A Unified Forum? The New Arbitration Rules for Environmental Disputes Under the Permanent Court of Arbitration

The international community has long been struggling to find an effective mechanism to resolve transboundary environmental disputes. On June 19, 2001, the ninety-four Member States of the Permanent Court of Arbitration ("PCA")1 adopted by consensus the Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the Environment ("Rules"),2 based on the widely used Arbitration Rules of the United Nations Commission on International Trade Law ("UNCITRAL Rules").3 The drafters claim that the Rules make the PCA the first unified international forum for environmental dispute resolution. Although the Rules do provide several innovative features particularly suitable for handling environmental disputes, the absence of compulsory jurisdiction and other procedural limitations will seriously undermine the effectiveness and applicability of the Rules. 1. PROCEDURAL INNOVATIONS The most significant procedural innovation of the Rules is that they permit greater flexibility in the nature and number of parties that may engage in arbitration than currently exists elsewhere. First, the Rules allow any combination of states, intergovernmental organizations, non-governmental organizations ("NGOs"), multinational corporations, and individuals to use them.4 Second, in a departure from the traditional two-party adversarial system, the Rules also allow multi-party arbitration.5 These innovations directly address the two principal lacunae in environmental dispute resolution. First, it is widely acknowledged that granting NGOs direct access to dispute resolution tribunals is indispensable to effective resolution of international environmental controversies.6 However, because the existing international legal system is based on the notion of state sovereignty, only a state can be a party before various tribunals; non-state actors gain access to these tribunals indirectly through state actors. For example, most of the tribunals with universal jurisdiction, such as the International Court of Justice ("ICJ") and the World Trade Organization Dispute Settlement Process, are open only to states. Even though some regional tribunals, such as the Court of Justice of European Communities ("ECJ"), do provide access to non-state actors, they must meet stringent standing requirements. The Rules make the PCA the first universal tribunal through which NGOs and individuals can gain equal footing with states and multinational corporations in environmental controversies. Second, it is equally necessary to have a multilateral system that can bring in all of the interested parties to an environmental dispute. Because international environmental problems often affect many entities and involve multiple sources and cumulative causes, the existing two-party adversarial system of international litigation is arguably incapable of dealing with such issues. Because the Rules are also open to business entities and other interest groups, allowing environmental NGOs involvement will not necessarily privilege environmental interest over other interests. Therefore, the forum is unified in the sense that with such broad flexibility, there should be no international environmental dispute that the PCA regime could not accommodate procedurally. Another notable innovation of the Rules is that parties may choose to use two panels: one arbitrator panel and one expert panel. Like most arbitration rules, the Rules allow parties to directly appoint a panel of arbitrators. In cases where the parties cannot reach agreement, they may together choose an appointing authority and entrust that authority with forming the arbitrator panel.7 Unlike other arbitral rules, the PCA rules allow the arbitrator panel to appoint one or more experts to form an expert panel that reports to the panel.8 Further, to assist parties in rapidly appointing arbitrators and gaining expert opinions, the PCA will provide a list of arbitrators with legal experience in environmental protection or natural resource conservation, as well as a list of environmental scientists who are qualified and willing to provide expert assistance to the parties and the arbitral tribunal. …