Independence and Impartiality of Adjudicators in Investment Dispute Settlement: Assessing Challenges and Reform Options

Abstract

As discussions on the reform of investor-State dispute settlement deepen and gather momentum at the United Nations Commission on International Trade Law (UNCITRAL), this article delves into a specific and fundamental issue: the requirement that adjudicators in investment disputes are and remain independent and impartial. It begins by explaining the principle of independence and impartiality in international courts and tribunals, with a focus on arbitral institutions. The article then highlights a range of specific concerns that the present system of investor-State arbitration raises in respect of independence and impartiality. Finally, it provides a comparative analysis of how different reform proposals presently discussed within UNCITRAL Working Group III would fare in terms of delivering a dispute resolution mechanism that ensures independence and impartiality. Rather than providing one specific solution, this article assesses the different options discussed, with the aim to help both policy-makers considering reform and other stakeholders and scholars.

Evidence-Guided Reform: Surveying the Empirical Research on Arbitrator Bias and Diversity in Investor–State Arbitration

“…Independence and impartiality refer to two conceptsalthough more distinct in theory than practice. Independence refers generally to the institutional independence of adjudicators from other branches of government or parties to the case (Giorgetti et al 2020). Although others argue that independence is not simply external and may be affected by the internal dynamics within an institution (Avbelj 2019).…”

“…Impartiality is a state of mind and generally more internal in nature: it refers to the lack of prejudgment by an arbitrator together with an absence of interests in the case and the ability to treat each party equally. 5 Importantly, it is commonly expected that independence and impartiality must be both real and perceived (Giorgetti et al 2020).…”

“…This is because external relationships can also affect impartiality. For example, constant reappointment by a single type of party in a dispute (e.g., a certain investor, state or law firm) can raise problems for independenceas has been claimed in a number of challenges to arbitrators (Giorgetti et al 2020). In ISDS disputes, such regular reappointment though can raise questions of perceived impartialitythere may be concerns that the arbitrator is likely to regularly favor parties that hail from the same side (i.e., claimants or respondents).…”

“…10.3.1.2 General Pro-Investor Bias? Another systemic bias claim frequently lodged against the investor-state arbitration system is a bias against states in general and favoritism towards foreign investors (Giorgetti et al 2020). While the evidence of some type of structural or systemic bias against developing states in ISDS cases is relatively strong, a pro-investor bias is slightly more difficult to substantiate.…”

“…That said, empirical work on bias must be done and reviewed with caution as it is frequently difficult to demonstrate with precision the causal link between biases and the individuals and institutions purported to be biased. Nevertheless, such research can assist in providing evidence on the extent of a problem, even if a particular bias is unproven, and inform the strategies to adopt in reform processes (Giorgetti et al 2020;Puig 2019). For example, practices such as double hatting can be descriptively mapped even if issues of bias are harder to pin down; and that mapping can prove very valuable in terms of demonstrating the extent of the problem, but also how to target reforms that might best curtail the perceptions of bias that it attracts (Langford, Behn and Lie 2017).…”