THE CURIOUS CASE OF ASIAN RESISTANCE TO THE MAURITIUS CONVENTION
By Aayushi Singh
Keywords: international investment agreements, transparency, Asia-pacific
More than a third of existing international investment agreements (“IIAs”) involve Asian signatories. These IIAs stipulate higher transparency standards with developed nations, but a strange dichotomy is revealed in agreements entailing only Asian signatories - perhaps eliciting a deep-rooted Asian disregard towards transparency. The shift of the global economy towards the Asia-Pacific has rippled a massive rise in institutional caseloads.
The proposed research intends to scrutinize: 1) BIT regimes with transparency stipulations and 2) the Asian resistance to the Mauritius Convention and plausible reasons for the same. The paper analyses the positions of China (courtesy OBOR), India, Korean and Japan plausibly due to their fiscal interests as “developing” nations. Suggestions regarding publication, accountability, amicus briefs are made towards the end.
As opposed to China’s initial reluctance towards adoption of the national treatment standard which was due to the strong urge to protect Chinese infant industries from foreign competition, the revised version of China’s Model BIT reflects a stronger interest in actively protecting the foreign direct investment engagement of Chinese companies abroad. While China showed resistance towards arbitration as a means of resolving investment disputes with the initial two versions of China’s Model BIT merely accepted reference of “disputes involving the amount of compensation for expropriation” to an ad-hoc three member arbitral tribunal, a significant change in its attitude towards ISDS occurred towards the end of the 1990s.
There is no mention of transparency in investor-state arbitration in the 1997 China Model BIT, however, Article 9(2)(b) of the Chinese Model BIT does make a reference to ICSID. One of the earliest examples of any acceptance of ISDS transparency was the 2008 China-Mexico BIT, where awards rendered were publicly accessible unless the disputing parties agreed otherwise however the BIT made no further stipulation regarding transparency .
Canada and China agreed to the compulsory publication of awards and acceptance of amicus curiae briefs at the tribunal’s discretion, however, the Agreement does not mandate public hearings. Publication of pleadings and other related documents and similar requests can only be made upon the agreement of the respondent state. The China-Australia Free Trade Agreement (“FTA”) is perhaps the most progressive one which refers to mandatory publication of awards, public hearings at the respondent state’s discretion and amicus briefs. Similarly, the Agreement that China concluded with ASEAN in 2009 is silent on transparency and even though continuous reference has been made to ICSID, UNCITRAL Arbitration Rules and ICSID Additional Facility Rules or other rules of the parties’ choice, the Mauritius Convention or UNCITRAL Transparency Rules are excluded. China’s BITs with Mali (2009), Malta (2009), Tanzania (2013) and South Korea (2015) are also silent on provisions related to transparency. It is fairly evident that there is a dichotomy in China’s attitude towards stipulations of transparency.
The India-Malaysia FTA signed in 2011 states that the disputing Party may make publicly available all awards and imposes no specific obligations on the parties. India’s first adverse award came in the White Industries Case where India was found to have violated its commitments under the Australia-India BIT, pursuant to which India was hit with a barrage of investment claims, which led to the creation of a more protectionist Model BIT. The Model BIT received mixed responses since it advocates for a mode of exhaustion of domestic/local remedies first. European Union and several developed nations have strongly objected to the exclusion of the MFN clause and exclusion of issues pertaining to taxation. The Model BIT has only one article dedicated to Transparency which covers publication of material related to the arbitration “to the extent possible” and allows amicus briefs by “interested persons” as a “reasonable opportunity to comment on proposed measures.”
Strangely, Korea takes two diverse stands when it comes to negotiating with Asian and non-Asian economies. None of the relevant treaties or Free Trade Agreements recently carried out by Korea make any stipulations regarding transparency including the Korea-Myanmar BIT (2014), which is not in force yet, Korea-China FTA (2015) and China-Japan-Korea Trilateral Investment Agreement (2014). A different stand on mandatory publication of arbitral documents, awards and inclusion of amicus briefs is taken under the Free-Trade Agreements carried out between Korea and the United States (2012), Korea-Australia (2014), Korea-Canada FTA (2015) and lastly, the Singapore-EU Free Trade Agreement (2015). There is a contrast of stance which is clearly visible when Korea is transacting with developed nations and the difference in its position when contracting with developing nations in South East and South Asia. The dichotomy can possibly be explained by the fact that developed countries require transparency standards in their treaties.
Japanese BITs have non-mandatory provisions under which the respondent state has to make available publicly all the documents submitted to the arbitral tribunal  however the UNCITRAL Transparency Rules are only limitedly applied when the claim is brought under the UNCITRAL Arbitration Rules. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“TPP”) to which Japan is a party, is one of the few examples of an IIA that provides for the explicit application of the UNCITRAL Transparency Rules to any investor-state dispute regardless of which arbitration rules have been chosen by the disputing parties. The Japan-Mozambique BIT (2014), Japan-Myanmar BIT (2014), Japan-Uruguay BIT (2015) contain stipulations on the publication of all arbitral documents at the discretion of the respondent state however the BITs make no further stipulations regarding transparency.
Plausible reasons for Asian non-participation in the Mauritius Convention
This part of the paper draws attention towards relevant BITs carried out by Asian nations in line with the standards for transparency set out by the TPP and The North American Free Trade Agreement (“NAFTA”). Unless the parties agree otherwise, the UNCITRAL Transparency Rules are applicable to all arbitrations conducted under UNCITRAL Arbitration Rules pursuant to a treaty ‘concluded on or after 1 April, 2014.’ If we look back and analyze the responses of Asian nations to the UNCITRAL Transparency Rules and the Mauritius Convention, there is a failure to find a consistent and continuous position with respect to the same. For example, when the UNCITRAL Secretariat circulated a questionnaire relating to nations’ best practices related to transparency in August 2010, China adopted a rather negative stance. In responses to queries regarding third party briefs and publicity of proceedings, China curtly replied that though it was a party to the ICSID Convention, no examples of the aforementioned situations had occurred. 
This was not inaccurate as the first ICSID proceeding against China came as late as the Shum case. China also unequivocally objected to the idea of mandatorily enforcing a transparency regime in 2010. However a radical shift came in the Chinese delegation’s opinion later in 2013 and it stated that there was a strong need for a more definitive transparency regime in the ISDS system as it would “dispel people's apprehension that international arbitration tribunals tend to protect investors at the expense of the public interest.”
A plausible explanation to this dramatic change of stance could be China’s One-Belt-One-Road initiative wherein PRC is attempting to invite more investment and lowering trade and investment barriers. Ironically, Singapore offered support to China’s erstwhile held opinions by stating that there was really no need for a convention on transparency as it would place an unnecessary burden on other nations to unwillingly submit to a treaty to which they were not particularly well inclined. Singapore, however, made a suggestion about how there could be bilateral enforcement of the Mauritius Convention instead of an all sweeping mandatory obligation on states since there were unprecedented cost concerns due to publication of awards and publicity of proceedings.
The Korean delegation also mentioned that the Mauritius Convention was rather ‘new’ and ‘untested’ and a very wide application in little or no response time from the international community was rather rushed. After a more holistic analysis, it is very clearly evinced that transparency is definitely not a policy concern for Asian nations and continues to be a subject which is only negotiated on the basis of ad-hoc concerns raised by the counterparties. The Model BITs of the United States of America and Canada have included comprehensive transparency provisions since 2004 and 2003, respectively. This is largely the result of these states’ experience with NAFTA and “represent the present high-water mark of transparency in investment treaty practice. Where the host-state in a BIT may be negotiating for a higher threshold of transparency, even states like India and China with limited or no provisions for transparency in their Model BITs may be open for amenable provisions related to the same. However, it seems highly unlikely that they will indicate such interest on their own accord.
Transparency lies at the foundation of good governance. It could also well be that transparency may expose administrative and political indiscretions (bribery scandals, misspending of public funds) to the public resulting in public criticism of the government. Beyond the question of whether the State has discharged its substantive international obligations under an investment treaty, an investor-State claim will raise questions about the State's prospective exposure to liability. Transparency may have negative effects in the Asian context and thus may be a reason for opposing transparency.
While reaffirming state control and retaining commercial interest of investors, multiple reforms to the existing investment regime have been elicited. Such reforms include publication of awards (redacted versions), public access to proceedings, amicus briefs and third-party submissions etc. Asia-Pacific is, however, lagging in some respects as mentioned earlier and having considerable investment jurisprudence before them, Asian states are now uniquely placed to benefit from the experiences of others.
Aayushi Singh is a double-degree candidate from MIDS, Geneva and the National University of Singapore.
Preferred Form of Citation: Aayushi Singh, “The Curious Case of Asian Resistance to the Mauritius Convention” (ICAR, 10 April 2021) <https://www.investmentandcommercialarbitrationreview.com/post/the-curious-case-of-asian-resistance-to-the-mauritius-convention>.
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The views and opinions expressed in the article are those of the author(s) solely and do not reflect the official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.