Alternative Dispute Resolution

Best Interests, Conflict and the Role of Mediation in Medical Treatment Disputes

/ essexlawresearch / Leave a comment
Image via Shutterstock

By Margaret Doyle and Jaime Lindsey

Introduction

Best Interests is a BBC drama exploring the turmoil of decision-making about healthcare for a critically unwell child. Marnie is a 13-year-old girl who was born with a life-limiting form of muscular dystrophy. The crux of the four-part drama is about how to treat Marnie when her condition deteriorates, having been otherwise cared for at home for most of her life.

Marnie is admitted to hospital due to a chest infection, and subsequently deteriorates, needing resuscitation and ventilation. Several days after her admission she suffers a cardiac arrest and is resuscitated with CPR, but remains unconscious and on a ventilator.

The central legal question that emerges is what healthcare is in Marnie’s best interests, hence the show’s title. Her mother, father, sister and the various treating healthcare professionals all appear to have differing perspectives on what should happen to Marnie; they cannot agree on what is in her best interests. Is further treatment and ventilation causing her harm and prolonging her suffering, or is this episode similar to previous crises, from which she has pulled through to enjoy life again?

While unusual, these high-conflict disagreements do sometimes occur between healthcare professionals, patients and family members, and the show is careful to provide a nuanced and interesting portrayal of the ethical and emotional issues at stake for all those involved.

In this post, we provide some reflections on this portrayal from the perspective of researchers currently looking into these issues (see also our previous post here). We draw out some of the key themes that struck us as pertinent, look at how conflict in these cases can occur, and consider the potential of mediation as a way of helping to resolve them.

Depicting the causes of conflict

A key theme of the show is the way disagreements between families and Health Care Professionals (HCPs) develop and can become entrenched. In episode 1, for example, we see a member of the hospital team invite the parents to a meeting with the senior doctor in charge of Marnie’s case. ‘Invited’ is probably what was intended, but it was received by the parents as, in effect, a summons to meet with the doctor at a specific time and place of her choosing, not theirs, with no indication given of what was to be discussed. That alone can feel disempowering to parents, even ones as accustomed to the ways of the hospital as Marnie’s parents had become, and the sense of dread they felt was palpable.

At the meeting, a palliative care doctor is casually introduced, without apparently any prior discussion having taken place of the possibility of palliative care for Marnie. The depiction of this meeting – a discussion entirely dominated by the medical team’s timing, interests and perspectives – highlights how breakdowns in trust can occur.

Episode 1 also powerfully alluded to the role of resources in these cases, which can be the elephant in the room. The doctor says to the parents, in relation to further treatment for Marnie, that ‘we have to question the cost of that’. This is followed by a statement to clarify that she meant the costs ‘to Marnie’. The parents think that costs of ongoing treatment might be a factor in the healthcare professionals’ approach, whereas the doctor means cost in quality of life for Marnie. This was an issue that was revisited during the trial in episode 4, with the barrister for Marnie’s mother cross-examining the treating clinician on her role in rationing paediatric intensive care beds during the pandemic.

Importantly, the show also provided life and character to Marnie; she is shown playing with her older sister, laughing and dancing, and enjoying a ‘normal’ family life. The realities of family life, in contrast with the hospital settings, were a stark reminder of how HCPs and parents approach the issue from fundamentally different standpoints. A parent will remember their child full of life and getting joy out of everyday experiences, despite their suffering. HCPs, however, will more often only see the child when something has gone wrong, when suffering is more apparent to them than joy or pleasure.

There is another element that contributes to this divide in perspectives. Written by Jack Thorne, whose previous TV dramas include the story of disability rights activists Barbara Lisicki and Alan Holdsworth, Best Interests is also a critique of the ways in which society devalues the lives of disabled people. The show captures how a perception of bias (ableism) feeds into concerns about decisions made by HCPs about issues like continued treatment and resuscitation of disabled patients. Are non-disabled HCPs using ableist measures when assessing the quality of life of a disabled patient?

Furthermore, the drama captures the cumulative anger felt by many parents of disabled children who feel they have had to fight to get the support and health care and even adaptive technology and wheelchairs their children are entitled to. It is important to recognise that the show highlights the impact of this experience on the response of the parents, in particular Marnie’s mother, Nicci. HCPs would be better positioned to anticipate, and respond appropriately to, the response of Marnie’s mother if they truly understand the background of parents fighting for their child to be valued.

Despite characterising Marnie with such life, the most salient missing feature of the show, which may have been intentional by the writers, was the absence of Marnie’s own views about how she should be treated. A court-appointed guardian spoke with individual members of the family and attended the hearing, but if he gave evidence in court, this was not portrayed in the programme. We don’t know what Marnie’s views are on continuing treatment, if her threshold of tolerance is higher or lower than those of her parents, if her assessment of what makes life meaningful reflects theirs. This is often a criticism of medical and legal processes, that they fail to engage with the people most affected by the decisions. While Marnie’s views were not ascertainable during her acute stay in hospital, her views could have been recorded at an earlier stage, while she was still able to communicate effectively. If decision-making in this area is to be improved, a starting point must be to identify early on, and have at the centre of the decision-making process, what the patient herself would have wanted.

Resolution options

Although viewers are aware from the start that the case proceeded to court (the initial scene shows the family outside the court), the drama depicts other approaches to resolving the disagreement. A Clinical Ethics Committee (CEC) meeting is depicted in episode 2. There was no parental involvement in this, which is common practice but also a common criticism. The CEC meeting also revealed some degree of conflict between two of the HCPs caring for Marnie.

Mediation was also highlighted in episode 2 as a potential option for resolving the disagreement. This is often suggested in these cases due to the problems with litigation, something evident in episode 4 with the adversarial nature of court brought to the fore. However, the way mediation was introduced unfortunately reflected many misconceptions.

First, it was initiated by the treating clinician, so it is perhaps understandable that the family had reservations about its use. The mediator meets with Marnie’s parents at home and describes mediation as a way to challenge how people are thinking, but Nicci interprets that as ‘making me ok with your decision’. Mediation is sometimes seen by parents as a mechanism for persuading them of the hospital’s views. Making mediation genuinely an option that parents are aware of and can initiate might help alleviate some of these concerns about bias and power. However, misperceptions about mediation stem from other life experiences and are harder to counter. For example, Nicci also has experience of a workplace mediation (which she also refers to as arbitration) which was unsatisfactory, leading her to distrust mediation in the context of Marnie’s treatment.

Our research on mediation (discussed further below) will hopefully shed some light on how mediation might be used in these cases to good effect.  

Conflict, mediation and the way forward

It is not possible to remove all conflict from life. People will reasonably disagree about what should be done in any given situation, none more so than life-or-death cases concerning children. But is it possible to reach some form of joint understanding, or even agreement, between people when so much is at stake? How can one consider shifting on questions of professional ethics (for the doctors) and on prematurely ending a child’s life (for the parents)? The association of mediation with compromise and ‘splitting the difference’, as it is so often portrayed in commercial disputes, is inappropriate in these healthcare conflicts.

The show is accurate in flagging up mediation as an option; it is also accurate in depicting its rejection by parents. Mediation has been proposed as a better way forward to resolve these difficult conflicts – it is one element of improvements set out in the proposed Charlie’s Law [i] after the Charlie Gard case – but our understanding is that it has rarely been attempted in the cases that ultimately end up in court.

In a recent literature review produced for the Nuffield Council on Bioethics, mediation is allocated a short section – perhaps reflecting the lack of evidence on its use in these contexts. That review suggests that mediation may be appropriate in some contexts involving ‘moderate’ conflict; that used early on in such circumstances, it can promote inclusion and identify mutual interests. One concern highlighted, which is reflected in Marnie’s mother’s reaction in Best Interests, is that parents have unequal power because in cases involving a hospital view that further treatment is futile, ultimately courts will always decide for the health professionals. Mediation then is seen by parents as merely an earlier opportunity to uphold the hospital’s view, but by way of persuasion rather than judicial determination.

Indeed, mediation is a very different approach to exploring conflict than the adjudication used by courts. Mediation is a non-judicial form of dispute resolution that is voluntary, flexible, informal, confidential and party-led. Any agreements – or indeed a decision not to agree – is made jointly by the parties, not by the mediator. It prioritises communication and understanding rather than the assessment of hard evidence. A particular benefit of mediation is that it can help to improve communication by bringing people together, and in this way facilitating better understanding of issues and perspectives and enabling all individuals to feel heard as participants, something which parents sometimes think is not done effectively in healthcare.

There are other potential benefits of mediation – for example, it tends to be less costly than court proceedings and can be quicker. It can also be tailored to individual needs – for example, it can take place over multiple days, over the phone/online and in various locations, and it can use specialist expertise to facilitate the participation, direct or indirect, of the patient where possible. It can generate creative solutions through collaboration, and it can result in de-escalating conflict even where disagreement remains. Mediation can also be valuable in reaching an agreement on arrangements for withdrawing treatment following a court order, to help with decisions on the issues faced by the family in Best Interests.

Despite the promises made for mediation, we do not have a strong evidence base for its use in these cases, and further research is underway to consider what potential benefits and risks it might have.

We have been researching the use of mediation as an alternative way to resolve medical treatment disputes. This research will consider whether there are any therapeutic, or healing, benefits of using mediation to resolve disputes that arise from health and care contexts, as well as considering the ways in which mediation could become more therapeutic as an intervention. We look at cases involving children (similar to those discussed in Best Interests) as well as cases involving adults under the Mental Capacity Act 2005. As part of this research, the team will be observing medical mediations, as well as interviewing and surveying mediation participants.

The study is now recruiting participants for this exciting research project, and we would like to hear from mediators, healthcare professionals, patients and family members who have been involved in mediations of medical treatment disputes. We hope that by gathering more evidence about the role of mediation, its potential benefits can be made available to those who, like Marnie and her family, find themselves in these challenging situations in the future.

If you would like to take part or want to know more about our research, please contact Dr Jaime Lindsey, Principal Investigator of this ESRC-funded research at j.lindsey@reading.ac.uk and on Twitter @meddisputes or Margaret Doyle at mdoyle@essex.ac.uk.

[i] An initiative of the family of Charlie Gard, a baby who died after a high-profile court case to resolve a disagreement about withdrawing life support. See here for more.

Mediating Conflict Between Families and Doctors

/ essexlawresearch / 2 Comments
Image via Shutterstock

Jaime Lindsey and Margaret Doyle, University of Essex, School of Law

Fundamental disagreements between healthcare professionals and family members about the life and death of loved ones are, thankfully, relatively rare. It is even rarer for those disagreements to be resolved through the courts. The Archie Battersbee case has, however, brought this issue to the fore in recent weeks. For his family, their fight on his behalf was played out on the media stage at every turn. It ended in the 12-year-old boy’s death in hospital on 6 August 2022, a devastating outcome for his family. This followed several hearings culminating in an appeal to move him to a hospice being refused by the courts.

Others have already commented on the legal issues arising from that case, centring mainly on the best interests of the child. While we are sympathetic to the view previously put forward by others such as Dominic Wilkinson, and Cressida Auckland and Imogen Goold, of an alternative to the use of the best interests test in cases like these, for example the use of a significant harm threshold, that substantive legal discussion is not the aim of this piece.

Instead, our aim here is to consider whether, when these disputes do arise, there might be better ways to resolve them than going through the courts. For many, the court process is expensive, time-consuming, adversarial and, psychologically and physically exhausting. It is also uncertain, because the parties on both sides of the conflict must await an outcome determined by a third party, the court.

As a result, it has been suggested that mediation might be a better way of approaching these issues when they first arise, not least by Mr Justice Francis in the Charlie Gard case, who remarked that the case was calling out for mediation:

‘I recognise, of course, that negotiating issues such as the life or death of a child seems impossible and often will be. However, it is my clear view that mediation should be attempted in all cases such as this one even if all that it does is achieve a greater understanding by the parties of each other’s positions‘.

Para. 20

Yet despite increasing emphasis on mediation in other broadly similar areas, including family law and clinical negligence, there is limited evidence about its use in medical treatment cases. Furthermore, in medical treatment disputes the aims of the mediation might not be, as they are often in these other areas, settlement rates and cost savings; mediation may require a different approach that instead prioritises the experiences of participants and the potential for a therapeutic outcome.

The use of mediation to resolve medical treatment disputes is the focus of a research project led by Dr. Jaime Lindsey with consultancy from Margaret Doyle and Sarah Barclay, funded by an ESRC New Investigator Grant. This research will consider whether there are any therapeutic, or healing, benefits of using mediation to resolve disputes that arise from health and care contexts, as well as considering the ways in which mediation could become more therapeutic as an intervention.

The research seeks to test, empirically, the various claims about mediation through qualitative analysis of mediation in medical treatment disputes, covering cases involving children (similar to those involving Charlie Gard and Archie Battersbee, for example) and cases involving adults under the Mental Capacity Act 2005 (similar to cases such as that of Aintree v James as well as wider health and care decisions). How best to resolve these disputes was also the topic of a project led by the Nuffield Council on Bioethics – Disagreements in the Care of Critically Ill Children – and is being looked at by the UK government, which in the Health and Social Care Act 2022 committed to undertaking a review into how to resolve disagreements in the care of critically ill children and to report within one year.

What is Mediation and Why Might it Help?

Mediation is one type of ‘alternative dispute resolution’ (‘ADR’), which is generally seen as more informal and flexible than court proceedings and has several perceived benefits for those who take part. For example, it can improve communication between parties, enable individuals to feel heard as participants and increase the speed of resolution. It also tends to be less costly than court proceedings and can take place in parallel, meaning that no delay is needed should those involved not reach agreement at mediation. However, cases involving medical treatment disputes, especially involving children, are highly emotive, often involve life and death issues and have evident power imbalances between family members and healthcare professionals, meaning that mediation is not always seen as appropriate. Furthermore, for mediation to work, all parties must voluntarily agree to its use, which is not always possible.

Despite the drawbacks, mediation might help family members come to terms with the issues at the heart of the dispute and help healthcare professionals fully understand family members’ perspectives. The realisation as a parent that you are not legally the final decision maker for your own child can be shocking and lead to a feeling of powerlessness in the interactions with healthcare professionals. It can take time and careful discussion to digest the realities when faced with your seriously unwell or dying child.

Conversely, healthcare professionals may benefit from hearing directly from the family, in a neutral venue, over a period of time, away from the realities of the hospital ward. For both parties, then, mediation might provide an opportunity to hear from and be heard, in a way that is not possible in the ordinary course of the provision of healthcare.

Yet mediation is not a cure-all to the difficulties that arise in these disputes, and it should not be discussed as such. Nor should it be seen as a route to compromise, something neither party in medical treatment disputes could countenance when issues of life and death are at stake.

In such contexts, the ‘stereotypical image of a mediated settlement model, often characterised in terms of a confidential carve-up borne of an unseemly horse-trade, need not apply. Mediation is a flexible tool, in which the ground rules and outcomes can be dictated by the nature of the dispute and the priorities of the parties.’[1] Unlike in clinical negligence disputes, the remedy sought in medical treatment cases is not a financial settlement, requiring a different ‘sensibility’ of mediation than that commonly used in civil and commercial claims.

One of the concerns, raised by Supperstone et al and other public lawyers, is the confidentiality of mediation when used in disputes with a wider public interest. It is important to draw a distinction between the confidentiality of the mediation discussion and the confidentiality of any agreed outcome. The former is the default position for most mediations, to allow for frank and honest exchange between the parties. The latter, however, is for the parties to agree, and in mediations involving a wider public interest, the parties can agree on a shared public statement on the mediation outcome.

Mediation in medical treatment disputes should be seen as providing a much-needed neutral space for careful discussion between parents and family members and the healthcare professionals, mediated by an independent and highly skilled facilitator. Working with the parties, the mediator tailors all aspects of the mediation process to the needs of all those involved and ensures each voice is heard. Getting the appropriate people to the mediation is important so that questions can be answered, interests explored and, where appropriate, consensual agreements reached on ways forward.

Mediations are often highly emotive meetings, and no more so than in this context. Crucially, any outcomes are ones the parties themselves have decided on, and in that way they are active participants reaching collective decisions. Where the parties in dispute must maintain an ongoing working relationship, this can be invaluable.

What’s the Evidence?

Despite the perceived benefits of mediation and the wide-ranging evidence from other fields, there is currently only limited evidence about its use to resolve medical treatment disputes. There is some evidence about mediation’s use in the linked areas of resolving paediatric conflict, adult care mediation and an interview study with participants in mental capacity law mediations, see Reimagining the Court of Protection: Access to Justice in Mental Capacity Law. Otherwise, the data on mediation’s use is incomplete.

As part of our current research on medical treatment mediation, we will be conducting direct observations of mediations, as well as interviewing and surveying mediation participants. Our research will provide much-needed evidence as to whether mediation does provide a more therapeutic way of resolving medical treatment disputes, and if so, in what ways.

What Next?

The discussion about how best to resolve disputes between healthcare professionals and families will no doubt continue, with some advocating for greater parental rights and others maintaining that the current law is well suited to resolving these matters. What is clear, however, is that the legal process can reinforce disagreement and entrench positions.

Perhaps a different way of approaching healthcare conflict is required – one which values giving all parties the time and space to engage in early communication and to seek agreement on their own terms, with a neutral third party guiding them.

Yet the risks in using mediation are numerous: it is relatively empirically untested as a way of resolving these cases specifically (although the evidence is strong in other fields); it may lead to the interests of one of the parties being prioritised over the other’s; it may cause delay and lead to prolonged suffering for the patient; it may be felt by families that mediation is used merely to persuade them into agreement with the healthcare professionals; it may fail to prioritise the voice of the patient herself.

Using mediation to resolve these cases will not be a panacea. However, its potential is worth considering, and we aim to shine a light on it as a tool for helping to resolve these difficult cases in a more therapeutic way.

If you would like to know more about our research project looking at the use of mediation in medical treatment disputes, please contact Dr Jaime Lindsey, the Principal Investigator, at j.t.lindsey@essex.ac.uk.

[1] M. Supperstone, D. Stilitz and C. Sheldon, ‘ADR and Public Law’, (2006) Public Law Summer, 299-319, p. 313.

Incremental Development of a Legal Framework for Arbitration in Emerging Markets: A Case Study of Construction Arbitration in Nigeria

/ essexlawresearch / 1 Comment
Photo by David Rotimi

Dr. Fikayo Taiwo, Lecturer in Law at the University of Essex, has concluded her Ph.D. thesis titled ‘Incremental Development of a Legal Framework for Arbitration in Emerging Markets: A Case Study of Construction Arbitration in Nigeria’.

The problem the thesis sought to investigate is the continued exportation of Africa-related disputes for arbitration outside of the continent based on a perceived lack of an appropriately attractive seat of international arbitration within the region.

Given the economic impact of arbitration activity on a nation’s gross domestic product (GDP), the issue of capital flight was especially concerning.

To this end, the aim of the thesis was dual: first, to ascertain the viability of existing frameworks for commercial arbitration in African emerging markets for the purposes of promoting their reputation as seats of international arbitration; and second, to extend the literature on the African Union’s economic integration agenda that has recently been brought to the fore again by the Agreement establishing the African Continental Free Trade Area (AfCFTA).

In dealing with the problem, Dr. Taiwo set out to investigate the main research question of the extent to which a sector-specific specialist arbitration framework could enhance the right of access to justice.

Using a hybrid methodology and the single case study design, the central argument was that, to the extent that the necessary political will is present, identifying small spaces for reform (especially through specialist arbitration frameworks) and dealing with these issues in chunks is an effective way of progressively improving the parameters of access to justice, building attractive seats of international arbitration in Africa and consequently, contribute to economic and sustainable development.

One of the original contributions the thesis makes is applying access to justice from human rights law to commercial law as a major conceptual basis for the research to address not only arbitration matters but also other issues that parties take into consideration when choosing a seat of arbitration.

The wider significance of the work lies in its ability to not only reinforce the idea that the law is part of the development and should be part of critical sectors like the construction industry but also to inform law and policy for commercial arbitration in emerging markets and international institutions.

The thesis also expands the knowledge base of access to justice and the role it plays in issues beyond the realm of human rights law and discourse.

Dr. Taiwo plans to publish journal articles from her thesis to further explore the theme of the interplay of commercial dispute resolution and human rights for sustainability, and pathways to effective regionalisation through commercial arbitration in Africa.

ESRC New Investigator Grant Award For ‘Mediation of Medical Treatment Disputes: A Therapeutic Justice Model’

/ essexlawresearch / 1 Comment
Photo by Priscilla Du Preez

Dr. Jaime Lindsey, Senior Lecturer in Law at the University of Essex, has recently been awarded the prestigious ESRC New Investigator grant for her research project ‘Mediation of Medical Treatment Disputes: A Therapeutic Justice Model’. She has been awarded £299,791 over 30 months to use socio-legal methods to research the use of mediation in medical treatment disputes.

The core aim of the project is to understand whether and, if so, the extent to which, mediation can and should be viewed as a form of Therapeutic Justice in medical treatment disputes. The research will adopt a mixed-methods approach including observations of medical treatment mediations, interviews with mediation participants and a questionnaire.

Mediation, which is a form of alternative dispute resolution, is generally more informal and flexible than court proceedings, but often takes place alongside or in parallel with court cases. ‘Medical treatment disputes’ in this context means disagreements that arise between patients, health professionals, family members and others regarding the provision of health and care to the patient herself.

Usually the patient will be an adult with impaired mental capacity or a child below the age of 16, such that they are legally incapable of making their own decision about medical treatment, hence the involvement of healthcare professionals, family members and the courts. The disputes most commonly arise between family members of the patient and healthcare professionals, but in some cases may involve the patient herself.

The research will consider whether there are any therapeutic, or healing, benefits of using non-court based methods of resolution, such as mediation, to resolve disputes that arise from healthcare contexts, as well as considering the ways in which mediation could become more therapeutic as an intervention. For example, through improved communication between parties, improved voice or participation in the process of dispute resolution and speed of resolution.

This project builds on existing research on mediation and Therapeutic Justice to consider mediation’s value in often challenging healthcare environments, while also considering that mediation comes with a number of risks which may make it is less than ideally therapeutic. For example, mediation can reflect or reinforce existing power imbalances between parties, it can limit the participation of the subject of proceedings and it may be seen as a cost-saving, rather than therapeutic, exercise.

As the use of mediation has not yet been tested through empirical research in the medical treatment disputes context, nor has a model of Therapeutic Justice been developed or applied to this field, this project seeks to test those claims empirically through qualitative analysis of mediation in medical treatment disputes.

This research will commence in April 2022, with a launch event later that year, followed by dissemination of the research findings in the later years of the project. If you would like further information about the project or to be kept updated regarding the findings then please get in touch with the PI, Dr. Jaime Lindsey, at this email address: j.t.lindsey@essex.ac.uk

Corporate Investors’ Nationality and Reforming Investment Treaties: Can Older Generation Treaties Undermine Substantive Reforms?

/ essexlawresearch / Leave a comment
Photo by Christine Roy

Dr. Anil Yilmaz Vastardis, Senior Lecturer and Co-Director of the Essex Business and Human Rights Project, School of Law and Human Rights Centre, University of Essex

In my recently published book The Nationality of Corporate Investors under International Investment Law(Hart Publishing 2020), I dissect the relationship between international investment law, corporate law and the concept of nationality. I argue that this relationship has been problematic from host states’ and their communities’ perspective, for it creates a free market for manufactured corporate nationalities enabling wealthy investors to access investment treaty protections to challenge regulatory measures.

Scrolling through the UNCTAD investment dispute settlement database, one can detect, even without reading the awards or decisions, that some businesses publicly known to be corporate nationals of a particular state seek protection under investment treaties of other states. For instance, the UNCTAD database shows a claim filed by Chevron against the Philippines in 2019. One would expect this claim to be filed under the US-Philippines investment treaty, as Chevron Corporation is incorporated and headquartered in the US. But it appears from the UNCTAD investment agreements database that there is no investment treaty between the US and the Philippines. Instead, Chevron filed this claim under the Philippines-Switzerland investment treaty utilising its Swiss subsidiary Chevron Overseas Finance GmbH.

One investor, convenient nationalities

This practice of nationality shopping is relatively common and largely permitted in investment treaty practice. It is enabled by investment treaty texts and generous arbitral interpretations of a corporation’s link to its alleged home state. In the example of Chevron, while it certainly has a corporate presence in Switzerland, through which it may have channelled its investments to the Philippines, the question remains as to whether this alone makes Chevron a Swiss investor. The relevant investment treaty defines a protected Swiss ‘investor’ to include any company incorporated under Swiss law. According to this definition, Chevron in the Philippines is a Swiss investor and not a US investor. However,  according to two prior investment treaty claims that Chevron filed against Ecuador, it is a US investor. This is not an isolated instance. In its 2011 claim against Australia, Philip Morris argued it was a Hong Kong investor, whilst at the same time arguing in a 2010 claim against Uruguay that it was a Swiss investor. Philip Morris is a well known, US – headquartered tobacco company. But in investment treaty claims, it has never been a US investor. Similarly, Mobil initiated a claim against Venezuela in 2007 as a Dutch investor and against Argentina in 1999 as a US investor. Total was a French investor in its claim against Argentina in 2004, but it was a Dutch investor in a claim against Uganda in 2015.

Good governance and development narratives no longer justify manufactured nationalities

There are many similar instances of less well-known corporate investors relying on manufactured corporate identities or nationalities in order to invoke investment treaty protections. And all of this is often permitted within the boundaries of investment treaty law and corporate law. Taking a page from Katharina Pistor’s Code of Capital, we can understand investment treaties and corporate law principles as offering a legal coding of foreign investment that enables investors to change identity so as to increase the durability and priority of their interests. Those in favour of this flexibility of investment treaty law argue that we should focus on the bigger picture: the objective of investment treaty law to enhance good governance and economic development would be better achieved if all investors had access to treaty protections and investment arbitration, regardless of their origin or nationality. Thus, it is in line with the objectives of investment treaties to interpret the concept of investor or corporate nationality expansively and flexibly – so much so that an investor can be a national of one state for the purpose of one claim and a national of another state for the purpose of another claim.

The good governance and development narratives of investment treaties, however, have been challenged by recent empirical work. After 20 years of proliferation of investment treaty claims, the evidence is lacking to support these narratives as justification for expanding the personal scope of investment treaty protections. States have begun to  pay some attention to the personal scope of their investment treaties, especially for corporate investors, in newly negotiated investment treaties. Increasingly, states are adopting more detailed clauses that require a corporate investor to have a stronger connection to its home state than merely being incorporated in that jurisdiction. The question of personal scope of investment treaty protection is also considered by the UNCITRAL Working Group III as one of the reform areas to overcome consistency and correctness problems in investor-state dispute settlement. The recently published UNCTAD IIA Reform Accelerator also identifies ‘investor’ definitions among the eight key provisions of investment treaties in most need for reform. The objectives of these  reform efforts are to tighten the definition of ‘investor’ and introduce ‘denial of benefits’ clauses to prevent corporate investors’ reliance on tenuous links with a home state to access treaty protection. 

Reform and the pitfalls ahead

Reform is crucial in the area of personal coverage of treaties to (1) restore the reciprocal nature of investment treaty protections and (2) to avoid the reforms pursued by states on substantive investment treaty standards being side-stepped by investors by relying on the remaining older generation investment treaties. As I argue in my book, the permissive definitions of investor in older treaties and expansive interpretations of even the tighter definitions by arbitral tribunals have resulted in undermining the reciprocal nature of investment treaty commitments among states. There is no barrier for a US investor to rely on investment treaty protections for its investments in the Philippines, despite the two countries not having committed to extending such protection to each other’s investors. The definitions of investor, coupled with the convenience of creating corporate entities, artificially transform the standards of protection included in investment treaties into pseudo-erga omnes obligations for states which can be invoked by any investor, whether or not they are genuinely covered by a treaty. While reform of treaties is necessary to reverse this trend, treaty wording alone may not offer the tightening of standards the states are aiming for. Investment arbitration tribunals continue to have decisive input over the interpretation of treaty standards. This means that even tighter standards can be loosened in the process of arbitral interpretation. One of the key reforms added to investor definitions is to require that a protected investor has its real seat or substantial business activities in the home state. Yet, in a recent arbitral award in Mera Investment v Serbia, the tribunal interpreted the concept of real seat as the place of incorporation and permitted a shell corporation indirectly owned by nationals of the host state to benefit from the investment treaty, despite the investor lacking the genuine connections to the home state sought in the investment treaty. Thus, textual reform of treaties may not achieve the outcomes desired with the current model of investment arbitration.

The second consequence of the current definitions  of investor and arbitral interpretations is that they can undermine substantive investment treaty reforms pursued by host states. This is due to investors’ ability to adopt a new, or rely on an existing corporate nationality, established using subsidiaries or mailbox companies and based on tenuous links with a home state that has an older generation treaty with the host state. In this way investors, who may genuinely be nationals of a home state that has recently signed a reformed treaty with the host state, can sidestep the reformed treaty and rely on an older generation treaty to bring its claim against the host state. Many new investment treaties introduce more nuanced substantive standards of protection and exceptions to the application of standards such as the FET standard or indirect expropriation in the areas of policies and measures introduced in the public interest. If, for instance, a Canadian investor within the EU wishes to avoid the provisions safeguarding the host state’s right to regulate to achieve legitimate public policy objectives enshrined in CETA, it can rely on an older generation investment treaty signed by the relevant EU member state and a third state in whose territory the investor can set up a shell corporation or has an existing subsidiary to reroute its investment before filing a claim and before a dispute becomes reasonably foreseeable. 

Conclusion

Many states are working on reforming their investment treaties to curb the excesses of the older generation investment treaties. Unlike their first-generation counterparts, these newer generation treaties are being negotiated with greater attention to detail and lessons learned. The process for any state to reform its entire investment treaty programme can take a significant amount of time. In the meantime, investor definitions in treaties and expansive interpretation of this notion by arbitral tribunals can allow backdoor access for investors to older generation treaties via subsidiaries or shell corporations based in third countries. Even if a state reforms all its treaties and tightens investor definitions and includes denial of benefits clauses, there will still be a risk of arbitral tribunals undermining the objectives of the parties by interpreting the concepts incorrectly, as was done in Mera Investment v Serbia. The problems with both investment treaty texts and the decisive interpretative influence exercised by arbitral tribunals over those texts indicate that even serious change to one aspect of the  investment treaty system, in isolation, can be undermined in the absence of more systemic reform.    

The author would like to thank Daria Davitti, Nathalie Bernasconi,  Paolo Vargiu, and Zoe Phillips Williams for their helpful comments. This post was originally published on Investment Treaty News.

The Restrictive Approach to Legal Representation in Arbitration Proceedings and its Unintended Consequences in Nigeria

/ Alexandros Antoniou / Leave a comment
Arbitration by Nick Youngson CC BY-SA 3.0 Alpha Stock Images

Fikayo Taiwo, PhD candidate at the University of Essex, published in the Journal of International Arbitration an article titled ‘The Restrictive Approach to Legal Representation in Arbitration Proceedings and Its Unintended Consequences in Nigeria’.

The issue of legal representation in arbitration proceedings accounts for one of the sub-factors of ‘formal legal structure’ and ‘national arbitration law’ that disputing parties consider before choosing a seat of arbitration. Indeed, the ability of disputing parties in arbitration to freely select their desired representatives is embedded in the foundational principle of party autonomy, which continues to act as an incentive to settle cross-border disputes through international arbitration. However, while this may be the norm, a few countries take a different approach.

In Nigeria, a literal interpretation of the national arbitration rules prevents parties from selecting persons not admitted to the Nigerian bar as their representatives in arbitration proceedings. Upon being approached, courts of coordinate jurisdiction have interpreted the provisions in different ways. Therefore, this article examines the probable impact of this position on parties’ non-selection of the jurisdiction and its law in international arbitration proceedings. The article identifies scope for reform in the law and makes suggestions for creating a more liberal legislative and judicial framework in order to promote Nigeria as a seat of international arbitration.

The full article is published in Issue 2, Volume 37 of the Journal of International Arbitration and can be accessed here.

The First Ever In-depth Phenomenological Exploration of Participants’ Journey in Mediation

/ Alexandros Antoniou / 1 Comment

Dr Timea Tallodi, Lecturer in Law at the University of Essex, published a book titled How Parties Experience Mediation: An Interview Study on Relationship Changes in Workplace Mediation (Springer, 2019).

Dr Tallodi’s book is a detailed report of the first study in the literature that uses in-depth interviews with mediation parties and the qualitative methodology of interpretative phenomenological analysis in order to explore participants’ lived experiences of conflict and mediation.

The study focuses on exploring relational changes from the participants’ perspectives. Whilst mediation’s potential to induce changes in parties’ relationships as an advantage of the process is commonly mentioned in the literature, and is identified as a key to reconciliation, this topic has until now not been the object of interpretative qualitative enquiry.

The book combines truly interdisciplinary perspectives, drawing on the literatures on alternative dispute resolution, psychology and business. The applied methodological approach of interpretative phenomenological analysis, a popular methodology in psychology and an increasingly applied approach in other disciplines, e.g. human resources, occupational therapy, and management, adds to the interdisciplinary nature of the study. The phenomenological stance applied throughout the research process ensures a particularly rich data set and a nuanced interpretative analysis.

This pioneering research study seeks to enter mediation parties’ true experiences as closely as possible, moving beyond pre-existing theoretical, quantitative and large-scale qualitative explorations. The themes drawn out in the course of the analysis are discussed in the context of theory, research, and practice.

Dr Tallodi’s book advances knowledge about mediation both in relation to theory and practice.  Whilst the study has been conducted in the employment context, it has implications for all areas of mediation where parties tend to have an on-going relationship after mediation, including cases in the fields of family, divorce, commercial, civil and peer mediation. The book offers innovative conclusions and recommendations for developing mediation practice, mediation training programmes, and further research.