Wednesday, February 1, 2023

The Permanent Court of Arbitration: A Steadfast Pillar of the International Rules-Based Order

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By H.E. Mr. Marcin Czepelak, Secretary General of the Permanent Court of Arbitration

One can see it as a paradox, but I am the youngest Secretary General of the oldest international court in existence: the Permanent Court of Arbitration (“PCA”). Well known is the fact, that in order to offer the PCA a proper headquarters the Peace Palace was built thanks to the generous donation of Andrew Carnegie. It has quickly become the icon of The Hague, who with the PCA gained a fame of the city of “peace and justice”.

Indeed, the PCA is one of the institutional pillars of the peaceful settlement of international disputes, a foundational principle of our international legal order. As Secretary-General, I am deeply honoured to lead this intergovernmental organization with 122 contracting parties created to facilitate arbitration and other peaceful means of dispute resolution. The PCA administers procedures for the resolution of disputes involving various combinations of states, state entities, intergovernmental organizations, and private parties. We are also at the forefront of developing other dispute settlement mechanisms to meet the transnational challenges of the 21st century.

Today, the PCA is flourishing. In 2021 alone, we provided registry services in 204 cases. Seven are inter-State arbitrations; 115 are investor-State arbitrations; 80 are contract-based arbitrations involving a State, State-entity, or international organization; and two involve other dispute resolution procedures. Developments in the past century have also woven the PCA inextricably into the larger tapestry of international dispute resolution. References to our institution are included in a large and growing number of treaties and other international instruments. The Arbitration Rules of the UN Commission on International Trade Law (UNCITRAL), for example, authorize me, in my capacity as the PCA Secretary-General, to provide various services, including the appointment of arbitrators, ruling on challenges, or deciding on fee arrangements. The number of requests for these services has also grown exponentially—at 893 and counting—with the PCA receiving 43 requests relating to our appointing authority services just in 2022 alone.

Background

Created in 1899, the PCA is the precursor to any permanently constituted international court. Our institution predates the United Nations and most of what we now consider the international legal order. It was also created when there were few, if any, precedents for what an international body devoted to resolving international disputes might look like. As in our times, it was also a period of significant instability following unprecedented technological change and innovation.

From this turbulent background, the founding States came together in a peace conference in The Hague. The defining feature of the 1899 and 1907 Hague Conventions (which together constitute the PCA’s founding instruments) is the humility with which they approach the subject of international dispute settlement. Almost uniquely among international treaties, the Hague Conventions favour the resolution of disputes as such, rather than a particular method of dispute settlement. At their core, the Conventions recognize that no single method of dispute settlement is appropriate in all instances and that States are best equipped to determine how to resolve their disputes. Faced with the limitations of what could be agreed upon in 1899, our organization was created an open-textured institution in which various forms of dispute settlement could be pursued.

As a result of this wisdom, the PCA has been remarkably able to adapt to the changing dispute resolution needs of the international community. This institutional flexibility we enjoy currently manifests itself in four major areas of activity: (a) inter-State arbitration across a wide range of treaties,

  • mixed arbitration involving private parties, States, and international organizations, (c) other forms of non-binding dispute settlement, and (d) the creation of dispute settlement mechanisms in novel areas in which they are otherwise lacking.

PCA in Inter-State Arbitration

The PCA’s institutional flexibility is visible first and foremost in our work in inter-State arbitration. The Hague Conventions envisaged the creation of a standing Court of arbitrators, out of which individual tribunals would be formed. Yet it quickly became apparent that, when faced with a particular dispute, States were reluctant to have their appointments restricted to a specific list. Thus, the PCA’s founders ensured that the procedures they designed were residual: a default approach that would

give way to any other method agreed upon by the disputing parties. The 1899 Hague Convention thus expressly provided for the International Bureau of the PCA, which I head as Secretary-General, to support the work of any “special” arbitral tribunal its contracting parties might create, on the same terms as a tribunal created following the Hague Convention procedure.

Today, inter-State arbitration is alive and well at the PCA. Our institution is currently administering four inter-State arbitrations, two of which are between Ukraine and the Russian Federation: the first concerning Coastal State Rights in the Black Sea, Sea of Azov, and Kerch Strait, the second concerning the Detention of Ukrainian Naval Vessels and Servicemen. Recent inter-State proceedings have been initiated under various treaties, including the Law of the Sea Convention, the Indus Waters Treaty, the Timor Sea Treaty, the OSPAR Convention, and many other bilateral treaties. Any inter-State arbitration can be brought to us, whether the treaty provides for arbitration with nothing more, includes its own detailed rules of procedure, or expressly provides for the PCA and the application of the PCA’s rules of procedure. Regardless of the context, we can provide an arbitral tribunal with the infrastructure and secretariat support to enable it to function with the same efficiency as a permanently constituted body.

PCA in Mixed Arbitration

The second area where the flexibility of the PCA is evident is in our support for mixed arbitration involving States and private parties, or in disputes involving international organizations. For such disputes, international litigation is not an option as it involves one or more parties that are not a State. Resort to a domestic forum would have required at least one party to subject itself to the jurisdiction of another State. In these circumstances, it is not surprising that parties often agree on an arbitrated resolution.

The administration of such mixed disputes has a long tradition at the PCA. While the 1899 and 1907 Hague Conventions focused on resolving disputes on an inter-State basis, the conflicts they envisaged frequently concerned private rights. Indeed, during the 1899 Hague Conference, a consensus

was nearly achieved on a proposed obligatory arbitration for claims arising from harm to foreign nationals and their property.

Unsurprisingly, many of our institution’s early arbitrations concerned private rights and claims presented as inter-State matters. As international law progressed into the 21st century, issues involving private rights are now routinely handled directly between the States and the private entities involved. The commercial treaties of the early twentieth century developed into a large network of bilateral investment treaties providing for mixed arbitration. And States now commonly engage in the complex contractual undertakings in a wide variety of areas. Such cases make up a large portion of our current caseload.

PCA in other forms of Dispute Resolution

The PCA’s services are not limited to assistance with arbitral proceedings. We are also mandated by our founding conventions to assist States with other forms of dispute resolution, including mediation, fact-finding, and conciliation. These alternative forms of dispute resolution often take place out of the public eye but represent an area of great potential.

In 2016, for example, the PCA was heavily involved in the first-ever compulsory conciliation proceedings brought by Timor-Leste against Australia under the Law of the Sea Convention. By 2018, Timor-Leste and Australia had signed a settlement treaty based on a proposal from the Conciliation Commission. This ended a long-running and highly contentious dispute over their maritime boundary and petroleum development in the Timor Sea. This successful conciliation shows the potential of non- binding forms of dispute resolution, where litigation may not be conducive or where agreement on a binding solution may be out of reach.

Dispute Resolution Mechanisms of the Future

Able to support binding procedures, non-binding procedures, and anything in between, the PCA’s flexibility allows us to develop other mechanisms of dispute resolution to meet the evolving needs of States in an increasingly complex transnational setting. At its core, our institution is uniquely

empowered to create mechanisms for dispute settlement in contexts in which they are otherwise absent. Thus, in recent decades we have provided support to, among others:

  1. Permanent or long-standing legal institutions, such as the Bank of International Settlements Tribunal, the Iran-United States Claims Tribunal, and the Eritrea-Ethiopia Claims Commission, established to hear a number of cases over an extended period;
  • Expedited procedures such as the review panels under the Convention on the Conservation and Management of High Seas Fishery Resources in the South Pacific Ocean that have produced a decision within a few weeks;
  • Disputes in post-conflict environments, such as the Abyei Arbitration between Sudan and the Sudanese People’s Liberation Movement/Army, where an international mechanism is needed but the permanent involvement of the international community is neither appropriate nor desired; and
  • Dispute resolution in emerging areas of international law, such as climate change or the intersection of business and human rights.

Conclusion

Because of its flexibility, the PCA today is a modern dispute resolution institution that is more active than at any point in its more than 120-year history. The potential to leverage our institutional flexibility to meet the pressing needs of the international legal order is immense. Now, more than ever, the international legal order is under strain from the continued use of force and international disputes that seem to defy diplomatic resolution. Resolving these challenges requires the international community to not only address the crises, but to recommit itself to the fundamental principle of settling disputes through law.

The international community needs the PCA as a crucial pillar of this international rules-based order. Our steadfast institution—the first, and the oldest, intergovernmental organization to provide a global mechanism for resolving international disputes—remains uniquely suited to rise to these challenges.

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