This article is authored by Adhiraj Lath and Shubham Gandhi, who are Fourth Year Students of Law at National Law University, Jabalpur.
DATE OF PUBLICATION- 10/10/2021
Judge Peter Tomka recently resigned from the tribunal which was hearing a case brought before ICSID by a Japanese investor, Macro Trading Co., against China under the China-Japan BIT. This incident reignited a controversial debate against so-called “moonlighting” in international arbitration. To explain the concept briefly, when the International Court of Justice (ICJ) judges also act as arbitrators in investment treaty arbitration (ITA or ISDS), this “double-hatting” is referred to as moonlighting.
Such moonlighting is often criticised for the reason that it risks a perception as to a lack of independence and impartiality of ICJ judges. Such arbitral work may, for instance, be seen as a step towards cementing and establishing the position of the judge as a full-time arbitrator following their retirement from the ICJ. Moreover, the conflict of interest potentially compromises the legitimacy of the ICJ “as the highest authority on public international law”.
Although the ICJ has taken steps to prohibit such moonlighting, Judge Tomka’s controversial appointment to begin with, and subsequent resignation, warrants revisiting the controversy surrounding this phenomenon.
Illustrative Legitimacy Concerns when ICJ Judges Adjudicate as Arbitrators
In 2017, the International Institute of Sustainable Development (IISD) released a groundbreaking statistical commentary on the effect of moonlighting vis-á-vis the “reputation” of ICJ and its eventual impact on ISDS. This study emphatically highlighted the pernicious impact of the phenomenon on both adjudicatory venues by, among other things, highlighting the potential incompatibilities between such double-hatting and the fundamental tenets of judicial propriety.
ICJ judges and ITA arbitrators are to remain independent and impartial. In that light, it must be remembered that ICJ judges are offered the security of tenure with a fixed salary. While acting as an arbitrator, the judge will be earning an additional fee, besides existing fixed remuneration. The judge, now acting as an arbitrator, is also required to allocate time between their workloads. Finally, and more importantly perhaps, there may be a potential conflict of interests embedded in the incentivization to act in a manner that lines up future appointments.
Another major issue which stems from moonlighting is the undesirable influence of overlapping issues in ICJ cases and concurrent ISDS proceedings and the impact it can have on ICJ rulings. The IISD report highlights that approximately 10% of all known investor-state cases had featured an ICJ judge or judges on the tribunal and ICJ judges have acted as arbitrators in more than 90 investor-State disputes. Underlying this double-hatting is the perception that issues of analogous nature before the same judge can potentially influence rulings in another case. Professor Gus Van Harten succinctly encapsulated this concern by commenting that ICJ “judges must strive to protect the Court from appearances of bias tied to investment treaties.”
On the other hand, it has been argued that moonlighting allows ITA to benefit from top-notch international law expertise, bolsters the cogency of arbitral reasoning in harmony with international law, and thereby prevents its fragmentation. Thus, in a positive way, ICJ judges acting as arbitrators may facilitate systemic integration by enabling interaction between varying legal regimes.
A Contextual Primer on Moonlighting
Since its inception, the ICJ statute clearly mandates, pursuant to Article 16, that “no member of the Court may exercise any political or administrative function, or engage in any other occupation of a professional nature.” The issue regarding the extent of applicability of Article 16 came up in 1995. In the report dated 2 November 1995, the UN Security-General clarified that Article 16 does contain a prohibition, stating that “holding a position in a commercial concern, engaging in the practice of law, maintaining membership in a law firm or rendering legal or expert opinions” was prohibited under the Article.
However, while answering this contentious question, the Court clarified that “occasional appointments as arbitrators” will fall outside the scope of Article 16, citing a traditional practice of the Permanent Court of International Justice (PCIJ), the precursor to the ICJ. However, this response prompted another report by the Advisory Committee on Administrative and Budgetary Questions which questioned these outside remunerated activities engaged in by ICJ judges, and highlighted the need for disclosure requirements and guidelines for moonlighting.
In response to this, the Court elucidated in its Annual Report 1995-1996 that moonlighting is in line with the ICJ statute and reiterated that it was a long-standing practice endorsed from the origins of the PCIJ. While closing this debate, the Court suggested that judges acting as arbitrators would collectively benefit all concerned institutions in the development of international law so as not to be a cause of concern. This position remained settled until the IISD report in 2017 and related discussions reignited this debate once again.
As a result of the stir against moonlighting, in 2018, Judge Abdulqawi Yusuf, President of ICJ at the time, addressed this issue in the UN General Assembly by announcing that, due to the mounting workload of the court, “the members of court have decided that they will not accept to participate in international arbitration. In particular in investor-State arbitration or in commercial arbitration.” This rationale was recapitulated in the Obligation to Negotiate Access to the Pacific Ocean case. Further, he mentioned that the Court in ‘exceptional’ circumstances may permit its members to participate in inter-state arbitrations and declared that the Court was in the process of finalizing guidelines on moonlighting.
In a more recent speech of 2020, Yusuf J. again reiterated this decision, stating that “the Court has clarified that invitations to visit from States that have cases pending before it may not be accepted by any of its members” Following this, the guidelines on the extrajudicial activities of its members were made public. These guidelines prohibit members from participating in arbitration proceedings and only permit appointments made to investor-state arbitrations, consistent with Judge Yusuf’s 2018 speech.
Curiously, these two speeches made by the President do not assert that moonlighting is against Article 16 of the ICJ Statute. This paves the way for the possibility that limiting appointments is to ensure greater efficiency of the ICJ. This construction of Article 16 implies that prohibiting moonlighting of ICJ judges is a temporary measure, which is subject to the workload of the Court. This possibly keeps the door ajar for moonlighting to resume in the future, when the caseload of the Court diminishes.
Consequences of the New Guidelines on International Law
To counter the growing legitimacy concerns of moonlighting, the guidelines restricting appointments to ISDS tribunals will inevitably put an end to the perceived lack of independence, impartiality and incentivization for future appointments. From a broader prospect of maintaining ICJ’s integrity as a preeminent authority in public international law and restoring the legitimacy of ISDS, the current guidelines are an appropriate measure to ensure that the adjudicator’s role in both the systems remains unsullied and ultimately, to restore faith in ICJ judges and ITA arbitrators alike.
Seemingly, the appointments permitted solely to investor-state arbitrations under the new guidelines appear to be compatible with the existent contentious jurisdiction between states of the ICJ. Moreover, the guidelines permit only one appointment at a time. Interestingly, the guidelines mention that judges “may” only participate in one investor-state arbitration at a time. This allows for the possibility of appointments being permitted to more than one investor-state arbitrations.
Conflicts of interest and emitting concerns such as perceived lack of independence and impartiality and economic incentivization are inherently precluded when Judges cannot sit as arbitrators between investors and States. Further, the creation of a panel of judges who will authorize any appointment to a tribunal under the new guidelines. Accordingly, the guidelines provide a mechanism for disclosure obligations to the Court which allay fears of opacity and allow for a potential conflict of interest scrutiny of prospective appointments.
Undoubtedly, the prohibition of moonlighting will also help the ICJ to direct its focus to effectively deciding the cases before it. In particular, time-sensitive matters requiring provisional measures are greatly consequential, requiring urgent attention of the Court. It was evident in the recent cases before the ICJ, in particular, the Jadhav and Iran v. USA cases that the time factor was exigent to the situation.
The guidelines aim for absolute precedence of judicial activities of the ICJ. In consequence, judges must decline appointments by states with cases pending before the Court even if there is no “substantial interference” with the work of the Court. Appointments made prior to the framing of these guidelines remain unaffected. The venerated role of ICJ judges as preeminent authorities of international law, should, most of all, be their inherent motivation in refraining from moonlighting.
Conclusion
Allowing ICJ judges to arbitrate may potentially mitigate fragmentation, maintain consistency of reasoning in the system and enhance systemic integration. However, it is evident that the adverse effects of moonlighting tend to erode the legitimacy of both the ICJ and ISDS. Baleful perceptions of conflict of interests, issue conflicts, economic incentivization for switching workload, cementing positions for future appointments, among other issues, are grave concerns for any adjudicatory system. Consequently, it becomes imperative that any impartial and independent adjudicatory system is infallible to these questions. The new ICJ guidelines attempt to preempt just that.