International Centre For The Settlement Of Investment Disputes Research Articles

System in progress: applicable law and the icsid Convention

The legal norms that govern the applicable law to disputes submitted to the International Centre for the Settlement of Investment Disputes (ICSID) can be considered a system in progress. Although the rule contained in Article 42(1) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, signed in Washington in 1969, seems simple, case law and scholarship on the subject has been through recent transformation, including the role of international law and the power of the Tribunal to determine the applicable law. This article will address the most relevant aspects on the issues pertaining to conflict of laws in the ICSID environment, including the role of party autonomy and its limitations, and the interaction between municipal and international law in the determination of the law applicable to an Investor-State arbitration under the auspices of ICSID. Investor-State arbitration; private international law; party autonomy.

The Legal Policy of Executability in the International Arbitral Tribunal Decision for Settlement of Investment Disputes

<div><table cellspacing="0" cellpadding="0" align="left"><tbody><tr><td align="left" valign="top"><p class="AbstractText">The growing number of investment disputes indicates more challenging and controversial matters in the various arbitration practices. However, the International Centre for the Settlement of Investment Disputes (ICSID) rules do not entirely solve the problem in the arbitration process. This study aims to explain how the ICSID tribunal’s inherent reconsideration power can be exercised to “fill the gap” in arbitration proceedings. This study concludes that it can be enforced under Article 44 of the ICSID Convention, which decides the question submitted to the tribunal that the ICSID Convention does not cover. Second, in completing this study, the wording of Rules 19 of Arbitration Rules gives an almost similar order to the tribunals in the case of absence in the conduct of proceedings. Third, under Rule 38 (2) Arbitration Rules, the tribunals can exercise the reconsideration power when discovering new facts that decisively affect the case's outcome.</p></td></tr></tbody></table></div>

Itisaluna and Others v Iraq: The OIC Agreement Conundrum: Consent to ICSID Arbitration and the MFN Clauses Saga

In an Award dated 3 April 2020 (Itisaluna Award), the Tribunal analyzed whether the most favoured nation (MFN) clause in article 8 of the Organization of Islamic Co-operation (OIC) Agreement allows a foreign investor to import a provision permitting access to International Centre for the Settlement of Investment Disputes (ICSID) arbitration from bilateral investment treaties (BITs) concluded between Iraq and third countries. In this Award, the Tribunal dismissed the Claimants’ attempts to use the MFN clause in the OIC Agreement to import Iraq’s consent to ICSID arbitration from other BITs. The Tribunal declined jurisdiction on the ground that the OIC Agreement does not establish clear consent to ICSID arbitration. The Tribunal majority’s approach was subject to a dissent by arbitrator Peter, who was of the view that the Tribunal had jurisdiction on the ground that the general consent to arbitration in article 17 of the OIC Agreement could extend to...

The proportionality of provisional measures in ICSID arbitration

International Centre for the Settlement of Investment Disputes (ICSID) tribunals increasingly regard proportionality as a requirement for the indication of provisional measures. While proportionality's relevance to the application of substantive investment protection standards has received significant scholarly attention, less discussed is proportionality's potential impact in the provisional measures context. In light of proposals raised in the ongoing ICSID Rules Amendment Project to codify a requirement of proportionality for provisional measures, this article analyses how proportionality might be used to address State concerns regarding the effect of provisional measures on their sovereign prerogatives. It argues that the proportionality requirement's codification could meaningfully alter the approach of ICSID tribunals to provisional measures in a way which is valuable to States, but which remains fair to investors. To do so, this article outlines specifically what is meant by the ‘proportionality requirement’ in the context of the ICSID provisional measures framework, as well as the concerns which have animated State comments regarding its proposed codification in the ICSID Rules (Section 2). This article then contends that the proposed codification has the potential to meet State concerns at little cost to investors (Section 3). In order to illustrate the point, ICSID tribunals’ treatment of requests for the suspension of domestic tax enforcement is contrasted against their treatment of requests for the suspension of criminal investigations or proceedings.

Taking Investors’ Rights Seriously: The Achmea and CETA Rulings of the European Court of Justice do not Bar Intra-EU Investment Arbitration

Abstract In its 2018 Achmea ruling, the European Court of Justice (ECJ) found intra-European Union (EU) investment arbitration incompatible with EU law, and in its 2019 opinion on the proposed Canada–EU Trade Agreement (CETA), the ECJ has set out requirements for the recognition by the EU of investor–State arbitration at large. On the other hand, in the last few years a great many tribunals (under both International Centre for the Settlement of Investment Disputes (ICSID) and non-ICSID regimes) have dealt with intra-EU investment arbitrations, most of them under the Energy Charter Treaty (ECT). None of these tribunals found the proceedings to be incompatible with EU law. The reason for this discrepancy is that the tribunals deal with investors’ rights, while the ECJ, in contrast, is concerned with intra-EU governance issues. However, individual rights are not alien to EU law. Against that background, this note is based on the established finding that investment treaties bestow private investors with individual rights under public international law. These rights need to be taken seriously: as third parties, investors can, under both public international law and EU law, draw upon these rights, irrespective of the internal EU governance rules with which the ECJ was concerned. Hence, this note2 is not meant to be a further contribution to the voluminous debate on the internal EU governance rules drawn upon by the ECJ. In contrast, it is based on the binding effect on the EU of the investors’ individual rights. Furthermore, it shows that the ECJ’s rulings do not have an adverse precedent effect on the pursuit of investors’ rights and that, in addition, the ECT meets the criteria under which the ECJ has assessed EU compatibility of investment arbitration. Last but not least, the denial by EU institutions of investors' rights under the ECT may, in itself, constitute an infringement of the ECT.

Most-Favored-Nation Clause in the Practice of Establishing the Jurisdiction of the International Center for the Settlement of Investment Disputes (ICSID)

Based on the analysis of arbitration practice and doctrine, the author identifies the principles of interpretation of the most-favored-nation clause in order to resolve the issue of the jurisdiction of the International Center for the Settlement of Investment Disputes (ICSID) by arbitration. The author concludes that the arbitration should be guided not only by the principle of literal interpretation of the international investment agreement and, in case of uncertainty, establish the intention of the contracting states to apply the most-favored-nation clause to the process of resolving investment disputes, but also take into account the public policy of the contracting states.

United Utilities (Tallinn) BV v Estonia1

In United Utilities (Tallinn) BV and Aktsiaselts Tallinna Vesi v Republic of Estonia, an International Centre for the Settlement of Investment Disputes (ICSID) tribunal had to determine whether, following the judgment in Slovak Republic v Achmea BV,4 it was precluded from hearing and determining claims brought by a European Union (EU) investor against a Member State under an intra-EU bilateral investment treaty (BIT). As explained below, the Tribunal held that it had jurisdiction to hear and determine claims brought under the 1993 Netherlands–Estonia BIT5 (the Treaty), notwithstanding the Achmea judgment and an amicus curiae brief submitted by the European Commission. However, on the merits, the majority rejected all the investors’ claims against Estonia, including alleged breaches of the fair and equitable treatment (FET) standard and an umbrella clause. By way of background, on 6 March 2018, in the Achmea judgment, the Grand Chamber of the European Court of Justice (the European Court) held that an investor–State arbitration clause in a BIT between EU Member States had ‘an adverse effect on the autonomy of EU law’.6 The European Court reasoned that disputes falling within the jurisdiction of tribunals constituted under such clauses ‘may relate to’ the interpretation and application of EU law, despite such tribunals not being situated within the judicial system of the EU and not being regarded as a court or tribunal of a Member State under the Treaty on the Functioning of the European Union (TFEU).7 In such an event, the dispute may not be ‘resolved in a manner that ensures the full effectiveness of EU law’.8 The European Court accordingly held that the arbitration provision was incompatible with EU law.9

The Interplay between International and National Institutions in Fighting Corruption: Lessons from the Piero Foresti, Laura de Carli & Others v. The Republic of South Africa’s Case

Piero Foresti, Laura de Carli and others v. Republic of South Africa is the only case, administered by the International Centre for the Settlement of Investment Disputes (ICSID), that involves the Republic of South Africa. This case was characterized by an allegation of corruption which appeared, not ‘before’ the referral to the tribunal as occurs in most investment disputes, but ‘during’ the proceedings of the ICSID tribunal: How did the corruption manifest in this case? How was it fought and by which institutions? This article examines these questions and discusses the role of arbitral tribunals and local institutions (notably courts and national bar associations) in addressing the challenge of corruption. It looks also at the kind of interplay that may exist between international and national institutions for an effective fight against corruption. Such a discussion is particularly relevant in the context of a country like South Africa, which has terminated most of its bilateral investment agreements and replaced them with a national piece of legislation: The Protection of Investment Act (PIA) of 2015 which does not provide for Investor-State Arbitration. Consequently, foreign investors in this country have only recourse to national adjudicative bodies (but also to mediation or state-to-state arbitration) for the settlement of their disputes, including corruption-based disputes. Therefore, what are the lessons to be learned from this case with regard to the uses of the law to combat corruption and to the adequacy of national institutions to deal with corruption cases with transnational elements?

Contributory Fault under International Law: A Gateway for Human Rights in ISDS?

Abstract The intersection between foreign investment and human rights is gaining attention, as is evident from an increasing number of investment treaty awards analysing legal issues relating to human rights. In the recent International Centre for the Settlement of Investment Disputes (ICSID) arbitration of Bear Creek v Peru, Philippe Sands QC posited, in a dissenting opinion, that the investor’s contribution to events—ie protests against its allegedly adverse environmental impact and disregard of indigenous rights, namely resulting from its ‘inability to obtain a “social licence”’—which led to the unlawful expropriation of its investment, was ‘significant and material’. He further noted that the investor’s ‘responsibilities are no less than those of the government’ and found that damages should thus be reduced. Last year, the Netherlands adopted a new model bilateral investment treaty (BIT), which allows tribunals to ‘take into account non-compliance by the investor with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises’ when assessing damages. These recent developments shed light on how states and tribunals, as part of their decision-making process, can take into account human rights in practice, and crucially in respect of damages analyses. By first dissecting the concept of contributory fault, then shedding light on the intersection of investment treaty law and human rights, as elucidated in recent jurisprudence, this article questions whether there now exists a gateway for human rights obligations (soft or hard) in the investment treaty arbitration realm through the concept of contributory fault.

Reverse Contributors? African State Parties, ICSID and the Development of International Investment Law

Abstract International investment disputes involving African States before the International Centre for the Settlement of Investment Disputes (ICSID) have generated significant critical inquiry. Yet, not enough academic literature has been devoted to accounting for the implications that arise from the disputes involving African States to the development of the ICSID case law and international investment law in general. This article addresses this gap by conceptualizing African States parties before ICSID tribunals as reverse contributors. While the article acknowledges the critiques of ICSID vis-à-vis African State parties, it contends that, over time, the involvement of African States in ICSID disputes has generated opportunities for the clarification, confirmation and development of ICSID jurisprudence. Although the article is not a case for African exceptionalism, it contributes to the dearth of materials that revisit the participation of African States before ICSID, while simultaneously acknowledging the need for reforms.

Consent to Arbitration: African States’ Practice

There is no gainsaying that arbitration is at the center of contemporary discourse and the practice of international litigation and dispute settlement. Africa has not been left out of this trend.2 Dispute resolution on the continent or involving African countries can be categorized into three main forms: (i) the normal domestic court processes for resolving economic and other disputes; (ii) investment treaty disputes in which African countries are primarily defendants or respondents; and (iii) international commercial dispute settlements using arbitration. There are no easy or comprehensive statistics on domestic judicial processes of dispute settlement but statistics on international arbitration—investor–State or commercial—point to an astronomical rise in the use of arbitration as a means of resolving international economic disputes. According to the International Centre for the Settlement of Investment Disputes (ICSID) Secretariat, fewer than 30 cases were filed there in the two decades between 1972 and 1992, but since the turn of the millennium the average number of cases in a single year has been 20.3 The trend in Africa clearly mirrors that of the global trajectory as captured by ICSID. In the last 15 years, African countries have been parties to about 15 percent of ICSID cases. The figure could be much higher if the participation of all African countries were categorized as such rather than being classified as lying either north or south of the Sahara.

Non-Disputing Party Participation in ICSID Disputes: Faux Amici?

This article employs a mixed methodological approach to evaluate non-disputing party (NDP) participation by means of amici curiae submissions in investment disputes settled by the International Centre for the Settlement of Investment Disputes (ICSID). The work presents and analyzes statistics on NDP participation in ICSID cases in order to investigate whether amicus submissions are a suitable vehicle for the incorporation of the views of NDPs, and whether they contribute to the development of international investment law and policy. The article argues that amicus briefs are a welcome addition to the ICSID arbitral process in theory, having contributed to the enhancement of the rule of law in investment arbitration through increased transparency. However, the level of NDP participation that amicus briefs provide within ICSID is minimal, and the extent to which they may affect the final outcome of the case is very much at the discretion of the individual tribunal. In light of this, and recognizing previous research that has noted the potential benefits of amici curiae submissions in dispute settlement processes (investment and otherwise), this article will go on to suggest reforms to enhance the participation of NDPs in ICSID arbitration. This will, in turn: contribute to the development of international investment law and policy; increase its integration with other branches of public international law (namely human rights); and enhance transparency and respect for the rule of law.

Australia’s Bilateral Investment Treaties: A Laid-Back Approach to Consent?

This article considers the requirement in a number of Australian investment treaties that a host state, following the referral of a dispute to arbitration before the International Centre for the Settlement of Investment Disputes, provide written consent to arbitration. The uncertainty around the practical operation of such provisions is problematic. It remains to be seen how International Centre for the Settlement of Investment Disputes (ICSID) tribunals will address this requirement as Australian investors become more engaged with investor-state arbitration. One would hope that a more ‘laid back’ approach to consent prevails.

Midiendo la influencia de las políticas públicas ambientales en procesos de arbitraje internacional bajo las reglas del Tratado de Libre Comercio: un estudio de caso del conflicto entre Renco Group y la República del Perú (2011-2016)

This paper will focus on a specific case of international arbitration, for which the International Centre for the Settlement of Investment Disputes (ICSID) released a Final Award on Jurisdiction in December 2016: The Renco Group vs. Republic of Peru case. This was the first case where an American-based transnational mining company sued the Peruvian State under the legal framework of the US-Peru FTA, which entered into force in February 2009; with a favourable result for the Peruvian State. In order to understand the causes of this outcome, we deal with two different but complementary problems: the impact of the US-Peru FTA in domestic politics and its public policy outcomes, as well as the influence of these reforms in the Final Award given by the ICSID arbitration court.

Equity-Based Discretion and the Anatomy of Damages Assessment in Investment Treaty Law

This article looks at the manifestation of equity-based arbitrator discretion as a tool to balance treaty-based investor rights with extrinsic public law obligations of states. The article breaks down the process of damages assessment into four separate decision stages and analyses at each stage (1) a dataset of previous International Centre for the Settlement of Investment Disputes (ICSID) awards; (2) the answers to a survey of arbitrators, jurists and practitioners; as well as (3) scholarly opinion. The article argues that equity-based discretion happens at each stage of the conceptualized decision-making chain and contributes to the incoherence of damages awards. The author argues that although arbitrators’ resort to discretion must remain unfettered, it is preferable for vague concepts such as equity to be kept to a minimum to protect the continued legitimacy of the investment treaty system. Instead, it is the language of investment treaties that needs to be adapted in the long-term, thus keeping pace with developing international investment law standards.

ADVANTAGES OF NON-LEGAL METHODS OF DISPUTE SETTLEMENTS IN INTERNATIONAL SPACE LAW

INTRODUCTION:The law provides the rules and justification for dispute settlement. The evolution of international dispute settlement has following five phases:a)There was the concept of just war which allowed the enforcement of rights and obligations between states through a legally accepted use of armed force; b) Realization of the importance of peaceful settlement of dispute between states and before adhoc bodies; c) The establishment of Permanent Court of Arbitration (PCA) by 1899 treaty, with the awareness of the urgency to establish a standing body; d) The establishment of the Permanent Court of International Justice (PCIJ), International Court of Justice (ICJ), regional bodies such as European Court of Justice (ECJ), The European Court of Human Rights (ECHR) and International Center for the Settlement of Investment Disputes (ICSID) after World War II and in early 1980s; e) The established of various human rights commissions and tribunals (Rosanne, 1991: 4).These evolutions show clear inclinations away from the use of force and dispute settlement towards recourse to third party compulsory mandatory jurisdiction and binding decision making powers. Generally speaking, a dispute occurs when a party perceives itself to be injured; decide some other party is responsible; from a sense of entitlement to some kind of redress, and formulate a specific claim which is rejected by the other party. The method of dispute settlement to be chosen by parties depends upon following factors:a)The extent of the interaction and interdependence of the actors involved; b) Whether the parties are in a continuing relationship with each other, their relative bargaining power and ability to exert influence on each other; c) Their geographical and political relationship with each other and third party; d) The similarities or differences in their political, cultural or economic ideology; e) The history of their relationships and the methods of dispute settlement used in the past between them; and, f) Their respective commitments to international law and principle of peaceful settlement of dispute (Surds & Shany, 1999:28).The Charter of United Nations (UN) provides, in Art. 2(3) and (4), two parallel obligations, requiring all members to settle their international disputes by peaceful means in a manner that international peace and security and justice are not endangered; and to refrain from any treat or use of force in their international relations against the territorial integrity or political independence of any state, or in any other manner inconsistent with the purpose(s) of the UN (Watts, 2001:21). Article 33 of the charter of UN requires that parties of any disputes which the continuance of it is likely to endanger the maintenance of international peace and security shall first of all seek a solution by negotiation, equity, mediation, conclusion, arbitration, judicial settlement, resort to regional agencies or arrangement (Watts, 2001:21).In this paper we are about to analyze advantages and disadvantages of non-legal methods of peaceful settlement of conflicts arises in space activities, which are consultations, negotiations, inquiry and fact finding, mediation and good offices, conciliation and the claims commission (CC).NON-LEGAL DISPUTE SETTLEMENT METHODS RECOMMENDED BY SPACE TREATIES: CONSULTATIONS:Consultations and prior notification is one of the most useful methods of dispute settlement and conflict avoidance techniques. This method requires a party that might adversely affect another party, to inform the other party of its intentions and to discuss the matter and avoid any disputes. Some advantages of this method are as follows:a) Advocating a Pre-emptive and early resolution of a dispute by permitting parties to identify and attempt the settlement of potential problems at an early stage through taking action before parties' positions become rigid and polarized and their difference become more critical and intractable. …

Toward an EU-Taiwan Bilateral Investment Treaty: A Roadmap

In its latest trade strategy document, released in 2015, Trade for All, the EU declared that “[B]uilding on the investment provisions under negotiation with China, the EU will explore launching negotiations on investment with Hong Kong and Taiwan”. Such proposal has been welcomed by Taiwan, but the road toward an EU-Taiwan bilateral investment treatment (BIT) is destined to be long and tortuous. Politically, the EU has, since the establishment of official diplomatic relations with China in 1975, adhered to a “One China policy”. Whether and how this “One China policy” might impact the shape and substance of a EU-Taiwan BIT is a subject to be explored. This political issue can be expressed in two specific questions. On the EU side, it is doubtful whether the EU would be willing to conclude a BIT with Taiwan before the inking an EU-China BIT. On the Taiwan side, the juxtaposition of Taiwan and Hong Kong seems to imply that the EU treats Taiwan and Hong Kong equally, at least from an economic perspective. Whether such a juxtaposition undermines Taiwan’s sovereignty should be carefully examined. Legally, while the EU and Taiwan are both Members of the World Trade Organisation (the WTO), they are not active actors in international investment law. Moreover, given that the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) is open for signature only to sovereign states, neither the EU nor Taiwan is contracting parties to this Convention; similarly, the institutional design of the International Centre for the Settlement of Investment Disputes (ICSID) limits its activities to sovereign states, the dispute settlement mechanism of an EU-Taiwan BIT should be thus located in some other forum. Would such a design affect the effectiveness of an investment dispute resolution? Additionally, as there are no official diplomatic relations between the EU and Taiwan, how should this EU-Taiwan BIT be signed is also an intriguing question. Would it be done through their respective missions, or are their missions to the WTO an option? In view of these uncertainties, this chapter aims to probe the possible course of the EU-Taiwan BIT negotiations and outline a roadmap. This chapter first portrays current political and economic relations between the EU and Taiwan and then explores the possible form of the envisaged EU-Taiwan BIT by examining such critical issues as the contracting parties, the design of investor-State dispute resolution, the investment court proposal by the EU and the sequence in which the EU might conclude BITs with China and Taiwan.

Greek Debt Restructuring and Investment Treaty Arbitration: Jurisdictional Stumbling Blocks for Bondholders

The recent award of an International Center for the Settlement of Investment Disputes (ICSID) tribunal in Poštová banka a.s. and ISTROKAPITAL SE v. Hellenic Republic came as an unpleasant surprise for holders of Greek sovereign debt, who suffered losses because of the sovereign debt restructuring (SDR) that took place in February 2012, since it seems to be at odds with past case law on the matter. The tribunal found that it did not have jurisdiction to hear the dispute, inter alia, because the acquisition of Greek sovereign bonds by Poštová banka did not constitute an ‘investment’ under Article 1(1) of the Greece-Slovakia Bilateral Investment Treaty (BIT). At any rate, according to the tribunal, transactions over sovereign bonds on the secondary markets do not fall within the definition of ‘investment’ under Article 25 of the ICSID Convention. In this article, the author questions the narrow interpretation of the definition of ‘investment’, as set forth in Article 1(1) of the Greece-Slovakia BIT, adopted by the tribunal. In declining jurisdiction, the tribunal looked through the provisions of Greek law so as to ascertain whether the claimants had rights protected under the BIT. The author advocates a different interpretation of the relevant provisions of Greek law in accordance with legal doctrine in Greece concerning the rights of investors over dematerialized government debt. The author also supports a wide meaning of the term ‘investment’ under Article 25 of the ICSID Convention, so that sovereign bonds are included in the definition.

The European Union’s Proposed Investment Court System: Addressing Criticisms of Investor-State Arbitration While Raising New Challenges

Many would agree that reforms to the existing investor-State arbitration system are necessary, but opinions diverge on precisely what these should be. The European Commission’s proposal is to include an Investment Court System (ICS) in the investment chapters of the European Union (EU) Free Trade Agreements. This article scrutinizes, first, difficulties in setting up an ICS: the International Centre for the Settlement of Investment Disputes (ICSID) Convention’s applicability, the rules regarding conflicts of interest, ethics and ancillary professional affiliations of adjudicators, and requirements in terms of nationality, expertise and diversity of the bench. Secondly, problems are examined which may emerge in running an ICS: ensuring transparency, allowing for third party participation, and avoiding major increases in length and costs of the proceedings. Thirdly, issues concerning the review and enforcement of ICS decisions are analysed. Although the Commission has made a meritorious attempt at countering the main criticisms of investor-State arbitration, several new challenges have emerged which need to be addressed in order for an ICS to be fit for purpose. Although the incorporation of investment rules into the World Trade Organization (WTO) would seem unlikely to become politically feasible in the foreseeable future, multiple bilateral ICS mechanisms could serve as stepping stones towards a multilateral adjudicatory system for international investment disputes.

Building International Investment Law: The First 50 Years of ICSID

The International Centre for the Settlement of Investment Disputes (ICSID) is celebrating the fiftieth anniversary of the ICSID Convention. 2 To commemorate this milestone, ICSID has, among other things, published Building International Investment Law: The First 50 Years of ICSID . 3 Professors, arbitrators and practitioners from around the world analyse the history of ICSID and the development of international investment law through some of the leading cases that have marked the practice of investment arbitration, address ongoing challenges and offer suggestions for future improvements. The first part of the book contains six chapters dedicated to the analysis of ‘general principles’ in investment arbitration, in general, and in ICSID arbitration, in particular. Michael Reisman and Judge Mahnoush Arsanjani offer an analysis of the history of Article 42 of the ICSID Convention, which governs the law applicable to a dispute. 4 They take us through the decisions of the first ad hoc committees ( Klöckner v Cameroon and Amco Asia v Indonesia , both brought pursuant to an arbitration clause in a contract) 5 and their interpretations of Article 42 at a time when ICSID consent under bilateral investment treaties (BITs) was not the norm, and they contrast such interpretations with one of the first annulment committee decisions under a BIT, Wena v Egypt . 6 The authors conclude that from the legislative history of Article 42 it is clear that ‘some role [has been] reserved for domestic law’, 7 and they lament that the two contradictory approaches undertaken by the ad hoc committees do not allow any defaulting operation for domestic law but revert to the application of international law.