Australia signs the Mauritius Convention

06 September 2017

Jessica Laverty, Graham Maher

On 18 July 2017, Australia became the first state in the Asia-Pacific region to sign the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (commonly known as "the Mauritius Convention"), and in doing so, became the 21st signatory. The Mauritius Convention, being ratified by Canada, Mauritius and Switzerland, will enter into force on 18 October 2017.

The Mauritius Convention extends the UNCITRAL Rules on Transparency in Treaty-based investor-State Arbitration ("Rules") which are procedural rules that ensure transparency and public accessibility to 'treaty-based investor-State arbitration'. The Rules, which apply to treaties concluded after April 2014, require disclosure of a wide range of information, the provision of open hearings, and the opportunity for third parties to make submissions, as a means to open up investor-State disputes, which are traditionally confidential in nature despite their public importance.

Article 1(2) of the Mauritius Convention defines 'investment treaty' as "any bilateral or multilateral treaty, including any treaty commonly referred to as a free trade agreement, economic integration agreement, trade and investment framework or cooperation agreement, or bilateral investment treaty, which contains provisions on the protection of investments or investors and a right for investors to resort to arbitration against contracting parties to that investment treaty".

As with arbitration in general, the confidential nature of investor-State arbitration has prevented the development of precedence in investor-State disputes. Critics have questioned the legitimacy of investor-State arbitration, arguing that transparency is needed to encourage consistent decision-making across investor-State arbitrations. Commonwealth Solicitor General Justin Gleeson SC recently spoke to this point, noting that "Critics point to its [investor-State arbitration] lack of consistency in the development of principle, made worse by the absence of a doctrine of precedent or established appeal mechanisms"1. The Rules and the Mauritius Convention attempt to address such criticisms by providing mechanisms for transparency, which promote the view that publicity translates to accountability.

Historically, the confidential nature of investor-State disputes has meant that even the very existence of claims against States have been kept confidential. The Preamble to the Mauritius Convention provides that the signatories to the Mauritius Convention recognise the "need for provisions on transparency in the settlement of treaty-based investor-State disputes to take account of the public interest involved in such arbitrations". In pursuit of greater transparency, the Mauritius Convention extends the scope of the Rules to investment treaties concluded before the Rules entered into force. The Mauritius Convention provides a mechanism for States to opt into the Rules on Transparency in respect of their pre-April 2014 investment treaties.

Lisa Johnson of the Columbia Center on Sustainable Investment, provides a useful annotated guide to the Mauritius Convention, and opines that "Overall, the Convention is a landmark instrument and, if widely adopted, will do much to reform investor-State arbitration under existing treaties and address concerns that, under the status quo, and even with the adoption of the Transparency Rules, important issues of public interest are too easily and too frequently being decided behind closed doors"2.

Looking forward, it remains to be seen whether Australia will ratify the Mauritius Convention, especially given that Singapore and Hong-Kong, leaders in the Asia-Pacific arbitration space, have not as yet become signatories to the Mauritius Convention.

Authors

Jessica Laverty

Jessica Laverty

Associate
Australia

Call me on: +61 2 9226 9888

Graham Maher

Partner
Australia

Call me on: +61 2 9226 9888