Material breach of a treaty: some remarks on the Partial Award of 30 June 2016 in the matter of an arbitration between Croatia and Slovenia

Abstract

This article examines the Partial Award of 30 June 2016 in the matter of an arbitration between Croatia and Slovenia, which presents particular interest with regard to the topic of termination of a treaty – which in this case was an arbitration agreement – on the grounds of its material breach by a party. It focuses on the issues of: (1) the jurisdiction of the Tribunal to examine the legality of the purported termination of the arbitration agreement; (2) the possibility of termination of an arbitration agreement because of its material breach; (3) the definition of material breach, examining the notion of repudiation of a treaty and the notion of violation of a provision essential to the accomplishment of the object and purpose of the treaty, as well as the question of whether the material character of breach depends on the gravity of the latter; and (4) procedural issues with regard to the termination of a treaty on the grounds of its material breach. The article argues that, in this Partial Award, the Tribunal made some important clarifications with regard to the issue of termination of a treaty on the grounds of its material breach. Moreover, the Tribunal arguably emphasised treaty stability, by adopting a strict interpretation of the definition of material breach according to Article 60 (3)(b) VCLT, which, however, moves away from the letter of this provision to a certain extent.