Public interest: From peripheral to central issues?

Respondents were asked whether they had been involved in arbitrations where specific public interest issues were raised (including white collar crime,⁴⁰ environmental,⁴¹ corporate social responsibility,⁴² public health⁴³ or human rights⁴⁴). They were then invited to identify the types of arbitration in which these issues emerged: investor-state disputes with a State or state entity (ISDS); commercial arbitration with a State or state entity (commercial-State); and/or commercial arbitration with private parties. Respondents could select more than one type of arbitration where applicable.

Fewer than a third of respondents indicated encountering these specific public interest issues in their arbitrations. White collar issues were the most encountered (32%), followed by environmental issues (30%), corporate social responsibility (26%), public health (20%) and human rights (15%). The data indicates that commercial arbitration is the type of arbitration in which public interest issues are most frequently encountered by respondents. 

Many interviewees mentioned facing allegations of corruption and other white collar offences in arbitration proceedings. 68% of respondents who encountered these issues stated they experienced them in commercial arbitration, and less so in commercial-State (34%) and ISDS (26%).⁴⁵ Interestingly, interviewees suggested that arbitration allows the parties to resolve the commercial implications of fraudulent behaviour. As one respondent noted, "Most cases with white collar crime issues settle. You rarely get an award on it." Some interviewees emphasised that the standard of proof for corruption in arbitration is typically lower than in domestic criminal proceedings, often relying on circumstantial evidence and red flags rather than full legal investigations. Interviewees also discerned that arbitrators gave particular attention to allegations of corruption in arbitrations involving States and state entities.

Interviewees observed that there has been a dramatic rise in instances of environmental issues being raised in arbitrations: "Twenty years ago, no one was paying attention to environmental topics. Today, they are getting more important by the day." New energy and construction projects in particular see an increasing number of environmental claims. Several interviewees also noted that the misrepresentation of ESG credentials can trigger post-M&A, shareholder and regulatory disputes. Some respondents surmised that, due to heightened sensibility to environmental issues, environmental claims could be used strategically to influence a tribunal. For many, this raises the question whether allegations relating to environmental issues should “factor into legal determinations or remain outside the four corners of the contract”. Others mentioned renegotiations of investment treaties due to climate change concerns, alongside an evolving body of jurisprudence: “ISDS judgments have made it clear that these issues must be taken into account."

View full image: Chart 13: In the past five years, have you been involved in arbitrations where any of the following public interest issues have been raised? (PDF)

View full image: Chart 14: In what type(s) of arbitration were the public interest issues raised? (PDF)

Public health concerns arose mainly in disputes following the COVID-19 pandemic. Separately, a few interviewees noted public health issues being raised increasingly in ISDS but also in the construction sector. In the latter context, interviewees also noted a growing trend to include explicit compliance requirements in contracts: "You now regularly find a section on compliance clauses, modern slavery and human rights. These were not in construction contracts before."

Looking ahead, interviewees expect public interest issues, in particular environmental and human rights, to increasingly feature in arbitration. They observed that claims relating to these issues are becoming central rather than peripheral parts of disputes. While these issues have long been seen in disputes involving state parties, it is most interesting to see that many respondents now commonly face them in purely commercial arbitrations.

Arbitrating public interest issues: The advantages

Respondents were asked to identify the most significant advantages of international arbitration for resolving disputes involving issues of public interest. They could select three options from a list of nine perceived advantages or suggest ‘other' options in a free text box.

The most significant benefit according to respondents (47%) is the ability to select arbitrators with relevant experience or knowledge. One interviewee noted, "Arbitration allows the combination of commercial and public interest issues to be dealt with in one proceeding, but with an experienced arbitrator." Others emphasised that arbitrators with subject-matter expertise can challenge weak or abusive claims: "Experienced arbitrators clearly see whether certain assertions are trustworthy or not."

Avoiding specific legal systems or national courts was another advantage, selected by 42% of respondents. Many expressed concerns that national courts tend to prioritise public policy considerations over commercial interests, which can create imbalances in decision-making.

The ability to handle both commercial and public interest issues simultaneously was cited by 35% of respondents. Many interviewees underlined efficiency as a key advantage of being able to deal with all aspects of a dispute in a single setting. As one respondent declared, "The beauty of arbitration is the concentration of all disputes in a single forum. Not to have adjudicators dealing with different sets of disputes."

Confidentiality, identified by 34% of respondents as a key factor, is particularly relevant in cases involving corporate social responsibility, corruption or harassment allegations. Many respondents highlighted the importance of confidentiality in delicate disputes with state entities or in reputation-sensitive cases.

The enforceability of arbitral awards was selected by 32% of respondents. Interviewees appreciated the ability to choose different jurisdictions for enforcement, where an award dealing with public interest issues might trigger regulatory or public policy hurdles in some.

Neutrality was highlighted by 28% of respondents, with interviewees remarking that domestic courts in certain jurisdictions may be subject to external pressures. One respondent opined that arbitrators who are not of the nationality of any stakeholder can reach better and more objective rulings: "It is much easier to have arbitrators not involved in the national context if one party is to claim there was corruption."

21% of respondents chose flexibility, contemplating that arbitration allows for greater adaptability, enabling arbitrators to tailor proceedings to deal with the particularities of any public interest issue raised, for example, by requesting further expert evidence. Finally, 18% of respondents noted that arbitration is well suited for handling the international nature of public interest issues.

Arbitrating public interest issues: The disadvantages

Respondents were asked to identify the most significant challenges in arbitrating disputes involving issues of public interest. They could select up to three options from a list of nine perceived disadvantages or suggest ‘other' options in a free text box.

The most frequently cited challenge was balancing confidentiality and transparency (47%). Respondents noted that, while confidentiality is key in arbitration,⁴⁶ transparency can be necessary when public interest is involved. As one respondent put it: "Confidentiality might allow parties to resolve disputes without reputational damage, but it can also shield improper conduct [of state entities] from public scrutiny." The role of media and public perception was also discussed, with concerns that arbitration proceedings could be unfairly perceived as "secret courts" and thus seen as less legitimate, particularly in the context of ISDS. However, others mentioned that if arbitration proceedings are not confidential, this may weaken the perceived standing of arbitration as an appropriate mechanism to resolve sensitive disputes.

The lack of arbitral tribunal power in relation to third parties was of similar concern (46%). Respondents highlighted that arbitration is an inherently consensual process, and that arbitrators cannot compel third parties to participate or provide evidence. The limitation on tribunals being able to invite third-party participation can be problematic in cases involving public interest issues, for instance in environmental and human rights contexts, where regulatory bodies or affected communities may wish to be involved. One interviewee observed: “Whenever you have a state-owned entity in a commercial arbitration, you are dealing with taxpayer money. Public-private arbitration raises issues that courts would normally address, but arbitrators do not have that authority.”

The limited ability of arbitrators to investigate beyond parties' submissions was the third most selected answer (39%). Since arbitrators rely on the submissions and evidence presented by the parties, and do not have the same powers to investigate, or to compel evidence or testimony, as national courts generally do, some respondents pointed out that arbitrators may lack the ability to thoroughly examine all relevant aspects of a dispute. As one interviewee explained, "An arbitrator operates in a hermetically sealed environment; they can only work with the evidence parties provide."

View full image: Chart 16: What are the most significant challenges to arbitrating disputes involving issues of public interest? (PDF)

Concerns over perceptions of the legitimacy of arbitration as a mechanism for resolving disputes involving public interest issues were also significant (30%). Some respondents noted that national courts may provide a degree of public accountability that arbitration generally lacks: "Arbitration was designed for commercial disputes between private parties. When state interests are involved, questions arise about whether it is the right forum."

On the difficulty of securing effective interim, conservatory or emergency relief (20%) or non-pecuniary sanctions and relief (19%), several interviewees mentioned greater challenges in arbitration compared to court proceedings, especially when public interest concerns are involved.
The risk and effects of public scrutiny and intimidation were not a major concern for most respondents (17%). A number of interviewees did express their disquiet over the pressure that arbitrators may face, particularly in politically sensitive cases.

The limited ability of States to bring counterclaims against investors was selected by only 12% of respondents, but was noted as a significant shortcoming by interviewees involved in ISDS disputes: "States need better mechanisms to bring counterclaims, particularly for environmental and social harm."

Should international arbitration proceedings be ‘open' to the public?

Given the challenges of balancing confidentiality and transparency in resolving disputes, we then asked respondents whether international arbitration proceedings should be ‘open' to the public, and, if so, to what extent. Respondents indicated whether they thought amicus curiae participation, hearings, submissions and evidence, redacted or unredacted awards should be available to the public in each of ISDS, commercial-State and commercial arbitration proceedings. Respondents were instructed to assume for the purposes of this question that the existence of the arbitration and the identity of the parties is publicly known.

The results demonstrate a deep divide between those advocating for confidentiality and those in favour of transparency. The first group views arbitration as inherently private. As one interviewee opined, "If arbitrators become aware of a crime or offence against public policy, they should report it to the police—but that does not mean proceedings should be public." In-house counsel representing States or state entities in particular were the most strident in preferring confidentiality. Conversely, as one interviewee from the second group noted, "There is no less reason for the public to evaluate the fairness of the dispute simply because it is in arbitration. Sunshine is the best disinfectant." The overall picture, however, was in favour of the status quo: the significant majority of respondents were against greater openness other than in the ISDS context.

Should arbitral awards be made public? For redacted awards, the majority said no in commercial arbitration but yes for ISDS cases, and the views were evenly split for commercial-State arbitration. There was less support for providing fully unredacted versions, particularly outside the ISDS sphere. In ISDS, 59% supported redacted awards, while 33% would also be in favour of unredacted versions. This trend was also seen for commercial-State arbitrations (51% redacted, 18% unredacted) and commercial arbitration (39% redacted, 10% unredacted). Perhaps surprisingly, counsel were generally more in favour of publishing redacted awards than arbitrators.

View full image: Chart 17: Should international arbitration proceedings be ‘open’ to the public? (PDF)

A range of thoughtful views were expressed regarding the desirability and ramifications of publishing awards, whether in redacted or unredacted form. One interviewee pragmatically noted that, in some jurisdictions, many awards become public at the enforcement stage such that "keeping proceedings private is an illusion". Many interviewees (across multiple roles, including in-house and external counsel, arbitrators and academics) were of the view that publishing awards in both commercial and ISDS cases could improve the development of arbitration. However, one interviewee argued that, "Without the pressures of public disclosure [in cases involving States or state entities], arbitration remains a fairer and more neutral process."

A high level of support was observed for amicus curiae participation by third parties in ISDS, supported by 45% of respondents, compared to only 29% in commercial-State disputes and 22% in purely commercial arbitration. One respondent remarked, “An arbitrator should have the best possible information before them.” While the public interest in ISDS was acknowledged by respondents, some interviewees expressed scepticism regarding intervention by NGOs in such cases. 

The greatest resistance to transparency was recorded in relation to access to submissions and evidence. One respondent stressed that "If parties want confidentiality, they should be entitled to it." Others feared that public disclosure of submissions could politicise proceedings, particularly in ISDS cases or commercial-State arbitrations.

There was also significant resistance to opening hearings to the public. Counsel interviewees noted that in an ISDS case, opening hearings may be "futile" and "unnecessary"; another mentioned that it may entail disclosure of sensitive information in commercial arbitration.

For commercial arbitration, the great majority continue to prioritise parties' desire for confidentiality over other interests. The public interest aspect where disputes involved States or state entities, however, was a recurring theme in interviews, with many supporting greater transparency for this reason. Some respondents argued that arbitration proceedings involving States or public money should be made public. Another suggested that the behaviour of state entities should be subject to public scrutiny. Others warned against unintended consequences, with one interviewee cautioning that, "Opening up proceedings may weaponise arbitration, transforming a legal issue into a matter of public perception."

_{40 E.g., bribery, corruption, fraud, money laundering.
41 E.g., use of natural resources, pollution, climate change, energy use, waste management. 
42 Excluding environmental and human rights issues but including, e.g., child and forced labour, labour and working conditions, responsible sourcing, charities, community relations.
43 E.g., pandemic prevention and response, consumer product safety. 
44 E.g., human trafficking and modern slavery, displacement of indigenous peoples, destruction of cultural heritage sites, racial, ethnic or religious discrimination.
45 Environmental issues appeared most frequently in commercial arbitration (52%), followed by commercial-State disputes (28%) and ISDS (19%). Corporate social responsibility issues were primarily encountered in commercial arbitration (63%), featuring less prominently in commercial-State (39%) and ISDS (35%). Public health issues followed a similar trend, with commercial arbitration (77%) being the dominant setting, while less frequently seen in commercial-State (43%) and ISDS (21%). Human rights issues, on the other hand, were encountered evenly across all forums: commercial arbitration (27%), commercial-State (29%) and ISDS (30%).
46 See also p.23 and Chart 15 above and 2018 International Arbitration Survey, pp.27-28.}

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