii) all orders, decisions and awards of the arbitral tribunal. Furthermore, all hearings for the presentation of evidence or oral argument will generally be public. The Transparency Rules also provide exceptions to transpar-ency in Art. 7 in relation to the confidential or protected information.
According to the Parliamentary History, it is believed that even where the Transparency Rules have been declared inapplicable to an existing investment treaty, the rules themselves may nonetheless provide a reason to agree on transparency and confidentiality.
In addition to the incorporation (or not) of the Transparency Rules or a set of arbitral rules that provide a (default) position on confidentiality (e.g., the UNCITRAL Arbitration Rules) the State parties to the investment treaty can also provide explicit rules in the treaty on confidentiality of any future arbitration proceedings. As part of the so-called 'standing offer to arbitrate', such explicit rules are part of the arbitration agreement once the offer is accepted by a disputing investor. Since there are no mandatory rules pertaining to confidentiality in the Dutch Arbitration Act, Dutch courts must respect the party autonomy represented by such a choice for transpar-ency or confidentiality.
Procedural order on confidentiality/disputing parties' agreementBecause 'standing offer to arbitrate' represents a take-it-or-leave-it proposition for prospective claimants, the arbitration agreement found in investment treaties reflects the autonomy of the contracting States to the treaty. If the contracting States have made the Transparency Rules applicable to the treaty, Art. 1(3) of those rules severely limits the ability of disputing parties to derogate from that. If the Transparency Rules are not applicable, however, the disputing parties' autonomy to agree on confidentiality (for example to prevent disclosure of sensitive information) will most likely be respected under Dutch law. If the disputing parties cannot agree on this issue, a tribunal may render a procedural order on this topic. In accordance with the Parliamentary History, however, tribunals tasked with such a decision should consider public interest concerns arising from in-vestment arbitrations. The UNCITRAL Notes for Organizing Arbitral Proceedings provides a list of topics that could be covered in a procedural order.
As a final note, there are clear-cut exceptions to confidentiality. For example, enforcement proceedings, setting aside proceedings or requests for interim measures before the Dutch courts will result in – at least – the disclosure of an arbitration's existence. Though Dutch court proceed-ings are in principle public, only the hearings and court decisions are accessible to the public. Unlike in other jurisdictions such as the United States, the parties' submissions and underlying documents such as the award are not made public. Thus, unless portions of an award or related document are quoted in open court or in a court decision, these documents will not themselves become public. Of course, judicial decisions will almost certainly provide a factual summary of a dispute and the relevant issues for setting aside, enforcement or interim measures. In certain cases, disputing parties may also be required to pay regard to mandatory reporting obligations.
As it follows from above, the disputing parties in Netherlands-seated investment arbitration cannot rely on a general principle of confidentiality. The disputing parties, i.e., both States and investors, should be aware of the regulatory puzzle and be sure to take timely measures to secure the desired level of transparency or confidentiality for their own disputes. In the case of States, such consideration should also include the possibility of future disputes.