ICSID publishes revised draft code of conduct for adjudicators

Out-Law News | 28 Apr 2021 | 10:29 am | 1 min. read

A revised, streamlined version of a proposed code of conduct for adjudicators in investment treaty disputes has been published, with changes to clarify terminology and reduce confusion.

The International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL) released the draft code in May 2020. Version two (17 page / 421KB PDF) incorporates comments and feedback on the original draft.

ICSID said it had re-ordered articles based on recommendations from state representatives and other stakeholders as well as attempting to streamline the text.

The code defines adjudicators as both arbitrators and judges, with ‘arbitrator’ further defined as a member of a tribunal or panel or an ICSID committee appointed to resolve an international investment dispute (IID).

Version two of the draft replaces the term ‘investor-state dispute settlement’ (ISDS) with IID, as the code could apply to both state-state and investor-state disputes arising from international investment treaties. It would exclude contractual and foreign investment law cases arising under international investment dispute provisions, and, unlike the previous version, avoids the need to address subnational entities.

ICSID said if it was decided the code should cover IIDs for investment contracts and foreign investment law, additional language would be needed to address the source of the disputes and the potential parties involved.

The code now sets out the fundamental obligation of independence and impartiality and an adjudicator’s obligations to take reasonable steps to avoid bias, conflict of interest, impropriety, and

the appearance of bias.

The revised code prohibits adjudicators in IID proceedings from taking a concurrent role as counsel or expert witness in another IID case, unless the parties agree.

The code also covers duties of confidentiality, fees and expenses, and adjudicators’ disclosure obligations. Under the current proposals, adjudicators risk disqualification or removal if they breach articles 3 to 8 of the code. ICSID suggested the removal provisions should not apply to articles 9 and 10, which govern fees and disclosure, as it would be sensible to avoid strategic challenges based on requirements not strictly related to ethics. 

International arbitration expert Clea Bigelow-Nuttal of Pinsent Masons, the law firm behind Out-Law, said: “The revised version of the code of conduct, along with the helpful explanations of the changes published by ICSID, give further clarity on some of the evolving issues of ISDS in key areas where users and critics of ISDS alike demand reassurance and regulation. In particular, the new Article 4 provision on double-hatting, which requires informed consent of the disputing parties, strikes a measured balance.”

“The practical revisions will be welcomed by practitioners, who will look forward to the implementation of the draft Code when it comes," she said.

UNCITRAL and ICSID are also developing a paper that addresses possible methods of implementing the code of conduct. This will be issued separately.