Addressing the Inadequacies: A New Multi-Faceted Solution to Double Hatting in ISDS
| Author | Mohit Kumar Tanwar |
| Position | BA LLB (Hons) candidate at the Faculty of Law, Jamia Millia Islamia, India, '22 |
| Pages | 115-165 |
2021
LSE LAW REVIEW
115
Addressing the Inadequacies: A New Multi-Faceted
Solution to Double Hatting in ISDS
Mohit Kumar Tanwar*
ABSTRACT
In Investor-State Dispute Settlement (ISDS), ‘double hatting’, or the playing of multiple roles
by arbitrators in different ISDS proceedings as counsels, expert witnesses, or tribunal secretaries,
is a problematic phenomenon. This regrettable practice results in the monopolisation of power
and builds up suspicions regarding such arbitrators’ impartiality which, in turn, threatens the
legitimacy of the whole ISDS regime itself. Therefore, to sustain the current ISDS system as a
viable dispute resolution option for investors and states, there is a need to regulate double hatting
at the earliest. To that end, numerous solutions have been forwarded by scholars and international
bodies alike. The recently proposed Draft Code of Conduct for Adjudicators in ISDS is a
significant development in this field. However, all these solutions are either unviable or inadequate
as they fail to account for the variations in the forms and intensities of double hatting.
To remedy this lacuna, this article analyses the existing proposals, including the Draft Code of
Conduct, and, thereafter, develops a more comprehensive solution by inculcating measures such
as compulsory disclosure requirements and temporary bans. Further, it adapts these measures to
regulate, and minimise, concurrent and successive double hatting across different classes of arbitral
proceedings. By doing so, this article adopts a novel, multi-faceted approach to overcome the
problem on a case-by-case basis, serving its aim of bringing to the table a viable and effective
solution—one that ticks the maximum number of boxes—to resolve the risks posed by double
hatting.
* BA LLB (Hons) candidate at the Faculty of Law, Jamia Millia Islamia, India, ‘22.
116
A New Multi-Faceted Solution to Double Hatting in ISDS
Vol. VII
INTRODUCTION
When it comes to ethical regulations, the Investor-State Dispute Settlement
or Investor-State Arbitration (ISDS) is a ‘no-man’s land,’
1
and ‘double hatting’—
a notion lacking any unanimously agreed upon definition—is one of its most
serious problems.
2
As a highly concentrated phenomenon
3
that has gained
ground over the past two decades,
4
‘double hatting’, for the scope of this article,
refers to the playing of multiple roles by arbitrators in different ISDS proceedings,
and includes both sequential and simultaneous movement between roles as
arbitrators, counsels, expert witnesses and tribunal secretaries.
5
Scholars and international bodies have put forth many different proposals
to resolve this problem, including the recent Draft Code of Conduct for
Adjudicators in Investor-State Dispute Settlement which is being drafted by the
International Centre for Settlement of Investment Disputes (ICSID) and the
United Nations Commission on International Trade Law (UNCITRAL).
6
The
ICSID and UNCITRAL released the first version of this Draft Code of Conduct
on 1 May 2020, and its updated version on 19 April 2021.
7
1
Catherine A Rogers, ‘Fit and Functional in Legal Ethics: Developing a Code of Conduct
for International Arbitration’ [2002] 23 Michigan Journal of International Law 341, 341.
2
ICSID and UNCITRAL, ‘Draft Code of Conduct for Adjudicators in Investor-State
Dispute Settlement’ (1 May 2020) para 65, 66
<https://uncitral.un.org/sites/uncitral.un.org/files/media-
documents/uncitral/en/draft_code_of_conduct.docx> accessed 25 August 2021 (Draft
Code of Conduct 2020).
3
Ariel Anderson, ‘Saving Private ISDS: The Case for Hardening Ethical Guidelines and
Systematizing Conflicts Checks’ (2018) 49 Georgetown Journal of International Law 1143,
1157.
4
Malcolm Langford, Daniel Behn and Runar Hilleren Lie, ‘The Revolving Door in
International Investment Arbitration’ (2017) 20 Journal of International Economic Law
301, 326 (The Revolving Door).
5
ibid 301.
6
Draft Code of Conduct 2020 (n 2) para 65.
7
ICSID and UNCITRAL, ‘Draft Code of Conduct for Adjudicators in International
Investment Disputes: Version Two’ (19 April 2021)
<https://icsid.worldbank.org/sites/default/files/draft_code_of_conduct_v2_en_final.p
df> accessed 25 August 2021 (Draft Code of Conduct V2.0).
2021
LSE LAW REVIEW
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To aid in combating double hatting, this article argues that the currently
available solutions, (including the Draft Code of Conduct) suffer from limitations,
and that a more holistic, multi-dimensional approach is better suited to remedying
the problem. Section I of the article begins by explaining the problems that double
hatting gives rise to. It then touches upon the core values of the ISDS system that
one must account for while considering any measure against double hatting.
Thereafter, Section II analyses four solutions that are currently available for
resolving double hatting. The article highlights the limits of absolute bans,
temporary bans, the Multilateral Investment Court (MIC), and the Draft Code of
Conduct as possible solutions. Then, Section III develops a novel solution to the
problem at hand, and grounds it in ISDS jurisprudence. It also briefly discusses
the achievements and limitations of the said proposal. Finally, Section IV of the
article concludes the analysis with a note of caution against opting for solutions
that are overly broad, overly narrow or, simply, impractical.
I. PROBLEMS AND PRINCIPLES
Why double hatting is problematic
The diversity crisis
Diversity is a key value that is advantageous to all adjudicatory systems.
8
The
availability of a diverse body of decision makers to choose from helps in avoiding
cognitive biases and groupthink by allowing inflow of fresh and diverse
perspectives, and also in strengthening the appearance of legitimacy and fairness
of the adjudicatory process.
9
Despite such an important role, the ISDS system is
undergoing a grave ‘diversity crisis’, as its levels of diversity continue to remain
8
Vanina Sucharitkul, ‘ICSID and UNCITRAL Draft Code of Conduct: Potential Ban on
Multiple Roles Could Negatively Impact Gender and Regional Diversity, as Well as
Generational Renewal’ (Kluwer Arbitration Blog, 20 June 2020)
<http://arbitrationblog.kluwerarbitration.com/2020/06/20/icsid-and-uncitral-draft-
code-of-conduct-potential-ban-on-multiple-roles-could-negatively-impact-gender-and-
regional-diversity-as-well-as-generational-renewal/> accessed 21 August 2021.
9
Andrea Kay Bjorklund, ‘The Diversity Deficit in Investment Arbitration’ (EJIL:Talk!, 4
April 2019) <https://www.ejiltalk.org/the-diversity-deficit-in-investment-arbitration/>
accessed 5 July 2021.
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