{"id":528,"date":"2010-04-04T18:23:02","date_gmt":"2010-04-04T22:23:02","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=528"},"modified":"2010-04-04T18:23:02","modified_gmt":"2010-04-04T22:23:02","slug":"symposium-on-investorstate-dispute-resolution","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2010\/04\/symposium-on-investorstate-dispute-resolution\/","title":{"rendered":"Symposium on Investor\/State Dispute Resolution"},"content":{"rendered":"

I had written here<\/a> in anticipation of the March 29, 2010, Joint Symposium on International Investment Law and ADR, held by UNCTAD and the Washington\u00a0and Lee School of Law.\u00a0 It was a smashing and impressive success, due to the remarkable convening powers of hosts Susan D. Franck of Washington and Lee and Anna Joubin-Bret of UNCTAD. \u00a0My expectations were very high, and predictably they were variously exceeded and frustrated.\u00a0 Even among the Great and the Good, and despite a truly inspirational White Paper that preceded the Symposium, we are still a long way from dealing with international investor conflicts as if they were a “problem” and not a “case.”<\/p>\n

Although open to the public, the Symposium was conducted under “Chatham House Rules” so this report will not attribute statements to the speakers and participants.\u00a0 But suffice it to say this was cream-of-the-crop.\u00a0 Professor Reisman of Yale was the Keynote and other speakers included\u00a0several\u00a0professors of ADR and leaders of ADR institutions; representatives of the World Bank; internationally reknown arbitrators and attorneys from the world’s leading law firms; officials and Trade Representatives from the United States, Japan, South Africa, Peru, Dominican Republic, Thailand, Ecuador, Argentina, Rwanda, South Korea, Uruguay… even two multinational investors!\u00a0 (Where are the rest of you guys???)<\/p>\n

It\u00a0was noted at the outset\u00a0that there are thousands of investment treaties with arbitration clauses and only a handful that go to arbitration.\u00a0 Moreover, of those that are filed with ICSID,\u00a0about 35% do not go to award, so they presumably settle or are withdrawn.\u00a0 Yet ICSID arbitration is by far the most common method of dispute resolution in this field, and a single arbitration can last for years and cost between $500,000 and $20,000,000.\u00a0 It was “in the shadow” of this unwieldly, inefficient, commercially\u00a0risk-filled but nevertheless familiar dispute resolution process that the Symposium’s analysis of alternatives took place.\u00a0 The participants never really got from beneath that “shadow.”\u00a0<\/p>\n

How many matters arise\u00a0but are resolved privately, before arbitration is commenced?\u00a0 No one knows.\u00a0 What are the attributes of the 35% of arbitrated matters that settle rather than going to an award?\u00a0 It was conjectured (again, in the absence of data) that they involved commercial rather than public policy issues; that they involved a single investor rather than a group of similarly situated investors; that they arose from a long-term relationship that benefited both parties rather than from a one-off deal; and that formal ADR processes played a minor role.\u00a0 (The Conciliation Rules of ICSID have been used only six times in 30 years.)\u00a0<\/p>\n

A chronic problem in this field is negotiator authority on the State side of the table, and no speaker had a firm resolution to it.\u00a0 The idea was proposed by several commentators\u00a0that a “lead agency” should exist whose job is to ensure co-ordination among various government ministries and to educate and manage policy modifications “across the board” so that policy decisions on a sub-national level\u00a0that may have an\u00a0effect on commercial treaties are identified and their impact on investors and on other agencies\u00a0would, at least, be intentional.\u00a0 Ordinarily there is no central agency whose charge includes understanding all extant BIT provisions, and acting as a central information repository.<\/p>\n

In this difficult context, ideas of co-mediation (with a governmental and a commercial facilitator) and parallel mediation (to accompany the arbitration process and take advantage of “mediation windows”) took on new and important meaning.\u00a0\u00a0 So did the phrase “capacity building,” as it became increasingly apparent that few companies and practically no governments had a standing ability to devote sophisticated problem-solving resources to a complex investor-state dispute.\u00a0 All seemed to agree that, in the current state of affairs, the use of arbitration to obtain a judgment was reflexive: There was no incentive or reward for devising objective criteria to value negotiators’ positions or to measure the acceptability of a proposed negotiated solution.\u00a0 As one participant put it, “We lack the mechanism to manage claims until after the dispute has arisen and an arbitration has been filed.”<\/p>\n

It was not surprising (to me) that the most common-sense problem-solving came from the two private sector investor representatives.\u00a0 (Why only two??\u00a0 Where are you guys????)\u00a0 Any process like arbitration, that doesn’t build into its structure the ability to value and renegotiate a contract in order to complete the intended project under changed circumstances, is ultimately inappropriate to the challenge from an investor’s point of view.\u00a0 And one company speaker said that, in his experience, trying to persuade a host government to enter into facilitated negotiation involving a third-party mediator was “like pushing a rope.”\u00a0 If the parties were looking for an infrastructure for authoritative contract renegotiation, then arbitration is a poor forum, and an alternative infrastructure too often simply doesn’t exist.\u00a0 As an ADR professional put it, “we ought to be looking for solutions to problems, not wins.”<\/p>\n

It was during the presentations of two ADR systems designers that I began to lose heart a bit.\u00a0 The Symposium White Paper was, in my view, a real game-changer, mainly from the assurance and sohistication with which it placed emphasis on conflict prevention, identification and management, rather than merely (?) dispute resolution.\u00a0 But that perception was not generally shared — or at least was not the core of the discussion.\u00a0 The “shadow” of arbitration was long and blocked a lot of light.\u00a0<\/p>\n

The rationale of the\u00a0discussion at the Symposium\u00a0was: Here\u00a0is a case that has been filed for\u00a0arbitration; are there better ways\u00a0to resolve it?<\/p>\n

One wishes that the discussion were: Here is a sophisticated and complex problem, with many stakeholders.\u00a0 How can we solve it in a way that it doesn’t recur?<\/p>\n

Put otherwise, the normative base should not be\u00a0not arbitration; the normative base should be\u00a0the problem.\u00a0 And I continue to sense that attorneys (in particular) do not adopt this critical change in starting-point.\u00a0 It is a question of perception and framing: Professional dispute managers are trained to resolve\u00a0disputes adversarially.\u00a0 The best of them are imaginative and value-driven enough to seek to improve upon, or even displace,\u00a0that adversarial process in the right circumstances.\u00a0 But too often they don’t see it as a problem to be solved — they see it as a case to be taken on.<\/p>\n

Nor is this unexpected; if the only tool you have is\u00a0a hammer, you tend to see every problem\u00a0as a nail.<\/a><\/p>\n

\"hit<\/a><\/p>\n

But problem-solving in this challenging context is not beyond our abilities.\u00a0 Several ADR professionals kept on the same refrain:\u00a0We can do this!\u00a0 This is not impossible!\u00a0\u00a0We can design a system of problem identification and problem-solving that is designed by, owned by, negotiated by and respected by the participants themselves, and put expressly into the BITs.\u00a0 This can be done.<\/p>\n

But if not by this esteemed group, then by whom?\u00a0 And if not at this impressive Symposium, then when?<\/p>\n","protected":false},"excerpt":{"rendered":"

The recent Symposium at Washington & Lee School of Law showed both the need for more efficient business solutions for investor-state disputes and the difficulty of framing them.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,13,24],"tags":[29,25,20,10,23],"class_list":["post-528","post","type-post","status-publish","format-standard","hentry","category-arbitration","category-international","category-systems-design","tag-add-new-tag","tag-adr-institutions","tag-arbitration","tag-conflict-management","tag-systems-design"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=528"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/528\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=528"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}