Review DIS40 Conference: "ESG – Dawn of A New Era of Disputes in International Arbitration?“

Newsletter 12/2022 - Review: Past Events


The DIS40 Autumn Conference started off with a keynote speech under the title „ESG – Three letters and a big question mark“. Speakers Katrine R. Tvede (Morgan, Lewis & Bockius) and Marc Jacob (DLA Piper) introduced the audience to the „E“nvironmental, „S“ocial and „G“overnance aspects generally referred to under the umbrella-term „ESG“ and then shared their thoughts on whether arbitration is suitable and effective for resolving ESG related disputes. Regarding investment treaty arbitration, it was pointed out that out of the 800-900 known investment treaty claims, around 190 concern environmental claims. Commercial arbitration appears particularly suitable to enforce ESG clauses in contract given the general advantages of arbitration such as enforceability of the award and the possibility to have experts on the tribunal. Katrine and Jacob agreed that strategic litigation, in particular where interest groups bring claims against governmental bodies or large corporations to provoke a policy change or a change of behavior, are better placed before state courts – not only for the lack of contractual relationships between the parties but primarily because the public impact of the claim is a key factor for these groups.


The first Panel on “Arbitration and Environment” was moderated by Johanna Büstgens (Hanefeld). The panel comprising Amanda Neil (Freshfields Bruckhaus Deringer), Viktoria Schneider (Noerr), Alicja Zielińska-Eisen (Queritius), Jan Heiko Köhlbrandt (ADM) shared the opinion that strategic climate protection lawsuits brought by interest groups are probably best placed in state courts, but that investment and commercial arbitration will increasingly be the forum for disputes that touch upon climate change and environmental issues incidentally. Investment arbitration is currently seeing an increasing number of cases relating to the phasing out of traditional energy sources, but also relating to incentives for renewable energy projects. Against this background, the panel discussed whether the ECT leaves states enough freedom to implement changes to meet their decarbonization targets. In commercial arbitration, ESG clauses might become increasingly relevant. Even though from a business perspective, the breach of an ESG clause is “just” a breach of contract dispute, transparency might become an important aspect in cases triggered by a public event where the affected company will regularly have a strong interest to exonerate itself and demonstrate that the fault actually lies with a supplier.


After the lunch break, Alessandro Covi (Herbert Smith Freehills) moderated a panel on “Arbitration and Business & Human Rights” where Emanuel Ghebregergis  (Covington & Burlington), Laura Halonen (Wagner Arbitration), Simona Scipioni (Webuild) and Jan Erik Spangenberg (MANNER SPANGENBERG) introduced the audience to the concept of business & human rights and the arbitration framework for such disputes, in particular the Bangladesh Accord and the Hague Rules on Business and Human Rights Arbitration. It was then discussed whether arbitration of business & human rights disputes is feasible and attractive for affected stakeholders, and, given the public interest involved, whether arbitration of such disputes is really desirable from a policy point of view. Finally, the panel addressed the role of business & human rights in investment arbitration and, in particular, how states can raise such issues in ISDS proceedings.


The conference concluded with a debate on “Fraud and Corruption in Arbitration” moderated by Adilbek Tussupov (Herbert Smith Freehills), where Iuliana Iancu (Hanotiau & van den Berg) and Sebastian Wuschka (Luther) discussed four resolutions:

  • First, the burden of proof should be shifted or a least shared in case of alleged corruption: Mr Wuschka argued in favor by inferring information asymmetry between the investor and the state given that the former does not have access to the internal administration of the state; Ms Iancu disagreed, saying that it is a false premise that it is easier for the accused party to investigate the facts and provide exculpatory evidence, given that the investor has the possibility to request document production and compel witnesses.
  • Second, the standard of proof should be heightened: Mr Wuschka supported the proposition arguing that corruption allegations, if they become public, pose a serious risk of harm to the affected parties' business and reputation; Ms Iancu countered that it is an allegation just like any other and did not find it convincing to make the standard of proof depend on the seriousness of the allegation.
  • Third, there is a duty of arbitrators to investigate red flags of corruption and fraud: Mr Wuschka pointed to the duty of the arbitral tribunal to render an enforceable award which does not violate international public policy and, in addition, argued that arbitration cannot afford the reputation of making awards supporting corruption given that it already suffers from some mistrust in the public eye; Ms Iancu replied that there is no place for the arbitral tribunal to sua sponte initiate investigations as the arbitral tribunal is a creature of contract and should be focused on efficiently resolving the dispute based on the parties’ arguments.
  • Fourth, estoppel is warranted for fraud arguments in post award proceedings: Ms Iancu took the view that a party that could raise a corruption argument must do so during the arbitration proceeding as there is no legitimate reason to save such argument for the enforcement stage; Mr Wuschka countered that the proposition would allow the parties to further limit the courts’ scrutiny to review awards which would likely not be accepted regarding issues of public policy and in any case would undermine the trust in arbitration.

It has to be noted that the position the speakers took for the sake of a controversial debate does not necessarily reflect their personal opinion.


Both the DIS40 and the DIS Autumn Conference offered a great insight into highly relevant topics that are sure to be on our minds for the time to come.

Tanja Stooß


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