case comment - mcgill university · 6 “most-favoured-nation treatment” means that the host...

On 2 August 2005 Biwater Gauff (Tanzania) Ltd., a company incorporated as a joint venture between an English and a German multinational water company, filed a request for arbitration against the United Republic of Tanzania at the World Bank’s

International Centre for Settlement of Investment Disputes (ICSID). The company alleged that Tanzania had breached its obligations under a bilateral investment treaty1 in respect of the company’s investment in the water and sewerage system of Dar es Salaam. The company claimed losses of U.S.$20–25 million as a result of Tanzania’s alleged breaches.2

* With acknowledgement to Louis D. Brandeis, United States Supreme Court Justice (1916-1939) and his oft-quoted remark “Sunlight is said to be the best of disinfectants; electric light the most efficient police-man” (Louis D. Brandeis, Other People’s Money: And How the Bankers Use It (Fairfield, N.J.: Augustus M. Kelley, 1986) at 92).

** The author is an international lawyer based in Geneva and a consultant with the International Institute for Sustainable Development’s (IISD) Trade and Investment team. She was involved in the preparation of a written submission by five non-governmental organizations in Biwater Gauff (Tanzania) Ltd. v. Tanzania. That submission was filed in accordance with Procedural Order No. 5 of the tribunal, discussed in this case comment.

1 Agreement Between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United Republic of Tanzania for the Promotion and Protection of Investments, 7 January 1994, U.K.T.S. 1996 No. 90 (entered into force 2 August 1996) [UK-Tanzania BIT].

2 Biwater Gauff (Tanzania) Ltd. v. Tanzania, Procedural Order No. 1 (31 March 2006) at paras. 1-14, (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/arb0522-ProceduralOrder1.pdf> [Biwater, Procedural Order No. 1].

Case Comment: The Precarious State of Sunshine:* Case Comment on Procedural Orders in the Biwater Gauff (Tanzania)

Ltd. v. Tanzania Investor-State Arbitration

Fiona Marshall**

182 JSDLP - RDPDD marshall

The case is one of more than 250 known international arbitrations by foreign investors against governments, mostly of developing countries, under bilateral investment treaties (BITs) in the past two decades.3 A BIT is a treaty between two governments under which “each prom-ises, on a reciprocal basis, to observe the standards of treatment laid down by the treaty in its dealings with investors from the other contracting state.”4 Such standards typically include fair and equitable treatment, national treatment,5 most-favoured-nation treatment,6 and com-pensation for the investor if its investment is expropriated or nationalized.7 Most, but not all, BITs also include a provision allowing disputes between an investor and the host government to be referred to international arbitration; often, as in the present case, through ICSID.8 A major rationale in giving foreign investors the right to take a host government to international arbitration (a right not enjoyed by domestic investors) is to avoid the delay or bias an inves-tor might face if it were to commence legal proceedings against the host government in that country’s courts.9

As a dispute resolution procedure, arbitration is renowned for the privacy and autonomy it affords to disputing parties.10 While such considerations may be appropriate for resolving disputes between two private parties, they are more problematic in an arbitration between a foreign investor and a host government, where public versus private interests are at stake. Investor-state arbitrations invariably have implications for the sustainable development of the host country, particularly given that the majority of cases have been filed against developing

3 UNCTAD, “Latest Developments in Investor-State Dispute Settlement” (2006) IIA Monitor No. 4 at 2 (UNCTAD), online: UNCTAD <http://www.unctad.org/sections/dite_pcbb/docs/webiteiia200611_en.pdf> [UNCTAD, “Latest Developments”]. There are now approximately 2500 bilateral investment treaties (UNCTAD, “The Entry into Force of Bilateral Investment Treaties (BITs)” (2006) IIA Monitor No. 3 at 4 (UNCTAD), online: UNCTAD <http://www.unctad.org/en/docs/webiteiia20069_en.pdf>), intended to promote foreign investors and their investments through investment protection provisions (UNCTAD, Bilateral Investment Treaties 1995-2006: Trends in Investment Rulemaking (New York: UN, 2007) at 1 [UNCTAD, Bilateral Investment Treaties]). There are undoubtedly more than the 250-plus investor-state arbitrations that are known to have taken place, but as the ICSID is the only framework that maintains a public registry of claims as required by the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (18 March 1965, 575 U.N.T.S. 159 (entered into force 14 October 1966), art. 36(3) [ICSID Convention]), exact numbers are not available (“International Investment Disputes on the Rise”, Note, (2004, UNCTAD) at 2, online: UNCTAD <http://www.unctad.org/sections/dite_pcbb/docs/webiteiit20042_en.pdf>).

4 Peter Muchlinski, Multinational Enterprises and the Law (Oxford: Blackwell, 1995) at 617.5 “National treatment” means that the host country must not subject the investments of nationals or com-

panies of the other country to treatment less favourable than that which it accords to the investments of its own nationals or companies (UNCTAD, Bilateral Investment Treaties, supra note 3 at 33).

6 “Most-favoured-nation treatment” means that the host country must not subject the investments of nationals or companies of the other country to treatment less favourable than that which it accords to the investments of nationals or companies of any third state (ibid. at 38).

7 Ibid. at xii.8 Ibid. at 100.9 Muchlinski, supra note 4 at 559.10 See e.g. the description of arbitration on the International Court of Arbitration’s website (What is ICC

Arbitration: Arbitration Today, online: International Chamber of Commerce <http://www.iccwbo.org/court/arbitration/id4398/index.html>).

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countries:11 First, such disputes frequently arise in sensitive public service sectors like water, electricity, oil and gas, waste disposal, and telecommunications.12 Second, investor-state arbi-trations may challenge measures taken by the host government to protect the public welfare, if the measures directly or indirectly affect the value of the investment. Such measures might include legislation directed to human rights, health and safety, labour laws, or environmental protection.13 Third, investors have been known to use the threat of investor-state arbitration as a tactic to discourage governments from pursuing public welfare regulations in their public’s interest. For example, the United States tobacco lobby threatened to commence arbitration proceedings under NAFTA14 against the Canadian government if the latter proceeded with planned restrictions on cigarette packaging.15 The regulations were never adopted. Fourth, all investor-state arbitrations have significant implications for the public purse. The costs involved in defending an international arbitration are considerable and absorb funds that could other-wise be used for a public purpose.16 Moreover, there have been a growing number of awards over U.S.$100 million in recent years.17

11 See UNCTAD, “Latest Developments”, supra note 3 at 12-13.12 See e.g. in respect of the water sector, Suez v. Argentina (pending), (International Centre for Settlement

of Investment Disputes) [Suez]; in respect of the electricity sector, PSEG Global v. Turkey (2007), (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/pdf/ARB025-Award.pdf>; regarding oil and gas, and waste disposal, Gas Natural SDG S.A. v. Argentina (pending), (International Centre for Settlement of Investment Disputes); and regarding telecommunications, France Telecom v. Lebanon (2005), (UNCITRAL), (award has been kept private).

13 A selection of the public policy issues raised in recent investor-state arbitrations include a city’s drinking water supply in Bolivia (Aguas del Tunari S.A. v. Bolivia (proceeding discontinued due to settlement), (International Centre for Settlement of Investment Disputes)), where the investor’s actions resulted in public riots leading to injuries and one death (see Aguas del Tunari S.A. v. Bolivia, NGO Petition to Participate as Amici Curiae (29 August 2002) at para. 1, online: Investment Treaty Arbitration <http://ita.law.uvic.ca/documents/Aguaaboliviapetition.pdf>); Mexico’s refusal to grant a permit for a hazardous waste disposal site in Metalclad v. Mexico (2000), 40 I.L.M. 36, (International Centre for Settlement of Investment Disputes); measures taken by Argentina in response to its economic crisis (see e.g. Siemens A.G. v. Argentina (2007), (International Centre for Settlement of Investment Disputes), online: Investment Treaty Arbitration <http://ita.law.uvic.ca/documents/Siemens-Argentina-Award.pdf> [Siemens]; Azurix v. Argentina (2006), (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/pdf/ARB0112_Azurix-Award-en.pdf> [Azurix]); and a ban by the United States on a polluting gasoline additive in Methanex v. United States (2005), (UNCITRAL), online: Investment Treaty Arbitration <http://ita.law.uvic.ca/documents/MethanexFinalAward.pdf>.

14 North American Free Trade Agreement Between the Government of Canada, the Government of Mexico and the Government of the United States, 17 December 1992, Can. T.S. 1994 No. 2, 32 I.L.M. 289 [NAFTA].

15 See British Columbia, Legislative Assembly, Special Committee on the Multilateral Agreement on Investment, Report of Proceedings (Hansard), No. 4 (29 September 1998) at 32 (Barry Appleton).

16 E.g. the Czech Republic is reported to have spent U.S.$10 million in defending the claims against it in the related proceedings of Lauder v. Czech Republic ((2001) 9 I.C.S.I.D. 62, (UNCITRAL)) and CME Czech Republic B.V. v. Czech Republic ((2003), 9 I.C.S.I.D. 113, (UNCITRAL) [CME]) (See Luke Eric Peterson, “Czech Republic Hit With Massive Compensation Bill in Investment Treaty Dispute” Investment Law and Policy Weekly News Bulletin (21 March 2003), online: International Institute for Sustainable Development <http://www.iisd.org/pdf/2003/investment_investsd_march_2003.pdf>).

17 For example, in Siemens (supra note 13 at para. 403) the tribunal awarded U.S.$217 million in damages, in Azurix (supra note 13 at para. 442) the claimant was awarded U.S.$165 million in damages, and in CME (ibid. at para. 620) the tribunal awarded a record U.S.$350 million in damages.


Despite these implications for the host country’s sustainable development, investor-state arbitrations have largely taken place under a veil of secrecy. Even when a tribunal finds against a host government and orders it to pay millions of dollars in compensation to an investor, the country’s citizens may not know that the proceedings ever existed.18 Such a lack of transparency clearly goes against democratic principles of good governance,19 which is itself recognized as a fundamental component of sustainable development.20 Without access to information or the right to participate, citizens cannot ensure the proper functioning of the democratic system.

In the last few years, there has been a dawning recognition that conducting investor-state arbitrations out of the public eye is problematic in democratic systems. As a result, there is now a slow but noticeable trend toward greater transparency and public participation in the arbitral process. In furtherance of participation, a small but increasing number of tribunals have allowed non-parties such as human rights and environmental non-governmental orga-nizations to file written submissions in the proceedings.21 A number of developments have effected greater transparency: In 2006, ICSID revised its Arbitration Rules so that the ICSID secretariat now has the authority to promptly include in its publications excerpts of the legal reasoning of the tribunal, even when the disputing parties do not agree to the publication of the award.22 Canada, the United States, and Mexico have agreed that investor-state hearings under NAFTA should be open to the public.23 In addition, Canada and the United States have agreed that in disputes involving either country, they or the investor may unilaterally make the

18 See supra note 3.19 In its Resolution 2000/64, the United Nations Commission on Human Rights has identified the key

attributes of good governance as transparency, responsibility, accountability, participation, and respon-siveness to the needs of the people (Commission on Human Rights, Report on the 56th Session, UN ESCOR, 2000, Supp. No. 3, UN Doc. E/2000/23 at 278).

20 Resolution 2000/64 of the United Nations Commission on Human Rights expressly links good gover-nance to an enabling environment conducive to the enjoyment of human rights and sustainable human development (ibid. at 277-78).

21 See e.g. Methanex v. United States, Decision of the Tribunal on Petitions From Third Persons to Intervene as “Amici Curiae” (5 January 2001), (NAFTA & UNCITRAL), online: Investment Treaty Arbitration <http://ita.law.uvic.ca/documents/Methanex-AmiciCuriae.pdf> [Methanex, Amici Curiae Order]; Suez v. Argentina, Order in Response to a Petition for Transparency and Participation as Amicus Curiae (19 May 2005), (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/pdf/12_Amicus_Curiae_03-19_e.pdf> [Suez, 2005 Amici Curiae Order]; Suez v. Argentina, Order in Response to a Petition by Five Non-Governmental Organizations for Permission to Make an Amicus Curiae Submission (12 February 2007), (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/pdf/ARB0319_ORDER.pdf> [Suez, 2007 Amici Curiae Order].

22 ICSID Arbitration Rule 48(4) in ICSID Convention, Regulations and Rules (Washington, D.C.: ICSID, 2006) at 122, online: ICSID <http://www.worldbank.org/icsid/basicdoc/basicdoc.htm> [ICSID Convention, Regulations and Rules].

23 NAFTA Free Trade Commission Joint Statement, Canada, Mexico and United States, 16 July 2004, online: Foreign Affairs and International Trade Canada <http://www.dfait-maeci.gc.ca/nafta-alena/JS-SanAntonio-en.asp>.


award public.24 Canada and the United States have followed a similar approach in a number of recent BITs with developing countries, including Peru, Uruguay and others.25

On 29 September 2006 the tribunal in Biwater delivered its Procedural Order No. 3 in response to the claimant’s request for provisional measures on confidentiality.26 While the deci-sion acknowledges the trend toward transparency, it ultimately flies directly in the face of that trend.

On 2 February 2007 the tribunal released its Procedural Order No. 5 in response to a petition by five non-governmental organizations for amicus curiae status.27 The tribunal’s deci-sion grants the petitioners the right to file a written submission but denies their accompanying application for access to key arbitration documents. The net result is that the petitioners may file a written submission but must do so without having seen the pleadings or other documents setting out the scope of the proceeding.

This case comment examines the tribunal’s decisions in procedural orders No. 3 and No. 5 in the light of the growing recognition of the need for greater transparency and public partici-pation in investor-state arbitration. Adopting the famous metaphor of Supreme Court Justice Louis D. Brandeis,28 it concludes that while the sun may slowly be emerging in the area of investor-state arbitration, the decisions of the tribunal in procedural orders No. 3 and No. 5 show that its foothold remains precarious.

FACTUAL BACKGROUND

The substance of the dispute in Biwater concerns the claimant’s investment in the water and sewerage system of Dar es Salaam.

Until 1991, the government of Tanzania had endeavoured, rather unsuccessfully, to provide water in Dar es Salaam at no cost.29 In 1991, in an effort to improve the standard of

24 NAFTA, supra note 14, c. 11, Annex 1137.4.25 See e.g. Agreement Between Canada and Peru for the Promotion and Protection of Investments, 14 November

2006, art. 38(4), online: Foreign Affairs and International Trade Canada <http://www.international.gc.ca/tna-nac/documents/Canada-Peru10nov06-en.pdf>; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, 4 November 2005, art. 29, online: Office of the United States Trade Representative <http://ustr.gov/assets/Trade_Agreements/BIT/Uruguay/asset_upload_file748_9005.pdf>.

26 Biwater Gauff (Tanzania) Ltd. v. Tanzania, Procedural Order No. 3 (29 September 2006), (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/arb0522_procedural_order3.pdf> [Biwater, Procedural Order No. 3].

27 Biwater Gauff (Tanzania) Ltd. v. Tanzania, Procedural Order No. 5 (2 February 2007), (International Centre for Settlement of Investment Disputes), online: ICSID <http://www.worldbank.org/icsid/cases/pdf/ARB0522_ProceduralOrdNo5.pdf> [Biwater, Procedural Order No. 5].

28 “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman”. Louis D. Brandeis, Other People’s Money: And How the Bankers Use It (Fairfield, N.J.: Augustus M. Kelley, 1986) at 92.

29 With the exception of some high income areas, where water usage was billed. See Romilly Greenhill & Irene Wekiya, Turning Off the Taps: Donor Conditionality and Water Privatisation in Dar es Salaam, Tanzania (ActionAid International, 2004) at 5, online: ActionAid UK <http://www.actionaid.org.uk/_content/documents/TurningofftheTAps.pdf>.


supply, the government removed subsidies for water utilities and required that they eventually become self-financing.30 Crisis neared in 1997, as “first floods and then drought” eroded the water system’s weak infrastructure.31 The government of Tanzania reacted by creating Dar es Salaam Water and Sewerage Authority (DAWASA) as a quasi-commercial parastatal.32 With donor assistance and encouragement (from the World Bank in particular), the government also “began to look for a private operator to take over major responsibility for water production, transmission, distribution, billing and collection.”33

The international financial institutions, and especially the World Bank, played a central role in the push to bring private investment into the water and sewerage system of Dar es Salaam. For example, in March 2000 the World Bank and the International Monetary Fund made the “signing of [a] concession agreement assigning [the] assets of DAWASA to private management companies” one of the conditions for Tanzania to qualify for debt relief under the Heavily Indebted Poor Countries Initiative.34

Tanzania’s search for a private partner began in mid-1997 and “took a full 6 years to con-clude,” going through several phases and rounds of bidding.35 In the final round, only one bid was received, a joint tender by Biwater International Ltd., an English company, and HP Gauff Ingenieure GmBH & Co. KG-JBG, a German corporation. They were ultimately awarded the contract.36

The two companies incorporated Biwater Gauff (Tanzania) Ltd. (Biwater Gauff) for the purpose of their investment.37 In February 2003 DAWASA and Biwater Gauff’s Tanzanian subsidiary signed a ten-year lease contract under which the latter agreed to provide water and sewerage services for a period of ten years and to implement and manage the implementation of certain capital works.38

Before Biwater Gauff’s subsidiary commenced operations in August 2003, DAWASA had about 100,000 water customers in a city of around 2.5 million people.39 Even for these cus-tomers, the service was erratic with many households being supplied less than six hours per day.40 The other (mostly poorer) inhabitants of Dar es Salaam were left to source water through other means, such as “[buying] water from neighbours, tanker trucks or vendors – with at least

30 Ibid.31 Roger Christen et al., United Republic of Tanzania: Privatization Impact Assessment – Infrastructure (Private

Participation in Infrastructure Advisory Facility, 2005) at 25.32 Ibid. at 23.33 Ibid. at 25.34 International Development Association & International Monetary Fund, Tanzania: Decision Point

Document Under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative (2000) at 22-23, online: International Monetary Fund <http://www.imf.org/external/NP/hipc/2000/Tza.pdf>.

35 Christen et al., supra note 31 at 25.36 Ibid. at 27-28.37 Biwater, Procedural Order No. 1, supra note 2 at para. 5.38 Ibid. at paras. 7-10.39 Greenhill & Wekiya, supra note 29 at 5.40 Christen et al., supra note 31 at 23.


the last two charging unit prices that were a huge multiple of the DAWASA tariff.”41 Water delivered was often not safe for drinking, and the city suffered periodic outbreaks of cholera and other water-borne diseases. By 2002, unaccounted-for water (through leaks, non-metered connections, illegal connections, and theft) accounted for fifty-five per cent of water entering the city’s system.42 The poorest areas of the city had the worst service; that is, “the least well-off were paying the highest prices for water.”43

In accepting Biwater Gauff’s bid, “[t]he primary assumption on the part of almost all involved, certainly from the donor side, was that it would be very hard if not impossible for the private operator to perform worse than DAWASA … [b]ut that is what happened.”44 A World Bank study subsequently found that water quantity was “lower than the average during DAWASA by about 20 percent,” the rate of new water connections did “not show improve-ment from the pre-lease era,” and the rate of collection of water charges was lower than under DAWASA.45

Moreover, Biwater Gauff’s subsidiary apparently failed to meet its own performance targets under the lease contract. For example, in lease year one it was “supposed to install 16,500 new meters, add 1,000 new water connections, and reduce greatly repair time on burst pipes.”46 According to the government of Tanzania, in year one it “actually installed 8,751 new meters (47 percent shortfall), added 400 new connections (60 percent shortfall) and did not reduce repair times.”47 Moreover, there was “a decline in the availability of water in many parts of Dar es Salaam.”48

In August 2004 Biwater Gauff’s subsidiary requested that its income under the contract be reviewed. Independent auditors appointed in accordance with the contract concluded that there were no grounds for an interim review of the tariff payable to the company.49

In December 2004 and again in January 2005, Biwater Gauff’s subsidiary proposed a revi-sion of the lease contract’s terms, including a reduction in the amount of equity it would have to contribute, an increase in tariffs, a reduction of lease fees and other fees, a writeoff of existing obligations to DAWASA, and a free hand in reduction of staff.50

41 Ibid. at 23.42 Ibid.43 Ibid.44 Ibid. at 28.45 Silver Mugisha, Ato Brown & Sonko Kiwanuka, Water Reforms in Three East African Capital Cities, World

Bank Working Paper (2005) at 12, cited in Christen et al., supra note 31 at 30.46 Christen et al., ibid. at 29.47 Ibid.48 Ibid.49 Price Waterhouse Coopers, Review of the City Water Services Limited (the Operator) Submission on the

Grounds for an Interim Review of Tariff Under the Lease Contract and Equity Contribution (N.p., 2004) at 1.

50 Christen et al., supra note 31 at 32.


In April 2005 Biwater Gauff and Tanzania appointed an independent mediator to conduct a contract renegotiation.51 In its draft final report, the mediator stated that Biwater Gauff’s subsidiary’s performance during the first eighteen months of the contract was below that pro-posed in its bid, as well as that achieved by DAWASA during the twelve months before the commencement of the lease contract. Moreover, over the past six months Biwater Gauff’s subsidiary’s performance had exhibited a declining trend.52 The mediator reported that at the end of the renegotiation period, Biwater Gauff’s subsidiary would not commit to achieve the level of collections proposed by DAWASA, notwithstanding that the proposed level was sub-stantially below the level in Biwater Gauff’s bid.53

On 13 May 2005 the government announced that the lease contract was terminated effec-tive from that day.54 Several weeks later, Biwater Gauff’s senior management were deported from Tanzania.55

These events marked the end of Biwater Gauff’s investment in Tanzania. In August 2005 Biwater Gauff filed a notice of arbitration with ICSID relying on the 1994 BIT between the United Kingdom and Tanzania (UK-Tanzania BIT).56 According to Biwater Gauff, Tanzania’s actions over the preceding months, including the termination of the contract and the deporta-tion of senior management, constituted the expropriation of its investment and a breach of its obligations under the UK-Tanzania BIT. Biwater Gauff alleges that as a result of Tanzania’s breaches it suffered losses in the region of U.S.$20–25 million.57

THE CASE IN CONTEXT

Biwater Gauff’s investment in the water and sewerage system of Dar es Salaam has been closely watched by civil society groups, both national and international, concerned that priva-tization of the water supply will result in even worse access to water for the poor.58 Such groups

51 The mediator was TRC Economic Solutions. See TRC Economic Solutions, Contract Renegotiations of Lease Contract Between Dar es Salaam Water and Sewerage Authority (DAWASA) and City Water Services Ltd (CWS): Phase II, Draft Final Report (N.p., 2005) at 12.

52 Ibid. at 47.53 Ibid. at 54.54 Bilal Abdul-Aziz, “Govt dumps City Water” The Guardian [of Dar es Salaam] (14 May 2005), online: IPP

Media <http://216.69.164.44/ipp/guardian/2005/05/14/39435.html>.55 Biwater Plc, Press Release, “City Water and the Government of Tanzania” (2 June 2005), online: Water

Technology <http://www.water-technology.net/contractors/construction/biwater/press3.html>.56 UK-Tanzania BIT, supra note 1. An investor’s right to bring a claim under a BIT alleging that the host

country has breached its BIT obligations toward the investor’s investment exists independently from any rights that the investor may have to sue under the project contract itself. Indeed, in the present case, Biwater Gauff has also commenced separate arbitration proceedings against the Tanzanian government under the project contract; the status of these proceedings is not publicly available.

57 Biwater, Procedural Order No. 1, supra note 2 at para. 1.58 See e.g. Greenhill & Wekiya, supra note 29; Dominick de Waal, Prospects for the Poor: Water Reforms

and Private Sector Participation in Dar es Salaam, Tanzania (WaterAid, 2004), online: WaterAid <http://www.wateraid.org/documents/plugin_documents/prospects_for_the_poor.pdf>; Public Citizen, Biwater: A Corporate Profile (2003), online: Public Citizen <http://foodandwaterwatch.org/water/pubs/reports/biwater>.


point to a number of water privatization projects in Africa, Latin America and Asia that they say have disadvantaged the poor and undermined prospects for sustainable development.59

Leaving aside the thorny issue of the merits of private sector involvement in water supply, the arbitral proceedings themselves may have implications for the sustainable development of Tanzania. Biwater Gauff’s claim challenges measures taken by Tanzania to look after its own citizens in a highly sensitive sector (i.e., the termination of a non-performing contract for the supply of drinking water). Furthermore, if Biwater Gauff succeeds in its claim, Tanzania may have to pay out millions of dollars in compensation. Even should Biwater Gauff not succeed, Tanzania will be left with a hefty legal bill, funds that may otherwise have been available to further sustainable development in this least developed country. Lastly, and the focus of the present case comment, the tribunal’s decisions to deny the public access to the documents in the proceeding run counter to principles of democratic good governance, a cornerstone of sustainable development.60

PROCEDURAL ORDER NO. 3

On 17 July 2006 Biwater Gauff filed a request for provisional measures on confidential-ity.61 In its request, Biwater Gauff asked the tribunal to order the following measures:

[T]hat, for the duration of the arbitration proceedings, the parties refrain from taking any steps which might undermine the procedural integrity, or the orderly working, of the arbitral process and/or which might aggravate or exacerbate the dispute, and in particular that:

a. the parties undertake to discuss on a case by case basis the publication of all Decisions other than the Award made in the course of the proceedings, with the object of achieving mutual agreement, and if agreement cannot be reached, the parties refer the matter to the Tribunal for decision;

b. the parties refrain from disclosing to third parties any of the Pleadings;

c. the parties refrain from disclosing to third parties any of the documents produced in the respect of the First Round Disclosure and the Second Round Disclosure; and

d. the parties refrain from disclosing to third parties any correspondence between the parties and/or the Tribunal exchanged in respect of the arbitral proceedings.62

59 See e.g. David Hall & Emanuele Lobina, Pipe Dreams: The Failure of the Private Sector to Invest in Water Services in Developing Countries (2006), online: World Development Movement <http://www.wdm.org.uk/resources/reports/water/pipedreamsreport01032006.pdf>.

60 See supra notes 19-20.61 Biwater, Procedural Order No. 3, supra note 26 at para. 6.62 Ibid. at para. 12.


In support of its request, Biwater Gauff alleged that Tanzania had unilaterally published on the Internet certain documents produced in the proceedings63 and had refused to undertake not to disclose further documents.64

Biwater Gauff noted that the dispute had already attracted significant public interest.65 For example, a non-governmental organization called World Development Movement had initi-ated a campaign entitled “Dirty Aid, Dirty Water: Hands Off Tanzania: Stop UK Company Biwater’s Attempt to Sue.”66 There had also been public commentaries on the case, such as in the Investment Treaty News bulletin.67

The Tribunal’s Decision

On 29 September 2006 the tribunal released its decision, Procedural Order No. 3.68 The order was in the following terms:

[F]or the duration of these arbitration proceedings, and in the absence of any agree-ment between the parties:

(a) All parties refrain from disclosing to third parties:

i. the minutes or record of any hearings;

ii. any of the documents produced in the arbitral proceedings by the opposing party, whether pursuant to a disclosure exercise or otherwise;

iii. any of the Pleadings or Written Memorials (and any attached witness statements or expert reports); and

iv. any correspondence between the parties and/or the Arbitral Tribunal exchanged in respect of the arbitral proceedings.

(b) All parties are at liberty to apply to the Arbitral Tribunal in justified cases for the lifting or variation of these restrictions on a case-by-case basis.

(c) Any disclosure to third parties of decisions, orders or directions of the Arbitral Tribunal (other than awards) shall be subject to prior permission by the Arbitral Tribunal.

(d) For the avoidance of doubt, the parties may engage in general discussion about the case in public, provided that any such public discussion is restricted to what is

63 These documents were: Biwater Gauff (Tanzania) Ltd. v. Tanzania, Minutes of the First Session of the Arbitral Tribunal (23 March 2006), (International Centre for Settlement of Investment Disputes), online: Investment Treaty Arbitration <http://ita.law.uvic.ca/documents/Biwater-MinutesofFirstSessionParis23March2006.PDF>; Biwater Gauff (Tanzania) Ltd. v. Tanzania, Procedural Order No. 2 (24 May 2006), (International Centre for Settlement of Investment Disputes), online: Investment Treaty Arbitration <http://ita.law.uvic.ca/documents/BiwaterProceduralOrderNo224May2006.pdf>.

64 Biwater, Procedural Order No. 3, supra note 26 at para. 13.65 Ibid. at para. 15.66 Ibid. at para. 16.67 See Damon Vis-Dunbar, “Tanzania Wants Open Hearings in BIT Arbitration Over Water Concession”

Investment Treaty News (4 July 2006), online: International Institute for Sustainable Development <http://www.iisd.org/pdf/2006/itn_july4_2006.pdf>.

68 Biwater, Procedural Order No. 3, supra note 26.


necessary, and is not used as an instrument to antagonize the parties, exacerbate their differences, unduly pressure one of them, or render the resolution of the dispute potentially more difficult, or circumvent the terms of this Procedural Order.

Further it is recommended that:

(e) all parties refrain from taking any steps which might undermine the procedural integrity, or the orderly working, of the arbitral process and/or which might aggra-vate or exacerbate the dispute …

This Procedural Order No. 3 shall be subject to no confidentiality restrictions, and may be freely disclosed to third parties.69

When compared against Biwater Gauff’s request for provisional measures, it is apparent that the order not only grants Biwater Gauff’s request but goes further than was requested. In particular, the order explicitly extends confidentiality to the minutes and records of any hear-ings; it requires any disclosure to third parties of decisions, orders, or directions of the tribunal (other than awards) to be subject to the tribunal’s prior permission; and it restricts general dis-cussion by the parties about the case in public to what is “necessary”. In doing so, it also goes against the clear trend in investor-state arbitration toward greater transparency. Notably, the tribunal’s decision pays strong lip service to this trend but then decides in the other direction.

The Tribunal’s Reasoning

The tribunal observes that determining Biwater Gauff’s application “entails a careful bal-ancing between two competing interests: (i) the need for transparency in treaty proceedings … and (ii) the need to protect the procedural integrity of the arbitration.”70 It considers each in turn.

Transparency

The tribunal first remarks that “[w]ithout doubt, there is now a marked tendency towards transparency in treaty arbitration,” although it does not elaborate further.71

It then declares that “in the absence of any agreement between the parties … there is no provision imposing a general duty of confidentiality in ICSID arbitration.”72 It adds that “[e]qually, however, there is no provision imposing a general rule of transparency or non-con-fidentiality … ”73 It notes that the new ICSID rules, in force since April 2006,74 which govern the proceeding, “clearly reflect an overall trend … towards transparency,” though it notes that the changes mainly concern amicus curiae briefs and third party attendance at the hearing.75

It records that “[a]s matters now stand, the ICSID Convention and the Administrative and Financial Regulations and Rules only contain limitations on specific aspects of confiden-

69 Ibid. at paras. 163-64.70 Ibid. at para. 112.71 Ibid. at para. 114.72 Ibid. at para. 121.73 Ibid.74 ICSID Convention, Regulations and Rules, supra note 22 at 73-128.75 Biwater, Procedural Order No. 3, supra note 26 at para. 122.


tiality and privacy.”76 For example, article 48(5) of the ICSID Convention provides that “[t]he Centre shall not publish the award without the consent of the parties,”77 and rule 32(2) of the new ICSID Arbitration Rules provides that the hearing may be opened by the tribunal to other persons provided that no party objects.78 The tribunal states that “[t]hese provisions require (subject to contrary agreement) the privacy of the arbitral hearing – a central element of the arbitral process.”79 The tribunal notes, however, that “the foregoing provisions focus on the actions of ICSID and arbitral tribunals, and do not expressly address the actions of the parties themselves.”80

The tribunal observes that “[t]here is no provision in the ICSID Arbitration Rules which expressly provides for the confidentiality of pleadings, documents or other information sub-mitted by the parties during the arbitration.”81 It notes that, to the contrary, “the official anno-tations accompanying the original version of the ICSID Arbitration Rules (which are not binding, and do not form part of the Rules) state that the parties are not prohibited from publishing their pleadings, but that they may agree not to do so ‘if they feel that publication may exacerbate the dispute’.”82

The tribunal comments that this position was confirmed by the ICSID tribunal in Amco Asia v. Indonesia,83 in the context of a request for provisional measures to prevent the parties from promoting newspaper publication of details of the case.84 The Amco tribunal rejected the request, observing that “as to the ‘spirit of confidentiality’ of the arbitral procedure, it is right to say that the Convention and the Rules do not prevent the parties from revealing their case ….”85

The tribunal then notes that other types of treaty arbitration take a similar view.86 It cites the ICSID Additional Facility Rules, which also contain “no general duty of confidentiality, but rather a small number of specific protections.”87 In respect of those rules, the tribunal quotes

76 Ibid. at para. 123.77 ICSID Convention, supra note 3.78 ICSID Convention, Regulations and Rules, supra note 22 at 115.79 Biwater, Procedural Order No. 3, supra note 26 at para. 124. In fact, Rule 32(5) does not require the

privacy of the arbitral hearing subject to contrary agreement, but rather places the presumption in the opposite direction - the hearing may be opened by the tribunal “unless either party objects” (ICSID Convention, Regulations and Rules, ibid.).

80 Biwater, Procedural Order No. 3, ibid.81 Ibid. at para. 125.82 Ibid., quoting Christoph H. Schreuer, The ICSID Convention, A Commentary (Cambridge: Cambridge

University Press, 2001) at 824.83 Decision on Request for Provisional Measures (9 December 1983), 24 I.L.M. 365, (International Centre

for Settlement of Investment Disputes) [Amco].84 Biwater, Procedural Order No. 3, supra note 26 at para. 126.85 Amco, supra note 83 at para. 4.86 Biwater, Procedural Order No. 3, supra note 26 at para. 127.87 Ibid. at para. 128. The tribunal was referring to the rules in effect before January 1, 2003 (ICSID Additional

Facility for the Administration of Conciliation, Arbitration and Fact-Finding Proceedings, online: ICSID <http://www.worldbank.org/icsid/facility-archive/facility.htm> [Pre-2003 Additional Facility Rules]). See


from Metalclad v. Mexico,88 including: “Though it is frequently said that one of the reasons for recourse to arbitration is to avoid publicity, unless the agreement between the parties incorpo-rates such a limitation, each of them is still free to speak publicly of the arbitration.”89

The tribunal notes that a general duty of confidentiality was also rejected by the tribunal in Loewen Group v. United States90 “insofar as [it] might preclude a Government or other party from discussing the case in public, and thereby deprive the public of knowledge and informa-tion concerning government and public affairs.”91

In respect of NAFTA, the tribunal comments that since the Free Trade Commission’s interpretation of 31 July 2001,92 it has now been made clear that

[n]othing in the NAFTA imposes a general duty of confidentiality on the disputing parties to a Chapter Eleven arbitration, and, subject to the application of Article 1137(4), nothing in the NAFTA precludes the Parties from providing public access to documents submitted to, or issued by, a Chapter Eleven tribunal.93

The tribunal then considers the United Nations Commission on International Trade Law Arbitration Rules,94 observing that, aside from two provisions – article 25(4) (“hearings shall be held in camera unless the parties agree otherwise”) and article 32(5) (awards are to be “made public only with the consent of both parties”) – “there are no other provisions expressly impos-ing a general duty of confidentiality, or prohibiting disclosure of documents prepared for or disclosed in the arbitration.”95

The tribunal concludes its discussion on transparency with the statement: “These consid-erations, and the accepted need for greater transparency in this field, generally militate against the type of provisional measures for which [Biwater Gauff] now contends.”96

Until this point in the decision, the tribunal’s reasoning is closely supported by its review of other sets of arbitral rules and relevant past decisions. As the tribunal commences its discus-

e.g. art. 39, which limits attendance at hearings, and art. 44(2), which limits publication of minutes of hearings by the ICSID Secretary-General.

88 Decision on a Request by the Respondent Prohibiting the Claimant from Revealing Information Regarding ICSID Case ARB/(AF)/97/1 (27 October 1997), (International Centre for Settlement of Investment Disputes), online: NAFTA Claims <http://naftaclaims.com/Disputes/Mexico/Metalclad/MetalcladProceduralOrder1.pdf> [Metalclad, 1997 Decision].

89 Biwater, Procedural Order No. 3, supra note 26 at para. 128, quoting Metalclad, 1997 Decision, ibid. at para. 9.

90 Decision on Hearing of Respondent’s Objection to Competence and Jurisdiction (5 January 2001), 7 I.C.S.I.D. 421 (International Centre for Settlement of Investment Disputes) [Loewen].

91 Biwater, Procedural Order No. 3, supra note 26 at para. 129, citing Loewen, ibid. at paras. 24-28.92 Notes of Interpretation of Certain Chapter 11 Provisions, Canada, Mexico and United States, 31 July

2001, online: Foreign Affairs and International Trade Canada <http://www.dfait.gc.ca/tna-nac/NAFTA-Interpr-en.asp> [NAFTA Interpretation].

93 Biwater, Procedural Order No. 3, supra note 26 at para. 130, quoting NAFTA Interpretation, ibid., s. A.1.

94 GA Res. 31/98, UN GAOR, 31st Sess., Supp. No. 17, UN Doc. A/31/17 (1976).95 Biwater, Procedural Order No. 3, supra note 26 at para. 132.96 Ibid. at para. 133.


sion of the second of the competing interests, however, its reasoning takes a strikingly free-wheeling approach.

Procedural Integrity and “Non-Aggravation” or “Non-Exacerbation” of the Dispute

The tribunal remarks that “it is now settled in both treaty and international commercial arbitration that an arbitral tribunal is entitled to direct the parties not to take any step that might (1) harm or prejudice the integrity of the proceedings, or (2) aggravate or exacerbate the dispute.”97

The tribunal observes that both concerns have a number of aspects, which can be articu-lated in various ways, such as the need to

• preserve the tribunal’s mission and mandate to determine finally the issues between the parties;

• preserve the proper functioning of the dispute settlement procedure;

• preserve and promote a relationship of trust and confidence between the parties;

• ensure the orderly unfolding of the arbitration process;

• ensure a level playing field;

• minimise the scope for any external pressure on any party, witness, expert or other participant in the process;

• avoid “trial by media”.98

The tribunal provides no indication of the source from whence the above list has been drawn but rather continues:

It is self-evident that the prosecution of a dispute in the media or in other public fora, or the uneven reporting and disclosure of documents or other parts of the record in parallel with a pending arbitration, may aggravate or exacerbate the dispute and may impact upon the integrity of the procedure. This is all the more so in very public cases, such as this one, where issues of wider interest are raised, and where there is already substantial media coverage, some of which already being the subject of complaint by the parties.99

One can agree with the tribunal’s statement that such actions may aggravate or exacerbate the dispute and impact the integrity of the procedure. However, such actions will not necessar-ily exacerbate the dispute. In particular, it is not at all “self-evident” that they would do so in the present case. Rather, it is difficult to see how they could. The UK-Tanzania BIT protects a foreign investor’s investment, rather than the investor itself, and any compensation payable is in respect of the investment, not the investor.100 As Biwater Gauff had ceased its investment

97 Ibid. at para. 135.98 Ibid.99 Ibid. at para. 136.100 E.g. art. 2(2) provides that “[i]nvestments of nationals or companies of each Contracting Party shall at all

times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory


and exited the country before the proceedings were commenced, Tanzania’s conduct during the proceeding could not affect the investment. The investment is at an end and any losses on the investment must have already crystallized.

Likewise, it is not “self-evident” how disclosure would threaten the integrity of the proce-dure in the present case. Surely, the test of this threat is whether the parties will be freely able to present their case and the tribunal freely able to come to its own decision. Neither Biwater Gauff nor the tribunal put forward any evidence that they have been or will be obstructed from doing so. In fact they would have been hard put to do so, given that there have been no reports of disruption in any investor-state arbitration to date in which documents have been publicly available.

The tribunal opts to deny citizens’ democratic right to information on the lowest and most nebulous of standards; namely, on the chance that harm “may” result from disclosure, not even that harm be likely, probable, or foreseeable. This standard differs markedly from the threshold required by other tribunals. For example, the tribunal in Metalclad held that “[i]n order to succeed in a request for provisional measures an applicant party must demonstrate that the measures are urgently required in order to protect its rights from an injury that cannot be made good by the subsequent payment of damages.”101

Neither Biwater Gauff nor the tribunal itself point to any evidence of how Biwater Gauff’s rights may suffer injury by disclosure, let alone serious or irreversible damage. The tribu-nal in Amco, whose words were adopted by the Metalclad tribunal,102 held that the ICSID Convention

requires the party which solicits a provisional measure to specify the rights that such measure would be purported to preserve. Obviously, the rights to which this provi-sion is relating are the rights in the dispute, and no such right could be threatened by the publication of articles like those which are produced by both parties.103

On the basis of Amco, the rights must be those in the dispute. Neither the Amco or the Metalclad tribunals explain exactly what they mean by “the rights in the dispute”, but it would seem that this phrase refers to the substance of the claim, namely, Biwater Gauff’s investment in Tanzania. It is not at all clear how Biwater Gauff’s rights in the dispute (i.e., its investment) could suffer harm by disclosure. As noted earlier, the UK-Tanzania BIT’s provisions protect a foreign investor’s investment, rather than the investor itself. Tanzania’s conduct during the pro-ceeding cannot now affect Biwater Gauff’s investment, because that investment ended when the lease contract was terminated and Biwater Gauff exited the country. The fact that Biwater Gauff’s public reputation may suffer as a result of disclosure is not relevant – Biwater Gauff is

of the other Contracting Party” (UK-Tanzania BIT, supra note 1). Art. 5(1) provides that:

[i]nvestments of nationals and companies of either Contracting Party shall not be nationalised, expropriated or subjected to measures having effect equivalent to nationalisation or expropriation ... except for a public purpose … on a non-discriminatory basis and against prompt, adequate and effective compensation. Such compensation shall amount to the genuine value of the investment expropriated immediately before the expropriation … [Ibid.]

101 Metalclad, 1997 Decision, supra note 88 at para. 8.102 Ibid.103 Amco, supra note 83 at para. 3.


the investor; the UK-Tanzania BIT protects the investment. In light of the above, the tribunal’s decision to grant the requested provisional measures on the basis that it is “self-evident” that harm “may” occur seems highly questionable.

Moving on, the tribunal states that its concerns have been “recognised in a number of previous decisions.”104 In particular, the tribunal cites the observations made in Loewen and Metalclad that “it would be of advantage to the orderly unfolding of the arbitral process if during the proceedings the parties were to limit public discussion to what is considered nec-essary,”105 “subject only to any externally imposed obligation of disclosure by which either of them may be legally bound.”106 The tribunal objects to Tanzania’s contention that if the orders sought by Biwater Gauff were granted, this would be without any precedent in ICSID proceedings, and an event “unique in ICSID history.”107 The tribunal states that “[t]here are a number of instances in which such recommendations have been made – albeit not all publi-cised – and the underlying rights and interests in question are now well-accepted.”108

The tribunal’s statement is questionable in two respects: first, the tribunal reveals a star-tling lack of transparency in its own decision making by relying on unnamed cases to support its position; second, closer examination of the three cases cited in the proceeding indicates that Tanzania’s contention may indeed be well founded.

In Metalclad and Amco, the tribunals rejected the requests for provisional measures regard-ing confidentiality.109 In Loewen the tribunal allowed the respondent’s request to make all filings except for minutes publicly available.110 In all three cases, the tribunals’ observations about the advantages of limiting public discussion were comments only and did not form part of their orders. In the present case, the tribunal goes further by including them as the following part of the order:

(d) For the avoidance of doubt, the parties may engage in general discussion about the case in public, provided that any such public discussion is restricted to what is necessary, and is not used as an instrument to antagonise the parties, exacerbate their

104 Biwater, Procedural Order No. 3, supra note 26 at para. 138.105 Ibid., quoting Loewen, supra note 90 at para. 26.106 Biwater, Procedural Order No. 3, ibid., quoting Metalclad, 1997 Decision, supra note 88 at para. 10.107 Biwater, Procedural Order No. 3, ibid. at para. 141.108 Ibid. at para. 141.109 Metalclad, 1997 Decision, supra note 88 at paras. 8-10; Amco, supra note 83 at para. 6.110 In Loewen, supra note 90 at para. 24, the Respondent sought to make all filings, including minutes of

the hearing, publicly available. However, under art. 44(2) of the ICSID Arbitration (Additional Facility) Rules in effect before January 1, 2003 (Pre-2003 Additional Facility Rules, supra note 87), minutes could not be published without the parties consent. The tribunal accordingly held that the minutes could not be made available without consent (Loewen, supra note 90 at para. 25). However, it impliedly allowed the Respondent to make all other filings publicly available. It held that “it is not to be supposed that, in the absence of express provision, the [ICSID] Convention or the Rules and Regulations impose a general obligation on the parties, the effect of which would be to preclude a Government (or the other party) from discussing the case in public, thereby depriving the public of knowledge and information concern-ing government and public affairs.” (Ibid. at para. 26).


differences, unduly pressure one of them, or render the resolution of the dispute potentially more difficult, or circumvent the terms of this Procedural Order.111

Thus, Tanzania’s contention that the order is without precedent in ICSID proceedings would seem correct, at least in respect of ICSID decisions cited in the case. Moreover, as the tribunal gives no guidance about what it would accept as “necessary” public discussion, parties may be forced to err on the side of caution to avoid being subsequently found in breach of the order, which would effectively limit disclosure still further.

Conclusion on Procedural Order No. 3

The tribunal’s decision flies directly in the face of the general trend in investor-state arbi-tration toward greater transparency. The tribunal states that, importantly, its concerns are not “inconsistent for all time with transparency” and that once the arbitration has concluded, “most restrictions would not normally continue to apply.”112 However, in democratic gover-nance terms, this is like shutting the stable door after the horse has bolted.

If the decision is to be followed in future cases, it will have serious ramifications for the long-awaited sunshine in this area. In particular, there would seem to be no special circum-stances in the present case that dictate a greater than normal need for confidentiality or to avoid exacerbation of the dispute. Indeed, the reverse would seem the case. Thus, if the tribu-nal can find that the facts of the present case weigh against transparency, future tribunals could do so in almost any factual matrix.

Of particular note in this regard, the tribunal asserts the need to avoid “trial by media” and to “preserve the proper functioning of the dispute settlement procedure.”113 However, neither Biwater Gauff nor the tribunal itself contend that the tribunal would not be able to come to an independent decision in the face of high media interest. While it might be more of a concern if the case were to be decided by a panel of members of the public, the need to avoid “trial by media” would seem an unlikely problem here, where the tribunal consists of three eminent arbitrators.114 Similarly, Biwater Gauff has exited Tanzania, so the tribunal’s concern to preserve the relationship of trust and confidence between the parties would seem irrelevant. Likewise, there can be no concerns about exacerbating the value of the dispute itself, because Biwater Gauff’s losses crystallized at the point where it left the country.

Finally, the tribunal refers to the need to minimize “the scope for any external pressure on any party, witness, expert or other participant in the process.”115 Taken to its logical but ominous conclusion, the more the public vocalizes its concerns about a given case, the more likely the proceeding is to be kept confidential. Thus, on the basis of Procedural Order No. 3, the state of sunshine in investor-state arbitration is precarious indeed.

111 Biwater, Procedural Order No. 3, supra note 26 at para. 163.112 Ibid. at para. 140.113 Ibid. at para. 135.114 These arbitrators are Gary Born, Toby Landau, and Bernard Hanotiau.115 Biwater, Procedural Order No. 3, supra note 26 at para. 135.


PROCEDURAL ORDER NO. 5

On 27 November 2006 five non-governmental organizations filed a petition for amicus curiae status in the same proceeding.116 In addition to amicus curiae status, their petition sought access to key arbitration documents, the opening of the hearing of the proceeding to the public, and the right to reply directly to any questions from the tribunal concern-ing their submissions.117 On 2 February 2007 the tribunal released Procedural Order No. 5, granting the five non-governmental organizations the right to file a written submission in the proceeding.118

The tribunal’s decision is significant because it is the first to be made under the recently amended ICISD Arbitration Rules that now explicitly give arbitral tribunals the power to allow submissions from non-disputing parties.119 The amended ICSID Arbitration Rules stand alone as the only set of international arbitration rules to expressly convey such a power on tribunals.

The tribunal’s decision is also notable because, at the same time as granting the petition-ers the right to file a written submission, it denies their accompanying application for access to key arbitration documents that they had sought to assist them to prepare their submission. The net result is that the petitioners may file a written submission in the proceeding but must do so without having seen the pleadings or other documents setting out the scope of the proceeding.

116 Biwater, Procedural Order No. 5, supra note 27 at para. 1. The five Petitioners were:

1. The Lawyers’ Environmental Action Team, a public interest environmental law organisation in Tanzania with a mission to ensure sound natural resource management and environmental protection in Tanzania.

2. The Legal and Human Rights Centre, a Tanzanian non-governmental organization established to contribute to the process of democratization in that country.

3. The Tanzanian Gender Networking Programme, a Tanzanian non-governmental organization focus-ing on gender equity and issues concerning access to water, especially for the poor and women.

4. The Center for International Environmental Law (CIEL), a non-governmental organization estab-lished in the United States with a mission to use international law, institutions and processes to protect the environment, human health and human rights. CIEL described itself as having been engaged in inter-national trade and investment law issues since the early 1990s. CIEL was granted amicus curiae status in the Methanex arbitration (Methanex, Amici Curiae Order, supra note 21 at para. 53) and in the Suez case (Suez, 2007 Amici Curiae Order, supra note 21 at para. 27).

5. The International Institute for Sustainable Development (IISD), a Canadian-based non-govern-mental organization with a mandate to foster local, regional and international policies and practices in support of sustainable development. IISD described itself as having been engaged in international invest-ment law issues since 1998. IISD was also granted amicus curiae status in the Methanex case (Methanex, Amici Curiae Order, supra note 21 at para. 53).

The above description of the Petitioners is based on the more detailed description in Biwater, Procedural Order No. 5 at para. 11.

117 Biwater, Procedural Order No. 5, ibid. at paras. 25-30.118 Ibid. at para. 55.119 See text accompanying note 121.


Although the tribunal’s willingness to hear from local and international non-governmental organizations is a very positive move, its requirement that the petitioners do so without having seen even the pleadings places an unnecessary hurdle in front of them and hampers the poten-tial relevance and usefulness of their contribution.

The Tribunal’s Decision

The tribunal begins by noting that, although the application is entitled “petition for amicus curiae status”, the ICSID rules do not provide for an amicus curiae “status” but rather “two specific – and carefully delimited – types of participation by non-parties”; namely, the filing of a written submission (rule 37[2]) and attendance at hearings (rule 32[2]).120 The tribunal further notes that “[e]ach of these types of participation is to be addressed by a tribunal on an ad hoc basis, rather than by the granting of an overall ‘amicus curiae status’ … ”121

The test the tribunal must apply in deciding whether to allow a non-disputing party to file a written submission in a proceeding is set out in rule 37(2):

After consulting both parties, the Tribunal may allow a person or entity that is not a party to the dispute (in this Rule called the “non-disputing party”) to file a written submission with the tribunal regarding a matter within the scope of the dispute. In determining whether to allow such a filing, the Tribunal shall consider, among other things, the extent to which:

(a) the non-disputing party submission would assist the Tribunal in the deter mination of a factual or legal issue related to the proceeding by bringing a per-spective, particular knowledge or insight that is different from that of the disputing parties;

(b) the non-disputing party submission would address a matter within the scope of the dispute;

(c) the non-disputing party has a significant interest in the proceeding.

The Tribunal shall ensure that the non-disputing party submission does not disrupt the proceeding or unduly burden or unfairly prejudice either party, and that both parties are given an opportunity to present their observations on the non-disputing party submission.122

In its decision, the tribunal indicates that, “having carefully considered each of the condi-tions in Rule 37(2)(a), (b) and (c) … [o]n the basis of the information provided in the petition, the nature and expertise of each Petitioner,” and the parties’ observations on the petition, it is of the view that it “may benefit from a written submission by the Petitioners, and that allowing for the making of such submission by these entities in the proceedings is an important element in the overall discharge of the Tribunal’s mandate, and in securing wider confidence in the arbitral process itself.”123

120 Biwater, Procedural Order No. 5, supra note 27 at para. 46, citing ICSID Convention, Regulations and Rules, supra note 22 at 115, 117.

121 Biwater, Procedural Order No. 5, ibid. 122 ICSID Convention, Regulations and Rules, supra note 22 at 117.123 Biwater, Procedural Order No. 5, supra note 27 at para. 50.


The tribunal respectfully adopts the following words of the arbitral tribunal in Methanex:

There is an undoubtedly public interest in this arbitration. The substantive issues extend far beyond those raised by the usual transnational arbitration between com-mercial parties. This is not merely because one of the Disputing Parties is a State: there are of course disputes involving States which are of no greater general public importance than a dispute between private persons. The public interest in this arbi-tration arises from its subject-matter ... There is also a broader argument … [the] arbitral process could benefit from being perceived as more open or transparent; or conversely be harmed if seen as unduly secretive. In this regard, the Tribunal’s will-ingness to receive amicus submissions might support the process in general and this arbitration in particular; whereas a blanket refusal could do positive harm.124

The tribunal also refers to another recent ICSID case, Suez v. Argentina, which related to a water concession covering the city of Buenos Aires and the metropolitan area of Greater Buenos Aires. The tribunal emphasises that the public interest dimension of that dispute applies equally to the present arbitration and quotes the following remarks from the decision of the Suez tribunal:

[The water distribution and sewerage systems of the City of Buenos Aires and sur-rounding municipalities] provide basic public services to millions of people and as a result may raise a variety of complex public and international law questions, including human rights considerations. Any decision rendered in this case … has the potential to affect the operation of those systems and thereby the public they serve. These factors lead the tribunal to conclude that this case does involve matters of public interest of such a nature that have traditionally led courts and other tribunals to receive amicus submissions from suitable nonparties.125

The tribunal notes that Biwater Gauff has contended that the present proceeding differs from the Suez case because Biwater Gauff is “no longer seeking to operate in Tanzania.”126 In the tribunal’s view, this difference is “not determinative of the issue, since any decision by [the tribunal] still has the potential to impact upon the same wider interests.”127 Further, “even if [Biwater Gauff] ultimately proves that such wider interests, as a matter of fact, are untouched by its claims,” the tribunal finds that the observation of the Methanex tribunal would “still [apply] with force”; namely, that “the acceptance of amicus submissions would have the addi-tional desirable consequence of increasing the transparency of investor state arbitration.”128

The tribunal notes that the parties, in particular Biwater Gauff, have expressed concerns “as to the timing of the Petition (i.e. the delay in its filing); the proximity of the substantive hearing (April 2007); and the tight procedural timetable that exists in the meantime.”129 The tribunal states that it “has great sympathy with these concerns, and [that it] is adamant that no

124 Ibid. at para. 51, quoting Methanex, Amici Curiae Order, supra note 21 at para. 49.125 Biwater, Procedural Order No. 5, ibid. at para. 52, quoting Suez, 2005 Amici Curiae Order, supra note

21 at paras. 19-20. The tribunal in fact quoted a more lengthy excerpt, but the most pertinent part is set out here.

126 Biwater, Procedural Order No. 5, ibid. at para. 53.127 Ibid.128 Ibid. at para. 54, citing Methanex, Amici Curiae Order, supra note 21 at para. 22. 129 Biwater, Procedural Order No. 5, ibid. at para. 59.


procedural direction be given which might unduly burden any party in their preparation for the forthcoming hearing, or indeed jeopardise the hearing itself.”130

The tribunal, however, considers that these factors are “insufficient in themselves to deny the Petition … ”131 Rather, the tribunal holds that they “militate in favour of a two-stage process … ”132 In the first stage, the petitioners are to jointly “file a single, initial written sub-mission.”133 Each party will then have a three-week period before the April 2007 hearing to “consider the written submission, and decide how best to address it [at that stage] (if at all).”134 In the second stage,

[f ]ollowing the conclusion of the April hearing, and having consulted with the dis-puting parties … [the tribunal] will issue procedural directions for responses from both parties to the written submission (in so far as any party wishes to respond further or at all), as well as for any further written submissions [from the Petitioners] … in so far as the Tribunal deems this appropriate.135

The tribunal observes that “it will be better placed after the April hearing to make further determinations on this issue, since it will then have a clearer view as to any areas on which it might need further assistance.”136

Application for Access to Key Arbitration Documents

The tribunal holds that, in addressing the petitioners’ application for access to key docu-ments, “it is important to be clear as to the proper role of a ‘non disputing party’, or amicus curiae in any given case.”137 The tribunal envisages that “[i]n this case, given the particular qual-ifications of the Petitioners, and the basis for their intervention as articulated in the Petition … the Petitioners will address broad policy issues concerning sustainable development, environ-ment, human rights and government policy.”138

The tribunal states that “[t]his has been a very public and widely reported dispute,” and that “[t]he broad policy issues on which the Petitioners are especially qualified are ones which are in the public domain, and about which each Petitioner is already very well acquainted.”139 The tribunal considers that “[n]one of these types of issues ought to require – at least for the time being – disclosure of documents from the arbitration.”140

The tribunal holds, however, that “this is an issue that may be revisited after the con-clusion of the April hearing … [as] the concerns with respect to procedural integrity may

130 Ibid. 131 Ibid. at para. 60.132 Ibid.133 Ibid.134 Ibid.135 Ibid.136 Ibid.137 Ibid. at para. 63.138 Ibid. at para. 64.139 Ibid. at para. 65.140 Ibid.


[then] be altered … [leaving] less impediment to the disclosure of documents to non-disputing parties.”141 The tribunal thus denies the petitioners’ application for access to documents filed in the proceeding, albeit perhaps “for the time being only … pending a further ruling after the April hearing.”142

Application for Access to Oral Hearings

In respect of the petitioners’ application for an order that the hearings be open to the public and that the petitioners be allowed to reply directly to any questions from the tribu-nal concerning their submissions, the tribunal states that the opening words of rule 32(2) of the amended ICSID Arbitration Rules (“unless either party objects”) clearly condition the tribunal’s powers in this regard.143

As Biwater Gauff objects to the presence of the petitioners at the hearing, the tribunal “has no power to permit the Petitioners’ [participation].”144 The tribunal, however, “reserves the right to ask the Petitioners specific questions in relation to their written submission, and to request the filing of further written submissions and/or [evidence], which might assist in better understanding the Petitioners’ position ….”145

Conclusion on Procedural Order No. 5

The tribunal’s Procedural Order No. 3, discussed in the first Part of the case comment, has the potential to be a serious backward step for transparency and public participation in inves-tor-state arbitration. By comparison, Procedural Order No. 5 could be described as three steps forward, one step back: The first step on the positive side is the tribunal’s repeated acknowl-edgement of the undoubted public interest in the arbitration and its rejection of Biwater Gauff’s submission that the case is a simple contractual dispute without wider environmental, human rights, or sustainable development implications. Second is the tribunal’s adoption of the Methanex tribunal’s statements concerning the desirability of increasing the transparency of investor-state arbitration. Third is the tribunal’s willingness to allow the petitioners to file a written submission; its statement that doing so is an important element in the overall discharge of the tribunal’s mandate and in securing wider confidence in the arbitral process itself; and its adoption of the Methanex tribunal’s statements that receiving amicus submissions might support the process in general and this arbitration in particular, whereas a blanket refusal could do positive harm.

The shadow cast by Procedural Order No. 3, however, falls across Procedural Order No. 5 too, by way of the tribunal’s refusal to grant the petitioners access to key arbitration docu-ments. In taking this position, the tribunal may ultimately sabotage the potential for the peti-tioners’ submission to afford it “perspectives, arguments and expertise that will help it to arrive at a correct decision.”146 The relevance of the submission must inevitably be impeded when the

141 Ibid. at para. 66.142 Ibid. at para. 68.143 Ibid. at para. 70, citing ICSID Convention, Regulations and Rules, supra note 22 at 115.144 Biwater, Procedural Order No. 5, ibid. at para. 71.145 Ibid. at para. 72.146 Ibid. at para. 52, quoting Suez, 2005 Amici Curiae Order, supra note 21 at para. 21.


petitioners are kept in the dark about the allegations made by the claimant, the legal framing of its claim, and the respondent’s defence. Moreover, this restriction places an unnecessary hurdle before the petitioners, who must endeavour to guess the substance of the proceeding in order to make their submission relevant and useful.

CLOSING COMMENTS

Despite their potential implications on sustainable development, investor-state arbitra-tions have to date largely taken place under a veil of secrecy. In the last few years, there has been a dawning recognition that such secrecy is problematic where public interests are at stake. As a result, there is now a slow but noticeable trend toward greater transparency and public participation in the arbitral process.

In Procedural Order No. 3, concerning the claimant’s request for provisional measures, the tribunal acknowledges this trend. Its decision, however, ultimately flies directly in the face of it, ordering the parties to refrain from disclosing any of the pleadings or other documentation filed in the proceeding and to limit any general discussion about the case in public to what is “necessary”.

In Procedural Order No. 5, the tribunal grants five non-governmental organizations’ peti-tion to file a written submission but denies their accompanying application for access to key arbitration documents. The net result is that the petitioners may file a written submission but must do so without having seen the pleadings or other documents setting out the scope of the proceeding.

While the sun may slowly be starting to come out in the area of investor-state arbitration, the tribunal’s decisions in procedural orders No. 3 and No. 5 show that, in the absence of clear rules ensuring the transparency of investor-state proceedings, the yet weak sun is struggling to shine.