Regardless if you see it as being catastrophic or simply weird, for many and varied reasons, 2016 looks set to be a most memorable year. For arbitration lawyers, it could be marked as the year in which investor-state arbitration became a talking point. How do we know this? Well, because 2016 was the year in which BuzzFeed – otherwise known for pop culture, listicles, and lots and lots of cats – published a four part series on investor state dispute settlement (ISDS), entitled Secrets of a Global Super Court.
Amplifying the sense of injustice suggested by the title, the article opens with an invitation to “Imagine a private, global super court that empowers corporations to bend countries to their will”.
Unsurprisingly the tone of the articles is unremittingly hostile to investor-state arbitration, laying out criticisms that it is overly favourable to corporations, that its decisions are opaque. That allowing lawyers to shuffle between arbitrator and counsel roles is akin to them having a “vested interest in expanding the court’s authority”, that shell companies are being formed specifically to take advantage of differing international treaties, and that lawsuits, or the threat of them, is at the same time placing an unfair burden on poorer countries and placing a regulatory chill on their future social and environmental policies.
These are familiar complaints towards the process, and form part of the discussion on the ongoing transformation of arbitration from being a method of resolving specific disputes, to being something like a law making process – with its own judiciary and jurisprudence – as evidenced by the investment court system proposed in the Transatlantic Trade and Investment Partnership (TTIP) negotiations.
Arbitration as ‘lawfare’?
There are aspects of investor state arbitration which do give cause for concern, but the same could well be said of the outcomes of many cases pursued under domestic law – even ones decided at the highest level. And that is where the author of the Buzzfeed article should acknowledge that the examples he provides in the article could benefit from a more nuanced approach.
Take, for instance, the case of Hussain Sajwani and others v Egypt, concerning property deals signed under the Mubarak regime. Following the revolution there, Sajwani was convicted in absentia for corruption, as the new government decided that a purchase Sajwanni had made of some beachfront property, previously owned by the Egyptian State, was illegal (in part because it was alleged to have been underpriced).
Immediately after that conviction, an associate of Sajwani brought a case to the International Centre for Settlement of Investment Disputes (ICSID), which resulted in a settlement. The terms of that confidential settlement, as well as including the dropping of criminal charges against Sajwani, are known to have resulted in a payment to the Egyptian government.
On the face of it that could look like ISDS being used indeed to subvert attempts at transitional justice by using arbitration as ‘lawfare’- and certainly the