16th London Branch Mediation Seminar:  Mediating Investment Treaty Disputes – Feasible or a waste of time?

L-R: John Whittaker, partner, Clyde & Co, Paul Rose, Chair and convenor, London Branch; Phillip Howell-Richardson of Independent Mediators, and Dr Tunde Ogowewo, of the Dickson Poon School of Law, King’s College, London.  

On 4 July 2019, an expert panel considered the pros and cons of mediation given the unique challenges of investment treaty disputes. A typical dispute might be a multinational corporation claiming that a sovereign state has not abided by a bilateral trade agreement or multilateral trade treaty following inward investment. 

Paul Rose, Chair of the London Branch, thanked host Clyde & Co and welcomed attendees.  

John Whittaker has extensive experience of acting for and against states, and specialises in international sanctions. He set out the case against mediation of investment treaty disputes, which are more commonly subject to arbitration than mediation. He felt that mediation is most viable where both parties have something to lose if the matter proceeds to arbitration or litigation. However, it is very difficult to enforce awards against a state. Typically, enforcement can only be achieved against commercial assets of the state, which may be difficult to identify. Execution immunity waivers, allowing enforcement against state assets, are very rare. This reduces the incentive to mediate. John also considered that political realities present severe difficulties. States generally preferred arbitration, as the outcome is imposed on them and they are less likely to be criticised compared with making a decision to settle in cases involving huge sums. Policies may change dramatically with a change of government, which can derail the process. There are significant practical difficulties as it can be difficult to find out which organ of government is able to make the decision to settle. John concluded that the better course is to tackle potential disputes in the early stages with the help of embassies and lobbyists. 

Dr Tunde Ogowewo is a visiting Professor at both New York University School of Law and the National University of Singapore, and is both an expert and arbitrator, and acts as counsel for the Nigerian government in international arbitrations. He set out the case for mediation in investment treaty disputes. He began by making a general observation that mediation is gaining acceptance as an alternative to arbitration, and as a novelty, there is a willingness to consider it. States are increasingly including mediation clauses in agreements. He believes that officials are more connected with the dispute in mediation, as arbitrations tend to be handled exclusively by justice departments. A state may need the disputed investment project to be completed successfully, and mediation may be the best way to save a project. He acknowledged the practical difficulty of finding the decision-maker, and the particular strains introduced by reduced confidentiality given public accountability, but felt that there was a place for both mediation and arbitration between states and investors. 

Phillip Howell-Richardson is a mediator specialising in complex international disputes including investor-state treaty disputes and product liability claims involving governments. He offered some reflections on the arguments for and against mediation in this context based on his experiences mediating between commercial organisations and states. He felt that mediation did present great possibilities. The process is a negotiation between the state and the investor, where the mediator coaches, challenges, manages the process and helps the parties craft a deal that meets their needs. The state may be able to further the company’s commercial objectives in a way other than paying money. It can be a very long process, perhaps taking years, and the first few weeks or months may be spent finding out who the decision-maker is, and establishing trust in the mediator. The mediator is likely to be expected to lead the settlement process, and is unlikely to be a hands-off facilitator. Any settlement proposal needs to show a sustainable benefit for the state, so it will survive a change of government. His conclusion was that mediation was a valuable alternative to arbitration for investor-state disputes. 

There followed an extensive Q&A Session, and drinks reception was kindly provided by hosts Clyde & Co.