Social media and arbitration

One of the main catalysts for firing up the campaign against investor-state dispute settlement (ISDS) as contained in investment treaties has been the effective use of social media tools by non-governmental organisations (NGOs), local communities and other civil society stakeholders.

Typically, social media tools are used to publicly target a foreign investor who has purportedly caused damage to the environment or the living conditions of local communities, such as, for example, in the case of an oil spill.

The repeated publication of such claims (whether or not well founded) not only, over time, affect significantly the perception of the foreign investor in the host state itself, but also globally. This can affect not only the way in which the administration and local courts treat the investor, but it could also derail international arbitral proceedings, which the investor may have launched against the host state.

Indeed, it seems that the ferocious campaign against foreign investors is, to a large extent, caused by the fact that the affected local communities (or the NGOs claiming to represent them) are not formally part of the arbitral proceedings. In other words, they feel shut out and unheard; this alienates them further against arbitration.

Despite the fact that the powerful effects of social media have been amply proven in the past years, thus far the arbitration community and rules do not seem to have addressed this issue adequately.

While the submission of amicus curiae briefs has increasingly become accepted and, indeed, included in recent international treaties, such as the United Nations Commission on International Trade Law (UNCITRAL) Transparency Rules 2014 and in the finalised Comprehensive Economic and Trade Agreement (CETA) text, this does not seem to be sufficient for the critics.

In fact, it has been reported that an International Centre for Settlement of Investment Disputes (ICSID) arbitral tribunal very recently admitted an NGO to intervene in arbitration proceedings and granted it access to the whole case file. This underlines the increasing trend towards involving NGOs in arbitration proceedings.

Similarly, while the Organisation for Economic Co-operation and Development (OECD) National Contact Points (which allow NGOs to complain against the conduct of a multinational) have been used more than 300 times, this procedure does not seem to be considered a substitute for full participation in arbitral proceedings.

However, in light of the powerful impact social media has on the public perception of foreign investors, which can also lead to legal and physical harassment of the investors and their legal counsel (sometimes even fueled by the host state itself), it would seem necessary to consider ways of making the arbitral proceedings more inclusive. For example, this could be done by making local communities or their representatives third parties to the dispute.

There are several advantages to this approach:

  • First, the third party could fully participate in the proceedings by making oral and written statements, and they could have full access to the case file.
  • Second, the claimant (foreign investor) and the arbitral tribunal would be in a position to review, question and cross-examine any evidence and witness statements put forward by the third party.
  • Third, the arbitral tribunal would be able to issue (restraining) orders against the third party, for example, by ordering it to stop any social media campaign against the investor.

Even though the admission of a third party to the proceedings will inevitably lead to additional costs and delays, it may well be worth the price for fewer disruptions to the process and less antagonism towards the investor. Indeed, if the local communities and their NGOs start appreciating the benefits of being able to become an integral part of the arbitration proceedings, they would certainly have much less reason to criticise.

That in turn would be very beneficial for the future of arbitration.

EFILA Nikos Lavranos

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