International Investment Disputes Research Articles

Investor-State Arbitration before the High Courtof Singapore: Territoriality, Nationality andArbitrability

This case note analyses the recent jurisdictional decision of the High Court of Singapore in Laos v Sanum Investments, concerning an alleged expropriation by the Laos government of an investment made by an entity incorporated in Macau. The Court's key finding was that the bilateral investment treaty between China and Laos was not intended to extend to Macau. This note questions the Court's focus on the territorial scope of the bilateral investment treaty, as opposed to the nationality of the investor, and appraises whether this case represents a departure from the ‘pro-arbitration’ reputation of Singaporean courts in international investment disputes.

Possible Paradigmatic Changes in the Settlement of International Investment Disputes

Possible Paradigmatic Changes in the Settlement of International Investment Disputes

Predictability versus Flexibility: Secrecy in International Investment Arbitration

Transparency can have a large impact on whether the work of international legal institutions such as tribunals is seen as legitimate as well as the ability of governments to manage the domestic audience costs of adjusting to international norms. International investment arbitration offers a special opportunity to study transparency because nearly always the parties to international investment disputes have the choice of whether to reveal the final results of arbitration to the public. Working with a new statistical database of disputes at the world’s largest investor-state arbitral institution — the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) — this paper examines the incentives of individual firms as well as governments to keep the details of their disputes secret. Secrecy prevails in cases where the incentives for privacy are strongest: over investments that have long time horizons where costly compromises by investors and the host state are essential to keeping the project financially viable and when any party has reason to expect ex ante that it will lose. This research has sobering implications for scholarship that has identified transparency as an essential condition for institutional legitimacy and effectiveness because the public is least informed about arbitral outcomes in precisely those cases where broad public interests are likely to be most affected.

Stayin' Alive?: BG Group, PLC v. Republic of Argentina and the Vitality of Host-Country Litigation Requirements in Investment Treaty Arbitration

Over the last few decades, international arbitration has emerged as the preferred mechanism for resolving high-stakes international investment disputes. Last Term the Supreme Court of the United States decided BG Group, PLC v. Republic of Argentina, the first case the Court had ever heard concerning an international arbitration award rendered pursuant to an investment treaty dispute. The bilateral investment treaty (BIT) at issue expressly required litigation in a host-country's courts prior to international arbitration, but petitioner BG Group sought arbitration directly against Argentina without first seeking recourse in the Argentine courts. The arbitral tribunal held that failure to fulfill this condition did not strip it of jurisdiction and the tribunal reached the merits, finding in favor of BG. Because the parties chose the United States as the seat of arbitration, Argentina began proceedings in the U.S. national courts to vacate the award. On March 5, 2014, the Supreme Court ruled not to vacate, relying chiefly on the premise that fulfillment of the litigation requirement in the BIT was a procedural precondition to arbitration and thus a question for an arbitrator, not a court, to decide. But what about the text of the BIT, which plainly insists on host-country litigation prior to arbitration? What about the broader criticism that the current investment treaty arbitration (ITA) regime shortchanges host-country sovereignty in order to please foreign investors? Or that host-country courts are better positioned than international arbitral tribunals to decide questions of host-country law? These concerns deserve a response if ITA is to maintain its prominence. Thus, in addition to exploring the implications of the Court's decision for ITA and international commercial arbitration, this Note proposes an improved host-country litigation requirement, arguing that countries should learn from BG Group and seek to implement or improve host-country litigation requirements in their BITs.

Possible Paradigmatic Changes in the Settlement of International Investment Disputes

Possible Paradigmatic Changes in the Settlement of International Investment Disputes

Interpretation of Bilateral Treaties for the Promotion and Protection of Foreign Investments

The issues discussed in the following article focus on legalregula- tionsregarding bilateral interstatetreaties for thepromotion andprotection of foreigninvestments(inthedoctrineandthepracticeofinternationalinvestment law commonly referred to as 'BITs', hereinafter referred toas 'BITs') that are made by nationals of one state in another state. Subject to this matter, con- tracting states agree to protect investors from the state party in the territory of their country and to arbitrate international investmentdisputes that might arise. Taking this into account theauthors of this article would like to takeup issues concerning bilateral investment treaties in the context of their interpre- tation. Both general problems regarding interpretation ofbilateral investment treaties and specific rules of investment clauses' interpretation are taken into consideration.Simultaneously,inthelastpartofthispaper,theauthorsbriefly indicaterulesfortheinterpretationmadebytheInternationalCentreforSettle- mentofInvestmentDisputes(hereinafterreferredtoas'ICSID'),aninstitution engagedinthesettlementof investmentdisputes,mainly basedonbilateral in- vestmenttreaties. Thespecificity of thesubjectmatter requirestheirthorough and accurate interpretation. Scientifically, it is important whether in relations betweenstates situatedon differentstages of economic development,theinter- pretation confirms their inequality or rather this interpretation tries to restore suchequality.Inaddition,theimpactofregional legal regimes, bindingfor one contractingparty,ontheinterpretationofBITs,appearstobemeaningful.Due tothelimitedscopeofthisstudy,itisdifficulttoprovideclearanswerstothese questions, however - given the on-going development of international cooper- ation and its interdependence - attempts to systematize the mere matter of bilateral treaties' interpretation, inthe authors' opinion are worth studying.

The Authority of Domestic Courts in Adjudicating International Investment Disputes: Beyond the Distinction Between Treaty and Contract Claims

The Authority of Domestic Courts in Adjudicating International Investment Disputes: Beyond the Distinction Between Treaty and Contract Claims

The Authority of Domestic Courts in Adjudicating International Investment Disputes: Beyond the Distinction between Treaty and Contract Claims

While it is widely acknowledged that international tribunals may, depending on their jurisdictional entitlements, entertain treaty claims as well as claims arising out of breaches of contract, the exercise of jurisdiction by domestic courts has generally been deemed to be limited to matters of national law. What is more, domestic adjudication has generally been considered without consequence for the outcome of a number of international proceedings. However, is deference to international dispute settlement mechanisms really compatible with dispute settlement clauses contained in investment treaties and contractual agreements that foresee a role to be played by domestic courts? The answer attempted by this paper is in the negative. On the one hand, the identity of a legal dispute within the jurisdiction of different forums is not dependent on the cause of action that might be invoked, nor is the distinction between contract claims and treaty claims one that necessarily justifies the existence of two wholly separate layers of legal obligations. This may be illustrated through an assessment of how international jurisdictional entitlements exist and interact with specific dispute settlement clauses contained in contracts and treaties. On the other hand, where a distinction based on the causes of action might exist, municipal courts that deal strictly with matters of domestic law ought not to be deprived of influence on the outcome of international proceedings. In this regard, an analysis of the consequences for international tribunals of adjudication by municipal courts over derivative claims and investment disputes in general will be of avail.

Moral Damages in International Investment Disputes – On the Search for a Legal Basis and Guiding Principles

This article sets out to examine the legal nature of and the requirements for granting moral damages in international (investment) law. In doing so, we will consider various general public international law and investment law cases. We will place a particular emphasis on the former, since they provide a valuable platform for the analysis of the origins of moral damages and an exploration of how international tribunals have dealt with moral damages under different circumstances. The more recent investment arbitration cases provide a useful insight into several controversial issues arising out of the arbitral tribunals’ holdings. We will develop a proposal as to how moral damages should be characterized doctrinally and show that nowadays moral damages claims are generally accepted in investment law, despite still existing uncertainties regarding their scope and application.

Leveraging the Trade Preference Program to Secure a State’s Compliance with International Law Obligations

This Article explores the use of the trade preference program to pressure a State to comply with its international law obligations. Examining recent international investment disputes involving Argentina, Ecuador, and the Russian Federation, this Article discusses the increasing role of U.S. and EU trade preference programs as retaliatory mechanisms for noncompliance. This Article concludes that the use of the trade preference program as a leveraging tool can meaningfully impact a host State involved in an international investment dispute, particularly where the host State either has not consented to arbitration or has allegedly failed to comply with an adverse award.

Privileging Domestic Remedies in International Investment Dispute Settlement

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Law applicable to claims asserted in international investment disputes

PurposeThis article aims to deal with international investment disputes, with a focus on the nature of the law applicable to the merits of such disputes.Design/methodology/approachThe procedure for determining the law applicable in investment disputes, the phases of determination and the impact thereof on the applicable law were analyzed. The diagonality of the disputes and its impact on the law applicable to the merits from the perspective of the interaction between national and international law were also analyzed. Further, the authors focused on the nature of the host state's breach of obligations towards the investor anchored in the investment treaty, and the effect thereof on the law applicable to the merits. In this respect, the notion of the investment itself was analyzed according to the relevant BITs and MITs. Finally, the authors analyzed the applicability of the Ordre Public concept to investment disputes.FindingsThe study provided practical demonstrations and examples of choice of law and application issues as resolved by the tribunals established under the ICSID.Research limitations/implicationsThe article deals mainly with the ICSID proceedings. Another should be also analyzed.Originality/valueThe paper provides a new insight into issues of the law applicable to investment disputes by analyzing this problematic in relation to all stages of investment arbitration proceedings. Particularly it took an innovative approach in shedding light on and analyzing the applicability of the Ordre Public concept in relation to investment protection, especially in relation to Article 52 of the ICSID Convention, and the recognition and enforcement proceedings of arbitral awards issued in the course of investment arbitration.

Indirect Expropriation as Examined in International Investment Disputes ‐Experience of the United States in NAFTA Proceedings and Its Implication

Indirect Expropriation as Examined in International Investment Disputes ‐Experience of the United States in NAFTA Proceedings and Its Implication

Water-Related International Investment Disputes: A Fresh Look at Bayview Irrigation District v. United Mexican States

Water is one of the most vital resources on Earth. Furthermore, agricultural, industrial, environmental, recreational, and domestic uses of water all require fresh water in one form or another. Earth's exceedingly limited supply of fresh water, however, has led to countless water-related disputes. There are many theories on how best to combat water dispute problems; however, finding the complete solution has proven elusive up to this point. A front-runner, at least at the international level, is the idea of commoditizing fresh water as a good and subjecting it to international trade laws. However, the idea of regulating fresh water using international law raises many important questions. Of particular importance: To what degree should the North American Free Trade Agreement (NAFTA) apply to water disputes at the domestic and international level? The answer to this question has the potential to have far-reaching implications for water dispute issues in North America, as well as the rest of the world. Specifically, NAFTA's effect on fresh water flowing throughout Canada, the United States, and Mexico would create a significant impact on international investment disputes, as well as regulation of fresh water resources at all levels. The article addresses this increasingly important issue through a studied analysis of Bayview Irrigation District et al. v. United Mexican States.

Alternative Dispute Resolution for Stakeholders in International Investment Law

This article discusses several alternative dispute resolution (‘ADR’) mechanisms that intend to address complaints from civil society stakeholder groups that may suffer as a consequence of foreign direct investment (‘FDI’). ADR methods such as mediation are well suited to resolving international investment disputes of this nature because these methods are more accessible to such stakeholders in the developing world where conventional fora such as civil courts may be unavailable, not independent or else too expensive. The article explores common stakeholder grievance procedures within the international development banks that fund investment projects in the developing world. It then examines the national contact points (‘NCP’) procedures established under the Organization for Economic Cooperation and Development as well as a new office maintained by the Canadian government for complaints regarding foreign investment in the extractive sector. The article concludes by recommending ways in which participation in these types of processes by investors and other stakeholders can be improved through mandatory provisions in international investment agreements (‘IIA’)s.

International Investment Dispute Settlement in the 21st Century: Does the Preservation of the Public Interest Require an Alternative to the Arbitral Model?

This paper aims at taking stock of the criticism directed at the mechanism of international arbitration for settling disputes between international investors and host states. This paper also analyzes and describes the main attempts at reforming the arbitral model in response to those criticisms, notably in terms of transparency and participation. It finally briefly presents and evaluates proposals for plain alternatives to the arbitral model in investment dispute settlement, and assesses those proposals in legal and policy terms. The paper closes with a few remarks on the real potential of the arbitral model in investment disputes, and insists on the need to further reform it so that it can serenely and credibly play its role of impartial dispute settlement mechanism in cases often involving high doses of public interest. The paper notably makes a case for the fostering of a peaceful and practical co-existence between arbitral tribunals and domestic courts.

Arbitrariness, the Fair and Equitable Treatment Standard, and the International Law of Investment

AbstractOne of the most common features of international investment treaties is the obligation of a state to grant ‘fair and equitable treatment’ to investors and investments. Treatment giving rise to allegations of breaches of this obligation has taken many forms, namely bad faith, discrimination, denial of justice, frustration of legitimate expectations, lack of transparency, coercion and harassment, and arbitrariness or arbitrary conduct. This latter form of treatment – arbitrariness – has rarely been the focus of scholarly works and, thus, its scope and meaning are difficult to ascertain. When examined in the context of international investment disputes, however, one may conclude that, while its scope and meaning may vary, arbitrariness is indeed a legitimate basis for claim under the fair and equitable treatment standard. The thresholds for demonstrating arbitrariness, however, are decidedly and consistently high.

An Analysis of Mauritius as an Arbitral Seat for International Commercial and Investment Dispute Resolution

This paper highlights the salient features of the new International Arbitration Act 2008, in force in Mauritius. It also analyses the issue as to what makes a venue attractive and whether Mauritius can carve its place in the bubbling universe of international arbitration.

Rola prawa krajowego w międzynarodowych sporach inwestycyjnych

The author of the article deals with the issue of how important the laws and regulations of the host state really are, when it comes to international investment disputes. To answer the aforementioned question, the reader is fi rst given a short introduction to the idea of foreign direct investment within international trade, along with the major legal agreements governing them. The fi rst main part of the article brings closer the notion of international investment law and tries to explain its complex nature, together with some historical context. The second and the main part is divided into smaller divisions, in order to refl ect the stages of FDI from its commencement up to a possible outcome of a legal dispute before an international arbitration tribunal, and to present how the applicability and signifi cance of the host state law changes, along with the shift of those stages. The most important deliberations on the host state law within the article consider: its complimentary character to public international law and the investment treaties, its infl uence on the issue of jurisdiction of the arbitration tribunals in international investment disputes and its applicability during the merits stage of such disputes. Another feature worth mentioning is the presentation of the new form of clauses incorporated into modern investment contracts, i.e. – the choice of law and stabilization clauses. The author based his conclusions on a vast selection of international arbitration awards and decisions, as well as the modern treaty practice of the states, by virtue of researching model BIT’s of the biggest traders in the world, e.g. Germany, China, France and United Kingdom of Great Britain and Northern Irelan.

Rationalizing Costs in Investment Treaty Arbitration

International investment and related disputes are on the rise. With national courts generally unavailable and difficulties resolving disputes through diplomacy, investment treaties give investors a right to seek redress and arbitrate directly with states. The costs of these investment treaty arbitrations - including the costs of lawyers for both sides, as well as administrative and tribunal expenses - are arguably substantial. This Article offers empirical research indicating that even partial costs could represent more than 10% of an average award. The data suggested a lack of certainty about total costs, which parties had ultimate liability for costs, and the justification for those cost decisions. Although there were signs of balance and a preference for parties to be responsible for their own costs, there was neither a universal approach to cost allocation nor a reliable relationship between cost shifts and losing. Awards typically lacked citation to legal authority and provided minimal rationale, and the justifications for cost decisions exhibited broad variation. Small pockets of coherence existed. Tribunals typically decided costs only in the final award; and as the amount investors claimed increased, tribunal costs also increased. Such a combination of variability and convergence can disrupt the value of arbitration for investors and states. In light of the data, but recognizing the need for additional research to replicate and expand upon the initial findings, this Article recommends states consider implementing measures that encourage arbitrators to consider specific factors when making cost decisions, obligate investors to particularize their claimed damages at an early stage, and facilitate the use of other Alternative Dispute Resolution (ADR) strategies. Establishing such procedural safeguards can aid the legitimacy of a dispute resolution mechanism with critical implications for the international political economy.