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Judging the adjudicators: Analysing ICSID and UNCITRAL's proposed Code of Conduct

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Following the publication of the draft Code of Conduct for adjudicators in investor‑state dispute settlement by ICSID and UNCITRAL, Emily Wyse Jackson considers how the new code may help or hinder the conduct of dispute resolution proceedings.

 

Investor‑state dispute settlement (ISDS) mechanisms can be valuable tools for protecting overseas investment from state interference, particularly for investors in developing or less politically stable states.

However, "traditional" ISDS by arbitration (commonly provided for by international investment treaties) has come in for criticism in recent years, prompting various stakeholders to consider options for reform.

One area of criticism has been the perceived lack of regulation of party‑appointed tribunal members and their independence and impartiality, with particular regard to their fees, qualifications and diversity.

While many investment treaties and arbitral rules already articulate standards of conduct for adjudicators, there have been calls for a universal standard to be developed to ensure consistency of approach across ISDS proceedings.

As part of their respective reform agendas, two of the key bodies in the field of ISDS, the International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL), have sought to do just that.

On 1 May, ICSID and UNCITRAL jointly published a draft Code of Conduct for adjudicators in investor‑state disputes. It is envisaged that, once finalised, the code could be implemented by a range of means, including incorporating it into investment treaties or procedural rules, or having disputing parties agree to its application at the outset of a case.

The draft code applies to all those who adjudicate ISDS cases, including arbitrators, annulment committee members, members of appeal mechanisms and judges on bilateral or multilateral permanent courts. Its scope also extends to adjudicators' assistants, who often are closely involved in the adjudicator's work and privy to confidential information.

A number of important issues are addressed in the draft code, including:
 
  • Potential conflicts of interest: The draft code expressly confirms that adjudicators are required to avoid any direct or indirect conflict of interest. Rather than seeking to list comprehensively what might constitute a conflict, it provides for extensive disclosure of circumstances that could potentially give rise to one, with a view to allowing parties to assess the risk on a case-by-case basis.
 
  • Repeat appointments: Extensive disclosure is also the code's proposed answer to a related concern regarding adjudicators repeatedly appointed by the same counsel, client or "side" (i.e. investor or state). This approach has been favoured over introducing a fixed cap on the number of repeat appointments that can be taken, which some have argued would unduly constrain parties' abilities to appoint the most appropriate adjudicator for their case. Again, the rationale behind favouring disclosure over a strict limit is said to be the flexibility it would afford parties to assess the merits of challenging an adjudicator in the specific circumstances of their case.
 
  • Double-hatting: The practice of an individual acting as an adjudicator in one case while simultaneously acting as counsel or an expert witness in another is commonly known as "double‑hatting". The practice has led to concerns regarding adjudicator impartiality (e.g., if the determination of a certain issue in the adjudicated decision might affect the outcome of the case in which the adjudicator acts as counsel). However, this is not a straightforward issue to regulate: difficult questions remain as to precisely which overlapping roles are problematic (e.g., should only cases under the same investment treaty be caught, or any ISDS proceedings?) and whether acceptance of such roles should be banned outright (which arguably could significantly narrow the field of potential candidates, since many practitioners, particularly at earlier stages of their careers, will be unable or willing to forego counsel work completely in favour of arbitral appointments) or merely mandatorily disclosable. Currently, the draft leaves open a range of approaches for consideration, and this will no doubt be a topic of debate before the code is finalised.
 
  • Availability and diligence: On a more practical level, the draft code deals with the need for adjudicators to have sufficient availability to hear the case in question, and requires them to act at all times with "diligence, civility and efficiency". It expressly provides that adjudicators must not delegate their decision‑making function, which is "at the core of the role and must be exercised by the individual selected". The drafters also float the idea of including a cap on the number of pending ISDS proceedings that an adjudicator may serve on at once, to address concerns that, if adjudicators have taken on a large number of cases, they may be unable to dedicate sufficient time to each. For now, however, the cap remains a placeholder and the commentary to the draft article correctly acknowledges that "introducing a specific number would be controversial".
While some way remains to go before an agreed position is reached on these and other difficult policy questions regarding adjudicator conduct, the draft code represents an important step in that direction.
In a field that is, by its nature, used by participants from a range of legal and commercial backgrounds globally, greater clarity and uniformity as to the standards to be expected of adjudicators will no doubt be welcomed by potential users of ISDS. Practitioners in this area will continue to monitor these developments.
 

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