Revisiting the Importance of Site Visits in Investor-State Disputes

In investment arbitration proceedings, site visits refer to an inspection of any land pivotal to a dispute, carried out by arbitrators, to collect and evaluate existing evidence. Article 43 of the ICSID Convention, Rule 34 (2) (b) of the ICSID Arbitration Rules, and Article 7 of the IBA Rules on Taking of Evidence grant tribunals the power to visit the site of dispute and conduct any ancillary enquiries that it deems fit. Despite this, only ten publicly known site visits have occurred since the inception of ICSID arbitration, while three have been conducted in UNCITRAL based proceedings.

Relevance of site visits for the purposes of the proceedings

Site visits are beneficial in cases where the geography or topography of a particular land or the tangible existence of an object is paramount to the dispute. In such cases, they assist arbitrators to envisage narratives differently from the manner in which they are ordinarily presented by parties through paper-based evidence. Considering the adversarial nature of investment arbitration proceedings, parties, in their quest to win the arbitration, would most naturally tend to present exaggerated contentions and produce only such evidence that would assist their case. This may be counterproductive for arbitrators inasmuch as this does not generate a lucid, wholesome picture satisfactory for fair adjudication of a dispute. Site visits involve testimonies from and interviews with witnesses and the local population. This can help arbitrators confirm their conscious/subconscious interpretations of the dispute, generating an overall fairness within trials involving contentious issues of public interest.

Since site visits may involve a concerted effort of both parties to organise minute details of the visit, they may also help to foster a sense of cooperation amongst otherwise disputing parties. For instance, in Burlington Resources v Ecuador and Chevron v Ecuador, the arbitrators agreed to a site visit only if parties negotiated the scope, pre-site visit inspections, transportation, security, food and dress code. This is extremely important in investment arbitrations like the aforementioned, where the point of contention, being measures being taken on Ecuadorial land, posed a threat to the local population (that was not party to the proceedings). In Burlington, the tribunal noted that the site visits specifically helped them understand the differences in sensitivity of the agricultural and industrial land, the accuracy of the mapping systems, and actual impact of the project on locals.

Although site visits can potentially be beneficial for the reasons highlighted above, it is very difficult to practically ascertain how distinctly they contribute to the outcome of arbitrations from other types of evidences. With advancements in technology, photographs, satellite videos, maps, GPS systems and audio recordings can almost entirely substitute the need for site visits. Recent use of the 3-D technology and its potential use as evidence will waive off the need for site visits altogether, for it is now possible for arbitrators to practically visualise the entire dispute without having to visit the disputed area. It will also make adjudicating such disputes cheaper for the parties. Furthermore, arbitral tribunals are now frequently seeking the help of experts in investment cases, thus reducing the need for a site visit.

Approaches to site visits taken by tribunals

Investment arbitration cases are often a mix of commercial and public interest issues. The arbitrator in Elsamex v Honduras visited 15 sites in Honduras in relation to a disputed highway rehabilitation project. In Marion Unglaube v Costa Rica, the claimant filed a case alleging Costa Rica’s lack of payment of compensation for expropriation of the claimant’s property, located on a beach. The Respondent State, on the other hand, cited a public interest objective to protect the country’s endangered Olive Ridley turtles. The Tribunal, while weighing these two considerations, deemed a site visit necessary owing to the ‘desirability of gaining a greater understanding of the particular area.’

In Lanco v Argentina, a case concerning public invitations to bid for concessions of a port terminal in the host state, the Tribunal deemed it necessary to visit the port in question to ‘gain perspective.’ Similarly, in Enkev Beheer v Poland, the Tribunal, after considering the Claimant’s request for an expert analysis of the site, ordered a site visit by stating that ‘the expert can make a permanent record of what he and the Parties consider relevant to the dispute.’ It is observed that tribunals that have initiated such visits do so based on the two common considerations: (i) when it is found that evidence on record is not enough to substantiate or provide a satisfactory worldview of the dispute; and (ii) the dispute in question deals with public welfare or interest-based considerations/ defences.

Such practice, however, is not the rule. Tribunals tend to make a concerted analysis of existing evidence before ordering such visits. In the case of Micula v Romania, a request for site visit was deemed unnecessary twice. At the first instance, the claimants’ application for a site visit was considered ‘premature’ owing to sufficient evidence already present at that stage. The tribunal proceeded to provide the claimants with another opportunity to renew their application, and subsequently rejected it, finding that the factual conclusions it arrived at would not have been altered by conducting a site visit. A similar conclusion was also arrived at by the Tribunal in OI European Group BV v Venezuela.

Apart from this, even if a particular site is the subject-matter of the dispute, determinations on questions of law may be able to resolve the dispute more efficiently than a determination on questions of fact. In Santa Elena v Costa Rica, the President of the Tribunal held that a site visit would be conducted only if, after presentation of oral hearings on existing fact and law, an additional need to conduct such visit was discovered. It was held much later that the same was ‘not necessary.’

Developing strict criteria for allowing site visits

A thorough understanding of site visits, more specifically its disadvantages and the overall hesitation of tribunals to initiate them, reveals a glaring need to define the parameters to invoke and govern them. There is a need to codify parameters that allow site visits within procedural rules of institutional arbitration, such as the ICSID Arbitration Rules, IBA Rules on Taking of Evidence and UNCITRAL Arbitration Rules, instead of making it solely discretionary in order to safeguard parties’ procedural rights. Based on certain befitting practices from the aforementioned case laws, the following parameters can be developed:

A. Parameters for invocation defining the right time to initiate a site visit

As a thumb rule, site visits must only be scheduled after presentation of evidence and conclusion of oral arguments, and before adjudication on counterclaims or passage of the award, in a manner similar to that of the tribunals in Burlington and Marion Unglaube. This would imply that site visits would take place only when tribunals have justifiable reasons to believe that the evidence on record is actually insufficient to resolve the dispute and such visit is the best way to add probative value to the case. At best, tribunals may schedule such site visits during the presentation of written submissions, in case there is a need to understand the practical complexities of the dispute before being able to proceed towards its resolution.

Such approach will ensure that essential interests of the parties are safeguarded. With the tribunal carefully perusing and analysing all evidence on record and then deciding upon the requirement of the site visit, the principles of expediency and cost cutting will be promoted. In fact, if the tribunal finds that it is absolutely necessary (after considering evidence on record), to conduct a site visit, the same will be in the interests of justice of the parties as well. Such a mandate from the institutional rules will make sure that orders for site visits are not given haphazardly but after careful consideration of evidence and with the aim of ensuring a fair hearing to all stakeholders involved.

B. Pre-determining intricacies of the visit in procedural order

Provided that a site visit is imperative, tribunals should ensure that every intricacy related to the visit is decided in advance. This may include considerations such as communication, costs, logistical requirements, time frame for visit etc. In cases where the tribunal allows parties to negotiate such terms, care should be taken to ensure that such negotiations do not lead to delay in proceedings. A viable alternative could perhaps be the attribution of a fixed time period to such negotiations, at the end of which, in the absence of any consensus, the tribunal can pass its own Procedural Order determining these intricacies. Preference, however, should be given to party negotiations to promote trust-building and make the atmosphere less hostile. This approach will balance expediency and the interests of justice.

Conclusion

There are no concrete standards governing site visits in international investment arbitration. While the approach, in all likeliness, is bound to be case specific, defining generic parameters may improve consistency of invocation of site visits and ensure that the usage of discretion of the tribunal is in the best interests of the parties and proceedings.

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