Do you know that Bulgaria claims that it has never lost a case at the International Centre for Settlement of Investment Disputes (ICSID)? This is a half-truth spread in bad faith! The sad reality, which Bulgaria manages to hide through loopholes in ICSID’s rules and regulations and large-scale misinformation campaigns, is that Bulgaria has settled with claimants many times. Sometimes these campaigns mislead even people with experience in arbitration how a case ended.

Countries usually settle with investors when they fear that there is a good possibility that they will lose a case. Why might this signal rule of law decay? Bulgaria’s case amply shows that the Ministry of Finance settles with claimants and then lies to the public that it won the case to hide evidence of unlawful conduct and/or crimes in office by public officials. This, of course, spares the latter accountability.

In a chapter titled ‘Investment Arbitration and the Rule of Law: How Transparency Impacts on Domestic Accountability’ in Mads Andenas and Maren Heidemann (eds), Commercial Contract Law and Arbitration From Assignments to Unfair Terms (Routledge 2024), I explain in much detail why ICSID’s rules and regulations have a direct impact on domestic rule of law and how their loopholes may be exploited by governments acting in bad faith to propel corruption. I also make suggestions for reforms of these rules.

Those of you who follow me know that I first started writing about this topic here – on my own blog. By accident, when taking a look at the website of a leading law firm, I noticed something odd – a statement which contradicted ICSID’s procedural rules and which potentially showed that Bulgaria had settled a case behind the scenes (see ‘An Arbitration Mystery and Bulgaria’s Rule of Law: How Arnold & Porter Gave Away the Existence of a Secret Deal’). Shortly after, I had no doubts that Bulgaria had settled this case of huge importance concerning the unlawful expropriation of Corporate Commercial Bank even though it claimed victory in public. I just took a closer look at ICSID’s procedural rules, the procedural details available on its website, and the publicly available information (see ‘Liar, Liar, Pants on Fire! How Bulgaria Deliberately Misinformed the General Public about the Outcome in ICSID Case No. ARB/15/43 (SGRF v Bulgaria)’).

The more I dug, however, the more lies I unearthed – I gathered enough material about other cases (for instance, Novera, Accession Eastern, etc.) which Bulgaria settled to scope out a systemic issue. This evidence became the basis of a proper academic study, which shows the complex links between investment arbitration and the rule of law.

After all, these wronged investors are compensated for the unlawful conduct/crimes in office of public officials with taxpayers’ money. Meanwhile, those officials remain in office undisturbed and face no consequences for these wrongdoings while claiming the investor was in the wrong and even spending taxpayers’ money to misinform the same taxpayers. There should be a better way forward.

My book chapter can be found here.