Wolf von Kumberg – Potential Impact of the Singapore Convention on Investor-State Mediation
Wolf von Kumberg
Independent Arbitrator & Mediator
Wolf von Kumberg is a certified CEDR mediator and an arbitration Fellow of the Chartered Institute of Arbitrators. He has over 30 years of international legal and business experience and has mediated and arbitrated numerous types of international commercial and investor state disputes. While serving as a Legal Director in Litton Industries Inc. and then as a Legal Director and Assistant General Counsel-International to Northrop Grumman Corporation, Wolf engaged with Governments and State Agencies in 52 countries dealing with trade, security and investment matters. In Northrop, he was also responsible for developing a dispute management process including an ADR Policy, Guidelines and International Dispute Clauses. In addition, he was involved in its international compliance program and complex investment negotiations with States. Wolf was also responsible for all international disputes including mediation, adjudication and arbitration.
Wolf is a leading international ADR figure who works with ICSID, CEDR and the Energy Charter Treaty Secretariat to develop protocols and policies, as well as training to enable the use of mediation in investor-state disputes.
Potential Impact of the Singapore Convention on Investor-State Mediation
by Wolf von Kumberg
Date: 13 May 2020
Time: 20:00 GMT+8:00 / 2:00PM CEST
Mr. Wolf von Kumberg (Independent Arbitrator and IMI Certified Mediator) gave a remarkable presentation on the topic ‘The Potential Impact of the Singapore Convention on the Development of the Investor-State Mediation’.
Mr. von Kumberg began his presentation by opining that that the signing of the Singapore Convention on Mediation (SCM) on 7 August 2019 was a decisive moment for cross-border disputes as it gave a new credibility to mediation as an international dispute resolution process.1 Prior to the signing of the SCM, many sovereign states and state entities were reluctant to settle disputes through mediation. This was due to uncertainties attributed to the mediation process. Private companies, on the other hand, were more willing to use mediation but it depended on companies’ size, sophistication, and location. He added that mediation was hardly featured in investor-State dispute settlement (ISDS) systems. The reason for that is that the ISDS had formulated its own unique dispute resolution system through the inclusion of arbitration provisions in bilateral investment treaties (BITS) or on a multilateral basis such as the North American Free Trade Agreement (NAFTA). Mr. von Kumberg stated that the International Centre for Settlement of Investment Disputes (ICSID), a body which handles most of investor-State disputes had only Arbitration and Conciliation rules. Additionally, the Conciliation rules were not a form of mediation as it involved a tribunal that renders non-binding opinions. As such, parties almost never used conciliation and used the cooling-off period provided for in BITS to prepare for arbitration.
Mr. von Kumberg then went on to talk about the Energy Charter Treaty (ECT); an international investment agreement, consisting of 54 States, that establishes a multilateral framework for cross-border cooperation in the energy industry. The ECT Secretariat was interested in plugging the gaps in its Rules and consequently, a Guide on Investment Mediation was published to outline the mediation process and how it could be used in investor-State disputes.2 However, the ECT Secretariat soon realized that the Guide alone was insufficient to promote mediation as states lacked internal framework to carry out mediation. As such, issues such as ‘Authority to settle’, ‘Transparency vs Confidentiality’, ‘Responsibility’, and ‘State budget’ had to be dealt with before states could adopt investment mediations. Subsequently, the Model Instrument on Management of Investment Disputes was published to assist States in dealing with these issues.3
Mr. von Kumberg recognized the importance of mediation awareness programs and trainings for mediators and states. These trainings would equip mediators and states with the knowledge and skillsets to effectively mediate investor-State disputes. Furthermore, by training more mediators to specialize in investor-State disputes, it would give the mediation process more credibility. The ICSID recognized and supported such a move and has began work on a new set of rules for investor-State mediation as part of a broader update to its procedural rules.4 He opined that this was a strong step forward in making mediation a part of the ISDS process and would give more credibility to investors, their counsels, and states.
Mr. von Kumberg stated that the Preamble of the SCM is a key significance to the development of investor-State mediation. He believes that states would recognize mediation as a legitimate dispute resolution mechanism once they ratify the SCM. He also stated that once this has been acknowledged, it would be difficult for states to hold the position that the SCM would not apply to states or their agencies when dealing with investors.
Mr. von Kumberg stated that the financial crisis arising from the COVID-19 situation will assist the growth of mediation. This has something to do with limitations to applying arbitration in investor-State disputes due to the following developments:
- A moratorium on all arbitration claims by investors under investment treaties called by the Columbia Centre on Sustainable Investment; and
- Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union signed on 5 May 2020.5
Mr. von Kumberg concluded his presentation by noting that the limitations on arbitration coupled with the SCM would be a major boost for mediation in investor-State mediations.
Q&A / Topics for Discussion
Some questions addressed by Mr. von Kumberg during the Q&A session:
- Would the SCM promote more respect for cooling-off periods or negotiation clauses in Investment Arbitration Agreements?
- How would the moratorium on investor-State disputes during COVID-19 affect mediation?
- Would the SCM be more attractive to capital-importing States than capital-exporting States?
- How realistic is enforcement of specific performance of obligations in a settlement agreement against a State? Would it be advisable to include pecuniary damages or dispute resolution clause in case of non-performance?
- How would the reservation to exclude settlement agreement involving state or state-owned enterprise from the SCM affect mediation in ISDS?
- Would the lack of third-party funding affect a State’s decision to adopt mediation for investor-State disputes?
We invite you to listen to Mr. von Kumberg’s answers from the video record of the session available here, as well as his response to other questions not listed above. A copy of the paper prepared by Mr. von Kumberg for this presentation is available here.
Links to other requested resources that came up during the session are provided below:
The team at SIMI and IMI would like to express our gratitude to Mr. von Kumberg for sharing his time to be a speaker at the Singapore Convention Seminar Series and to participants for joining us live for the session. Do join us for our next seminar by Ms. Sarah Blake on ‘Culture, Process and Value Proposition in the Era of Singapore Convention on Mediation’!
1 Officially named United Nations Convention on International Settlement Agreements Resulting from Mediation.
2 Guide on Investment Mediation, 19 July 2016 a copy is available here.
3 Model Instrument on Management of Investment Disputes, 23 December 2018, a copy is available here.
4 The latest draft of the rules was published in August 2019 in Working Paper #3: Proposals for Amendment of the ICSID Rules.
5 A copy is available here.