Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka 1

Transcription

1 ICSID Review, Vol. 30, No. 2 (2015), pp doi: /icsidreview/siv011 CASE COMMENT Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka 1 All that is Solid Melts into Air Antony Anghie 2 I. INTRODUCTION The broad framework of debate surrounding the meaning of investment in ICSID jurisprudence is by now fairly clear, even if the issue, which has generated a large literature, remains unsettled. Broadly, however, it is agreed that investments are protected whereas simple contractual rights are not. In Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka, the Tribunal held that a derivative instrument, a hedging agreement, constituted an investment. The decision raises interesting and important inter-related issues. First, it raises the question of how complex financial instruments, derivatives and hedging agreements, might be characterized within the system of international investment arbitration. Second, it suggests that no nexus needs to exist between investments and development. Third, the Tribunal s somewhat casual treatment of the specific language of the treaty raises questions about treaty interpretation and the importance of consent to the entire foundation of international investment arbitration. This Comment outlines the facts of the dispute, the reasoning of the majority and the detailed dissent. II. BACKGROUND TO THE DISPUTE The dispute between Deutsche Bank AG (Deutsche Bank) and the Democratic Socialist Republic of Sri Lanka (Sri Lanka) arose as a result of an oil Hedging Agreement that the two parties entered into on 8 July The Sri Lankan government, concerned about the rising price of oil, had looked into the possibility of using hedging as a means of protecting against further increases. The Central Bank of Sri Lanka and the Ceylon Petroleum Corporation (CPC) 3 had studied the issue at various times and reported back to the government. Following these inquiries, the CPC entered into a number of hedging agreements with Deutsche 1 Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka, ICSID Case No ARB/09/02, Award (October 31, 2012) (Bernard Hanotiau, President; Makhdoom Ali Khan; David AR Williams). 2 Samuel D Thurman Professor of Law, SJ Quinney School of Law, University of Utah, USA. tony.anghie@law.utah.edu. My thanks to Aniruddha Rajput for his research assistance. 3 A State-owned company entrusted with the task of carrying on business as an importer, exporter, seller, supplier or distributor of petroleum : Deutsche Bank (n 1) para 13. ß The Author Published by Oxford University Press on behalf of ICSID. All rights reserved. For permissions, please journals.permissions@oup.com

2 SPRING 2015 Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka 357 Bank, Standard Chartered Bank and Citibank. When oil prices began to fall in late July and August 2008, the CPC became liable for payments under the Hedging Agreements. The CPC failed to make payments, and litigation ensued. The Standard Chartered case was heard in the British High Court, the Citibank case by a tribunal under the London Court of International Arbitration Rules, 4 and the Deutsche Bank case by an ICSID tribunal. The hedging agreements had very similar features, and the issues raised in argument in the three cases shared many commonalities, although of course they acquired a different resonance as a result of being adjudicated according to the different systems of applicable law. Deutsche Bank is a judicial person incorporated in Germany, and relied on the bilateral investment treaty (BIT) between Sri Lanka and Germany, which provided for ICSID arbitration, to bring its case. The case raised a number of complex issues regarding, for instance, the capacity of the CPC to enter to the Agreement, and whether the action of the CPC was attributable to the State. The principal focus of this Comment, however, is on the question of whether a hedging agreement is an investment within the meaning of Article 25(1) of the Convention on the Settlement of Investment Disputes between States and National of Other States (ICSID Convention) and the BIT between Germany and Sri Lanka dated 7 June A majority of the Tribunal President Bernard Hanotiau and Arbitrator David Williams QC found that the Hedging Agreement was an investment and, further, that Sri Lanka had violated the fair and equitable (FET) provision of the BIT and had also committed an expropriation. Deutsche Bank was awarded roughly US$60 million and interest, and roughly US$8 million in legal fees. Arbitrator Makhdoom Ali Khan wrote a lengthy Dissenting Opinion, which focused in particular on the majority s approach to the concept of investment. The Hedging Agreement consisted of several documents, the most important of which was the Confirmation Letter, confirming the terms and conditions of the transaction. It incorporated the International Swap Dealers Association (ISDA) Commodity Definitions, the 2000 ISDA Definitions and the 1992 ISDA Master Agreement (which remained unsigned and undated). The terms of the Agreement basically provided that monthly payments would be made by one party to another, according to the formula set out: this depended on whether the Monthly Oil Price was more or less than the strike price of US$ per barrel of Dubai crude oil. If the price was more, Deutsche Bank had to pay the CPC, and if it was less, the CPC paid Deutsche Bank. The Agreement was for a period of one year, from 1 August 2008 to 31 July 2009, and the Strike Volume was barrels. According to the Agreement, the maximum payable by Deutsche Bank to the CPC was US $ There was no specified limit to the CPC s liability to Deutsche Bank. A failure by CPC to enter into the ISDA Master Agreement would amount to a termination event. 4 The distinguished Citibank Tribunal consisted of Lord Millett, Michael Hwang SC and VV Veeder QC (President). See Citibank NA v Ceylon Petroleum Corporation, LCIA Arbitration No 81215, First Partial Award (31 July 2011); the Court of Appeal Decision is reported as Standard Chartered Bank v Ceylon Petroleum Corporation [2012] EWCA Civ The Citibank Tribunal found in favour of the CPC; and the Court of Appeal in favour of Standard Chartered. One of the major issues before each forum was whether the CPC had acted ultra vires in entering into the agreement. This involved an analysis of whether the central transaction was hedging or speculation. The Citibank Tribunal found unanimously that it was speculation. Both these Decisions were included in the proceedings of the Deutsche Bank case. See Deutsche Bank (n 1) paras 113, 119 and Deutsche Bank (n 1) para 7.

3 358 ICSID Review VOL. 30 Deutsche Bank made one payment of US$ when oil prices rose in July After that, however, oil prices began to fall, and the CPC made payments under the Hedging Agreement of $ in October, and $ in November. No further payments were made, and Deutsche Bank and the CPC entered into discussions into the possibility of restructuring the arrangement in the light of the falling oil prices. On 28 November 2008, the Sri Lankan Supreme Court issued an Interim Order, pursuant to the fundamental rights jurisdiction of the Court, directing, among other things, that all payments by CPC to Deutsche Bank and other banks be suspended. The Central Bank of Sri Lanka had also commenced an investigation into the hedging transactions on 13 November The Central Bank later concluded that both CPC and Deutsche Bank had acted improperly in entering into the agreement. 6 On 3 December 2008, Deutsche Bank terminated the Hedging Agreement, citing the failure of the CPC to execute the ISDA Master Agreement within the prescribed time. Deutsche Bank calculated that the close out amount payable by the CPC to Deutsche Bank as a result of the early termination was US$ Given the earlier payments made by the CPC to Deutsche Bank, the CPC stood to pay more than US$65 million in total pursuant to an agreement by which the most it could have received was US$2.5 million. It is unclear, given the massive disparity between the potential liabilities of the parties, how the Sri Lankan government or any of its agencies could have allowed such a possibility to arise. 7 Deutsche Bank instituted proceedings in ICSID in February Sri Lanka countered by making a number of arguments. First, it argued that the Tribunal lacked jurisdiction because the Hedging Agreement did not fall within the meaning of investment as prescribed by Article 25(1) of the ICSID Convention and the BIT. Sri Lanka also argued that the transaction lacked the territorial nexus needed to establish jurisdiction; and that the CPC did not have the capacity to enter into the transaction. III. THE LEGAL FRAMEWORK In order for jurisdiction to exist, ICSID jurisprudence requires that there be an investment under both Article 25 of the ICSID Convention and the particular BIT involved. Both parties, in their arguments referred to Articles 1 and 11 of the BIT. Article 1 states: The term investments comprises every kind of asset, in particular...(c) claims to money which has been used to create an economic value or claims to any performance having an economic value and associated with an investment. Relying on the so called Salini 8 test and Professor Abi-Saab s dissent in Abaclat and others v Argentine Republic, 9 Sri Lanka asserted that the Hedging Agreement lacked the required nexus with the territory of Sri Lanka; that the Agreement 6 Deutsche Bank (n 1) para The litigation indicates that the CPC was unsure about the operations of these complex hedging agreements, and indeed asked the banks selling the products to advise them on how they worked. 8 Salini Costruttori SpA and Italstrade SpA v Kingdom of Morocco, ICSID Case No ARB/00/4, Decision on Jurisdiction (23 July 2001) para 52; 42 ILM 609 (2003). 9 Abaclat and others v Argentine Republic, ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility (4 August 2011).

4 SPRING 2015 Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka 359 made no contribution to the economic development of the country and was an ordinary commercial transaction albeit a very complex ordinary commercial transaction. The Tribunal ruled that the Hedging Agreement was an investment and that the Tribunal had jurisdiction. It proceeded to find that Sri Lanka had not accorded fair and equitable treatment and violated various other provisions in the BIT and found for Deutsche Bank on the merits. As is often the case, the dissenting opinion, in this instance by Makhdoom Ali Khan, is detailed and lengthy. The Tribunal in effect adopted the double barreled test of examining the meaning of investment in the BIT and under Article 25 of the ICSID Convention. With regard to the former, the Tribunal, pointing out that the BIT defines an investment to include every kind of asset, found that the Hedging Agreement is an asset: It is a legal property with economic value for Deutsche Bank. It is a claim to money which has been used to create economic value. 10 Interpreting Article 1(1) of the BIT, the Tribunal further found that the claim to money need not be associated with a separate investment, although such language was included in the text, for such an approach would involve circular reasoning, defining an investment as an investment. Sri Lanka argued that the asset had to be associated with an investment, but the Tribunal found that, at best, the term associated with an investment only applied to claims for performance, and not to claims for money. 11 The Hedging Agreement was therefore an asset and an investment within the meaning of the BIT. In considering the relationship between the definition of investment provided in the BIT and the requirements of Article 25(1) of ICSID Convention, the Tribunal pointed out that the drafters of the ICSID Convention could not reach agreement on the definition of the term investment and that, therefore, no single tribunal could provide a decisive and authoritative definition of investment. The Tribunals in Fedax 12 and Salini in combination had proposed that an investment must satisfy a five part test: (i) a substantial commitment or contribution; (ii) duration; (iii) assumption of risk; (iv) contribution to economic development; (v) regularity of profit and return, in order to determine the tribunal s jurisdiction. The Deutsche Bank Tribunal asserted that that these criteria were not applicable to all cases where the issue of investment was in dispute. 13 The Deutsche Bank Tribunal proceeded by stating that the development of ICSID case law suggests that only three of the above criteria, namely contribution, risk and duration should be used as benchmarks. 14 The Tribunal found that each of these criteria had been satisfied: Deutsche Bank had contributed by the resources and time it had devoted to negotiating the agreement, and by its commitment to pay US$2.5 million if the CPC s costs of importing oil arose above US$ over the following 12 months. That commitment continued after the 10 Deutsche Bank (n 1) para ibid para 286. Claimant had referred to Československa obchodní banka, as v Slovak Republic, ICSID Case No ARB/97/4; and Alpha Projektholding GmbH v Ukraine, ICSID Case No ARB/07/16, Award (8 November 2010) para 134, which apparently found that a loan agreement could be considered an investment. 12 Fedax NV v Republic of Venezuela, ICSID Case No ARB/96/3, Decision of the Tribunal on Objection to Jurisdiction (11 July 1997), 37 ILM 1378 (2002). 13 Deutsche Bank (n 1) para ibid para 295.

5 360 ICSID Review VOL. 30 conclusion of the agreement as Deutsche Bank made payments of US$ to the CPC. In terms of the concept of risk, the Tribunal noted Professor Schreuer s observation that the very existence of the dispute is an indication of risk ; 15 it also cited Kardassopoulos v Georgia 16 to the effect that the risk component is satisfied in light of the political and economic climate prevailing throughout the period of the investment. 17 The risk was the US$2.5 million that the Deutsche Bank stood to lose. In relation to the question of duration, the Tribunal pointed out that this should be assessed by considering the circumstances and the investor s overall commitment. Here, the Hedging Agreement had been unilaterally terminated by the Deutsche Bank after a period of 125 days; 18 but it was specified to be in place for two years even if terminable earlier upon the occurrence of various eventualities. The Tribunal confirmed that short term projects may be investments and relied on MCI v Ecuador 19 to assert that the duration characteristic is not necessarily an element that is necessarily required for the existence of an investment, but is to be considered a mere example of a typical characteristic. 20 Finally, the Tribunal addressed the question of whether the asset was an ordinary commercial transaction and contingent liability rather than an investment, and answered in the affirmative, pointing to the fact that a bespoke product such as this negotiated over a period of two years suggested it was not an ordinary commercial transaction. The overall circumstances had to be considered, and it was implicit that an expansive understanding of an investment would favor the host State. The Tribunal here cited Pantechniki, 21 which generously asserted: Why should States not be allowed to consider such transactions as investment to be encouraged by the promise of access to ICSID? 22 It is somewhat ironic that arbitrators outlining expansive definitions of investment claim to be doing so for the benefit of the State. The Tribunal accepted that a territorial nexus had to be established between the asset and Sri Lanka; applying the approach in Abaclat, the Tribunal found that such a nexus did exist in this case because the funds paid by Deutsche Bank in execution of the hedging agreement were made available to Sri Lanka, were linked to an activity taking place in Sri Lanka and served to finance its economy which is oil dependent. 23 The Respondent had argued that the asset lacked the requisite territorial nexus with Sri Lanka as the transaction was entered into between the government of Sri Lanka and Deutsche Bank London rather than Deutsche Bank Colombo. There was also an extended discussion of whether the Hedging Agreement was a valid hedging agreement or speculation, 24 this in the context of whether the 15 ibid para Ioannis Kardassopoulos v Georgia, ICSID Case No ARB /05/18, Decision on Jurisdiction (6 July 2007). 17 ibid para ibid para MCI Power Group LC and New Turbine, Inc v Republic of Ecuador, ICSID Case No ARB/03/6, Award (31 July 2007). 20 ibid para Pantechniki SA Contractors & Engineers v Republic of Albania, ICSID Case No ARB/07/21, Award (30 July 2009). 22 ibid para ibid para Deutsche Bank (n 1) paras

6 SPRING 2015 Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka 361 Chairman of the CPC had the authority to enter into such an agreement. It was found to be a valid hedge. The vigorous and detailed dissenting opinion by Makhdoom Ali Khan pointed out that the terms of the BIT needed to be given full weight, in keeping with the approach of Article 31 of the Vienna Convention on the Law of Treaties. It was notable that many treaties that Germany had entered into did not contain the phrase associated with an investment, whereas this did. Presumably then, the parties had thought this language to be of importance in deliberately choosing it to be included; further, it could not be assumed that any part of the language was superfluous or redundant, and that the terms and in the phrase having an economic value and associated with an investment must have meaning, and would not be needed unless it was intended to refer both to claims to money and to performance. Rather than being redundant, the meaning that the parties were intending to communicate seems plausible and sensible: only claims to money that had been associated with an investment would be protected by the BIT. Further, the claim to money has to be in relation to money used to create economic value. Here, no money was invested; rather, it was an undertaking to pay US$2.5 million if certain conditions were established. And the money claimed by Deutsche Bank, more than US$60 million, was much more than the US$2.5 million that Deutsche Bank was potentially liable for. As the dissenting opinion stated, the sum claimed is not the money the Claimant [Deutsche Bank] paid to the CPC. It is also not the current economic value of any money that the Claimant has ever used or that it paid to CPC. 25 It is here, too, that the possible connection between hedging and speculation is hard to overlook: the amount claimed is not the current value of the amount it had invested. It is an amount that is a product of speculation. It is different from the profit that could be expected from more conventional investment, the current value of a particular factory etc. How could the amount claimed be linked to money used to create economic value? The Deutsche Bank Tribunal relied on RFCC v Morocco 26 and Bayindir v Islamic Republic of Pakistan, 27 which stood for the proposition that the investor can make a contribution in terms of know how, equipment and personnel and in financial terms ; in LESI v Algeria, 28 the Tribunal held that the contractor must have committed some expenditure, in whatever form, in order to pursue an economic objective. 29 The Dissent pointed out that in each of these cases, however, the money claimed was linked to some sort of conventional infrastructure development project-highways in Morocco and Pakistan and a dam in Algeria. 30 In other words, they could be read as confirming the proposition that the claim to money must be related to a development project, an investment in the traditional sense. In Abaclat and Fedax too, the claims were linked to financing development. Both the cases and many eminent authorities suggest then, that some notional 25 Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka, ICSID Case No ARB/09/02, Dissenting Opinion of Makhdoom Ali Khan (23 October 2012) para Consortium RFCC v Kingdom of Morocco, ICSID Case No ARB/00/6, Decision on Jurisdiction (16 July 2001). 27 Bayindir Insaat Turizm Ticaret Ve Sanayi AS v Islamic Republic of Pakistan, ICSID Case No ARB/03/29, Decision on Jurisdiction (14 November 2005). 28 LESI, SpA and Astaldi, SpA v People s Democratic Republic of Algeria, ICSID Case No ARB/05/3, Decision on Jurisdiction (12 July 2006). 29 Deutsche Bank (n 1) para Deutsche Bank, Dissenting Opinion (n 25) para 50.

7 362 ICSID Review VOL. 30 connection with development, understood in a fairly conventional way, was required. IV. CONCLUSIONS Almost fifty years after it came into force, it is now hard to grasp the extraordinary and indeed revolutionary character of the system created by the ICSID Convention. In broad terms, it attempted to resolve a titanic struggle 31 between capital importing and exporting, developed and developing States. In essence, developing countries agreed to internationalize investment disputes with foreign corporations which, under the classic principles of international law, had no international standing. Developing States agreed to compromise their hard-won sovereignty and granted to unknown corporations and other investors the right to transfer a dispute that arose within their own territory and with regard to their own resources to an international tribunal that applied a species of international law of uncertain provenance and character that was, in effect, to be created by a community of international and commercial law specialists who came preponderantly from the West. Developing States did this in the hope of encouraging the investment flows that were indispensable for their development. The Executive Directors of the World Bank who created this system recognized the radical nature of what they were proposing. They stressed therefore that the consent of sovereign States was a cornerstone of the system 32 whose unique existence could only be justified by the claim that it promoted development however vaguely defined. 33 Arguably, the World Bank could not have become involved in this issue without such a connection with development. The full and proper name of the Bank is, after all, the International Bank for Reconstruction and Development. Sovereign consent and development then, are the historical foundations of ICSID arbitration. It is understandable therefore that, despite controversies about the meaning of development and the criteria used to define it, there is a significant jurisprudence which is supported by eminent scholars and jurists, that the idea of development cannot be dispensed with in interpreting Article 25, and that there is an outer limit based on this concept to what may be properly characterized as an investment for determining the jurisdiction of the tribunal. 34 Recent trends in international arbitration, however, have eroded the meaning and operation of these fundamental principles of sovereign consent and development. This case furthers these trends, in some respects using the peculiar character of the hedging agreement to act as something like a solvent. The Tribunal s rather peremptory and indeed paternalistic examination of the text of the BIT for instance, its claim that it is circular might be questioned. In the 31 See Malaysian Historical Salvors, SDN, BHD v Malaysia, ICSID Case No ARB/05/10, Decision on the Application for Annulment (16 April 2009), Dissenting Opinion of Judge Mohamed Shahabuddeen (19 February 2009) para See Guigo Wang, Consent in Investor-State Arbitration: A Critical Analysis (2014) Chinese J Intl L 335, 337. See Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (18 March 1965) (Executive Directors Report) para See Executive Directors Report, ibid para For one of many overviews of this debate, see eg Michael Hwang and Jennifer Fong, Definition of Investment A Voice from the Eye of the Storm (2011) 1 Asian J Intl L 99, See MS Sornarajah, The International Law on Foreign Investment (3rd edn, CUP 2010) For the contrary position outlined by an eminent arbitrator, see Brigitte Stern, The Contours of the Notion of Protected Investment (2009) 24 ICSID Rev FILJ

8 SPRING 2015 Deutsche Bank AG v Democratic Socialist Republic of Sri Lanka 363 first place, as the Dissenting Opinion suggests, German treaties used different wording and it must surely at least be contemplated that the difference was intended to have significance. The Tribunal failed to explore this possibility. Further, many of the most contemporary treaties reproduce this supposedly tautologous or circular character. The American Model BIT of 2012, for instance, states that investment means every asset that an investor controls, directly or indirectly that has the characteristics of an investment, including such characteristics as the commitment of capital Moreover, the Tribunal seems to overlook basic principles of treaty interpretation, the principle for instance that the text must be presumed to be the authentic meaning of the parties. 36 This is a source of concern. As the Dissent very plausibly suggests, the language of the BIT, far from being circular, could be read to mean that any claim having economic value-as in this case, the claim based on the hedging agreement-must indeed be associated with an investment if it is to fall within the protection of the BIT. The words of the BIT cannot be ignored and as such debt arising from the hedging agreement is not in itself an investment under the terms of the BIT. 37 It is problematic, given all these circumstances, that the Tribunal does not provide more elaborate reasoning in dismissing the Respondent s argument, devoting hardly more than one paragraph to this issue. 38 There are persuasive reasons, given the need to strike a balance between the interests of the State and investor, and the very distinctive history and character of the ICSID process, to adopt the outer limits approach. But the essential point illustrated by this case is that if the outer limits approach is not adopted, then a Tribunal which in essence relies on the BIT to provide a workable definition of investment, must be particularly careful in interpreting the terms of the Bilateral Treaty. This is what the Tribunal failed to do. The approach which suggests that the meaning of investment in the BIT should be used to interpret Article 25 of ICSID is thus rendered nugatory. Both consent and development appear ancillary. It is notable that the Tribunal was faced with a number of complex and controversial issues, and every one of them was decided in favor of the Claimant. Debates will continue as to the requirement of development and the outer limits approach to the term investment for the purposes of Article 25 of the ICSID Convention. The Tribunal here reduced the Salini/Fedax factors to the three factors of contribution, risk, and duration, and dismissed the criterion of contributing to economic development as discredited and unworkable owing to its subjective nature 39. Again, rather than consider the possibility that they embodied a core idea of development, the Tribunal here proceeded to apply the factors in such a manner as to expand enormously the meaning of each term. Thus the Tribunal found that the litigation itself is proof of risk and a hedging agreement does not need to make any direct contribution to the economy to be deemed a contribution. Despite its outcome, this Award highlights the problem of dispensing completely with the idea of development for doing so could blur or 35 See US Model BIT 2012 < accessed 26 January YILC (1966-II) para 11. See Romesh Weeramantry, Treaty Interpretation in Investment Arbitration (OUP 2012) Dissenting Opinion (n 25) 5 and Deutsche Bank (n 1) para Deutsche Bank (n 1) para 306.

9 364 ICSID Review VOL. 30 erode the crucial distinction between investment and a commercial transaction. Or it might stand for the proposition that this distinction too is unnecessary and artificial. It surely seems inequitable that the Sri Lankan government should benefit from the Hedging Agreement and yet not be subject to any liabilities. Yet, perhaps the larger issue is whether a remedy should be provided to Deutsche Bank in an ICSID proceeding. Deutsche Bank could have pursued a claim in the English courts for breach of contract. Indeed, Deutsche Bank s right to do so remained unimpeded by the actions of the Sri Lankan government, raising a further question as to whether there had been an expropriation as held by the Tribunal. We might see this decision as part of a longer continuum: investments have changed their character from factories and large scale infrastructure projects to financial instruments such as bonds, to derivatives. This is the trajectory from Asian Agricultural Products v Sri Lanka to Abaclat to Deutsche Bank. 40 The definition of investment has expanded accordingly, even as the evolving jurisprudence suggests that the need to demonstrate that this putative investment provides any benefit to the State has diminished into etiolated uncertainty. In the world of contemporary finance, derivatives, shadow banking, credit default swaps and the like have demonstrated their unpredictable and implacable power; regulators, practitioners and legal scholars have struggled to place these phenomena within given doctrines and theories. The question then arises as to how international investment arbitration engages with this Brave New World. There are surely temptations and even compelling reasons, certainly for those who engage in the field and who are convinced of its virtues, to expand the scope of investment arbitration. We are nevertheless left with the paradox of how an instrument which, by its very label hedging, derivative suggests its secondary, even ethereal character can, through the practiced alchemy of expert arbitrators, undermine the foundations of international investment arbitration, and thereby contribute to the legitimacy crisis that is now an inescapable aspect of the system. 40 Asian Agricultural Products Limited v Democratic Socialist Republic of Sri Lanka ICSID Case No ARB/87/3.