Decision on Jurisdiction: A Critical Analysis of Bayindir Insaat V. Pakistan in International Investment Arbitration

Abstract

This work explains the decision of International Centre for settlement of investment disputes (ICSID) on the issue of jurisdiction in relation to construction claims under International Investment Arbitration. It attempts to locate the place and significance of Bayindir Rule which highlighted the dangers of making claims under Bilateral Investment Treaties (BITs). In this context, the case of Bayindir v. Pakistan1 is addressed. Further, it also analyses similar cases on the issue of jurisdiction and construction contracts, such as, Pantechniki2 and Totto3. It argues that there is difference between treaty and contract claims. In this regard, contractors (at the time of conclusion of contract) need to carefully examine provisions of the agreement along with provisions of BITs while doing so because BITs do not provide protection for contractual matters. Further, contractors should be careful while investing in another country if the claim is purely contractual. The analysis of three cases reveals that redressal from ICSID in case of claiming through contract claims is condensed. In all three cases, contractors seek to get remedy under International Investment law (IIL) and approached ICSID, irrespective of their contractual arbitration agreement clauses under which the domestic law of the country will be applicable. It concludes that under IIL contractors faced difficulties while indicating that there claims are treaty claims and not contract claims. The uniqueness of the decisions of these three cases involves the scope of the ICSID’s jurisdiction.