“You Cannot Lose What You Never Had”: The Law Applicable to Property Determinations in ICSID Arbitration

Abstract

Abstract ICSID arbitration is witnessing a debate over the competing spheres of application between host State and international law: Under the second sentence of Article 42(1) of the ICSID Convention (and under similarly worded applicable law provisions contained in investment contracts or bilateral investment treaties), arbitral tribunals possess large discretionary powers over the decision of which law to apply to which aspect of a dispute. However, the recent partial annulment of the Mobil v. Venezuela award, on the basis of the original tribunal’s manifest failure to apply domestic law to certain aspects of the case, redefines the contours of this discretion by requiring the application of domestic law to proprietary determinations of investments. This article reviews the different approaches to the dichotomy between domestic and international law and the tribunals’ discretionary powers in this respect, and analyzes the limits imposed in the field of property determinations by the case law.