Treaty Claims Research Articles

Deconstructing Turkcell V Iran: The First Investment Treaty Claim against Iran

Once an arbitral tribunal is constituted, the preliminary issue to be decided is the question of jurisdiction and admissibility of the claim. At the pre-merit stage, the tribunal determines whether it has jurisdiction over the disputes to proceed with the substantive issues. In investment arbitration, the jurisdictional requirements are contained in bilateral investment treaties (BITs) and the 1966 Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID Convention) and municipal laws. This article critically analyses the first BIT claim against Iran by reconstructing the Turkcell arbitration case. The Turkcell case concerned complex questions of Iranian and international law concerning the jurisdiction of an arbitral tribunal over investment activities. The Turkcell case highlights the important issue of interpretation of treaty provisions concerning the definition of investment (ratione materiae) and investors (ratione personae).

Review of Crystallex International Corporation v. Bolivarian Republic of Venezuela Arbitration Case

The fair and equitable treatment provision and indirect expropriation provision are crucial elements within international investment agreements between foreign investors and the host countries. However, due to their vague meanings and criteria, the tribunals often interpret these issues broadly, leading foreign investors to regard them as tools to confront the administrative powers of the host country. In order to better balance the interests of both parties, this article analyzes the classic case of Crystallex v. Venezuela to clear the jurisdiction of the tribunals and the distinction between contract claims and treaty claims. Meanwhile summarizing the elements of fair and equitable treatment and indirect expropriation. Finally, this article proposes some recommendations to promote the sustainable development of international investment, therefore, the host countries can abide by regulations and administer in accordance with the law, as well as enhance stability, transparency, and predictability, so that can encourage investors to invest boldly and foster internationalization and facilitation of investments.

Westmoreland v Canada

This case- note focuses on the award issued in Westmoreland Mining Holding LLC V Government of Canada on 31 January 2022. The decision sets a relevant precedent against the transferability of treaty claims. The tribunal held that it lacked jurisdiction ratione temporis to decide a claim brought by the assignee of a treaty claim, considering that the claimant was not the investor that owned or controlled the investment at the time of the alleged breach. This case-note summarises the award and offers an analysis on the transferability of treaty claims, proposing that the ratione temporis requirement should not defeat the jurisdiction of tribunals facing claims brought by assignees.

Westmoreland V Canada: A Precedent against the Transferability of Treaty Claims

This case- note focuses on the award issued in Westmoreland Mining Holding llc v Government of Canada on 31 January 2022. The decision sets a relevant precedent against the transferability of treaty claims. The tribunal held that it lacked jurisdiction ratione temporis to decide a claim brought by the assignee of a treaty claim, considering that the claimant was not the investor that owned or controlled the investment at the time of the alleged breach. This case- note summarises the award and offers an analysis on the transferability of treaty claims, proposing that the ratione temporis requirement should not defeat the jurisdiction of tribunals facing claims brought by assignees.

Arbitrating Investment Disputes in Time of Geopolitical Unrest: Focus on Investment Protection in Russia

Russia’s illegal full-scale invasion of Ukraine in February 2022 and the resulting war have had profound humanitarian and economic consequences affecting the lives of people in Ukraine and the region’s economic stability. The international community imposed unprecedented economic sanctions on Russian entities and individuals to condemn Russia’s actions in Ukraine. As expected, Russia retaliated and issued a series of counter-measures targeting foreign investors within Russia and occupied territories in Ukraine. Such measures will give, and have already given rise to claims by foreign investors in Russia for breaches of international investment law. This article analyses the restrictive measures targeting foreign investment imposed by Russia in response to international sanctions. It further discusses their legal implications for foreign investors. An overview of investment protections afforded under international investment treaties and international conventions as potential sources of redress for foreign investors follows in section 3. The final section highlights the challenges of pursuing investment treaty claims against Russia in the current geopolitical context (section 4). investment treaty arbitration, sanctions, counter-sanctions, investment protection in Russia, Ukraine, foreign investors, expropriation, fair and equitable treatment, narrowly worded arbitration clause, nationalization

Shareholder reflective loss: a bogeyman in investment treaty arbitration?

Abstract Most advanced national legal systems bar shareholders from claiming the diminution in value of their shareholding in a company arising from wrongful acts committed against the company. In contrast, investment arbitral tribunals consistently allow investors to recover such loss because most investment treaties are formulated broadly to protect investments in the form of direct and indirect shareholding. Despite recent calls for reform by governments and inter-governmental organizations, there is nothing inherently wrong with such dissonance. First, the recoverability of ‘shareholder reflective loss’ is doctrinally in sync with the lex specialis characteristics of investment treaty claims. Second, as recently and rightly recognized by the apex courts of the UK and Singapore, the principle of ‘no reflective loss’ is founded upon separation of legal personality rather than prevention of double recovery. In investment treaty arbitration, the latter concern is sufficiently addressed by solutions ranging from jurisdictional barriers (fork-in-the-road and denial of benefits clauses), procedural devices (consolidation and joinder), and substantive defences (res judicata, collateral estoppel, and abuse of process). Hence, the growing fear of shareholder reflective loss undermining the investor–State dispute settlement system is but a bogeyman that States need not be afraid of.

Inward foreign investment screening targets China: interdisciplinary perspectives*

Screening of inward foreign investment in numerous countries worldwide has heightened in recent years for a range of reasons, one of which is the volume of Chinese outward investment. Moulding screening policies around concerns about Chinese investment has been a common pattern, particularly among developed countries and allies of the United States. The application of screening measures to Chinese investments in particular is also seen in recent practice in numerous countries. These developments create potential inconsistencies with international investment law, at least for those countries with an international investment agreement with China. The 2020 arbitral award in Global Telecom v Canada shows that even a provision that explicitly excludes investment screening decisions from a bilateral investment treaty may not apply to prevent all related investment treaty claims. The increased use of screening as a policy tool, with respect to China and otherwise, also raises questions about economic rationale and impact. Put simply, blocking a foreign investment proposal may have negative effects on shareholders, jobs and the economy itself, while even the existence of a restrictive screening regime and the threat of the imposition of conditions on a deal may dampen the appeal for foreign investors.

Blockades and international investment treaties

Abstract Blockades are sometimes an effective means for a State to disrupt the trade and commerce of an adversary State, and public international law has developed specific legal principles regarding blockades. The article examines the treatment of blockades under international law, and the scope for affected investors to bring investment treaty claims arising from international blockades.

The Legality of EU Sanctions Under International Investment Agreements

The ‘unilateral turn’ in EU trade and investment policy is also reflected in the EU’s adoption of restrictive measures or sanctions following the Russian invasion of Ukraine. EU sanctions do not only target the Russian government but also Russian individuals and companies with investments in the EU. They can also indirectly affect the economic activities of other foreign investors running businesses in the territory of Member States. This raises unexplored questions about the interaction between EU sanctions and certain disciplines of international economic law, such as international investment protection law. Member States have undertaken obligations under international investment agreements (IIAs) signed with Russia and other states in respect of investments made in their territory by Russian and non-Russian investors. This article examines whether, and if so to what extent, the EU’s unilateral turn in the form of sanctions can fall within the scope of international investment law. It shows that this policy can trigger claims against Member States under a different set of IIAs. This article also examines potential defences that Member States can invoke against investment treaty claims resulting from the implementation of sanctions. Sanctions, Russia-Ukraine conflict, international law, international investment agreements, ISDS, nationality, third-party countermeasures, essential security interests

The Assignment of Investment Treaty Claims: Doctrinal and Policy Perspectives

Abstract The breach of an investment treaty vests the covered investor with a treaty claim, i.e. the right to claim reparation vis-à-vis the host State. Typically, the investor itself will bring this treaty claim before an arbitral tribunal. Yet, it might be the case that the investor is unwilling to commence arbitral proceedings against the host State. In this scenario, is the investor permitted to assign its treaty claim to another entity which will then initiate arbitration? In the affirmative, which are the jurisdictional hurdles that an assigned claim might face? And, bottom line, does such an assignment constitute a legitimate practice? It is these questions, that this study attempts to answer. It submits that the assignment of treaty claims is not only doctrinal-wise tenable but also policy-wise desirable, in view of the extensive and – to some extent – opaque third-party funding arrangements, to which the assignment provides an alternative.

The Award in Waste Management v Mexico (No 2) and Its Influence on the Minimum Standard of Treatment

Abstract Judge Crawford’s contributions to public international law were immense and covered a vast field, including State responsibility, international criminal law, State immunity, international legal personality, the law of the sea, and the protection of human rights. The focus of this essay is on Judge Crawford’s work in the field of international investment law, to which he made substantial contributions as a scholar, as an arbitrator, and as counsel, at a time when the field of international investment law was in a relatively embryonic stage of development. The contribution focusses in particular on the award of the tribunal constituted under Chapter 11 of the North American Free Trade Agreement (‘NAFTA’) in Waste Management v Mexico (No 2) (‘Waste Management (No 2)’), in which Judge Crawford was appointed by the ICSID Secretary-General as the presiding arbitrator. The award contains an important dictum on the content of the minimum standard of treatment under Article 1105 of NAFTA, which has been highly persuasive within the NAFTA context, in other investment treaty claims, and in the subsequent treaty practice of States. The Waste Management (No 2) tribunal brought much-needed rigour to a field in which ad hoc tribunals were adopting broad interpretations of treaty obligations and imposing onerous obligations on States.

Vanishing Treaty Claims: Investors Trapped in a Temporal Twilight Zone

Abstract The recent surge of arbitral awards forging new paths in the less-explored frontier of jurisdiction ratione temporis is laudable. Yet, if left unchecked, the trajectory of jurisdictional barriers expanding in depth and difficulty threatens to shrink the road of arbitration to the eye of a needle. Two emerging rules are especially worrisome: first, the right to claim under BITs vests exclusively with the investor holding the investment at the date of breach; second, the right is extinguished upon disposal of the investment. Concomitantly, once a pre-existing foreign investment is impaired by State measures, a temporal twilight zone is formed between the date of breach and date of institution of arbitration. The right to claim risks vanishing into a legal black hole along with the investment. Impecunious investors are left with a binary choice: litigate or mitigate. Ultimately, the broader lesson is for investment tribunals to avoid two common missteps when examining temporal objections: overreach of jurisdiction ratione temporis into areas more appropriately covered by the other jurisdictional dimensions (ratione materiae and ratione personae) and doctrine of abuse of process; and overreliance on principles transposed from private commercial arbitration (succession and separability).

The ILC Articles on State Responsibility in Investment Treaty Arbitration

Abstract The International Law Commission adopted the Articles on the Responsibility of States for Internationally Wrongful Acts in 2001, when there had been fewer than 100 recorded investment claims. Since then, there has been a significant rise in the number of investment treaty arbitration cases. This article considers how the ILC Articles have been used by investment treaty tribunals to analyse issues of State responsibility in investment treaty claims. The article summarises key trends concerning the use of the ILC Articles in investment treaty arbitration. It addresses the application of the ILC Articles in investment disputes, the role given to the ILC Articles in determining questions of attribution, the influence of the ILC Articles for the analysis of temporal issues, and the role of the ILC Articles in determining matters of reparation and contributory fault. The article is accompanied by a lengthy case appendix which summarises references by investment treaty tribunals to the ILC Articles from 2010–2020.

HOW TO IDENTIFY INSIDERS AND INTRUDERS DISGUISING AS INVESTORS IN THE ASSIGNMENT OF INVESTMENTS

AbstractThe constant exchange of investment assets poses a risk of ‘commoditisation’ of investment treaty claims. Nevertheless, both traditional and modern investment treaties contain sufficient safeguards against attempts by host State ‘insiders’ and third State ‘intruders’ to create artificial access to arbitration. First, the definition of ‘investment’ can filter genuine investments from bare acquisition of assets (ratione materiae). Second, the textual linkage between ‘investor’ and ‘investment’ strongly implies that ‘active contribution’ in the investment is required from assignees to qualify for protection (ratione personae). Third, the doctrine of abuse of rights prevents treaty shopping and internationalisation of domestic disputes (ratione temporis).

Stop drinking the waipiro! A critique of the government's ‘why’ behind Te Mana o te Wai

Stop drinking the waipiro! A critique of the government's ‘why’ behind Te Mana o te Wai

Víctor Pey Casado and President Allende Foundation v Republic of Chile: Assignment of Investment Treaty Claims and Jus Standi of the Assignee

In a Resubmission Award dated 13 September 2016 (Second Award), the Tribunal in Víctor Pey Casado and President Allende Foundation v Chile (Resubmission Tribunal) examined whether a post-award assignment may entitle an assignee to appear as a co-claimant alongside the original investor (ie assignor) in resubmission proceedings. The Resubmission Tribunal held that the resubmission proceedings were a continuation of the original arbitration proceedings and the parties to these proceedings must therefore remain the same as in the original proceedings. Moreover, the Resubmission Tribunal observed that even if the assignee were to replace the assignor, the assignee would still need to establish jurisdiction in its own right. The Resubmission Tribunal’s decision was later confirmed by an ad hoc Committee (Second Committee) in an annulment decision issued on 8 January 2020 (Second Decision on Annulment).4 The question of whether an assignee of the original investor may acquire treaty rights along...

The Investment Treaty Implications of Covid-19 Responses by States

By analysing Covid- 19 measures taken by States in eleven jurisdictions – whilst considering a range of international investment agreements (iia s) including ‘old – school’ European bit s, North American style treaties, and Asian investment treaties – the authors examine to what extent Covid- 19 measures could potentially result in investment treaty claims. This study presents these implications through a balanced overview of treaty-based grounds and justifications, which are built upon classical investment protections and fundamental doctrines. When State measures are examined in terms of aim, effect, duration, and scope, a typology emerges that not only classifies, but also reveals similar patterns crystallising across varied jurisdictions – despite a decentralised and disparate approach taken by States. The comparative analysis of generational differences between iia s determines the probability of successfully invoking claims, whilst simultaneously assessing the risks for States seeking to rely upon treaty- based justifications. Thus, when read by States, this legal analysis amounts to a risk assessment, and when read by foreign investors, serves as a guide on recourse. The authors conclude that States should include ‘pandemic- proof’ provisions in prospective iia negotiations, and thus, potentially ushering a dawn of new ‘pandemic- proof iia s’.

Whither Wintego: Environmental Impact Assessment and Indigenous Opposition in Saskatchewan’s Churchill River Hydropower Project in the 1970s

This article details Saskatchewan’s first environmental impact assessment, which took place in the 1970s over a proposed dam on the Churchill River at the Wintego Rapids. The Wintego Dam, which would have been the largest hydroelectric dam in the province at the time, was controversial because of the environmental repercussions and impacts on the local Indigenous communities, particularly the Peter Ballantyne Cree Nation. We show that the Blakeney ndp government did not initially intend to create a robust environmental impact assessment, and then explain how and why such an assessment was ultimately undertaken. Using archival material that was previously unavailable, the article recounts the governmental study, the Indigenous-led studies (after they rejected the governmental process), and the final Board of Inquiry report. The Wintego saga should be understood within the context of a growing resistance to northern development projects whose benefits accrued mostly to the southern white population. Ultimately, the Blakeney government decided not to build Wintego because of the economic, environmental, and social impacts, as well as concerns about unsettled treaty claims. This could be considered the first attempt – even before the Berger Inquiry – by a provincial government to fully assess the impacts of a natural resource project before final approval, and it was the earliest incorporation of Indigenous-led studies into the assessment process.

Can Distributable Ledger Technology Be Part of the Future Withholding Tax Solution?

In this note, the authors discuss the practical issues beneficial owners holding portfolio investments and financial intermediaries providing services face when making treaty claims, the latest developments on this from a national and international perspective, and how new innovative technology may be the way to resolve these issues.

WAI 1909 – The Waitangi Tribunal Gambling Claim

In 2008, I lodged a claim with the Waitangi Tribunal in regard to problem gambling and its negative impacts on Māori people. The Tribunal is tasked with hearing grievances related to Te Tiriti o Waitangi (The Treaty of Waitangi) signed in 1840 between Māori and the British Crown. It is a historical claim focused on the lack of adequate protection of taiohi Māori (young people of Māori descent) and the intergenerational harm caused by problem gambling among their whānau, hapū, iwi (extended families and relatives) and urban Māori communities. However, this begs the question how can a Treaty claim improve the health outcomes of a generation of taiohi Māori who have been exposed to commercial gambling and its aggressive and targeted expansion and marketing? This paper frames the WAI-1909 claim as a Kaupapa Māori (Māori research approach) derived from the research of three wahine toa (warrior women) supporting the claim; and refers to epistemological standpoints of Māori women working in the gambling research space. I demonstrate how the gambling claim challenges the New Zealand government to honour the promises in the articles of Te Tiriti o Waitangi and to protect the rights of its citizens, especially taiohi Māori. The WAI-1909 gambling claim concludes that whilst the New Zealand Gambling Act (2003) includes a public health approach to problem gambling, it has not adequately addressed the rights of tangata whenua (Māori, the first people of Aotearoa/New Zealand) under Te Tiriti o Waitangi.