Is Transparency of Governmental Administration Customary International Law in Investor-Sovereign Arbitrations? -- Courts and Arbitrators May Differ

Abstract

‘No authority was cited or evidence introduced to establish that transparency has become part of customary international law’ So said Tysoe J. of the Supreme Court of British Columbia, disagreeing with the arbitral Tribunal in the Metalclad case under NAFTA Chapter 11.1 Is Tysoe J. correct? Some very prominent courts take a restrictive view toward the recognition of international customary law. Some very prominent international arbitrators have less difficulty finding it. The concept of international customary law of transparency and security for international investors under bilateral and multilateral investment treaties is familiar to international commercial arbitrators. The content of that concept is, however, far from clear. This article will first examine how the United States federal courts have recently defined international customary law. Second, it will examine how the oft cited Metalclad arbitration award under Chapter 11 of North American Free Trade Agreement defines transparency of governmental administration as it relates to investors protected by investment treaties. Third, it will examine how a number of recent arbitral Tribunals and the World Trade Organization Appellate Body have dealt with the concept of transparency. Fourth, it will endeavour to deduce a consistent basis in law for the awards discussed. Interestingly, United States Federal courts and arbitrators do not refer to each other when discussing international customary law. It is unlikely that such learned jurists and arbitrators are unaware of what the other is saying. One might suspect that citing each other does not in their view add much to the definition of international customary law, at least in the area of law in dispute before that court or tribunal. Then again, it might be a struggle by the proponents of positivism showing deference to law-making bodies against international arbitrators who believe they have the authority and obligation to contribute to the …