17th SIDRC Lecture Series with SIAC guest speaker Toby Landau QC
“Skating on Thin Ice: Arbitration and the Public Interest”


Report by SeungJin(Jin) Han
Attorney at Law (New York & Korea)
Kim & Chang

On 13 October 2016, Mr Toby Landau QC, member of the SIAC Court of Arbitration, gave a speech at the 17th SIDRC Lecture Series co-hosted by SIAC, the Seoul International Dispute Resolution Center (SIDRC), and the Korean Council for International Arbitration (KOCIA) at the Seoul Global Center. His lecture, “Skating on Thin Ice: Arbitration and the Public Interest” was as eye-opening and riveting as his other past lectures.

seoul_idrc members_audience
Toby Landau QC, Prof Hi-Taek Shin

Members of the audience

Mr Landau asked everyone in the room to imagine themselves skating on ice so thin you cannot tell when the ice will crack, sending you tumbling down into the cold abyss. International arbitration is exactly like skating on delicate ice. He went on to an in-depth discussion on how public interest will affect arbitration in the near future. Arbitration is grounded on party autonomy and seeks to confidentially resolve conflicts between two specific parties based on a contract. However, unlike commercial arbitration, investor-state dispute settlement (ISDS) is a new dispute resolution method based on a bilateral investment treaty between two countries and therefore the claimant is not a predetermined person or entity. Moreover, ISDS is used in resolving public issues rather than private commercial issues, which traditional arbitration tends to focus on. When arbitrators who mainly practice commercial arbitration participate in ISDS cases following the basic designs of a commercial arbitration case, issues tend to arise.

As an example, Mr Landau presented an ISDS case on the water infrastructure in Tanzania where the voice of the 38,000 people who actually lived in Tanzania, most affected by the outcome of the case, was not represented. Moreover, the arbitrators presiding over the case, which had such an enormous public impact, were not expert practitioners of public law. There are a myriad other ISDS cases on publicly sensitive subjects such as tax, tobacco, and nuclear plants generating astronomical compensations, i.e., the Yukos case. However, ISDS cases are not subject to appeal meaning that the checks and balances which public law generally requires, are absent. Furthermore, the public interest in major issues such as human rights, environment and sustainable development may not be adequately dealt with. Mr Landau pointed out that the arbitration community has failed to address these criticisms.

As a solution to this impending problem, Mr Landau suggested that there is a need to fundamentally improve the current system which is based on the commercial model. We need to increase public participation in ISDS proceedings and facilitate active discussions in issues such as human rights, environmental concerns, and sustainable development. Conversely, these changes made to ISDS will inevitably influence commercial arbitration. Mr Landau emphasised that in public interest cases, not only transparency but also the participation of all stakeholders in the proceedings must be encouraged.

Mr Landau ended the lecture by telling an anecdote in which he caught a taxi in London and even the driver was criticising arbitration. As Mr Landau repeatedly implored, a system that is condemned by the public cannot survive. The arbitration community must remember that we are all but skating on thin ice. For arbitration to sustain its glorious heyday, we must continue to subject ourselves to strict self-criticism and active self-improvement.
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