If confidentiality has been, and continues to be, one of the most important advantages that has led parties in the business and commercial community to select arbitration as a means of dispute resolution under international commercial law to settle their disputes, and has been the source of its strength and attractiveness, then it is. in truth, a reason for the growing demand by claimants and investors in view of the optimal guarantee it provides for the course and outcome of their investments, and for the protection of their technical and strategic data, especially their economic data (1).
However, treaty-based investor-state arbitration involves consequences and effects that impact the public interests of the peoples of those States, particularly because compensation awarded to the investor, who always prefers confidentiality in arbitration, is paid from the State Treasury. The international arena has witnessed some States suffering significant losses in this regard.
Accordingly, it became the right of the peoples of those States to demand public access to arbitration proceedings, and voices began to rise calling for transparency in treaty-based investor-state arbitration. Based on this, the United Nations Commission on International Trade Law (UNCITRAL), in its forty-first session, decided to address the issue of transparency in treaty-based investor-state arbitration. In its forty-sixth session, UNCITRAL adopted the Rules on Transparency in Treaty-based Investor-State Arbitration, and the United Nations General Assembly approved them on 16/12/2013 (2).
The Convention aims to serve as an instrument through which parties to investment treaties concluded before 1 April 2014 may express their consent to the application of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (“Rules on Transparency” or “Rules”).
The Rules on Transparency are a set of procedural rules intended to make information regarding arbitration proceedings between investors and States, arising from investment treaties, accessible to the general public.
With respect to investment treaties concluded before 1 April 2014, the Rules apply in circumstances that include the agreement of the parties to the relevant investment treaty to apply them. The Convention serves as an effective and flexible mechanism to record such agreements.
Investment Treaty
Paragraph 2 of Article One of the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration defines the investment treaty as:
“A bilateral or multilateral treaty, including any treaty commonly referred to as a free trade agreement or an economic integration agreement or a framework or cooperative agreement in the field of trade and investment or a bilateral investment treaty, which contains provisions regarding the protection of investments or investors and grants investors the right to resort to arbitration against the contracting parties to that investment treaty.”
Treaty-based Arbitration
Treaty-based arbitration refers to arbitration resorted to by contracting parties in an investment treaty when one party breaches the obligations contained in that treaty, in order to claim compensation in accordance with the standards of such protection, and it grants foreign investors the possibility of bringing claims against host States before international arbitral tribunals (3).
Scope of Application of the Convention
“This Convention applies to investor-State arbitration and arbitration between investors and regional economic integration organizations conducted pursuant to an investment treaty concluded before 1 April 2014 (investor-State arbitration).” This means that the Rules do not apply to investment disputes in which both parties are investors — whether natural or private legal persons — even if their States are parties to investment treaties. Rather, one party to the investment dispute must be a State or one of its public bodies as a party to the treaty, and the other party must be an investor belonging to a State that is party to the treaty.
Both parties to the dispute may be States, provided that both are parties to the investment treaty and that the subject matter of the dispute concerns investment (4).
The Rules on Transparency also apply to disputes arising under treaties concluded before 1 April 2014 when the parties to the treaty concerned, or the disputing parties, agree to apply them.
The Rules also apply to disputes arising under treaties concluded on or after 1 April 2014 (“subsequent treaties”) when investor-State arbitration is commenced under the UNCITRAL Arbitration Rules, unless the parties agree otherwise.
The Rules on Transparency may also be used in investor-State arbitration proceedings commenced under arbitration rules other than the UNCITRAL Arbitration Rules, and in ad hoc proceedings (5).
Paragraph 1 of Article Two of the Convention provides, with respect to the application of the UNCITRAL Rules on Transparency, that:
“1- The UNCITRAL Rules on Transparency shall apply to any investor-State arbitration where the respondent is a Party that has not made a reservation in this regard under subparagraph 1(a) or subparagraph 1(b) of Article 3, and where the claimant is of a State Party that has not made a reservation in this regard under paragraph 1(a) of Article 3, whether or not the arbitration is commenced under the UNCITRAL Arbitration Rules.”
If the UNCITRAL Rules on Transparency do not apply in accordance with the above provision of paragraph 1 of Article Two, then the UNCITRAL Rules on Transparency shall apply to investor-State arbitration if the respondent has not made a reservation pursuant to paragraph (1) of Article Three of the Convention, and provided that the claimant agrees to the application of the UNCITRAL Rules on Transparency, whether or not the arbitration is commenced under the UNCITRAL Arbitration Rules (6).
Where the UNCITRAL Rules on Transparency apply pursuant to paragraphs (1) and (2) of Article Two, the most recent version of those Rules shall apply, and the respondent shall not have a reservation to them pursuant to paragraph (2) of Article Three of the Convention (7).
However, the Convention does not apply the sentence contained in paragraph (7) of Article One of the UNCITRAL Rules, which states:
“Where there is a conflict between the Rules on Transparency and the treaty, the treaty shall prevail,”
with respect to transparency in investor-State arbitration claims commenced under paragraph “1(8).”
The claimant may not avoid the application of the UNCITRAL Rules on Transparency by invoking the Most-Favoured-Nation clause in order to render the UNCITRAL Rules on Transparency applicable in circumstances where they would not otherwise apply absent such invocation (9).
The Convention sets out in Articles Three and Four the reservations that may be made by the parties.
Why is there a growing demand for transparency in investor-state arbitration, despite the traditional importance of confidentiality for protecting technical and strategic economic data?
Confidentiality is traditionally valued in arbitration because it protects an investor’s technical and strategic data, specifically economic information, and is seen as providing an optimal guarantee for the course and outcome of investments.
Despite these advantages, the demand for transparency has grown due to the following factors:
- Impact on Public Interest: The consequences of treaty-based investor-state arbitration directly affect the public interests of the people within those states.
- Use of Public Funds: When an arbitral tribunal awards compensation to an investor, that money is paid from the State Treasury.
- History of Significant Losses: The international community has seen instances where States have suffered significant financial losses in these disputes.
- Right to Access: Because of the public and financial implications, there is an increasing call for the right of the people to have public access to arbitration proceedings.
In response to these demands, the UNCITRAL Rules on Transparency were established to ensure that information regarding these proceedings is accessible to the general public.
How does the Convention balance the investor’s preference for confidentiality with the public’s right to access proceedings when compensation is paid from the State Treasury?
The Convention balances the investor’s preference for confidentiality with the public’s right to information by implementing the UNCITRAL Rules on Transparency, which transition investor-state arbitration from a traditionally private process to one that is accessible to the general public.
The balance is achieved through several key mechanisms:
- Addressing the Public Interest: The Convention recognizes that while investors value confidentiality to protect technical, strategic, and economic data, the outcome of these disputes impacts the public interests of a State’s citizens. Because compensation is paid from the State Treasury, the Convention establishes that the public has a right to access the proceedings.
- Procedural Transparency: The UNCITRAL Rules on Transparency serve as a set of procedural rules specifically intended to make information regarding these arbitrations available to the public. This directly counters the traditional practice of total confidentiality in commercial arbitration.
- Preventing Circumvention: To ensure transparency is maintained, the Convention prevents claimants from using Most-Favoured-Nation (MFN) clauses to avoid these transparency requirements. This ensures that investors cannot point to other, more secretive treaties to bypass the public’s right to information.
- Flexible Application via Reservations: While the goal is transparency, the Convention allows for reservations under Articles 3 and 4. This provides a mechanism for States to define specific circumstances where they might not apply certain transparency rules, allowing for a degree of controlled flexibility.
- Scope of Application: The Convention specifically applies to disputes involving a State or public body and a foreign investor, ensuring that the transparency rules are active in the exact scenarios where public funds and interests are at stake.
Overview of the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration
This text outlines the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration, a legal framework designed to balance private commercial interests with the public’s right to information. While traditional arbitration relies on confidentiality to protect corporate data, this convention addresses the need for openness because legal outcomes often impact a nation’s public treasury and interests. The documents clarify that these transparency rules apply to disputes between foreign investors and host states arising from investment treaties signed before April 2014. By providing a mechanism for states to consent to public access, the convention ensures that proceedings involving sovereign entities are subject to greater scrutiny. The scope specifically covers procedural rules for sharing information while allowing for certain reservations by the participating parties. This initiative by UNCITRAL represents a significant shift toward accountability in the global international investment law landscap
Sources:
- Dr. Mahmoud Mohamed Al-Maghribi & Dr. Mahmoud Ali Al-Mulhim – Towards Transparency in Treaty-based Investment Arbitration – Distinction between a “Project” or a Decisive Venture in Light of Traditional Confidentiality – Published in the Journal of Legal and Economic Research – Issue 59, April 2016 – Published on the website Towards Transparency in Treaty-based Investment Arbitration.pdf – accessed 29/9/2025 at 1:27 PM.
- Dr. Amr Zakaria Sawi Abdelrahman – Explanation of the Rules on Transparency in Treaty-based Investor-State Arbitration 2014 within the Framework of Public International Law – Published in Helwan Journal of Legal and Economic Studies – p. 288 – Published on the website Explanation of the Transparency Convention.pdf – accessed 29/9/2025 at 2:30 PM.
- This definition is contained in the section on the Transparency Registry annexed to the Convention and published on the website Transparency Registry | UNCITRAL – accessed 29/9/2025 at 4:43 PM.
- Dr. Amr Zakaria Sawi Abdelrahman – Explanation of the Rules on Transparency in Treaty-based Investor-State Arbitration 2014 within the Framework of Public International Law – previous reference – p. 312.
- Preamble to the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration – published on the website UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (Effective 1 April 2014) – accessed 30/9/2025 at 12:56 PM.
- Article (2/2) of the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration adopted by the General Assembly on 10 December 2014 – published on the website United Nations Convention on Transparency in Treaty-based Investor-State Arbitration – accessed 30/9/2025 at 1:31 PM.
- Article (2/3) of the same Convention.
- Article (2/4) of the same Convention.
- Article (2/5) of the same Convention.
