Bolivia s Exit from ICSID:

Transcription

1 Bolivia s Exit from ICSID: Legal and Practical Consequences of Denouncing the ICSID Convention The text and context of the Convention A presentation to the BIICL Investment Treaty Forum 20 June 2007 By Alejandro A Escobar Latham & Watkins Latham & Watkins operates as a limited liability partnership worldwide with an affiliate in the United Kingdom and Italy, where the practice is conducted through an affiliated multinational partnership Copyright 2007 Latham & Watkins. All Rights Reserved.

2 Background On May 2, 2007, the World Bank received a written notice of denunciation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) from the Republic of Bolivia. (ICSID News Release, 16 May 2007) Bolivia signed the ICSID Convention on 3 May 1991 Became a Contracting State on 23 July 1995 Bolivia has been a party to one concluded and one pending ICSID arbitration proceeding

3 The Operative Provisions Article 71 Any Contracting State may denounce this Convention by written notice to the depositary of this Convention. The denunciation shall take effect six months after receipt of such notice.

4 The Operative Provisions (cont d) Article 72 Notice by a Contracting State pursuant to Articles 70 or 71 shall not affect the rights or obligations under this Convention of that State or of any of its constituent subdivisions or agencies or of any national of that State arising out of consent to the jurisdiction of the Centre given by one of them before such notice was received by the depositary.

5 Application to Bolivia s denunciation Bolivia s denunciation: shall not affect its rights or obligations under the ICSID Convention arising out of consent given by it (or by one of its subsdivisions, agencies or nationals) before its notice of denunciation was received by the World Bank (i.e. before 2 May 2007)

6 Rights or obligations under the Convention Article 25: mutual consent may not be unilaterally withdrawn Article 26: exclusion of other remedies Article 27: suspension of right of diplomatic protection Article 36: right to initiate proceedings Article 44: applicable Arbitration Rules Articles 50 52: post-award remedies Articles 53 55: effect and validity of an award Article 64: disputes concerning the ICSID Convention Article 66(2): effect of amendments to the Convention Articles 21-22: privileges and immunities re proceedings

7 Consent given by it prior to 2 May 2007 Given by it as opposed to third parties Compare Article 66 (2) No continuing obligation to recognize or enforce awards deriving from third party consent No continuing obligation to observe privileges and immunities in connection with third party consent Arising out of its consent No continuing rights or obligations of membership E.g. Appointments to panels E.g. Representation at the Administrative Council

8 When does consent need to be perfected? Does consent given by Bolivia need to have been accepted by a national of another ICSID Contracting State prior to 2 May 2007 for the Convention rights and obligations arising out of that consent to be preserved? Is there a date at which certain rights and obligations must arise from Bolivia s consent? Three basic scenarios have been outlined Each of them may be plausible on the basis of Article 72

9 Scenario 1: Before notice is received Consent must be perfected before notice of denunciation to have any legal effect (i.e. to survive denunciation) Pros: A) consistent with what may reasonably be understood as "consent of the parties" to the jurisdiction of the Centre B) provides certainty and control to denouncing State Cons: A) less certainty for investors who have invested on the basis of ICSID membership and BIT obligations B) would leave some BITs with no investor-state (Bolivia open to allegation of breach of treaties?) C) would mean no legal effect of consent in 6 months after notice

10 Scenario 2: Before denunciation takes effect Consent may be perfected as long as Bolivia remains an ICSID Contracting State, i.e. until 3 November 2007 Pros: A) Consistent with possibility that parties may give consent at different times B) Consistent with exercise of rights by a Contracting State until denunciation takes effect Cons: A) Some uncertainty if there is still no dispute B) Some uncertainty if State consent is given after date of notice

11 Scenario 3: As long as offer is in place Consent may be perfected as long as the consent given by Bolivia has not been withdrawn Pros: A) Would avoid any allegation of breach of BITs B) Would preserve expectations as time of investment Cons: A) Would tie in effect of the ICSID Convention for years beyond denunciation (even for post-denunciation investments) B) Would create uncertainty if consent is withdrawn despite BIT language

12 Conclusions The text of the ICSID Convention could support variety of possible solutions In the absence of some consensus and in the face of possible disputes the definitive approach may need to be settled as among ICSID Contracting States and Bolivia This will ultimately be a question of treaty interpretation under the rules of public international law