Challenges in multiparty investment arbitration

Question

What are the challenges in multiparty investment arbitration

Answer

In recent years more and more investors are becoming aware of the rights they may have under investment protection treaty provisions and laws; this may encourage groups of investors to commence arbitration proceedings against the same host state (Dugan et al, 2011). However, multiparty arbitration can be problematic. The biggest challenge is that most of the procedural rules are set up for a two-party process. Also, confidentiality cannot be observed strictly, and this principle is one of the main reasons some parties chose to subject their disputes to arbitration. There is also possibility of related parallel arbitration proceedings which increases the risk of inconsistency of what is determined by the arbitral tribunal. Moreover, a host State could be subjected to multiple awards for the same facts or measures. Multiparty arbitration usually also results from a single contract with a few parties or interdependent contracts between different parties. Other problems that can arise in such arbitral proceedings are equal treatment in the proceedings and also consent respectively. Furthermore, most international investment agreements do not contain provisions that specifically address the possibility of consolidation of different disputes that arise from the same facts or measures (Small, 2010) and this can lead to further problems for the outcome of the proceedings.

References

Christopher Dugan, Don Wallace, Noah Rubins, Borzu Sabahi (2011) Investor-State Arbitration, OUP: USA.

Katia Yannaca-Small (2010) Arbitration Under International Investment Agreements: A Guide to the Key Issues, OUP.