Global Policy Forum

NGOs Gain Access to Controversial Investment Dispute


October 28, 2009

A coalition of non-governmental organizations will be granted access to information about a controversial arbitration between a group of European investors and the government of South Africa, in a development that dents the custom of secrecy in international investment disputes.

The arbitration*playing out under the auspices of the World Bank's International Centre for Settlement of Investment Disputes involves several Italians and a Luxembourg corporation who argue that a piece of South African legislation has unlawfully expropriated their ownership of mineral-resource rights. The law in question, the Mineral and Petroleum Resources Development Act (MPRDA), was enacted in part to address economic inequalities rooted in South Africa's former apartheid regime.

The sensitive nature of the investors' claim has caught the attention of a number of civil society groups in South Africa and elsewhere. Three months ago, five NGOs applied for the right to submit a written brief to the tribunal.

In contrast to trade disputes, which are settled between states, international investment agreements often permit foreign investors to arbitrate disputes directly with host states. These investor-state arbitrations have long been criticised for being overly secretive. Proceedings are usually closed to the public and-unlike WTO trade disputes-the written arguments of the disputing parties are rarely published.

It is notable, therefore, that the tribunal's decision, issued on 5 October, not only grants the four NGOs the right to file a written submission, but also ordered that the NGOs will be furnished with key legal filings submitted by both the investors and the South African government.

The tribunal's decision was hailed as "a major step towards transparency in investor-state arbitrations" by the Center for International Environment Law (CIEL), one of the NGOs involved.

The coalition of NGOs says that their intervention will focus on South Africa's legal obligations to promote human rights, and the relationship between those responsibilities and South Africa's commitments under its international investment agreements.

Previously, non-disputing parties have been granted access to pleadings in investor-state disputes under the North American Free Trade Agreement (NAFTA). However, outside of NAFTA, there is only one other known case in which a non-disputing party has been given similar access to information, said Luke Eric Peterson, editor of the specialised news bulletin Investment Arbitration Reporter.  Earlier this year, the European Commission was granted access to the pleadings in a dispute involving the energy firm Electrabel and the government of Hungary, after it was granted leave to submit an amicus curiae submission.

"While it may be too early to call this a trend, it is certainly not an anomaly," said Peterson in an interview. He notes, however, that there is no formal precedent in investment arbitration. While he thinks that future tribunals will allow similar information disclosure in ICSID-based arbitrations, it remains possible that some may balk at this trend.

Importantly, the decision to grant the NGOs access to the pleadings in the South African dispute does not mean these documents will become public. Whether to release documents related to the dispute, remains at the discretion of South Africa and the investors.


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