Parliament approves UN Convention on transparency in investor-state arbitration

In brief

On 18 December 2024, the European Parliament gave its green light to the conclusion, on behalf of the European Union, of the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration. This text aims to make arbitration procedures between foreign investors and states more transparent.

Background

Investor-state arbitration (or ISDS, for Investor-State Dispute Settlement) is a mechanism that allows a foreign company to sue a state before a private arbitral tribunal if it considers that its investor rights have been violated. These procedures are often criticised for their lack of transparency: closed hearings, confidential documents, no participation of civil society. The United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (known as the Mauritius Convention) was adopted in 2014 to remedy these shortcomings. It applies the transparency rules of the United Nations Commission on International Trade Law (UNCITRAL) to existing arbitrations.

What was decided

The European Parliament approved the Council decision authorising the conclusion of the Convention on behalf of the EU. This means that the European Union can officially accede to this international treaty. The rapporteur, Anna Cavazzini (Greens/EFA, Germany), stressed that this convention is an important step towards greater transparency and legitimacy in the settlement of investor-state disputes. Parliament also insisted on the need for a thorough reform of the arbitration system, supporting ongoing work at UNCITRAL to create a permanent multilateral court.

Vote result

The legislative resolution was adopted by a large majority: 591 votes in favour, 7 against and 53 abstentions. This vote confirms Parliament's support for a more open and democratic approach to international arbitration.

What this means for citizens

Concretely, the EU's accession to the Mauritius Convention will make UNCITRAL transparency rules mandatory for all future arbitrations based on investment treaties concluded by the Union. This means:

• Access to documents: procedural documents, party submissions and decisions will be made public.
• Open hearings: hearings may be attended by the public, unless justified exceptions apply (e.g., to protect confidential information).
• Civil society participation: non-governmental organisations may submit observations (amicus curiae).

For European citizens, this is a step forward in terms of democracy and accountability: decisions involving public money and public policies will be less opaque. Parliament will continue to monitor the matter to ensure that transparency does not remain a dead letter and that the arbitration system evolves towards fairer justice.