The United Nations Commission on International Trade Law’s (UNCITRAL) Working Group III (WG III) reached agreement on a code of conduct for arbitrators during meetings at the United Nations headquarters in New York late last month. While the code of conduct imposes some limits on roles arbitrators can take in investment disputes proceedings, USCIB successfully advocated for narrower restrictions.

WG III was set up by the United Nations in 2017 to identify concerns and explore reforms relating to the operation of the Investor-State Dispute Settlement (ISDS) system. According to USCIB Vice President for International Investment and Trade Policy Alice Slayton Clark, this is the first time that agreement has been reached on text in over five years of WG III deliberations.

The agreement imposes temporary bans under certain scenarios on so-called “double hatting,” where an arbitrator can also serve as counsel in ISDS cases. Arbitrators would be subject to “cooling-off periods,” which vary from one to three years, depending on whether the two cases involve same measures, same or related parties, or same provisions in the same treaty. Delegates agreed to longer cooling-off periods for same measures and related parties, but shorter periods for same treaty, an important “win” for investors since it is not uncommon for multiple cases to arise under the same treaty and, in those cases, investors want to have maximum options in terms of their choice of arbitrator and counsel.

“USCIB has participated in WGIII discussions as a non-governmental organization since the start, advocating for balanced reforms that improve ISDS for both states and investors,” said Clark. USCIB member Lauren Mandell of WilmerHale has worked diligently with USCIB staff to promote member interests at UNCITRAL throughout this process.

In addition to the code of conduct for arbitrators, WG III also agreed on ethics rules for judges sitting on a permanent multilateral investment court, a structure that does not exist and that USCIB does not support. Because there is no agreement that there will even be a multilateral court, the final code has numerous caveats, with the European Union, the lead proponent of the court, acknowledging that the code may need to change based on the actual design of the court.

Lastly, WG III agreed to a set of technical provisions to encourage, rather than require, parties to mediate disputes as an “offramp” before parties turn to ISDS. Mediation may not be appropriate in a given dispute and could waste time and money when the other side is not seriously interested in the process.

The UNCITRAL Commission will finalize and endorse the three documents at its annual meeting in July.