Australia: A step in the right direction: lesson in transparency in international commercial arbitration from the Mauritius Convention

As a treaty promoting transparency in investor-State arbitration, at first blush the Mauritius Convention does not appear to offer any insights for international commercial arbitration. But does it?

Confidentiality for parties is traditionally assumed with international commercial arbitration, with transparency and confidentiality often viewed as mutually exclusive priorities. With this tension in mind, should international commercial arbitration adopt the elements of the Mauritius Convention that promote transparency?

Expecting the Australian legislative framework to support such a departure from the existing position, particularly with regard to confidentiality in international arbitration, may be a giant leap. However, the proposed amendments to the International Arbitration Act 1974 (Cth), which ensure that the Mauritius Convention (and the Transparency Rules that it gives effect to) are supported in Australia's arbitration legislation, are a step in the right direction.

WHAT IS THE MAURITIUS CONVENTION?

The United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the Mauritius Convention) is due to enter into force on 18 October 2017, following Switzerland's ratification of it on 18 April 2017.1

Australia became a signatory on 18 July 2017, marking the first jurisdiction in the Asia-Pacific region to do so.2 The decision to ratify the Mauritius Convention in Australia will next be considered by the Joint Standing Committee on Treaties.3

The Mauritius Convention extends the application of the UNCITRAL Rules on Transparency in Treaty-based investor-State Arbitration (the Transparency Rules) to apply to investor-State arbitrations initiated under investment treaties concluded before 1 April 2014.4

The Transparency Rules as a stand-alone instrument only apply to investment treaties concluded after 1 April 2014, so the Mauritius Convention extends the reach of the Transparency Rules to capture a greater number of treaties.

The practical implications of this for parties is that investor-State arbitrations against States who have ratified the Mauritius Convention will not be confidential (i.e. hearings and documents will be public, as they are in domestic court proceedings).

WHAT LESSONS CAN BE DRAWN FROM THE MAURITIUS CONVENTION FOR INTERNATIONAL COMMERCIAL ARBITRATION?

Transparency, as promoted in the Mauritius Convention, is inextricably connected with increasing the scope of application of the Transparency Rules. We are already seeing both the Convention and the Transparency Rules take on preliminary steps to permanence in Australian legislation, in the form of amendments to the International Arbitration Act 1974 (Cth) (the Act).

The Civil Law and Justice Legislation Amendment Bill 2017 (the Bill), currently before the Senate, will amend the Act if passed.5 Relevantly, one effect of the amendments will be clarifying certain confidentiality provisions in the Act. In the second reading speech of the Bill, Senator George Brandis (Attorney-General for Australia) noted that the amendments would 'help ensure that Australian arbitral law and practice stay on the global cutting edge, so that Australia continues to gain ground as a competitive arbitration friendly jurisdiction.'6 This comment, coupled with the actual amendments to the Act, suggests that Australia's ratification of the Mauritius Convention is not far off.

Signing the Mauritius Convention itself was a progressive move for Australia, particularly doing so ahead of the other international arbitration hubs in the Asia-Pacific region, Singapore and Hong Kong.

The Bill inserts the definition of both the Mauritius Convention and the Transparency Rules into the Act.7 It also inserts a new s22(3), which provides that the disclosure of confidential information provisions in s23C through s23G do not apply to arbitral proceedings which the Transparency Rules apply to, regardless of why the Rules apply.8

These amendments ensure that the effect of the Mauritius Convention and Transparency Rules are given room to operate unimpeded by the legislation, and signal the entrance of the transparency-minded provisions of the Mauritius Convention and Transparency Rules into the Australian legislative framework.

Interestingly, the amendments even apply to ss23F and 23G. These provisions allow courts to prohibit or allow the disclosure of confidential information in certain circumstances. Ensuring the Convention and Transparency Rules are also unimpeded by these requirements in the Act is particularly significant, because it gives them a wide scope of operation.

However, the exemption from these provisions does not apply to all investor-State arbitrations, only those which attract the operation of the Convention or Rules, and does not yet extend to commercial arbitration more broadly.

While they are certainly a step in the right direction towards a more transparency-minded framework, the proposed amendments to the International Arbitration Act 1974 (Cth) do not go so far as to demonstrate that international commercial arbitration will shift focus from confidentiality to transparency entirely.

Footnotes

1 Mauritius were the first to ratify the Mauritius Convention on 8 June 2015, followed by Canada on 14 December 2016.[1]

2 http://www.unis.unvienna.org/unis/en/pressrels/2017/unisl252.html

3 http://dfat.gov.au/news/news/Pages/australia-signs-the-mauritius-convention-on-transparency.aspx

4 http://www.unis.unvienna.org/unis/en/pressrels/2016/unisl239.html

5 http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=s1057 as at 7 August 2017.

6 http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansards%2F5a8fad58-1c5f-4288-b0fd-4bc542ae11ce%2F0115%22

7 http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=s1057

8 https://www.legislation.gov.au/Details/C2016C01110

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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