LAWS477 International Investment Law Course Syllabus

Transcription

1 LAWS477 International Investment Law Course Syllabus Second Semester, 2009 Dr Tracey Epps

2 University of Otago, Faculty of Law International Investment Law LAWS477 Dr Tracey Epps Class time Wednesdays 11am - 1pm Location tba My contact details Room 7.C.13 Tel tracey.epps@otago.ac.nz Office hours by appointment ( or see me after class) Course materials You should have received a pack of materials. From time to time, I may hand out additional materials in class (e.g., newspaper articles). Exam Date No exam Assessment - Class assignments 25% - Class participation 10% - Research paper 65% Class assignments (25%) You must do a total of five (5) class assignments. There are assignments set for each week from Class 2 onwards. You must do one assignment for five different weeks of your choosing (except that if you wish, you may do two from class two see the notes for that day). You may choose one of the assignments set, or if you prefer you may choose to write a critical response to any aspect of the readings set for the class. I strongly encourage you to set your own question if there is something in the readings that intrigues you but that I haven t covered in the questions. You can also write a case note for one of the cases (or an aspect of the cases) that have been assigned as reading. (I will distribute notes on how to write a case note and these will also be available on Blackboard.)

3 What I am looking for in your assignments is something that is analytical and insightful I don t just want a description of the facts of a case or factual situation. I want you to show that you have thought about the issue, that you have analyzed it, and are prepared to be critical. Your assignments should not exceed 750 words (excluding references). For some of the assignments, you will need to access sources outside of the materials. As a first port of call, you should use the articles on Blackboard these are mostly referred to in the questions but you should check Blackboard anyway. Second, you can use the books on reserve in the library. These are listed below in the section headed Resources. Assignments are due at the beginning of the class i.e., an assignment dealing with the topics covered in Class 4 are due at the start of Class 4. Class participation (10%) You are expected to participate in class by doing the readings and contributing to the discussion. The class will be much more enjoyable if everyone participates in the discussion. My hope is not that you will memorize every rule and award we study, but that you will really think about the issues, question the reasoning in awards, and the benefits and disadvantages of the system. That is why discussion is so important, it will help everyone to see different aspects of the issues. At least twice during the semester, I will ask each of you to do some preparation for the next class. This won t involve as much work as the class assignments, but it will require doing the reading. For example, I might ask you to come to the next class prepared to explain the facts of a particular case to the class, or to come ready to discuss your view as to whether a particular judgement was rightly decided. I will not be grading you on the correctness of your answers, but on your willingness to participate and engage in the class.

4 Research paper (65%) Due date Friday 16 October 2009, 5pm There is a compulsory research paper of between 3,000 and 4,000 words. This paper may count towards your LAWS research and writing requirement. I will distribute a list of potential topics. However, I strongly encourage you to think of your own topic which can include something that we haven t looked at in class or that we have only touched on briefly. The key thing to remember when picking a topic is that 3,000-4,000 words really isn t that much and you should focus on a narrow issue. Unless you are doing one of the topics provided, please come and see me before you finalize your topic. Once you have a topic, come feel free to come and see me if you need help getting started on some readings. While I don t expect you to do a huge amount of independent research, you will need to go beyond the course materials. The resources listed below will be a good start. In your paper, you should demonstrate critical analysis, and depending on the topic, set out your proposed solution to whatever problem you are addressing. Resources There are a number of books on reserve in the Law Library. You should look at these if you need extra resources for your class assignments. For your research essay, you will likely need to go beyond the books. Books on Reserve Andrew Newcombe & Lluís Paradell, Law and Practice of Investment Treaties Standards of Treatment (Wolters Kluwer, 2009). Rudolf Dolzer and Christoph Schreuer, Principles of International Investment Law (New York: Oxford University Press, 2008). Peter Muchlinski, Federico Ortino, & Christoph Schreuer, eds., The Oxford Handbook of International Investment Law (Oxford: Oxford University Press, 2008). Campbell McLachlan, Laurence Shore, & Matthew Weiniger, International Investment Arbitration (New York: Oxford University Press, 2007). August Reinish, ed., Standards of Investment Protection (New York: Oxford University Press, 2008). M. Sornarajah, The International Law on Foreign Investment 2/e (Cambridge: Cambridge University Press, 2004).

5 Gus Van Harten, Investment Treaty Arbitration and Public Law (New York, Oxford University Press, 2007). Websites Investment Treaty Arbitration: This website provides access to all publicly available investment treaty awards; information and resources relating to investment treaties and investment treaty arbitration; and links to further resources. ICSID: This is the official website of the International Centre for Settlement of Investment Disputes (ICSID). UNCTAD BITs Online: aspx This website contains a search engine which enables you to find BITs online. NAFTA Claims.com: On this website you can find information about NAFTA investor-state dispute settlement, including recent news and copies of NAFTA legal documents. Journals and other sources for articles Social Sciences Research Network: Use the search function of this electronic repository to find the most recent academic writing. The search function is very easy to use and the majority of the articles are available for free download. Journal of International Economic Law This journal is a good source for writing on matters involving both international trade and international investment law. It is available online through the University of Otago e-journals library: HeinOnline You can find this article database on the Otago library website at: It has a very userfriendly search function and contains most journals you will need. LEXIS & Westlaw You should also use LEXIS and Westlaw to search law reviews from the US, Europe, and elsewhere.

6 International Investment Law - Introduction Over the past twenty years, global flows of foreign direct investment (FDI) have increased at an astounding annual growth rate of over 25 percent. Multinational corporations (MNCs) and their overseas investment activities are an immensely important and often contentious aspect of globalization. This paper analyzes the developing global legal framework for regulating relations between foreign investors and the states hosting their investments. We will focus on the international law relevant to the resolution of investment disputes rather than on the law of doing deals. Over the course of the semester we will examine the sources of international legal rules governing the treatment of FDI, including primarily Bilateral Investment Treaties, or BITs, and the investment chapters of Free Trade Agreements, including Chapter 11 of the North American Free Trade Agreement (NAFTA), and the NZ China FTA. We will also spend time studying the ways in which investment disputes are settled, paying particular attention to international arbitration before the World Bank s International Centre for the Settlement of Investment Disputes (ICSID).

7 List of Abbreviations Below is a list of common abbreviations that you will encounter throughout the semester. EC ECJ ECT FDI FCN FTA GATT ICC ICJ ICSID ICSID Convention European Community European Court of Justice Energy Charter Treaty Foreign Direct Investment Treaty of Friendship, Commerce and Navigation Free Trade Agreement General Agreement on Tariffs and Trade International Chamber of Commerce International Court of Justice International Centre for Settlement of Investment Disputes Convention on the Settlement of Investment Disputes Between States and Nationals of Other States 1965 Draft Multilateral Agreement on Investment Most Favoured Nation North American Free Trade Agreement Organization for Economic Co-operation and Development Permanent Court of International Justice United Nations Commission on International Trade Law MAI MFN NAFTA OECD PCIJ UNCITRAL Vienna Convention Vienna Convention on the Law of Treaties 1969 WTO World Trade Organization

8 Class Schedule Class 1 Wed 15 th July - Introduction #1 Class 2 Wed 22 nd July - Introduction # 2 Class 3 Class 4 Class 5 Class 6 Class 7 Wed 29 th July - Overview of the Modern Legal Regime Wed 5 th August - Jurisdiction Wed 12 th August - Procedure Wed 19 th August Relative Standards of Protection: MFN Wed 26 th August Relative Standards of Protection: National Treatment MID-SEMESTER BREAK Class 8 Class 9 Class 10 Class 11 Class 12 Class 13 Wed 9 th Sept Absolute Standards of Protection: Minimum Standards of Treat, Fair & Equitable Treatment Wed 16 th Sept - Expropriation Wed 23 rd Sept Investment Contracts & Umbrella Clauses Wed 30 th Sept Defence of Necessity Wed 7 th Oct Set Asides & ICSID Annulment Procedures Wed 14 th Oct Effectiveness of BITs & the Future

9 Class 1 Introduction # 1 Objectives In this session we will cover the following issues: What is meant by foreign direct investment (FDI), and further: - why do companies engage in FDI? - why do host states accept FDI? - why might FDI be controversial from the host state perspective? - what makes FDI different from other forms of investment? (political risk, obsolescing bargain theory) How does international investment law fit into the scheme of international law more generally? What are the objectives of international investment law? Finally, we will start looking at the history of international investment law: - the colonial period through to independence of the colonies - Gunboat Diplomacy - the Calvo Doctrine (a Latin American perspective) - the Hull Formula (a US perspective) - the international minimum standard (tension between US & other perspectives) Readings You should make a start on the Newcombe & Paradell reading for today, and make sure you have read it all for the second class. It provides a good overview of the history of international investment law and everything from hereon in will make much more sense if you take the time to read it. Reading Newcombe & Paradell The articles by Goodman (re investment in the US) & Williams (re oil in Iraq) Purpose Describes the history of international investment law from the early days through to the advent of bilateral investment treaties (BITs) in the early 1990s. To get you thinking about some of the issues that FDI raises from the host state and investor perspectives.

10 Class 2 Introduction # 2 Objectives In this session, we will complete the historical overview that we began in the first class. We will look at: - attempts from the 1950s to develop the doctrine of Permanent Sovereignty Over Natural Resources (PSNR) through to the Washington Consensus of the early 1990s and the move towards negotiations of Bilateral Investment Treaties (BITs) Second, we will look at the subject of Diplomatic Protection & Espousal (where governments could bring an action on behalf of their nationals) and consider why this did not provide adequate protection for investors. Third, we will review Moran s theory of obsolescing bargain (which was introduced very briefly in Class 1) and discuss how well it is illustrated by the Chilean copper industry and also by Aminoil v Kuwait. The Aminoil case will also give you an introductory oversight into the legal aspects of international investment law, in particular: - ad hoc arbitration as a system for settling disputes - the tension between the idea that international promises should be kept except when they shouldn t - the legal and procedural flexibility that arbitrators often have in this area Readings Reading Purpose Newcombe & Paradell A history of international investment law from the early days through to the advent of BITs in the 1990s. ILC Draft Articles An attempt to codify Diplomatic Protection rules. Moran To introduce you to his theory of the obsolescing bargain and the nature of the investor-host state relationship, especially in the natural resources sector. We cannot understand international investment law without understanding the positions of both investor and host state. Aminoil v Kuwait (summary) To provide an illustration of the obsolescing bargain theory as it played out in a dispute and also to introduce you to some of the legal aspects of investment treaty arbitration. Optional Assignment (= 5% of your overall grade, choose one) Note. Because there was no assignment for week one, you may decide to do two assignments for this class. You must hand one of them in at the class, but the other may be handed in any time up until and including Class 4.

11 One: What are the key benefits and disadvantages of Diplomatic Protection? Which of these do you think outweighs the other? Why? (To answer this question, you might like to look at the optional reading by Eugene Staley which is posted on Blackboard.) Two: Summarise the differing perspectives on protection for foreign investors as expressed during the 19 th and 20 th centuries and explain how these perspectives were or were not reconciled by the 1990s move to sign bilateral investment treaties. Three: Provide a succinct explanation of Moran s obsolescing bargain theory and then consider either: 1. Is Moran s theory unduly pessimistic as a general theory of investor-state relations? or 2. Why do you think Moran s theory is considered to best apply to natural resources investments? Could it also apply to investments in the manufacturing sector? or 3. Should international law seek to stabilize the initial bargain? Or ought it to promote orderly, mutually acceptable, perhaps fair adjustment? Four: Explain how Moran s obsolescing bargain theory is or is not applicable to oil investments in Iraq (as per the Williams article) and in the light of your conclusion, consider what kind of protections oil companies might be looking for in any contracts with the Iraqi government.

12 Objectives Class 3 Overview of the Modern Legal Regime In this session, the aim is to provide you with an overview of the system of Bilateral Investment Treaties (BITs): - what is their purpose? - what kinds of matters do they cover? - how did they come to be? - how do BITs provide for settlement of disputes through arbitration? Second, we will briefly discuss the trend for Free Trade Agreements (FTAs) to include investment provisions, and in particular, will consider the North American Free Trade Agreement (NAFTA) and the NZ China FTA. Third, we will discuss the most important institution for investment treaty arbitration, the International Centre for Settlement of Investment Disputes (ICSID): - What is ICSID? - Key provisions of the ICSID Convention Finally, we will consider how it is that this system of BITs and investment treaty arbitration came to be and why developing countries in particular consent to it. Readings Reading Newcombe & Paradell Van Harten Kalderimis ICSID Convention NZ China FTA Purpose Explains the development of international investment law from the 1990s, including efforts to reach a multilateral agreement &- importantly for the rest of this paper the dispute settlement system. Considers why developing countries entered into BITs. Gives you a brief overview of the NZ-China FTA. You do not need to read in full, but have it in class as a reference for our discussion. You do not need to read in full, but have it in class as a reference for our discussion.

13 Optional Assignment (= 5% of your overall grade, choose one) One: Provide a critique of Van Harten s discussion (or a part thereof) of why developing countries entered into BITs from the 1990s. (To help with this task, you might want to skip forward and look at the article assigned for the final class, by Salacuse.) Two: What do you see as the key advantages and disadvantages of New Zealand having negotiated an investment chapter in the FTA with China? Three: Provide a critical response to any of the critiques of international investment law as set out on pages 63 and 64 of Newcombe and Paradell. You may wish to refer to one or more of the sources that the authors cite in the footnotes.

14 Class 4 Jurisdiction Objectives To gain an understanding of the key jurisdictional issues that arise in arbitral proceedings, especially in ICSID arbitrations. First, we will look at how countries consent to investor state arbitration. Second, we will look at what is called jurisdiction rationae materiae that is, what subjects are covered by the jurisdiction of the arbitral tribunal? The key question to be analyzed here is that of is there an investment? Third, we will discuss jurisdiction personae that is, who are entitled to be parties to a dispute before a given arbitral tribunal. The key issue here concerns nationality disputes are between an investor and a host state. The investor must be a national of a state other than the investor. A number of issues arise in determining who or what is a national of a given state. Readings Reading Purpose UNCTAD Materials The two sets of UNCTAD materials describe the key elements of a) jurisdiction rationae materiae; and b) jurisdiction personae. Fedax v Venezuela Jurisdiction rationae materiae. First ICSID case where jurisdiction was objected to on the grounds that the underlying transaction didn t qualify as an investment. It asks whether the holding of promissory notes constitutes an investment. Biwater Gauff v Tanzania, Jurisdiction rationae materiae. The tribunal rejected the Fedax factors 2008 for determining whether there is an investment. ASIL Insight Explains the facts of Biwater Gauff. Tokios Tokele v Ukraine Jurisdiction personae. This case is about nationality. It asks whether a company that is registered in one State can pursue a claim against the host State in a case where it is controlled by shareholders in the host State. Loewen v USA Jurisdiction personae. This case is about nationality. It deals with the question of continuous nationality. Is it a principle of international law that claimant s nationality must remain unchanged from the date of the events giving rise to the claim through to the date of resolution of the claim? Most commentators think the Tribunal got the answer wrong.

15 Optional Assignment (= 5% of your overall grade) One: Why do you think there is no definition of investment in the ICSID Convention? What are the benefits and disadvantages of having no definition? Two: Critically review the tribunal s decision in Tokios Tokele v Ukraine. Do you agree with the tribunal s decision that the control test could not be used to restrict the Centre s jurisdiction? Why / why not? Three: Critically review the dissent in Tokios Tokele v Ukraine. Do you see any risks if the dissenting opinion was to be adopted by another tribunal in a similar case? Four: Most commentators consider that the Tribunal was wrong in deciding the continuous nationality question in Loewen. Discuss your views. Look at the short extracts from McLachlan and Paulsson that are available on Blackboard to help you with this.

16 Class 5 Procedure Objectives This session will briefly explore some of the key procedural issues that arise in investor state arbitration. The aim is not to cover these issues in great depth, but to give you a good sense of what the various issues are that must be dealt with and also to ensure that you are able to distinguish the question of procedural issues from the jurisdictional issues that we discussed in Class 4. The issues that we will cover here are: - Parallel proceedings - Exhaustion of local remedies - Arbitrator selection - Applicable law - Place of arbitration - Initiation of proceedings and dealing with procedural questions - How awards are made The question of third party (or amicus) participation is another procedural issue that we will discuss. This is a particularly important issue, especially in the light of criticism in recent years that arbitral tribunals are not only contending with matters of considerable social, political, and economic importance, but are doing so hidden from public view. Readings Reading UNCTAD Materials Methanex v USA de Lotbinière McDougall & Ank Santens Purpose These materials describe key procedural elements of ICSID arbitrations. This case discusses the contribution that amicus participation would make to the legitimacy of NAFTA investor-state arbitration. Article discussing the issue of third party participation and amicus curiae. Optional Assignment (= 5% of your overall grade, choose one) One: Analyze and critique the exhaustion / fork in the road provisions for investor state arbitration in the NZ China FTA. Two: Discuss the adequacy or otherwise of ICSID Rules 32(2) and 37(2) relating to amicus curiae and non-parties, particularly given that the rules do not allow for attendance by non-parties at arbitral hearings. You may like to look at the article by Magraw et al that is available on Blackboard.

17 Class 6 Relative Standards of Protection: Most-favourednation (MFN) Objectives The objective of this session is to provide an introduction to the notion of state responsibility which encompasses both relative standards (non-discrimination i.e., mostfavoured-nation and national treatment) and absolute standards (minimum international standard of treatment; fair and equitable treatment). The session will then look more closely at the obligation of non-discrimination, which encompasses mostfavoured-nation (MFN) and national treatment. Following an introduction to the idea of non-discrimination (through a discussion of the Oscar Chinn case), we will explore MFN. This requires a host state to accord to the other contracting party treatment that is no less favourable than that which it accords to other or third States we will focus on the question of whether an MFN clause can extend to a treaty s dispute settlement provision. Readings Reading Purpose Oscar Chinn case Introduction to the concept of non-discrimination. TIME Magazine article Entertainment it s a very short one page article and the journalism style of the day is worth reading! McLachlan, Shore & Weiniger Provides an overview of the MFN obligation. Maffezini v Spain Queries whether an MFN clause can extend to a treaty s dispute settlement provision and answers in the affirmative. Plama Consortium v Bulgaria, Here, the tribunal questioned the correctness of the analysis in 2008 Maffezini. Optional assignment (= 5% of your overall grade, choose one) One: Referring to the Maffezini case, what are the consequences of a broad reading of MFN clauses on the ability of investors to predict their treaty rights a priori or for host states to predict their potential liability to particular investors? Two: McLachlan argues that the decision in Plama is to be preferred over that in Maffezini. Discuss. Three: Discuss the decision made by the negotiators of the NZ China FTA to include in Article 139 (the MFN provision) a clarification that the obligation in this Article does not

18 encompass a requirement to extend to investors of the other Party dispute resolution procedures other than those set out in this Chapter.

19 Class 7 National Treatment Objectives In this session we will work through the key elements that a claimant must prove in order to uphold a claim against a host state that it has violated the national treatment obligation. The national treatment obligation requires a host state to treat foreign investments or investors as well as, or no less favourably than, domestic investors in like circumstances. The elements that must be proven are: comparison of like circumstances, whether there is less favourable treatment, and whether the host state s actions were somehow justified. Readings Reading Bjorklund Methanex v USA Occidental v Ecuador GAMI v Mexico Purpose To provide an overview of the national treatment obligation. Deals with the like circumstances element of the national treatment test. Deals with the like circumstances element of the national treatment test. Deals with the like circumstances and less favourable treatment elements of the national treatment test. Optional Assignment (= 5% of your overall grade, choose one) One: It has been said about national treatment that it is perhaps the single most important standard of treatment enshrined in international investment agreements. At the same time, it is perhaps the most difficult to achieve, as it touches upon economically (and politically) sensitive issues. Discuss. Two: Andrea Bjorklund notes that in recent years, national treatment has been eclipsed by other investment agreement claims, including those based on alleged violations of fair and equitable treatment. Critically discuss the explanations for this. How important do you consider the national treatment standard to be?

20 Class 8 Absolute Standards of Protection Minimum Standard of Treatment, Fair & Equitable Treatment Objectives This session will focus on absolute standards of investor protection, namely, international minimum standard of treatment, and fair and equitable treatment (including denial of justice, and full protection and security). These are standards where the claimant has to show that the treatment it received fell below the standard established. There is no need to compare treatment received by other investors the standard is absolute Given that the international minimum standard is rarely the basis of an arbitral award, we will focus on reading cases that deal with fair and equitable treatment. However, we will discuss international minimum standard and some of the different views concerning its possible content and application. Under fair and equitable treatment, we will look at: denial of justice; arbitral awards concerning administrative decision-making; and full protection and security. Readings Reading Dolzer Loewen v USA Metalclad Corp v Mexico AAPL v Sri Lanka Purpose To provide an overview of the concept of fair and equitable treatment. Fair & equitable treatment denial of justice. Fair & equitable treatment administrative decisions. Fair & equitable treatment full protection & security. (Note that I have included the relevant provisions from the Sri Lanka-UK BIT separately for your reference.) Optional assignment (= 5% of your overall grade, choose one) One: Compare the absolute standards of protection provided in the NZ China FTA with those provided in Chapter 11 of the North American Free Trade Agreement (NAFTA). Are they substantially different in any way? Two: In Loewen, the tribunal essentially said that in the absence of evidence of full exhaustion, there could be no breach of the treaty standard. In doing so, it was borrowing principles from customary international law. Was its approach inconsistent with the creation of a right to arbitration by investors directly?

21 Three: To what extent do the cases regarding due process in administrative decisionmaking provide guidance to host states with regards to their actions concerning foreign investors? Four: In the case of AAPL v Sri Lanka, how reasonable were the state s actions? How much deference should tribunals pay to reviewing the reasonableness of policy decisions relating to national security?

22 Class 9 Expropriation Objectives The goal of this class is to explain the fundamentals of the concept of expropriation. We have already covered some of the basics of this concept in the introductory classes. In this session, we will go further and discuss how the concept has played out in arbitral decisions. In particular, the class aims to give you an understanding of the different concepts of direct expropriation and indirect, or regulatory, expropriation. Direct expropriation involves the taking of an investor s property by the government, while indirect, or regulatory, expropriation involves a government measure (usually a regulation) that deprives the investor of the benefit of their investment. We will also think about the considerations that expropriation might present for New Zealand in entering into free trade agreements that contain investment chapters. Readings Reading Newcombe Tecmed v Mexico Methanex v US CMS Gas Transmission Co v Argentina Purpose This article explores the concept of regulatory expropriation and some of the key issues that it presents. A NAFTA expropriation claim where the tribunal drew on the concept of proportionality under the European Court of Human Right s (ECtHR) jurisprudence. Tribunal found no expropriation because the measure was adopted for a public purpose, was not discriminatory, and no specific commitments had been given to the foreign investor. In this case, an ICSID tribunal endorsed the concept of substantive deprivation as determinative for establishing whether an indirect expropriation had taken place. Optional assignment (= 5% of your overall grade, choose one, choose one) One: States may be justified in expropriating property without compensation if they are exercising police power in order to advance public order and morality. Discuss how, in a world of divergent moral and political philosophies, arbitral tribunals might be able to make judgments about the scope of legitimate police powers with respect to morality? Two: Respond critically to Newcombe s discussion of why foreign investors should receive expropriation protections when similar protections may not be available to nationals. Explain why you agree or disagree.

23 Three: Respond critically to Newcombe s analysis of any one of his three hypothetical situations Four: Newcombe states that international expropriation law provides a minimum standard of protection and it does not need to search for the optimal balance between the interests of foreign investment and that of the state. Discuss.

24 Objectives Class 10 Investment Contracts & Umbrella Clauses This session is designed to provide an understanding of when foreign investors may arbitrate contract disputes with host states. Many investment treaties contain so-called umbrella clauses that require each party to observe obligations arising from particular commitments it has entered into with regard to investments. The interpretation of these clauses is a matter of contention, the question being whether such clauses act to render a host state s breach of contract with a foreign investor a breach of the investment treaty actionable through investor-state arbitration. Readings Reading Shenkman & File Halonen SGS v Pakistan SGS v Philippines Purpose Overview of tribunal decisions as to interpretation of umbrella clauses. Further discussion of interpretation of umbrella clauses. In this case, the tribunal found that the umbrella clause could not form the basis for a treaty claim based on breach of contract. In this case, decided just a few months after SGS v Pakistan, the tribunal reached the opposite conclusion, that the umbrella clause could form the basis for a treaty claim based on breach of contract. Optional assignment (= 5% of your overall grade, choose one) One: Which tribunal got it right, that in SGS v Pakistan, or that in SGS v Philippines? Two: Halonen argues that taking an ordinary meaning approach to the text of umbrella clauses in order to find the contracting parties intention is fundamentally flawed. Discuss.

25 Class 11 Defence of Necessity Objectives In certain circumstances, a State may be excused from its obligations under an investment treaty. These include consent by another State to the violation of an obligation towards that State, self-defence, countermeasures taken in respect of an internationally wrongful act, force majeure, distress, and necessity. This session will focus on the doctrine of necessity. This doctrine has featured prominently in the treatybased cases brought in the aftermath of the Argentine financial crisis. We will read excerpts from three of those cases. The objectives of the class are to understand the relationship between the doctrine and the obligations States have undertaken in their investment treaties. We will discuss how it has been interpreted by various tribunals in the Argentine cases, noting the divergence in the cases. Readings Reading Bjorklund CMS v Argentina, 2005 LG&E v Argentina, 2006 Enron v Argentina, 2007 Continental Casualty v Argentina, 2008 Purpose Background to and explanation of the doctrine of necessity. Here, the tribunal found that Argentina had failed to satisfy the conditions for the necessity doctrine. Here, Argentina was successful in invoking the necessity doctrine as set out in Article XI of the US-Argentina BIT. Here, the tribunal found that Argentina had failed to satisfy the conditions for the necessity doctrine. Again, Argentina was successful in invoking the necessity doctrine as set out in Article XI of the US-Argentina BIT. Optional assignment (= 5% of your overall grade, choose one) One. Discuss critically how it was that the LG&E and Enron tribunals came to different conclusions based on the same emergency measures. (Note, you may wish to refer to the Burke-White article available on Blackboard which discusses the awards issued in the Argentine cases.) Two. The Enron tribunal did not distinguish the LG&E decision with respect to necessity. Examine whether or not it could have done so. (Note, you may wish to refer to the Burke-White article available on Blackboard which discusses the awards issued in the Argentine cases.) Three. Should treaty-based exceptions that may be invoked on grounds of public order or essential security extend to an economic necessity defence?

26 Objectives Class 12 Set Asides & ICSID Annulment Procedures This session seeks to provide an understanding of what options a party has to challenge an arbitral award. For a non-icsid arbitration, parties may normally challenge awards through national courts asking to have the award set aside. However, there are limited grounds upon which recognition and enforcement may be refused by national courts. These are set out, for example, in Article V of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, ICSID arbitrations, on the other hand, are not subject to any form of scrutiny by domestic courts. The ICSID Convention makes provision for review, allowing for several remedies once an award has been released. These include supplementation and rectification, interpretation, revision, and annulment. The class will focus on annulment, looking at the grounds for annulment, and the implications of the Annulment Committee s decision in the CMS award. Readings Reading UNCTAD Materials CMS v Argentina (Annulment Decision) Purpose Explains the grounds for annulment, as well as the procedure for making an application for annulment under the ICSID Convention. The Annulment Committee attacked the tribunal s award in this case. Optional assignment (= 5% of your overall grade, choose one) One: Discuss the implications of the CMS Annulment Committee decision. Two: Discuss the adequacy or otherwise of the annulment procedures available under the ICSID Convention. ** Note: For both questions, you may wish to refer to the Burke-White article available on Blackboard which discusses the awards issued in the Argentine cases, including the decision of the Annulment Committee.

27 Class 13 Effectiveness of BITs & the Future Objectives In this last session, we will wrap up the course by looking at some broad, systemic questions. The focus for the class will depend on how the semester has gone and what people would like to discuss in the last session. However, likely topics of discussion will include: how effective have BITs been in achieving their objectives? Is the current system optimal, or is there a case for an international investment court? I would also like to discuss the ideas raised by Jeżewski regarding the desirability of a paradigm shift in international economic law. Readings Reading Salacuse & Sullivan Van Harten Purpose This article will take you back to some of the issues we discussed in the early classes. The authors consider how successful BITs have been in achieving their objectives. The author discusses the case for an international investment court. Optional assignment (= 5% of your overall grade, choose one) By now, you should be able to come up with your own topic (and I am running out of ideas)! Write a critical response to any aspect of today s readings, or, if you prefer, to any aspect of any of the readings that we have looked at during the semester. Or to the Jeżewski article that is available on Blackboard where he calls for a change in the paradigm of international economic law and in the whole framework of international public law. He proposes a shift from the law of investment protection towards a law of mutual and equal relations between investor and the host State.