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GA/L/3479
13 October 2014
Sixty-ninth session, 8th Meeting (AM)

Draft Transparency Convention ‘a Powerful Instrument’ in Treaty-based Arbitration United Nations International Trade Law Body Tells Sixth Committee

As the Sixth Committee (Legal) took up the report of the United Nations Commission on International Trade Law (UNCITRAL), the Chair of that Commission’s forty-seventh session highlighted the finalization and approval of a draft Convention on Transparency in Treaty-based Investor-State Arbitration.

Hahn Choonghee (Republic of Korea) told Committee members that the draft Convention would be “a powerful instrument to enhance transparency in investor-State dispute settlement”.  The Transparency Convention, if adopted, would allow States to apply it to arbitrations arising under almost three thousand investment treaties concluded before 1 April of this year.

Detailing progress made by the Commission’s six working groups on topics ranging from micro, small and medium-sized enterprises to electronic commerce and insolvency law, among others, he also underlined the Commission’s technical support to facilitate the adoption of its texts, which was of particular importance to developing countries and to those States who were less familiar with the Commission’s work.

In addition, he emphasized the importance of the Commission’s system of case law on UNCITRAL texts (CLOUT), pointing out that CLOUT included over 1,400 abstracts of cases available to the general public in the six official United Nations languages on the Commission’s website.

The Commission had developed effective working methods and a negotiating culture that was efficient and inclusive, he said.  The Convention on Transparency was just one example of UNCITRAL’s ability to shape the global policy agenda into legal norms that made international commercial law efficient while balancing concerns affecting public interest.

However, many of the projects were funded through extra-budgetary means, he pointed out, urging all stakeholders to contribute to sustain them.  He also observed that UNCITRAL’s Secretariat was at the same staff levels as it had been in the 1970s, and he called on the Sixth and Fifth (Administrative and Budgetary) Committees to provide the necessary support.

Responding to questions raised and comments made by delegations today, he had recalled that the Open Working Group on the post-2015 agenda had emphasized the importance of trade.  It was in that light he underscored how private commerce and trade formed “a locomotive for economic growth” that would make the post-2015 agenda feasible and possible.  The Commissions’ work should be part of the post-2015 discourse.

Praising UNCITRAL and its work, speakers today lauded the finalization of the draft Convention and spoke of varying aspects of the Commission’s work important to their national concerns.  Austria’s representative, whose country would be coordinating UNCITRAL resolutions, called the adoption of the draft Convention one of UNCITRAL’s most important achievements.

Zambia’s representative, also commending the finalization of the Convention on Transparency, welcomed the Commission’s work on micro-, small- and medium-sized enterprises aimed at developing economies.  Those sectors drove economic growth in most countries, including his, and their promotion was a viable approach to sustainable development.

Israel’s representative expressed support for initiatives aimed at establishing practical online dispute resolution rules for low-value, high-volume cross-border transactions, while Canada’s representative noted the challenging nature of such work; the Commission had decided to include consumers within the scope of that work, making it important to ensure that the rules safeguarded consumer protection.

Concluding consideration of the rule of law at the national and international levels were representatives of Saudi Arabia, Madagascar and Jordan, as well as observers from the Holy See and International Development Law Organization (IDLO).

Also participating in deliberations on UNCITRAL were representatives of Costa Rica (speaking for CELAC), Belarus, Singapore, Russian Federation, Japan, India, Algeria, South Africa, Republic of Korea, United States, United Kingdom, El Salvador, Madagascar and Philippines.

The Sixth Committee will next meet at 10 a.m. on Tuesday, 14 October, to take up the Report of the Special Committee on the Charter of the United Nations and on the Strengthening of the Role of the Organization and to consider Observer Status in the General Assembly for several groups.

Background

The Sixth Committee met today to conclude its debate on the rule of law at the national and international levels.  For background, see Press Release GA/L/3478.

It then would take up consideration of the report of the United Nations Commission on International Trade Law (UNCITRAL) on the Work of Its Forty-Seventh Session (document A/69/17).

Statements on the Rule of Law

GORMALLAH ALZAHWARI (Saudi Arabia), underscoring that his Government was based on the tenets of Islam, and thus on justice and equality among individuals, said that while there was not an agreed upon definition of the rule of law, United Nations activities must not lead to a unilateral definition of the principle or classification of States in any way or form.  The principle of equal sovereignty required that States focus on their equal opportunity to participate in drafting law at the international level.  His country had worked for peace and justice, and had refused the use of force or violence and any practices that threatened global peace.  Condemning and rejecting international terrorism, he stressed that Islam was free from terrorist practices with which it was sometimes unjustly associated.  He added that the international community must not replace local authorities in the establishment of rule of law at the national level.

LYDIA RANDRIANARIVONY (Madagascar), associating herself with the African Group and the Non-Aligned Movement, said that sustainable development based on inclusive growth was a major objective of her country’s State policy.  Her Government had focused on the re-establishment of the rule of law by restoring State authority in order to gain its citizens’ confidence and allow them to work in peace and had aimed to re-launch the economy.  In order to improve access to justice, the Ministry of Justice undertook actions in line with its Constitution which provided all people the right to obtain justice.  As a lack of resources should not be an obstacle in obtaining justice, a decree regulating legal aid or assistance was passed in 2009.  Legal aid offices were being progressively established, along with legal information offices.  Her Government had also established legal clinics to raise people’s awareness of their rights, gather complaints with respect to community-based cases, propose mediation and bring parties together to bring them access to law and legislation.

ALI ABSOUL (Jordan), associating himself with the Non-Aligned Movement, said his country had long supported international tribunals, recognizing their importance in the promotion of the rule of law at the international law.  Jordan had also ratified the Statute of the International Court of Justice.  At the national level, it had established new institutions, including the Ombudsman’s Office, which promoted integrity and the National Council for Human Rights towards facilitating its citizens’ access to justice.  An adjustment to the law on accountability enabled efforts to prevent corruption.  In 2007, the Government sought to increase the expertise of judges and promote relationships among partners in the litigation process.  The Ministry of Justice launched a development plan this year to enhance the judiciary based on a code of conduct, promote integrity and reform and develop a system of oversight by including an assessment of judges.

BERNARDITO AUZA, Permanent Observer of the Holy See, endorsed a definition of the rule of law which was both rationally and morally grounded upon the substantial principle of justice.  The rule of law meant that, in relations among States, there be a paramount respect for human rights; equality of the rights of nations; and respect for customary law, treaties and other sources of international law.  In future debates on the matter, he would welcome increased attention to the human person and the society in which that person lived because the rule of law was unattainable without social trust, solidarity, civic responsibility, good governance and moral education.  At the international level, if rule of law was to reflect justice, frameworks on the international protection of persons must be fairly and impartially applied by States to guarantee equal recourse to the protections available within the United Nations Charter.  If States were unable to guarantee such protection, the international community must intervene with juridical means provided in the Charter and in other international instruments.

PATRIZIO CIVILI, Permanent Observer, International Development Law Organization (IDLO), said that the IDLO advocated a practical, results-based approach to the rule of law that would focus on how greater justice, both nationally and internationally, could contribute concretely to furthering sustainable development.  In addition, IDLO supported States in furthering access to justice, a main pillar of his Organization’s work.  Grassroots legal empowerment, alongside capacity building in the justice sector, constituted the core of its activities in that area, which pursued through promoting gender equality and upholding the rights of women and girls; expanding legal services for poor and marginalized communities; and using the law to advance the right to health.  His Organization’s current or recently completed projects had been geared towards supporting different needs in that area, from access to legal services and rights awareness raising to empowering girl victims or those at risk of trafficking, and the protection of land rights for women.

Introduction of Report

HAHN CHOONGHEE (Republic of Korea), Chair, of the forty-seventh session of the United Nations Commission on International Trade Law (UNCITRAL), said the highlight of the recent two-week session had been the finalization and approval of a draft Convention on Transparency in Treaty-based Investor-State Arbitration.  The previous year, the Commission had adopted Rules of Transparency in Treaty-Based Investor-State Arbitration, which applied only to the settlement of disputes arising under investment treaties concluded after 1 April 2014.  The draft Convention before the Sixth Committee would allow the Rules to apply to arbitrations arising under almost three thousand investment treaties concluded before that date.

Thus, he continued, the Convention would offer those States wishing to make the Rules applicable to their treaties “a powerful instrument to enhance transparency in investor-State dispute settlement” without the expectation that other States would necessarily have to use it. A signing ceremony was envisioned for March 2015 in Mauritius, with Sixth Committee approval.

Noting that investor-State arbitrations were of public interest, particularly in countries receiving significant foreign investments, he urged those States to consider becoming party to the Convention.  To make information available to the public, the Rules provided for the establishment of a Transparency Repository.  The Commission had unanimously proposed that its Secretariat serve in that capacity.  A dedicated webpage on its website was already available as a pilot project, and the Secretariat had been requested to seek necessary funding.

Another important achievement was the Commission’s decision to publish the UNCITRAL secretariat Guide on the Convention on the Recognitions and Enforcement of Foreign Arbitral Awards, known as the New York Convention, he said.  It was freely accessible online, and contained the most comprehensive resources existing to date, including case law and bibliography references.  He went on to detail progress made by the Commission’s six working groups on topics ranging from micro-, small- and medium-sized enterprises, of particular relevance in developing countries, to electronic commerce and insolvency law among others. 

In the field of online dispute resolution, a draft of procedural rules relating to low-value, cross-border disputes arising from electronic commerce transactions was being prepared, he continued.  Also under consideration were the effects of online dispute resolution on consumer protection in developing and developed countries, as well as countries in post-conflict situations.  In addition, a draft resolution to enable the use of electronic transferable records was being prepared.

Touching on insolvency law, he said the Commission was addressing cross-border insolvency of multinational enterprise groups, of increasing importance in the post-economic crisis world.  Development of a model law or legislative provisions on the recognition and enforcement of insolvency-derived judgements was being considered.  In addition, progress had been achieved in preparing a draft model law on secured transactions.

He also noted that the Commission was actively providing technical assistance to facilitate the adoption of its texts, of particular importance in developing countries and in countries less familiar with the Commission’s work.  Observing that the conduct of that work depended on financial contributions to the trust fund for such activities, he appealed to all States, international organizations and other stakeholders to contribute.  He further called on regional private and public stakeholders to contribute to the UNCITRAL Regional Centre for Asia and the Pacific, located in Incheon, Republic of Korea, the Commission’s only regional presence.

Describing the system of case law on UNCITRAL texts (CLOUT) and the digests as the “third pillar of UNCITRAL’s work”, he noted that CLOUT included over 1,400 abstracts of cases, available to the general public in the six official languages on the Commission’s website.  He reiterated an appeal to Member States for additional resources to enhance CLOUT’s performance, pointing to the increasing number of States who looked to UNCITRAL texts when reforming or modernizing international trade law regimes.

With the number of initiatives affecting international trade growing, the Commission’s coordination role was becoming increasingly important, he said.  To that end, it maintained a sustained involvement in the initiatives of other organizations in the field of international trade law, with the aim of sharing information and avoiding duplication of work.  UNCITRAL, as well, was focusing its efforts to promote the rule of law at the national and international levels on such dimensions as access to justice as normative protection, capacity to seek remedies and capacity to provide effective remedies.

It was clear that a sound regulatory framework for businesses, investment and trade was a powerful driving force in addressing many sustainable development challenges, he said.  Equipping the United Nations with the knowledge and tools to assist States in building capacity to put in place sound commercial law frameworks was essential.  To that end, he encouraged greater integration of the Commission’s work in relevant United Nations programmes.

The Commission had developed effective working methods and a negotiating culture that was efficient and inclusive, he underscored.  The Convention on Transparency was just one example of UNCITRAL’s ability to shape the global policy agenda into legal norms that made international commercial law efficient while balancing concerns affecting public interest.  Pointing out that the Commission’s Secretariat was essentially the same size as in the 1970s, he called on the Sixth and Fifth (Administrative and Budgetary) Committees to provide the necessary support.

Statements on UNICTRAL

GEORGINA GUILLÉN-GRILLO (Costa Rica), speaking on behalf of the Community of Latin American and Caribbean States (CELAC), said the United Nations’ challenges in the codification of international trade law were increasing over time.  In light of the volume and characteristics of global trade and the ongoing technological development and diversification of business activities, the Commission’s work should correspond with the dynamics of trade activities as closely as possible.  For CELAC member States, participating in the sessions involved a significant effort.  Addressing paragraphs 292, 293 and 294 of the Commission’s report on “the dates and venues of future meetings”, she said alternating venues for the meetings between New York and Vienna eased the participation of countries since there were those who did not have permanent diplomatic representation in Austria.  Noting the Organization’s budget limitations, she said that that facilitating logistics for the wide participation of members enriched the debates.

ULRIKE KOHLER (Austria) said among UNCITRAL’s most important achievements was the adoption of the draft United Nations Convention on Transparency in Treaty-based Investor-State Arbitration.  The text was intended to give those States that wished to make the Rules on Transparency applicable to their existing investment treaties an efficient mechanism to do so, without creating any expectation that other States would use the mechanism offered by the Convention.  UNCITRAL also played a key role in strengthening the rule of law in the field of international trade law.  At its forty-seventh session, it held a rule of law briefing and panel discussion.  She said her country would again serve as coordinator for UNCITRAL resolutions.  Two draft resolutions had been circulated last week: the annual Omnibus Resolution on the Report of UNCITRAL and a draft resolution on the United Nations Convention on Transparency in Treaty-based Investor-state Arbitration.

ILYA ADAMOV (Belarus) welcomed the draft convention on Transparency in Treaty-based Investor-State Arbitration, as well as the guidelines on the New York Convention. However, the guidelines on insolvency law did not fully take into account the needs of micro, small and medium enterprises and should be adapted to the needs of developing countries, where such enterprises made significant contributions to the economy.  Stressing that regulatory mechanisms on those enterprises’ insolvency should be flexible and impactful, he supported the development of a model law on the matter.  As well, development of a compact model law on secure transactions would assist States in formulating national legislation.  In that context, his Government was reforming legislation on collateral and access to credit.  New topics for UNCITRAL’s consideration could include, among others, private-public partnerships, provided that it would not lead to further expenditures.  He underscored that UNCITRAL’S work could serve as a model to other bodies, as its work was not politicized.

NATALIE MORRIS-SHARMA (Singapore) expressed support for UNCITRAL Secretariat’s repository function established under the Transparency Rules, stating that it would promote the availability of the decisions of arbitral tribunals.  That, in turn, would enable States and investors to better understand the rules which governed the investment landscape and make more informed decisions.  However, she pointed out that it was still unclear how pleadings and awards were to be redacted, and to what extent they would be redacted when parties were unable to agree and the Tribunal was not available to provide a ruling.  Other possible issues were liabilities that the repository could encounter and any costs it would incur.  Given UNCITRAL’s constraints, optimizing the use of its scarce resources, including its Secretariat and working groups, was imperative.  The Commission must exercise greater control over its working groups and must prioritize the subjects that each group was to address.  As well, the UNCITRAL Secretariat and Commission should carefully consider how the Commission’s work could be streamlined to ensure that there was no duplication and inconsistency in outcomes.

ELENA MELIKBEKYAN (Russian Federation) welcomed the draft Convention on Transparency in Treaty-based Investor-State Arbitration, which provided important mechanisms relating to international trade law and was invaluable for regulating commercial litigation.  However, she called for greater coherence of standards.  Noting the growing importance of ecommerce, she stated that in August of this year, the Russian Federation had become party to the United Nations Convention on the Use of Electronic Communications in International Contracts.

KAITARO NONOMURA (Japan) commended the assumption of the new mandate which contained legal issues simplifying the establishment of micro-, small-, medium-sized enterprises, which was critical not only for economic development but also for new entrepreneurs.  Also, he congratulated UNCITRAL for having finalized and adopted the Transparency Convention.  His delegation would continue to participate in the work on the online dispute resolution rules for cross-border electronic commerce transactions.  Furthermore, his country had established basic legislation on electronic transferable records, which would help the discussion in that regard.

KOTESWARA RAO (India), expressing support for the work of the Commission, said that the legal texts and model laws prepared by the Commission had practical value for individuals, corporations and States.  He voiced support for holding the signing ceremony for the draft convention on Transparency in Treaty-based Investor-State Arbitration in Mauritius and proposed naming the convention for the name of the city of signing as the Port Louis Convention on Transparency.  Supporting adoption of that draft convention, he noted however, that it would have been preferable for there to be an “opt in” provision, with respect to the Treaty’s applicability, rather than an “opt out” provision.

MOHAMED SALAH EDDINE BELAID (Algeria) commended the finalization of the draft transparency convention and the efforts of Working Group II (Arbitration and Conciliation) in that regard.  He expressed support for the Commission’s Secretariat taking on the role of repository of published information under the Transparency Rules.  He expressed satisfaction with the upgrade of the UNCITRAL website and the establishment of the transparency registry page, and welcomed the initiative of Mauritius to host a ceremony for the signing of the transparency convention, once adopted by the General Assembly.  He also noted progress made by other working groups.

NEELU SHANKER (Canada) noted with great satisfaction the Commission’s approval of the draft Convention and its recommended adoption by the General Assembly.  He also welcomed the establishment of the repository at UNCITRAL for the publication of information and documents in treaty-based investor-state arbitration.  His country supported the Commission’s decision to consider the feasibility and possible form of work in the area of enforcement of international settlement agreements resulting from conciliation proceedings.  UNCITRAL’s work on online dispute resolution had been challenging as the Commission had decided to include consumers within the scope of that work.  Thus it was important to ensure that the rules safeguarded consumer protection.  It was also important to examine alternatives to arbitration awards as means of effective implementation of online dispute resolution outcomes.  He also said he was pleased at the support expressed by most States for his country’s proposal regarding future work on legal issues related to cloud computing.

THEMBILE JOYINI (South Africa) said the Mauritius Convention on Transparency, adopted in July of this year, established a mechanism through which all parties to existing investment treaties could efficiently and effectively update the procedural rules governing investor-State arbitrations under those treaties.  That would then assist in effectively implementing the Transparency Rules and better take into account the public interest nature of those disputes.  In November 2013, his Government had published the much anticipated draft Promotion and Protection of Investment Bill, which had been introduced as part of an overhaul of the regulatory framework for foreign investment in South Africa.  That had been done to address a legitimate and widely shared concern that bilateral investment treaties and the international system of investor-State arbitration inhibited the ability of Governments to enact legislation and regulatory measures aimed at promoting public policy objectives in areas such as public health, environmental protection and social equality.

HOSHIN WON (Republic of Korea) welcomed the finalization and adoption of the draft Convention, a testament to the growing concerns on promoting transparency in investor-State arbitration.  The promotion of the rule of law in commercial relations should be an integral part of the United Nations’ broader agenda.  Furthermore, UNCITRAL’s regulatory framework for business, investment and trade was a powerful force in addressing many challenges to sustainable development.  In that regard, he expressed support for the Commission’s role in effectively integrating the rule of law in commercial relations within the United Nations system.  His Government had sponsored activities of the UNCITRAL Regional Centre for Asia and the Pacific, including a conference on micro-businesses and another on arbitration, which served as a critical venue for discussion by experts of international rules in the Asia-Pacific region.

CAROL HAMILTON (United States) said the new Convention would be a convenient tool for applying transparency measures to arbitrations occurring under the thousands of existing investment treaties, without having to amend each treaty separately.  All States should consider becoming parties to the Convention.  She also voiced support for the Commission to continued its consideration of whether changes were needed to the processes by which it developed its work programme, including, among others, how to avoid the creation of permanent or semi-permanent working groups that continued to propose extensions of their own mandates, as well as whether UNCITRAL should reduce the number of its working groups to five, rather than six.

JESSE CLARK (United Kingdom) said that the draft Convention was an important mechanism that enabled States to apply the rules on transparency to arbitrations under existing treaties and to promote transparency in the international investment protection system.  His delegation had participated in the forty-fourth and forty-fifth sessions of Working Group V to discuss possible topics for future work and to advance the current mandate of the group to develop principles for facilitating the cross-border insolvency of multinational enterprise groups.  It was then agreed that that topic would be continued together with the development of text on the obligations of directors of enterprise group companies in the period approaching insolvency, a topic which his delegation had proposed to the group and which the Commission had agreed to at its forty-sixth session.

AMIT HEUMANN (Israel) commended UNCITRAL on the adoption of the “Mauritius Convention”.  He also expressed support for the efforts of Working Group III to establish practical online dispute resolution rules for low-value, high-volume cross-border transactions.  There was hope that dialogue achieved at the last Commission would lead to concrete progress in the drafting of rules that would address both the need to allow for binding awards to be issued and the concerns of certain States regarding the compatibility of such a mechanism with domestic applicable legislation.  Furthermore, UNCITRAL would benefit from a greater use of information technology, both for communications between governmental experts, where appropriate, and between the Commission and the broader public.  In particular, an increased use of social media could expand the Commission’s visibility, reach and influence.

RUBÉN IGNACIO ZAMORA RIVAS (El Salvador), welcoming the draft Convention, said it would contribute to a harmonized legal framework for international commerce and encourage best practices.  He also expressed satisfaction at the work conducted with regard to micro, small and medium enterprises.  Noting that his country had both benefitted from UNCITRAL’s work and had participated in it, he said that El Salvador had conducted the second seminar on trade law, facilitating the dissemination and application of UNCITRAL instruments, particular regarding cross-border insolvency.  Also voicing appreciation for UNCITRAL’s work on securities, he noted that his country was working to incorporate UNCITRAL rules into national legislation towards keeping with international norms.

LYDIA RANDRIANARIVONY (Madagascar) said that international trade was one of most effective means of participation in the global economy, encouraging developing countries to reduce their dependence on aid.  To re-launch its economy, her country had revived the trust of its partners by guaranteeing security of investment through simplification of procedures and tax incentives.  It was also aiming to boost its agricultural and tourism sectors.  The Government had improved its legislation by adopting laws relating to commercial enterprise, transparency of businesses, competition in investment, combating corruption and money-laundering, among others.  Her country had also deposited ratification on the Convention on the International Sale of Merchandise recently, an important tool in international commerce.  A training seminar on economic diplomacy would be held in Madagascar between 15 and 18 October of this year in partnership with the International Commerce Centre in Geneva and the United Nations through United Nations Development Programme (UNDP).

IGOR GARLIT BAILEN (Philippines) said his country looked forward to supporting the adoption of the Convention by the General Assembly and welcomed the Working Group II’s next work on revising the organizing arbitral proceedings’ notes, as well as the issue of enforcing international settlement agreements resulting from conciliation proceedings.  As micro-, small- medium-sized enterprises constituted the bulk of economic activity in many developing countries, the various legal obstacles they faced must be reduced in order to encourage them to trade at the international level.  His country supported Working Group I’s progressive contributions in that regard and its preliminary discussions on the development of a legal text on simplified incorporation and business registration.  He said that he followed with keen interest the contributions of other Working Groups and was especially interested in recommendations on how the draft rules on online dispute resolution could respond to the needs of developing countries and those in post-conflict situations.

KASWAMU KATOTA (Zambia) commended the finalization of the Transparency Convention, and welcomed the Commission’s work on micro-, small- and medium-sized enterprises aimed at developing economies.  Such work was especially important because those sectors drove economic growth in most countries, including his.  Their promotion was a viable approach to sustainable development.  The Common Market for Eastern and Southern Africa (COMESA) had adopted draft policy on micro-, small- and medium-sized enterprises to increase their prevalence in the region.  The policy addressed, among others, infrastructure improvement and the promotion of technical production capacity, which included the creation of a micro-, small- and medium-sized enterprise fund at the regional and country level.  During the sixty-eighth session, the General Assembly had, in a resolution, appealed to Governments to make voluntary contributions to a trust fund to provide assistance to developing countries that were members of the Commission towards facilitating their participation in the Commission.

Closing Remarks

Mr. HAHN, acknowledging the Sixth Committee’s views, encouragement and shared commitment on the importance of the Commission’s work, said that UNCITRAL needed to expand its outreach activity because of how advanced technologies were increasing private commercial activities online and through ecommerce.  Therefore UNCITRAL’s work must be broadly publicized.  As to duplication of efforts by working groups, he said he would pay attention to the mandates and duration of working groups, ensuring that they complemented rather than duplicated each other’s work.  Finally, he stressed that the Commissions’ work should be efficiently and effectively positioned in the context of post-2015 discourse.  He would think about how it should best be promoted in rule of law issues and in the post-2015 development agenda.  Pointing out that the Open Working Group on the post-2015 agenda spoke of the importance of trade, he said that private commerce and trade formed a locomotive for economic growth and would make the post-2015 agenda feasible and possible.

For information media. Not an official record.