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EVOLUTION IN INVESTMENT TREATY LAW AND ARBITRATION

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CONTENTS

CONTRIBUTORS

EDITORS’ PREFACE AND ACKNOWLEDGEMENTS

TABLE OF CASES

Decisions of ICSID and investment treaty tribunals

Decisions of other international courts and tribunals

Decisions of national courts

TABLE OF TREATIES

Bilateral investment treaties

Multilateral Investment Treaties and Free Trade Agreements

Other international conventions

PART 1 Introduction

1 Introduction: Evolution in investment treaty law and arbitration

PART II Shifts in fundamental character

2: Conflict and conflicts in investment treaty arbitration: Ethical standards for counsel

I Personal considerations

II The growing importance of imposing limits on arbitration roles

III Domestic case law

IV Cases before international investment tribunals

A Telekom Malaysia Berhad v. Republic of Ghana

B Eureko v. Republic of Poland

C Hrvatska Elektroprivreda v. Republic of Slovenia

D CEMEX Caracas Investments BV and CEMEX Caracas II Investments BV v. Bolivarian Republic of Venezuela

E Perenco Ecuador v. Republic of Ecuador and Empresa Estatal Pertoleos Del Ecuador

F ICS Inspection and Control Services Limited v. Republic of Argentina

G Vito G Gallo v. Government of Canada

H Rompetrol Group NV v. Romania

V Other international courts and tribunals: The ICJ and CAS

VI Going forward

3 Recent developments in the approach to identifying an `investment´ pursuant to Article 25(1) of the ICSID Convention

I Introduction

II Historical context of the definition of `investment´ in Article 25(1)

III Investments: Relevance of types of economic activity

IV `Knowing one when you see it´: Can this be a test for identifying an investment?

A piecemeal approach

V Malaysian Historical Salvors

VI Inmaris v. Ukraine

VII To what effect is this apparent change of emphasis?

VIII Conclusion

4 Investment treaty interpretation and customary investment law: Preliminary remarks

I Introduction

II Treaty interpretation and customary law: General issues

III Investment treaty interpretation: Case studies

A Investor–State treaty arbitration and diplomatic protection

B Primary investment obligations in treaty and customary law

C Non-precluded-measure clauses and circumstances precluding wrongfulness

IV Conclusion

5 The public–private dualities of international investment law and arbitration

I Introduction

II The characterisation of international investment law

III The function of international investment arbitration

IV The economic policy underlying international investment law

V The interests served by international investment law

VI The economic analysis of international investment agreements

VII Conclusions: The impact of the dualities in practice

6 Outline of a normative framework for evaluating interpretations of investment treaty protections

I Introduction

II Distributive impacts of IITs: The allocation of losses

A The nature and extent of the distributive consequences of IIT protections

B Evaluating the distributive consequences of IITs

C Libertarian theories of distributive justice

D Egalitarian theories of distributive justice

E Utilitarian theories of distributive justice

F Summary of distributive consequences of IITs

III Efficiency

A The concept of efficiency

B Free markets and competitive equality: A basic efficiency analysis

C Efficient government and investor conduct

D Summary of efficiency

IV Attraction of foreign direct investment

A Is additional FDI normatively desirable?

B The relationship between BITs and FDI

C Conclusion

V Regulatory chill: The consequences of IIT protections for the realisation of human rights and for environmental conservation

A Conceptual issues in an inquiry into regulatory chill

B What sort of evidence would be needed to test hypotheses about regulatory chill?

C Regulatory chill 1: Liability and chilling

D Regulatory chill 2: Uncertainty and chilling

E The consequence of regulatory chill for human rights and environmental conservation

F Summary of regulatory chill

VI Consequences for the rule of law

A Distinguishing debate about international arbitration and the rule of law

B Consequences of IIT protections for the rule of law in host States

C Summary of rule of law

VII Conclusion

7 Investment treaty arbitration as global administrative law: What this might mean in practice

I Introduction

II Global administrative law

III Neither international commercial arbitration nor public international law are appropriate paradigms

IV The public law paradigm

V Conclusion and further thoughts

PART III Actors in international investment law

8 Sovereign wealth funds and international investment law

I Introduction

II The rise of SWFs

A SWF activity and the role of governments in the global economy

B Shift in investment strategies of SWFs

C Concerns of home States over investment strategies of SWFs

III Conflicting approaches to regulating SWF activity

A The `hard law´ answer

B The `soft law´ answer

C Co-operation of host States, home States and SWFs with OECD and IMF measures

IV Protection of investments of SWFs under international investment law

A Protection of SWF investments under the ICSID Convention and BITs

B The temporal dimension of protection of SWF investments under BITs

C Host State defences

V Conclusion

9 Investor misconduct: Jurisdiction, admissibility or merits?

I Introduction

II Mapping investor misconduct by phase of investment and arbitration proceedings

III Distinguishing between jurisdiction and admissibility

IV Can an investment treaty claim be dismissed as inadmissible?

V Concluding thoughts

10 The European Union as a global investment partner: Law, policy and rhetoric in the attainment of development assistance and market liberalisation?

I Introduction

II Foreign direct investment as a matter of EU law and practice

III EU–ACP relations: Situating investment in the development context

A Investment provisions in the CARIFORUM–EU EPA: A meeting of minds?

IV Conclusion: Accommodating divergences in EU development and FDI policies

11 The `fair and equitable treatment´ standard and the circumstances of the host State

I Introduction

II The obligation in investment treaties to provide fair and equitable treatment

III Decisions concerning the relationship between the host State' s circumstances and the fair and equitable treatment standard

ADecisions arising from Argentina' s financial crisis

B Decisions applying elements of the fair and equitable treatment standard

1 Denial of justice

2 Protection of legitimate expectations

IV The uncertainty over the relationship between the host State' s circumstances and the fair and equitable treatment standard

V Resolving the uncertainty over the relationship between the host State' s circumstances and the fair and equitable treatment standard

A The element of the fair and equitable treatment standard which is being considered

B The standard of treatment required by the element which is being considered

C The relationship between the fair and equitable treatment standard and the customary international law standard of treatment

D The compensation awarded by the tribunal

VI Summary

12 The plea of necessity under customary international law: A critical review in light of the Argentine cases

I Introduction

II The plea of necessity: Basic parameters

A Protected interest must be an essential interest

B The potential peril should be grave and imminent

C The course of action taken in order to protect an essential interest must be the only available means for resolving the peril

D The measures taken by the State must not seriously impair an essential interest of another State toward which the obligation exists

E Necessity may not be claimed if the violated obligation in question specifically prohibits the possibility of invoking necessity

F Necessity may not be claimed if the State claiming it has contributed to the creation of the crisis

III Compensation

A Necessity: A `defence´ or an `excuse´?

IV Recent economic crisis and the future of the necessity doctrine

A The Icesave dispute

B The `Icesave´ dispute and the doctrine of necessity

C Lessons from the Icesave dispute

V Conclusion

13 Making way for the public interest in international investment agreements

I Introduction

II Legal disciplines in new-generation IIAs

A Expropriation

B Fair and equitable treatment

C Non-discrimination

III General exceptions clauses in new-generation IIAs

IV Non-economic policy objectives in the preambles of new-generation IIAs

V Concluding comments

14 The participation of sub-national government units as amici curiae in international investment disputes

PART IV The new significance of procedure

15 The new rules on participation of non-disputing parties in ICSID arbitration: Blessing or curse?

I Introduction

II The legal framework since 2006

III Arbitral practice since 2006

A Biwater Gauff

B Piero Foresti, Laura de Carli and ors v. South Africa

C AES Summit v. Hungary and Electrabel v. Hungary

D Micula v. Romania

IV Reasons to include non-disputing parties in arbitral proceedings

1 Which perspective?

2 Expertise of non-disputing parties

V Dangers associated with allowing non-disputing parties to participate in arbitral proceedings

1 Politicisation of investment disputes?

2 Overstraining of the arbitral process?

VI Concluding remarks

16 The role of procedure in the development of investment law: The case of Section B of Chapter 11 of NAFTA

I Introduction

II Systemic coherence in international investment law

A Why is systemic coherence so elusive?

1 Scope

2 Structure

3 Standing

B Consequences of the three S's that affect the development of investment law

III Systematic approach under NAFTA

A Waiver or `no-U-turn´ access model to arbitration

1 Background

2 Practice

B Consolidation process of common claims

1 Background

2 Practice

C Consolidation process of related parties claims

1 Background

2 Practice

D Participation by a party to NAFTA and amicus curiae

1 Background

2 Practice

(a) NAFTA party 1128 Submissions

(b) Amicus curiae participation in Chapter 11 cases

E Free Trade Commissions binding interpretations

1 Background

2 Practice

IV Conclusions

17 Navigating the parallel universe of investor-State arbitrations under the UNCITRAL Rules

I Introduction

II Preliminary matters

A What are the UNCITRAL Rules?

B When is there an option to submit an investor–State dispute to arbitration under the UNCITRAL Rules?

C The number of investor–State disputes under the UNCITRAL Rules

III In what ways is investor–State arbitration under the UNCITRAL Rules really that different from ICSID arbitration?

A Confidentiality and publicity

B Institutional support

C Appointment of arbitrators

D Challenges to arbitrators

E Provisional measures

F Preliminary avenues for disposing of frivolous claims

G Jurisdictional limitations

H Costs

I Annulment of awards

J Enforcement

IV Conclusions

18 The scope of `amount of compensation´ dispute-resolution clauses in investment treaties

I Introduction

II Awards limiting jurisdiction to quantum only

A Plama v. Bulgaria

B Berschader v. Russian Federation

C RosInvest Co. UK Ltd v. Russian Federation

D Austrian Airlines v. Slovak Republic

III Awards permitting jurisdiction over both expropriation and quantum

A Sedelmayer v. Russian Federation

B Telenor Mobile Communications AS v. Hungary

C Saipem SpA v. Bangladesh

D Czech Republic v. European Media Ventures (Eng. High Crt)

E Renta 4 v. Russian Federation

F Tza Yap Shum v. Peru

IV Conclusion

19 Interference by a local court and a failure to enforce: Actionable under a bilateral investment treaty?

I Introduction

II Saipem

A The facts

B The ICSID proceeding

1 Abuse of rights

2 Violation of the New York Convention

III Discussion of the ICSID tribunals decision in Saipem

A Generally

B Purported breach of the New York Convention

C What if the reasoning in Saipem were applied to other non-enforcement decisions?

IV Conclusion

20 Bias challenges in investor–State arbitration: Lessons from international commercial arbitration

I Introduction

II Themes of bias challenges in ICA

III ICA test for bias

IV ICSID test for bias

A The ICSID Convention

B ICSID Arbitration Rules

C ICSID Jurisprudence

1 Primary characteristics

(a) Nemo judex in sua causa

(b) De minimis non curat lex

2 Secondary characteristics

(a) Amco Asia Corp. v. Indonesia (1982)

(b) Zhinvali Development v. Georgia (2001)

(c) Vivendi Universal v. Argentina (2001)

(d) SGS v. Pakistan (2002)

(e) Canfor Corporation v. USA (2003)

(f) Generation Ukraine v. Ukraine (2003)

(g) Grand River Enterprises v. USA (2007)

(h) Suez and ors v. Argentina (No. 1) (2007)

(i) Suez and ors v. Argentina (No. 2) (2008)

(j) Perenco v. Ecuador (2009)

(k) Urbaser v. Argentina (2010)

V Hrvatska `counsel conflict´

VI Eureko/Vivendi role/issue conflict

VII Lessons

PART V Engagement with cross-cutting issues

21 Protecting intellectual property rights under BITs, FTAs and TRIPS: Conflicting regimes or mutual coherence?

I Introduction

II TRIPS flexibilities

III Additional IP protection under FTAs and BITs

A IP and investment chapters in FTAs

B IP as a protected investment under BITs

C Impact on TRIPS flexibilities

IV Conflicting regimes or coherence?

V Conclusion

22 Stabilisation clauses and sustainable development: Drafting for the future

I Introduction

II A brief history of the evolution of stabilisation clauses

III Stabilisation clauses in the spotlight: Is it all about scope?

IV The balancing act: Eliminating the threat to sustainable development whilst preserving a stable and predictable legal framework for investors

V Conclusions

23 A new investment deal in Asia and Africa: Land leases to foreign investors

I Introduction

II Dynamics of large-scale land leases

A Lessors

B Lessees

C Social and environmental impacts of FDI-fuelled large-scale agriculture

III International investment law context for overseas land-leases

A Umbrella clauses

B Lack of performance standards in BITs to protect public interest

C Investor–State agreements and stabilisation clauses

D Protecting the public interest

IV Conclusion

24 Thirst for profit: Water privatisation, investment law and a human right to water

I Introduction

II Water: A unique resource

A Essential for human life

B Scarce environmental resource

III The water business

IV State of the law

A Biwater v. Tanzania

B Azurix v. Argentina

V Water and investment law

VI Conclusion

25 Economic development at the core of the international investment regime

I Introduction

II Intentions of States in international investment law

III Economic development as expressed in relevant international instruments

A The relevance of the parties intentions in treaty interpretation

B Economic development as a goal of relevant international instruments

1 The International Centre for Settlement of Investment Disputes

2 International investment agreements

IV Economic development as considered in the jurisprudence of arbitral tribunals

V Economic development: A measurable concept

VI Conclusion

26 Regulatory chill and the threat of arbitration: A view from political science

I Introduction

II The regulatory chill hypothesis

III Critiques of the regulatory chill hypothesis

A Regulators are not aware of the threat of arbitration

B Governments can expect to win cases when regulation is bona fide

C There is no evidence to support the regulatory chill hypothesis

IV Examining investor threats to arbitrate: Two case studies from Costa Rica

A Harken Energy

B Vannessa Ventures

C Analysis

V Conclusion

PART VI Conclusions

27 Evolution or revolution in international investment arbitration? The descent into normlessness

I Introduction

II The old conflict

III On killing the goose that laid the golden eggs

A Exorbitant theories of jurisdiction

B Neoliberalism and substantive law on investment protection

1 The fair and equitable treatment standard

2 Expropriation

IV The future of investment arbitration

V Conclusion

28 Evolution or revolution?

I Introduction

II `Legitimacy´: Is investment treaty arbitration private or public?

III The applicable law

IV Treaty interpretation

V Issues of quality

VI Conclusion

Index