The ICLRC took part in the 47th session of the UNCITRAL Working Group III

On January 2226, 2024, the International and Comparative Law Research Center (ICLRC) took part as an observer in the 47th session of the UNCITRAL Working Group III. The Center’s experts Anna Kozyakova and Ekaterina Petrenko represented the ICLRC. At the session it was planned to consider the current versions of the draft statute of an advisory centre on international investment law
(A/CN.9/WG.III/WP.236), draft provisions on procedural and cross-cutting issues and annotations thereto (A/CN.9/WG.III/WP.231 and A/CN.9/WG.III/WP.232) and draft guidelines on prevention and mitigation of international investment disputes

Although the draft provisions on the establishment of the Advisory Centre had already been intensively discussed at the last session of the Working Group in October 2023, the second reading of the document at the 47th session took up most of the working time. As a result, a number of issues of principle were clarified.

Thus, it was decided to focus the name of the Advisory Centre on “international investment dispute resolution” and to remove the reference to “international investment law” as too broad a concept. At the same time, it was pointed out that the scope of “international investment dispute resolution” should not be understood as limiting the types of services provided by the Advisory Centre: they could also cover dispute prevention services as well as reaching an amicable settlement. It was also agreed to add an explicit reference to the function of “prevention” of international investment disputes in Article 2, paragraph 2, on the objectives of the Advisory Centre.

In the discussion of draft Article 3, the need to ensure the independence of the Advisory Centre was reiterated. The Working Group also drew attention to the importance of using the resources of the Advisory Centre efficiently and avoiding duplication of its work with other international and regional organizations. This idea was also expressed by the experts of the Center at the last session.

On the issue of membership (Draft Provision 4), there was broad support for the idea that members should be divided into different categories, which would determine, inter alia, the priority of their access to the services of the Advisory Centre, the amount of the membership fee, as well as the service fee charged. The idea to develop additional objective criteria taking into account the objectives of the Advisory Centre, such as, for example, GDP per capita, foreign direct investment flows, trade volume, and other economic indicators, was supported. It was also suggested that the lack of previous experience in the investor-State dispute settlement and the lack of financial resources should be taken into account when allocating support. As a result of the discussion, preference was expressed for the idea of categorizing members at the initial stages of the Advisory Centre’s work, with the Governing Committee empowered to make necessary adjustments to the established categories.

The structure of the Advisory Centre (Draft Provision 5) was the subject of much discussion. After a multi-stage discussion and a presentation by the Executive Director of the Advisory Centre on WTO Law, there was broad support for the view that the Advisory Centre should have a three-tiered structure: a Governing Committee, a Secretariat and an Executive Committee. This decision led to the discussion and inclusion in the draft statute detailed provisions on the Executive Committee and its functions.

With respect to the functions and services of the Advisory Centre, disagreement arose over the extension of the Centre’s services to include services related to State-to-State dispute settlement. One group of countries supports the idea of explicitly referring to services related to the settlement of State-to-State disputes, as such disputes are increasingly becoming a means of resolving investor-State disputes. Another group of countries strongly opposes the inclusion of a reference to State-to-State disputes in the draft provisions, emphasizing that the establishment of the Advisory Centre should be primarily aimed at addressing the reform of the investor-State dispute settlement (ISDS) system. There was a compromise proposal that technical assistance and capacity-building services (Article 6) and legal advice and support services for international investment dispute proceedings (Article 7) be treated differently. However, doubts were raised as to the advisability of the Advisory Centre providing representational services in connection with the settlement of State-to-State disputes. It was also suggested that the extension of the Advisory Centre’s services to State-to-State disputes could be left to the Governing Committee, since its mandate includes the scope and type of services to be provided by the Advisory Centre. No final decision on this issue was taken at the session.

Opinions also differed on the issue of extending the Advisory Centre’s technical assistance and capacity-building services to non-members. On the one hand, it was noted that priority should be given to its members. Limiting the beneficiaries of the Advisory Centre exclusively to its members could also create an additional incentive for States to join. On the other hand, it was suggested that the inclusion of small and medium-sized enterprises among the beneficiaries of the Advisory Centre could attract donors and that the participation of a wider range of entities could benefit all members. It was also suggested that a distinction should be made between non-member State entities and other entities. Differentiated approaches to the possible access of different categories of entities to the list of services specified in paragraph
2 (a) to (e) of Draft Provision 6 were also discussed. There was consensus that non-member States could be granted access to the broader list of services listed in paragraph 2 of Draft Provision 6, while other natural and legal persons could be granted access only to the services listed in subparagraphs (c) and (d). In addition, the right of members to object to the access of specific non-member States, as well as other natural and legal persons, to the services of the Advisory Centre was discussed. Such objections would have to be considered by the Governing Committee.

With regard to the fees charged for services under Draft Provision 6 for non-members of the Advisory Centre, the discretion of the Executive Director to waive such fees in certain cases, such as when the participation of such an entity benefited the objectives of the Centre and constituted a contribution in kind, was discussed. In the light of Draft Provision 7, it was proposed that the issue of access to legal representation for non-member States be left to the individual consideration of either the Executive Committee or the Governing Committee. The Working Group reached an understanding that priority would be given to members, and that non-members could be provided with services at higher rates than members.

It was only towards the end of the week that the Working Group touched upon such an important issue as the financing of the future Advisory Centre. The discussion did not concern the specific figures given in Annex IV, but only the principles of budget organization. There was support for the idea to be flexible by allowing members to contribute on an annual, multi-year, or one-time basis. It was also agreed to allow members to pay contributions in installments. There was a common understanding among members of the Working Group that the fees for services under Article 7 (Legal advice and support with regard to international investment dispute proceedings) should be different for different categories of members. For transparency reasons, including information on the receipt of voluntary contributions in the annual report was supported. 

Interest in hosting the headquarters of the future Advisory Centre was expressed by the Governments of France, Ghana, the Netherlands, Thailand, and Paraguay.

At the end of the discussion, the Working Group agreed to consider the remaining articles as well as outstanding issues at its next session in April 2024.

The Working Group instructed the Secretariat to update the draft guidelines on prevention and mitigation of international investment disputes the basis of written comments. Delegates were requested to provide input by February 5, 2024. Work on the draft provisions on procedural and cross-cutting issues would also continue on the basis of written comments. Written comments are invited to describe the vision of the States participating in the Working Group on how they would like to ensure the effectiveness of further work on the draft provisions, and to highlight ones that should be prioritized. 

The ICLRC will continue to actively follow the work of UNCITRAL Working Group III and participate in the discussions as an observer. Within the framework of the Investment Law and Arbitration Lab, participants also continue to consider topics of the Working Group III agenda. In particular, the Lab’s participants have recently finalized an article on the planned Advisory Centre (in Russian).