Former Chief of Investment Arbitration in the U.S. Department of State Jeremy Sharpe is currently a Partner at Shearman & Sterling. He has represented disputing and non-disputing parties in more than 25 international investment cases. He has recently published an article titled “The Agent’s Indispensable Role in International Investment Arbitration”.
The crucial work of State Agents in international adjudication is often seen as a precondition to an effective legal representation of a State. States regularly appoint Government agents to represent them before the International Court of Justice (‘ICJ’) and other tribunals administering inter-State disputes. International investments arbitration, however, is often an outlier, where an appointment of a State Agent is overlooked or underappreciated.
At Jus Mundi, we believe that making international law more accessible to all eventually leads to better legal representation, which in its turn enhances the legitimacy of international law and strengthens the rule of law globally. With this interview, we would like to start a series of interviews with State Agents to better understand the demands and needs of their offices. On our part, we seek to attend to the legal research needs of State Agents and other users of international law.
You have represented the United States in international disputes under bilateral investment treaties and investment chapters of free trade agreements. Did the United States have an Agent in such disputes?
No. Although the United States usually appoints an Agent for inter-State disputes, it does not appoint an Agent for its international investment disputes. Historically very few States have appointed Agents for their international investment disputes, in part perhaps because of the decentralized, ad hoc nature of international investment arbitration. The United States also lacks a law or regulation organizing its representation in international disputes. This has caused some uncertainty as to which agency is responsible for representing the United States in different international courts and tribunals. I think the United States, like many other States, could consider the process more systematically, to ensure the most effective representation. And that, in my opinion, should involve appointing an Agent.
An Agent brings certain advantages to the State in any international litigation. I will give you an example from investment arbitration. The United States often makes non-disputing party submissions in international investment disputes. Arbitrators often perceive these as coming from the office that represents the U.S. as a defendant in international investment disputes and therefore essentially serving the interest of the United States as a defendant in similar cases under the same treaty. In fact, these documents are shared across federal agencies and are approved government-wide. They are, and are meant to be, State practice. They are the formal views of the United States made to an international tribunal on matters of international law. If these pleadings were signed by a person formally designated Agent of the United States, it would reinforce their status as State practice and opinio juris, not a mere litigation document coming from a single ministry with narrow interests or a narrow perspective. If this practice were widely adopted, it could change the development of international investment arbitration, as more and more States are participating as non-disputing parties to try to control the development of arbitral precedent in international investment law. This could be a significant and positive development in the field.
You suggest in your article to enhance the role of the Agent to provide essential leadership, authority and credibility for the State in international litigation. Would you say, based on your experience and research, that the appointment of a skilled Agent increases the State’s chances of winning its case before an investment tribunal?
I might approach the question from the opposite end. What is the risk of not having an experienced Agent? There are many pitfalls that States can fall into in international investment arbitration right from the outset. States often have no designated individual to receive notices and requests for arbitration. It means that the files could be sitting on a desk unattended. The State does not take any action: it does not investigate the case; it does not seek to settle the case; it does not engage in alternative dispute resolution. The first time the State engages might be after the tribunal has already been constituted. That is a huge disadvantage for a respondent State.
Appointing a standing Agent ensures that there is one person individually responsible for receiving notices and requests for arbitration and individually authorized to begin the necessary investigation into the case, to contemplate settlement, to engage in fact finding, and to formally represent the State before the tribunal. I think it can only be to the State’s advantage to ensure that it has all these resources, authorities and standard operating procedures in place from the outset. I also think it would improve the State’s chances of prevailing ultimately in the case, but certainly it would prevent some of the catastrophic mistakes that many States have made through inattention or disorganization.
In your article you argue that the Agent increases the legitimacy of the adjudicative process, which has been a subject of a heated public discussion concerning investment arbitration. Do you think that strengthening the role of Agents, as well as bringing them to the spotlight, could help resolve certain doubts about the perceived privatization and lack of transparency of investment arbitration?
I do believe that Agents could greatly improve the legitimacy of the process. Right now, States’ lack of capacity itself is facilitating the perceived legitimacy crisis. A lot of States simply don’t have the resources and authorities to represent themselves effectively, or to effectively engage in a public dialogue about the benefits to the State of this process of peaceful dispute resolution. A standing Agent could explain the whole process—the treaties entered into, the protections given to foreign investors, the benefits received from foreign investment, the nature of the disputes brought against the State, and how the State has organized itself to defend against claims effectively. The Agent also helps set expectations: the State may win some cases and lose some cases, but that’s the bargain that it has struck to promote foreign investment under the rule of law. Today the process is often disorganized. The ministries and various State entities have different interests and priorities, and they may speak differently to the public or parliament. There is too little coordination. It raises the concern that the government is not effectively representing the State, and it feeds into the idea that the process is rigged against the State. An Agent can address the government, parliament, and wider audiences on the mechanics and benefits of investment dispute resolution.
You also suggest that the State Agent is someone who may help prevent unethical practices, both from external counsel and Government lawyers. You even mention that government Agents may come to form a de facto bar and develop best practices. I find this idea fascinating. Does such an initiative already exist? Do you have any plans to develop this idea further?
I think the idea might develop naturally coming out of the UNCITRAL Working Group III process. States are now focused on reforming the ISDS [Investor-State Dispute Settlement] system, which is not just about looking at the system internationally. There is an inherent need to look inward to see how the State approaches ISDS. As States become more and more involved in representing themselves, they will develop in-house expertise. Through experience and professional socialization, government lawyers will perhaps come to see themselves as a professional bar in international investment arbitration. This will benefit States in terms of developing best practices, including best ethical practices. But it will also benefit the international system as a whole by ensuring that we have qualified advocates and, ultimately, adjudicators coming from different parts of the world. UNCTAD reports that more than 110 States have been respondents in investment arbitration. As government lawyers become more involved in international investment arbitration, they will see the benefits of greater coordination, including to better develop the law through arbitration. So, to my mind, an international bar organized around Agents is almost a natural progression in the system, as it is developing now, starting with the UNCITRAL process.
You have noted in your article that many States lack resources to monitor the investment disputes to be able to shape the development of arbitral precedent. Jus Mundi is dedicated to making arbitral practice easily available and affordable to users, including States, worldwide. So far, law firms have been the most active users of the resources like Jus Mundi. In your opinion, may States benefit from a platform like Jus Mundi in shaping the development of arbitral precedent and in shaping their own policies?
It could be hugely valuable to States. States can’t outsource dispute resolution entirely to external counsel. They have to make many legal and policy decisions. Many States find it difficult to keep up with constant developments in international investment law and arbitration. Any platform, such as Jus Mundi, that enables States to engage more effectively can only be welcomed. I think international organizations also have a role to play, making resources more widely available and providing the necessary capacity-building and technical support to ensure that States can take advantage of new platforms, such as Jus Mundi. I think we will see substantial changes in the near future in that regard.
Do you think that it is possible to have a future in which the rule of law is a reality for the whole of international society? What advice would you give to young lawyers who want to participate in building such a future?
I think we will progressively see—with some backsliding, of course—the international development of the rule of law and international institutions. We will also see a continued proliferation of international courts and tribunals. International lawyers will continue to seek creative ways to solve international disputes peacefully, adapting to changing political circumstances.
As for advice for younger lawyers, I was struck by reading an observation that Judge Stephen Schwebel made some years ago. He noted that there were probably fewer than 100 people in the entire world at the turn of the 20th century who considered themselves to be, and who were considered by others to be, public international lawyers. If you wanted to be a public international lawyer at that time, then invariably you had to work in a foreign office or maybe a few law faculties. Now, we have more than 200 international judges, as well as many thousands of international lawyers in governments, in law firms, in NGOs and civil society, in law faculties. There are so many more opportunities for individuals to make an impact in public international law in ways they feel most motivated about. They have a huge opportunity to help resolve the most pressing challenges of the day, from climate change to international terrorism to so many other cross-border issues. So I’m quite optimistic about the future of international law and the ability of young people entering the field to make a significant impact on our profession and the world.