In October of this year, Bolivia ratified the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the Convention), becoming the seventh Contracting Party. The Convention entered into force in October 2017 and so far has been ratified by Australia, Cameroon, Canada, the Gambia, Mauritius and Switzerland. Twenty-three States have signed, but not yet ratified, the Convention.

Bolivia has an eventful history in investor-State arbitration.

Back in 2007, following a number of investment arbitration claims against the State in relation to its re-nationalization program, Bolivia withdrew from the International Centre for Settlement of Investment Disputes (ICSID) Convention, becoming the first country in history to do so. Of course, that did not foreclose access by foreign investors to international arbitration against the State through ICSID’s Additional Facility (with the latest case filed in 2018 by Banco Bilbao Vizcaya Argentaria S.A.) and through other fora under Bolivia’s bilateral investment treaties (BITs) (such as ad hoc arbitration under the UNCITRAL Arbitration Rules).

That was not the end, however. In 2009, Bolivia sought to terminate and re-negotiate its BITs, ultimately abrogating 23 BITs. This included the BIT with the US, which Bolivia terminated in 2012, becoming the first US treaty partner to terminate a BIT with the US. The termination of the US-Bolivia BIT means that investors that have invested under the US-Bolivia BIT will be covered until June 2022, but investments made after June 2012 (when the BIT was terminated) are not covered.

The saga continued. In 2015, Bolivia took another step backwards, when it passed a new act on arbitration with which it sought to keep arbitration proceedings, including investor-State arbitrations brought by foreign investors, within the State and subject to the laws of Bolivia.

Is Bolivia’s ratification of the Convention another affront to investor-State arbitration then?

Not necessarily.

One main criticism of investor-State arbitration has been the lack of transparency since the proceedings are generally not open to the public.

The Convention seeks to address this criticism by creating an international framework for transparency in investor-State arbitration that allows parties to agree that certain aspects of the proceedings will be made public. It is hoped that providing for more transparency would increase the legitimacy of the process.

Specifically, the Convention makes the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (Transparency Rules) applicable to investment treaties concluded before the Transparency Rules entered into force in April 2014. For those investment treaties concluded after April 2014, the Transparency Rules apply unless the relevant treaty expressly opts out of them, and the Convention has no effect.

The Transparency Rules set out certain requirements including:

1. making publicly available the names of the disputing parties, the sector involved and the treaty under which the claim is being made (Article 2);

2. making publicly available the parties’ pleadings and the award (Article 3);

3. the potential for third parties to make submissions (Article 4); and

4. making hearings public (Article 6).

On one hand, it is not surprising that Bolivia ratified the Convention. After all, back in 2015, a case against Bolivia, Iberdrola v Bolivia (PCA Case No. 2015-05), became the first case ever to apply the Transparency Rules. Both Bolivia and the Claimant in that arbitration agreed to apply the Transparency Rules. In addition, in Glencore v Bolivia (PCA Case No. 2016-39), the tribunal adopted certain transparency requirements in relation to the publication of the parties’ submissions, the tribunal’s decisions and procedural orders, even though the Transparency Rules were not applicable.

On the other hand, the practical effect of the Convention may not be significant for Bolivia, given that it terminated 23 BITs.

But the practical effect of the Convention is in any event limited at the moment.

The impact of the Convention depends of course on several factors. One is how many States sign and ratify the Convention. So far, the progress of the Convention has been slower than that of other international conventions.

For example, the New York Convention had 10 States sign it in June 1958, when it first opened for signatures. Today, 62 years later, it has 166 Contracting Parties.

More recently, the Singapore Convention on Mediation, which opened for signatures on 7 August 2019, had 46 States sign it, including global economic powerhouse such as China, India, Singapore, South Korea and the United States. The Singapore Convention on Mediation entered into force in September 2020, with six Contracting States so far (Belarus, Ecuador, Fiji, Qatar, Saudi Arabia, and Singapore).

In comparison, the Convention was signed by only eight States when it opened for signatures in March 2015. This is five times less than the Singapore Convention on Mediation, and also less than the New York Convention. Moreover, five years after it was opened for signatures, the Convention has seven Contracting States, compared to the six Contracting States to the Singapore Convention on Mediation during its first three months of having entered into force.

The Convention is still young, however, and it remains to be seen whether Bolivia’s ratification would have an impact on the ratification of the Convention by other Latin American States.