Investor-State Mediation: an Expert Roundtable

Date: 17 July 2020

Time: 20:00 GMT+8:00 / 2:00PM CEST

Presentation Summary

Mr. Wolf von Kumberg (International Arbitrator and Mediator), moderator for the webinar, kickstarted the session by asking: (i) what the trend will be for globalization and international investment in a post-Covid19 world; and (ii) what impact such trends will have on Investor-State Dispute Settlements (ISDS). Mr. von Kumberg added that the signing of the Singapore Convention on Mediation (SCM)¹ and increasing criticisms against arbitration in ISDS catapulted the growth of investor-State mediation. Panellists were then invited to share more about the initiatives that have been introduced by the different institutions to aid the development and use of mediation in ISDS.

Dr. Judith Knieper (Legal Officer, United Nations Commission on International Trade Law (UNCITRAL) Secretariat) presented on the UNCITRAL framework on mediation and shared about the progress of the reforms. One of the greatest steps undertook by UNCITRAL in relation to mediation was to draft the SCM. The SCM is a key instrument as it provides an efficient framework for the enforcement of international settlement agreements. The SCM is complemented by the Model Law on Mediation,² the Conciliation Rules,³ and the draft UNCITRAL Notes on Mediation.⁴ Dr. Knieper is confident that the Conciliation Rules and the UNCITRAL Notes on Mediation will be adopted in the upcoming UNCITRAL Commission sessions. That aside, she stated that UNCITRAL’s Working Group III: Investor-State Dispute Settlement Reform has a three-step mandate: (i) to identify all relevant issues, (ii) to identify if these issues are on reform, and (iii) to develop solutions to the issues. In that context, many States had identified mediation as a core issue. Accordingly, Working Group III will explore ways to promote, foster, and improve access to mediation in the ISDS context.

Next, Mr. Mark Appel (International Arbitrator and Mediator) began his presentation with an overview of the International Mediation Institute’s (IMI) Investor-State Mediation Competency Criteria as published by the IMI's Investor-State Task Force:⁵

• Familiarity with procedural and substantive issues in investor-State disputes;
• Expertise in mediation;
• Familiarity with and understanding of the different negotiation and mediation techniques;
• Understanding of ISDS arbitration process;
• Cross-cultural expertise; and
• Familiarity with tools and technologies to conduct online mediation effectively.

The criteria was developed with the goal to assist States and investors in identifying and choosing a competent mediator to mediate their respective disputes.

The criteria was developed with the goal to assist States and investors in identifying and choosing a competent mediator to mediate their respective disputes. Moving on, Mr. Alejandro Carballo Leyda (General Counsel & Head of Conflict, Resolution Centre at Energy Charter Secretariat (ECS)) gave a brief summary on the steps taken by the ECS to promote investment mediation in the Energy sector. He shared that in 2015, the ECS found out through a series of roundtables and dialogues that many investors and State officials lacked awareness about mediation. They were also uncertain about the application of the mediation process. To help overcome the lack of awareness and uncertainty, the ECS adopted the Guide on Investment Mediation. Additionally, mediation awareness trainings and technical advice were also offered to government officials. Furthermore, the Model Instrument on Management of Investment Disputes was created to provide a framework within a State. This framework would guide government officials and investors in the coordination and management of investment disputes. It would also guide the assessment of different dispute resolution mechanisms that are available so that the stakeholders can make an informed decision in relation to their dispute.

The next presenter, Ms. Frauke Nitschke (Senior Counsel & Team Leader, International Centre for Settlement of Investment Disputes (ICSID)), shared about the ICSID new mediation rules. There were strong indicators from the States that they were willing to adopt mediation as a dispute resolution mechanism. This led to the ICSID proposing a set of specific rules for investment mediation. The proposed ICSID mediation rules has been worded broadly to accommodate the different styles of mediation. Unlike UNCITRAL’s definition, mediation and conciliation were thought to be different dispute resolution mechanisms under the ICSID framework. Ms. Nitschke explained that under conciliation, there would be three members forming the conciliation commissions. Accordingly, all the members would be appointed like in an arbitration process. Mediators on the other hand, are appointed by the agreement of all the parties. She added that the proposed rules would allow the ICSID to facilitate the initiation of mediation by transmitting an ‘invitation to mediate’ to the other party of the dispute. Besides these proposed rules, the ICSID has been working on capacity building with mediators and government officials through courses, webinars, newsletters, and interactions through online platforms.

Next, Mr. James South (Managing Director of Centre for Effective Dispute Resolution (CEDR)) shared on the current trend in investor-State mediation awareness and mediator training. He stated that there has been a real shift in awareness from state investors and institutions over the years. He added that awareness training for all stakeholders continue to contribute to the growing interest in mediation. Further, he emphasized that it is necessary to create a cadre of competent mediators with skillsets that can effectively deal with the growing demand in mediation in investor-State disputes. These skills include but are not exhaustive to process design, co-mediation, intercultural competency, process considerations, and confidentiality versus transparency requirements. He was confident that the fundamental systemic reform through the SCM and the proposed ICSID mediation rules would catapult the growth of mediation within the ISDS context.

Finally, Mr. Malik Dahlan (Principal of Institution Quraysh for Law and Policy) presented on the use of investor-State mediation in the Belt and Road Initiative (BRI). He stated that the BRI would have a great impact on the infrastructure sector in an estimate of 60-100 countries. Therefore, it becomes essential to consider mediation for disputes in BRI for the following reasons:

• Lack of multilateral dispute resolution framework;
• Lack of institutional framework to administer dispute resolution mechanisms; and
• Lack of dispute resolution forum.

He also placed emphasis on factors of cultural and language differences that mediators would be to be acutely aware of when mediating between international parties. Mr Dahlan also shared that the Republic of China has taken as active role in the domestic promotion of the SCM and mediation awareness through its people's courts. Although it will take time, Mr. Dahlan is encouraged that the rest of the world will eventually understand the complexities of mediation.

Q&A / Topics for Discussion

Some questions addressed during the session:

• How would the SCM promote mediation in investor-State disputes?
• How would the SCM apply in the ISDS context?
• Following the investor-State mediator competency criteria, how does one pick the ‘right’ mediator?
• How would the co-mediation style be adopted in investor-State disputes?
• How would the Model Instrument on Management of Investment Disputes as developed by the ECS address investment-State mediation?

We invite you to listen to the panel’s answers to the questions from the video record of the session here.

The team at SIMI and IMI would like to express our gratitude and appreciation to Mr. von Kumberg, Dr. Knieper, Mr. Leyda, Ms. Nitschke, Mr. Appel, Dr. Dahlan, and Mr. South, for sharing their time to join this roundtable panel session, and to all participants for joining us live from around the world.

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¹Officially named United Nations Convention on International Settlement Agreements Resulting from Mediation.

²UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018.

³United Nations Commission on International Trade Law Conciliation Rules, 1980.

⁴A draft copy of the International Commercial Mediation: Draft UNCITRAL Notes on Mediation, as at July 2019, can be accessed here.

⁵A copy of the IMI Investor-State Mediation Competency Criteria can be accessed on IMI’s website here.