An Analysis of a Developing Jurisprudence in International Investment Law What Investment Treaty Tribunals Are Saying & Doing Jeffery P. Commission British Institute of International and Comparative Law 14 September 2007
Overview I. Introduction II. II. II. What Investment Treaty Tribunals Are Saying What Investment Treaty Tribunals Are Doing Observations on the Developing Jurisprudence 1
I. Introduction Moreover, there exists today a growing jurisprudence of arbitral decisions interpreting investment treaty provisions, something which hardly existed in 1970. Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic, Decision on Jurisdiction (16 May 2006) Salacuse, Kauffman-Kohler [C], Nikken [R] [ 50] ICSID s case-law. Case-[l]aw developed by the ICSID. Decisions of ICSID Tribunals. ICSID s decisions. ICSID jurisprudence. International investment law jurisprudence. Regardless of the precise terms employed, the development of an investment treaty case law or jurisprudence is unmistakable, and has not gone unnoticed in recent times, by treaty tribunals, and by those appearing before them. As such, international investment law now increasingly develops through this mounting jurisprudence, rendering the value of each decision, award and order, rightly or wrongly, tremendously significant. 2
II. What Investment Treaty Tribunals Are Saying ICSID and other investment treaty tribunals have adopted various approaches in considering and assessing the emerging jurisprudence. A. Certain tribunals make no mention about the doctrine of precedent generally, and simply refer to the cases and precedents throughout, and make no effort to disguise their outright reliance on the cases. CMS Gas Transmission Company v. Argentina, Decision on the Tribunal on Objections to Jurisdiction (17 July 2003) B. One tribunal, under the heading Checking the Tribunal s Conclusions, set forth its conclusions without any reliance on prior decisions, and then only afterwards proceeded to examine prior ICSID decisions. Gas Natural SDG, S.A. v. The Argentine Republic, Decision on Jurisdiction (17 June 2005) 3
II. What Investment Treaty Tribunals Are Saying C. Tribunals have addressed the issue directly in the body of their decisions. Enron Corporation and Ponderosa Assets, L.P. v. The Argentine Republic, Decision on Jurisdiction (14 January 2004) D. Most recently, certain tribunals have dedicated portions of decisions, typically a paragraph, labeled as opening considerations, introductory matters, or general observations, addressing the relevance of prior ICSID decisions. Jan de Nul N.V., Dredging International N.V. v. Arab Republic of Egypt, Decision on Jurisdiction (16 June 2006); El Paso Energy International Company v. The Argentine Republic, Decision on Jurisdiction (27 April 2006); AES Corporation v. The Argentine Republic, Decision on Jurisdiction, (26 April 2005) 4
II. What Investment Treaty Tribunals Are Saying The language travels from decision to decision along with a particular arbitrator, oftentimes unaltered, or with only minor variations. A. Significance of the Case-law Developed by ICSID and Other Tribunals. ICSID arbitral tribunals are established ad hoc, from case to case, in the framework of the Washington Convention, and this Tribunal is not aware of any provision, either in that Convention or in the relevant BIT, establishing an obligation of stare decisis. It is nonetheless a reasonable assumption that international arbitral tribunals, including those set up within the ICSID, will generally take into account the precedents set by other international tribunals. The present Tribunal will follow that same approach, especially since Claimants and Respondent, in the written pleadings and oral arguments have heavily relied on those precedents." Pan American Energy LLC & BP Argentina Exploration Company v. Argentina, Decision on Preliminary Objections (27 July 2006) (Caflisch, Stern [R], van den Berg [C]) [ 42]; El Paso Energy Company v. Argentina, Decision on Jurisdiction (27 April 2006) (Caflisch, Bernardini [C], Stern [R]) [ 39] 5
II. What Investment Treaty Tribunals Are Saying B. The relevance of previous ICSID decisions or awards In support of their position, both parties relied extensively on previous ICSID decisions or awards, either to conclude that the same solution should be adopted in the present case or in an effort to explain why this Tribunal should depart from that solution. The Tribunal considers that it is not bound by earlier decisions, but will certainly carefully consider such decisions whenever appropriate. Saipem S.p.A. v. The People's Republic of Bangladesh, Decision on Jurisdiction and Recommendation on Provisional Measures (21 March 2007) (Kaufmann-Kohler, Schreuer [C], Otton [R]) [ 66, 67)]; Jan de Nul N.V., Dredging International N.V. v. Arab Republic of Egypt, Decision on Jurisdiction (16 June 2006) (Kaufmann-Kohler, Mayer [C], Stern R]) [ 63 64)]; Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. A.Ş. v. Islamic Republic of Pakistan, Decision on Jurisdiction (14 November 2005) (Kaufmann-Kohler, Berman [R], Böckstiegel [C]) [ 73, 76)] 6
II. What Investment Treaty Tribunals Are Saying C. "It is true that arbitral awards do not constitute binding precedent. It is also true that a number of cases are factdriven and that the findings in those cases cannot be transposed in and of themselves to other cases. It is further true that a number of cases are based on treaties that differ from the NAFTA in certain respects. However, cautious reliance on certain principles developed in a number of those cases, as persuasive authority, to the extent that they cover the same matters as the NAFTA, may advance the body of law, which in turn may serve predictability in the interest of both investors and host States." Fireman's Fund v. Mexico, Final Award (17 July 2007) (van den Berg, Lowenfeld [C], Saavedra Olavarrieta [R]) [ 172]; ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary, Award (2 October 2006) (Kaplan, Brower [C], van den Berg [R]) ]) [ 293] 7
III. What Investment Treaty Tribunals Are Doing As is obvious from even a cursory review of the practices of ICSID, and other investment treaty tribunals, manifested in their awards and decisions, citations to supposedly subsidiary sources, such as judicial decisions, including arbitral awards, predominates. A. International Investment Jurisprudence Generally In 2006, I conducted a review of the 207 publicly available investment treaty decisions and awards issued from 1972 until October 1, 2006 to ascertain the prevalence and manner in which international investment jurisprudence was developing through citation. In short, as the number of investment treaty precedents has grown over time, so has the practice of considering and oftentimes relying on prior decisions and awards. For instance, as to ICSID decisions, and award, a number of observations merit consideration: Pre-1990 In general, the pre-1990 decisions and awards rendered by ICSID tribunals are fact-laden, and replete with references to decisions of the PCIJ, the ICJ, various arbitral awards, decisions from national courts, and various publicists. Up until 1994, the highest number of ICSID decisions or awards that had been cited in any ICSID decision or award was two (the average number of citations to ICSID awards and decisions ranged from.33 in 1990, 0 in 1991 (no awards or decisions), 1 in 1992, and 0 in 1993). 8
III. What Investment Treaty Tribunals Are Doing 1994 2001 In the period between 1994 and 2002, the practice of citing to prior ICSID decisions or awards increased slowly, and inconsistently, with tribunals typically citing between 2 and 4 decisions on average. The average number of citations to ICSID jurisprudence ranged from: 5 in 1994, 0 in 1995 (no awards or decisions) 1 in 1996 3.33 in 1997 2.5 in 1998, 2.5 in 1999, 1.17 in 2000, and 2.55 in 2001 9
III. What Investment Treaty Tribunals Are Doing Since 2001 In the time since 2001, the frequency of citation to ICSID jurisprudence has increased exponentially, as is demonstrated in a review of decisions on jurisdiction and final awards. The average number of citations to ICSID jurisprudence in (i) ICSID decisions and awards on jurisdiction ranged from: 9 in 2002, 8.6 in 2003, 11.6 in 2004, 12.92 in 2005, and 11.25 in 2006; (ii) ICSID awards ranged from: 3 in 2002, 6.75 in 2003, 4.5 in 2004, 11.5 in 2005, and 9.3 in 2006 10
III. What Investment Treaty Tribunals Are Doing B. International Investment Jurisprudence Leading Cases I. Jurisdictional Requirements: A. Ratione Materiae, B. Ratione Personae, C. Ratione Temporis II. III. Standards of Protection: A. Fair and Equitable Treatment, B. Full Protection and Security, C. Arbitrary and Discriminatory Impairment, D. Expropriation, E. National Treatment, F. MFN Treatment, G. Observance of Undertakings Defenses: A. State of Necessity [Additional slides to come based on findings from What Investment Treaty Tribunals Are Doing Leading Cases tables] 11
IV. Observations on the Developing Jurisprudence A. Increased Scrutiny of Awards and Decisions by Tribunals, Practitioners, and Commentators is Essential While undoubtedly a delicate issue, the use and abuse of precedents must be embraced by the authors of the awards and decisions as a legitimate test on their conclusions, or as put by one ICSID tribunal recently, albeit in a different context, [c]hecking the tribunal s conclusions. B. Investment Treaty Precedents Should be Used and Relied Upon Properly A continued failure to distinguish between the ratio decidendi and obiter of prior awards and decisions could threaten the integrity of the tribunals and legitimacy of the investment treaty system itself. 12
IV. Observations on the Developing Jurisprudence C. Lack of Citation, or Careless Reliance - Possible Grounds for Annulment While the possibility of annulment because of a tribunal s simple reliance on earlier decisions without independent decision making is likely possible, it is equally likely possible that an annulment could occur if a tribunal did not discuss prior awards. D. An Ordering of Precedents, ICSID and Others If the number of pending ICSID and other arbitrations, awards and decisions continues to increase at this remarkable pace, it may be time to consider certain tools to assist in locating precedents. Just as the exploding number of reported cases was by itself a sufficient impetus for the development of legal citation indexes in certain common law jurisdictions, there is no reason why a modified system could not be established in investment arbitration as a means of ensuring that well-reasoned decisions and awards do not remain in obscurity. 13