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In celebration of November 2022 marking the seventy-fifth anniversary of the International Law Commission (ILC)’s establishment, this Symposium has shed light on the enduring importance of the Vienna Convention on the Law of Treaties (VCLT) and the ILC’s work to achieve it. The Symposium has highlighted posts by authors of several chapters appearing in the recently-published book, The Vienna Convention on the Law of Treaties in Investor-State Disputes: History, Evolution and Future, co-edited by the authors of this post. Our book focuses on the VCLT’s influence on and future potential role in international investment law generally and for the resolution of investor-State disputes in particular. It considers how the VCLT’s rules have been invoked, interpreted, and applied by States in their treaty-making processes, by practitioners and by parties in investor-State dispute settlement (ISDS) proceedings, and by tribunals in investor-State arbitral decisions and awards. This Symposium has drawn specific focus to the enduring legacy of the ILC’s iterative efforts and associated drafting records to understand and apply international investment agreements (IIAs), particularly in the context of investor-State disputes.
This concluding post focuses on the inspirations that might be drawn from the ILC’s output, in the form of what became the VCLT, and its working methods in shaping the future of investment law and arbitration. Further, this post announces an “in conversation” webinar to be held in February 2023 featuring ILC Members covering topics coinciding with our book and this Symposium.
Substantive Contributions to Emerging Debates: The Flexibility of the VCLT Framework for Resolving New Issues
The ISDS system has increasingly become the subject of strong criticism and scrutiny. Over the past few years, many of the concerns associated with this field have prompted various unilateral, multilateral and institutional reform efforts. Working Group III of the United Nations Commission on International Trade Law (WGIII), for instance, is engaged in addressing several key procedural and systemic issues associated with investor-State arbitration including proposals for the development of an appellate mechanism to promote greater coherence and consistency among arbitral decisions, a Draft Code of Conduct to regulate arbitrator disclosures and to ensure conduct adhering to certain standards, and a standing multilateral mechanism for the selection and appointment of tribunal members.
As we demonstrate in our book, by revisiting the role that the VCLT previously has played in investor-State disputes to date, it becomes possible to unlock insights into how the VCLT might be used to support the development of the ISDS system and international investment law into the future. Our book and this Symposium highlight, in particular, the potential role and utility of the VCLT’s rules for arbitral tribunals, disputing parties, States and other stakeholders as they strive to reform the ISDS system to ensure that it remains fit for purpose and adequately supportive of the next generation of IIAs and the disputes that might arise under them.
The WGIII process, for instance, has frequently returned to the role to be played by the rules included in the VCLT for supporting – or in some respects, constraining or regulating – reform of investor-State arbitration. As the work of WGIII has noted, the VCLT has a central role to play for ISDS reforms, including in considering, inter alia, the issuance by States of joint, unilateral or multilateral interpretive declarations of investment treaties, the implications of an increased release of travaux préparatoires, and the role of State pleadings and non-disputing party submissions for treaty interpretation. In fact, in the Group’s discussions, “suggestion[s] to develop autonomous interpretative principles and rules that could complement or replace the general principles of treaty interpretation did not receive support and reference was made to the Vienna Convention on the Law of Treaties.” The VCLT also has a key role to play in treaty modification and termination processes, which are likely to be relied upon by States in adopting at least some of the WGIII reforms for application in future arbitrations.
Such considerations indicate that, while the VCLT alone does not provide all of the solutions necessary to address the challenges associated with the ISDS reform agenda, its tools certainly have a key role to play. As our book highlights, the VCLT can guide State practice for entry and exit from specific IIAs, inform the arguments of disputing parties as to how provisions of IIAs are to be understood and applied, and guide the decision-making of arbitral tribunals when such disputes come before them.
Procedural Inspiration and Relevance to Ongoing ISDS Reform Efforts
The ILC’s work on the VCLT also holds relevance to the future of investment law and arbitration in other key ways. Consideration of the procedures used by the ILC to develop the VCLT can reveal important insights and cross-cutting lessons relevant to achieving the progressive development of international investment law through bodies like UNCITRAL WGIII.
A first important lesson is the need for such processes to produce practical solutions capable of applying to, and remedying, the key issues encountered by States and practitioners in relation to a given field in practice. Of course, many theoretical debates were engaged by the ILC in developing the VCLT, as they similarly have been by States and other stakeholders confronting ISDS reform. In fact, the very design of the UNCITRAL ISDS reform process first focused delegates for some time on identifying concerns related to ISDS before turning to consider whether reform was even desirable and, if so, what possible relevant reform options may be. This sequencing means that, as Roberts and St John have noted, ultimately the UNCITRAL WGIII discussions have shifted over time to a more concrete analysis of options, such that:
“instead of being an arena in which states rethink the system’s fundamentals (eg what are the purposes of investment treaties) or engage in high level policy positioning (eg do they support a court or arbitration), the Working Group began to feel a bit like a team of engineers breaking down a complex design challenge into its component parts.”
It is thus clear that for both projects the feasibility and impact of proposals is dependent upon achieving concrete, practical, outcomes that can be implemented by States. This explains, for instance, the “marked impatience” that Rosenne reports was displayed during the negotiations at the Vienna Conference “with purely doctrinal contentions which did not add up to much in practice”.
Such outcomes must also be produced in a manner that is cognisant of a broader political and legal context. ISDS reform, in particular, is intensely political. Moreover, parallel efforts of States and other stakeholders to achieve reform in multiple different fora and through multiple different reform proposals increases the complexity of any reform agenda. In any international law codification or reform effort the capacity to produce viable proposals to guide State approaches depends in part upon a given body’s composition. Whereas the ILC has drawn much of its authority from the fact that it is composed of independent legal experts but is nonetheless institutionally linked to the UN General Assembly’s Sixth Committee, UNCITRAL’s WGIII must draw its strength from the fact that it is composed of State representatives aided by appropriate observers and non-State inputs and the substantive inputs of its Secretariat.
Compared to other UNCITRAL Working Groups, WGIII enjoys a higher level of government participation. This may be beneficial insofar as the solutions developed through the Group may be more likely to be taken up by States given their engagement in developing them. Yet, the Group also has needed to remain focused on involving the right stakeholders in reform efforts to position its efforts to produce “best practices” capable of standing the test of time. As the Chair of the WGIII discussions has noted:
“we make significant efforts to ensure that the voices of all stakeholders are heard at UNCITRAL, including the voices of the arbitration community. Ultimately, this is a process led by States who must consider diverse interests, but we are certainly open to hearing the views of stakeholders on these issues. In this regard, I think that a number of organizations involved in the existing arbitration community have been very heavily and constructively engaged in our work.”
Indeed, many critiques of international investment law and ISDS stem from the idea that foreign investors should not be permitted to challenge domestic public policy decisions from a “privileged” position and that the private arbitrators appointed to resolve these disputes are inherently biased in favour of claimant investors or otherwise ill-equipped to render important decisions concerning public interests or the use of public funds. While over time such critiques have prompted changed procedures, especially with the advent of greater transparency initiatives including those reflected in modern IIAs and institutional procedural rules, it remains important for reform and modernisation efforts to operate in a transparent manner. This allows the decisions taken to be understood alongside broader political and legal contexts and to lend legitimacy not only to the reform process itself (and its outputs) but also to the system of ISDS that it seeks to establish and maintain as a whole.
A further important lesson that might be drawn from the development of the VCLT by the ILC is the importance of procedure. The ILC has, for instance, over time moved from a model of voting to consensus. As Rosenne has noted, voting “is an abrupt way of deciding issues, and all experience shows that it is an unsatisfactory procedure for international lawmaking, especially when it is remembered that the majorities were frequently small, transient and even fortuitous.” Such changes influenced the ILC’s approach to the development of what became the VCLT, with Rosenne noting for instance that:
“Examination of the Commission’s prolonged work on the law of treaties will disclose that, with one or two exceptions, the formal vote at both the first and the second readings took place only at the very end of the discussions; that when the Commission was very evenly divided, no text was put forward at all; and that in one or two cases where the Commission was divided on a sort of 60:40 basis, the necessary two-thirds majority was not available in the diplomatic conference and the controversial passage was dropped there. This manner of proceeding … may well produce less incisive texts than can be done by straight majority voting. However, the end-product is probably more satisfactory to the diplomatic temperament because it attracts the widest possible degree of support both in the Commission itself and afterwards in the diplomatic conference.”
The ILC’s work to codify the law of treaties was an iterative process that unfolded over the course of nearly twenty years. During this period, the ILC’s approach shifted towards greater negotiation and conciliation in its working methods and it is widely accepted that the later period of the ILC’s work on the VCLT saw a greater flurry of momentum and consensus. UNCITRAL’s WGIII similarly faced early procedural difficulties, when the election of a Chair was put to vote rather than being decided by consensus. Other procedural choices have also had noticeable impacts on the substantive work and progress of the Group. As Langford and Roberts have noted, for instance, debates about whether WGIII’s analysis of reform options should be structured sequentially or concurrently in fact laid bare a “long-standing proxy battle between the two ‘incremental’ and ‘systemic’ reform camps.” In this sense, procedures can prove highly influential to a given body’s capacity to produce an intended output and to the nature and quality of its work product.
Conclusions and a Forthcoming Webinar on these Topics
As this Symposium has highlighted, the VCLT, as one of the greatest successes of the ILC, will continue to play a key role in resolving new and emerging issues in investment treaty disputes. The ILC’s proposed approaches to core rules of treaty law, as subsequently embodied in the VCLT, continue to guide the resolution of key issues of treaty law implicated in investor-State disputes. The ILC’s debates, and the VCLT’s rules, continue to influence approaches to interpreting investment treaties, to analysing their temporal and territorial application, and to resolving differences between texts in different languages. As this post has sought to highlight, the VCLT also holds relevance for ongoing ISDS reform efforts. Substantively, the VCLT’s rules may open up, or, conversely, constrain and regulate, options to reform investment treaties including to develop procedural, substantive, systemic and institutional reform proposals which may significantly transform the nature and features of this field in the future. So, too, the ILC’s efforts to develop the VCLT may well hold resonance or inspiration for groups engaged in such reform efforts.
What remains clear is that the ILC’s working methods and output hold enduring relevance to the field of international investment law, and to the resolution of investor-State disputes, and they are likely to continue to inform the development of this field into the future. Indeed, we anticipate that the field will continue to become more robust, particularly as transparency initiatives continue to facilitate greater public access to more examples of how the VCLT has been effectively employed in ISDS advocacy and decision-making. We further anticipate that technology and digital solutions will facilitate stakeholders’ ability to draw upon and harness the value of such practice into the future.
With these ideas in mind, we are pleased to announce a webinar in an “in conversation” format featuring Professor Sean D Murphy (ILC Member, 2012-2022), Dr Vilawan Mangklatanakul (ILC Member, 2023-2027), Professor Martins Paparinskis (ILC Member, 2023-2027) and Professor Penelope Ridings (ILC Member, 2023-2027), in which the panellists will discuss topics picking up on the interactions between the ILC, VCLT and ISDS as developed in our book and also this Symposium. The webinar is scheduled for Wednesday 1 February 2023 18:00 EST / Thursday 2 February 10:00 AEDT / 12:00 noon NZDT. You may register to join the program here.
The promo code 20VCLT22 offers a 20% discount on the retail price of The Vienna Convention on the Law of Treaties in Investor-State Disputes: History, Evolution and Future in the Wolters Kluwer eStore. The code is valid through to 28 February 2023.
Esmé Shirlow is Associate Professor at the Australian National University College of Law, and maintains a practice as a legal advisor and consultant in the fields of public international law and international investment law and arbitration. Kiran Nasir Gore is Professorial Lecturer at the George Washington University Law School, and an arbitrator, dispute resolution consultant, and counsel.