Vicu?a, Francisco Orrego, ‘Changing Approaches to the Nationality of Claims in the Context of Diplomatic Protection and International Dispute Settlement’, 15 icsid Rev-filj 340 (2000)

end p.930

Wallace, Stephen, ‘The “Juridical Architecture” of ICSID Arbitration under International Petroleum Agreements (and in Other Complex Situations)’, 18 ICSID Rev-FILJ 413 (2003)

Williams, David, ‘Challenging Investment Treaty Arbitration Awards—Issues Concerning the Forum Arising from the Metalclad Case’, in Albert Jan van den Berg (ed), International Commercial Arbitration: Important Contemporary Questions (The Hague, Kluwer Law International, 2003)

Yala, Farouk, ‘The Notion of “Investment” in ICSID Case Law: A Drifting Jurisdictional Requirement? Some “Un-Conventional” Thoughts on Salini, SGS and Mihaly’, 2 J Int'l Arb 105 (2005)

Yesilirmak, Ali, ‘Jurisdiction of the International Centre for Settlement of Investment Dispute over Turkish Concession Contracts’, 14 ICSID Rev-FILJ 391 (1999) Footnotes ?The author would like to acknowledge the extensive contribution of Ms Lauren Lindsay, in the preparation of this chapter and the editing assistance of Professor Christoph Schreuer, the Chair of the International Law Association Committee on Foreign Investment. 1 J Lew, L Mistelis, and S Kr?ll, Comparative International Commercial Arbitration (London, Kluwer Law International, 2003) at 329 citing J Gotanda, ‘An Efficient Method for Determining Jurisdiction in International Arbitrations’ 40 Columbia J Transn L 15 (2001). 2Convention on the Settlement on Investment Disputes between States and Nationals of Other States, 18 March 1965, in force 14 October 1966, 575 UNTS 159, 4 ILM 524 (1965) (‘The ICSID Convention’). Generally see L, Reed, J Paulsson, and N Blackaby, Guide to ICSID Arbitration (The Hague, Kluwer Law International, 2004); Christoph Schreuer, The ICSID Convention: A Commentary (Cambridge, Cambridge University Press, 2001). 3 ICSID Annual Report 2006, 5, available at: <http://www.worldbank.org/icsid/pubs/1998ar/ICSID_AR_06_ENG_CRA2.pdf>. 4 For a discussion of the origins of investment treaty arbitration see the Sir Elihu Lauterpacht QC's foreword to Professor Schreuer's ICSID Convention: A Commentary, above n 2 and David AR Williams QC, ‘Challenging Investment Treaty Arbitration Awards—Issues Concerning the Forum Arising from the Metalclad Case’, in Albert Jan van den Berg (ed), International Commercial Arbitration: Important Contemporary Questions, ICCA International Arbitration Congress Series No. 11 (The Hague, Kluwer Law International, 2003) at 444. 5 Paul C Szasz, ‘The Investment Disputes Convention—Opportunities and Pitfalls (How to Submit Disputes to ICSID)’, 5 J Law & Econ Dev 23 (1970–1) at 24. 6 Schreuer, above n 2 at 89. 7 ICSID Annual Report 2004, 3. In the 2006 ICSID Annual Report, it was noted that no conciliations were referred to the Centre during the 2006 financial year. Conciliation does not result in a binding decision, but merely a recommendation to the parties which they are not obliged to follow. 8 As to the burden of proof as to jurisdiction, this question has been addressed in a number of recent investment treaty arbitrations. See eg Plama Consortium v Bulgaria , ICSID Case No. ARB/03/24, Decision on Jurisdiction, 8 February 2005; Methanex Corporation v United States of America , (NAFTA) Final Award, 9 August 2005; Soci?t? G?n?rale de Surveillance (SGS) v Republic of the Philippines , ICSID Case No. ARB/02/6, Decision on Jurisdiction, 29 January 2004. A convenient analysis of the topic was given by the distinguished tribunal (composed of Mr Albert Jan van den Berg, VV Veeder QC, and Carl F Salans) in Plama Consortium, where the tribunal cited the test of Judge Rosalyn Higgins, put forward in the Case concerning Oil Platforms ( Islamic Republic of Iran v United States of America ) 1996, ICJ Reports 803, which had been followed in various investment treaty cases. At para 34 of that decision, the judge stated that ‘The Court should … see if, on the facts as alleged by [claimant] the [respondent's] actions complained of might violate the Treaty articles … Nothing in this approach puts at risk the obligation of the Court to keep separate the jurisdictional and merits phases … and to protect the integrity of the proceedings on the merits … what is for the merits, (and which remains pristine and untouched by this approach to the jurisdictional issue) is to determine what exactly the facts are, whether as finally determined they do sustain a violation of [the treaty] and if so, whether there is a defence to that violation …. In short it is at the merits that one sees “whether there really has been a breach” ’. The Plama Consortium Tribunal noted at para 120 that the burden of proof would be different for issues that did not relate to jurisdiction and went to the merits. 9 Szasz, above n 5, at 26. 10 Carolyn B Lamm, ‘Jurisdiction of the International Centre for Settlement of Investment Disputes’, 6 ICSID Rev-FILJ 462 (1992) at 464; See also, Ceskoslovenska Obchodni Banka (CSOB) v The Slovak Republic , ICSID Case No. ARB/97/4, Decision on Jurisdiction, 24 May 1999, 14 ICSID Rev-FILJ 251 (1999) at 274. 11 Schreuer, above n 2 at 89. 12 Stephen Wallace, ‘The “Juridical Architecture” of ICSID Arbitration under International Petroleum Agreements (and in Other Complex Situations)’, 18 ICSID Rev-FILJ 413 (2003) at 415. 13 CF Amerasinghe, ‘Jurisdiction Ratione Personae under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States’, 47 BYIl L 227 (1974–5) at 231. 14 Ibid, at 231–2. 15 Emphasis added. 16Mihaly International Corporation v Democratic Socialist Republic of Sri Lanka , ICSID Case No. ARB/00/2, Award, 15 March 2002 at para 31. 17ICJ Reports 89 (1995) at 99. 18 Schreuer, above n 2 at 102. 19 Robert Merkin, Arbitration Law (London, LLP, 2004) para 5.6. 20[2004] 1 NZLR 95 (HC). 21[1998] 2 All ER 23, 28–35 (CA). 22 Lamm, above n 10 at 474; W Michael Tupman, ‘Case Studies in the Jurisdiction of the International Centre for Settlement of Investment Disputes’, 35 ICLQ 813 (1986) at 815; Fedax NV v Republic of Venezuela , ICSID Case No. ARB/96/3, Award on Jurisdiction, 11 July 1997, excerpts in 24a YB Comm Arb 23 (1999). 23 Georges R Delaume, ‘ICSID and the Transnational Financial Community’, 1 ICSID Rev-FILJ 237 (1996) at 242. 24 Schreuer, above n 2 at 104. 25 Malcolm N Shaw, International Law (Cambridge, Cambridge University Press, 4th edn, 1997) at 129. 26Benvenutti & Bonfant v Congo , ICSID Case No. ARB/77/2, Award, 8 August 1980, 1 ICSID Reports 330 (1993). 27 There was no denial of the dispute being a legal one: see CSOB v The Slovak Republic , Decision on Jurisdiction, above n 10 at 272. 28 Ibid at 272. 29AES Corporation v The Argentine Republic , ICSID Case No. ARB/02/17, Decision on Jurisdiction, 26 April 2005 at para 44. 30 Ibid . 31 Walid Ben Hamida, ‘The Mihaly v Sri Linka Case: Some Thoughts relating to the Status of Pre-investment Expenditures’, in Todd Weiler (ed), International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (London, Cameron May, 2005) at 47. 32 Noah Rubins, ‘The Notion of “Investment” in International Investment Arbitration’ in Norbert Horn and Stephen Kr?ll (eds), Arbitrating Foreign Investment Dispute (The Hague, Kluwer Law International, 2004) at 283, 286. 33 Ibid at 287. 34CME v Czech Republic , UNCITRAL Arbitration Proceedings, Separate Opinion at the Quantum Phase, 14 March 2003. 35 Ibid at paras 17 and 72. 36IBRD Convention on the Settlement of Investment Disputes between States and Nationals of Other States—Documents Concerning the Origin and Formulation of the Convention (Washington, IBRD, 1968) at 623. 37 C F Amerasinghe, ‘The Jurisdiction of the International Centre for the Settlement of Investment Disputes’, 19 Indian J Int'l L 166 (1979) at 181; CSOB v The Slovak Republic , Decision on Jurisdiction, above n 10; Fedax NV v Republic of Venezuela , Award on Jurisdiction, above n 22 at 25. 38Mihaly , above n 16. 39 Ibid at para 33. 40 Carolyn B Lamm and Abby Cohen Smutney, ‘The Implementation of ICSID Arbitration Agreements’, 11 ICSID Rev-FILJ 64 (1996) at 80. 41Art 25(4) states that: any Contracting State may, at the time of ratification, acceptance, or approval of this Convention or at any time thereafter, notify the Centre of the class or classes of disputes which it would or would not consider submitting to the jurisdiction of the Centre. Despite excluding the Centre from a particular dispute, the state can still agree on an ad hoc basis to the Centre's jurisdiction: Tupman, above n 22 at 816. 42 Ibid . 43Report of the Executive Directors of the World Bank, 1 ICSID Rep 28 (1993). 44ICSID Case No. ARB/97/4, Decision on Jurisdiction, 24 May 1999, (1999) 14 ICSID Rev-FILJ 251. 45 See also the tribunal's comments in Fedax NV v Republic of Venezuela , Award on Jurisdiction, above n 22 at paras 7–15. 46CSOB v The Slovak Republic , Decision on Jurisdiction, above n 10 at para 64. 47 Christopher M Koa, ‘The International Bank for Reconstruction and Development and Dispute Resolution: Conciliation and Arbitrating with China through the International Centre for Settlement of Investment Disputes’, 24 NYU J Int'l L & Politics 439 (1991) at 452. 48 Delaume, above n 23 at 242. 49 Ibid . 50United Nations Conference on Trade and Development, Trends in International Investment Agreements: An Overview (Geneva, United Nations, 1999) at 45. 51 This two-stage approach has been adopted by ICSID tribunals in Fedax NV v Republic of Venezuela , Award on Jurisdiction, above n 22, and CSOB v The Slovak Republic , Decision on Jurisdiction, above n 10. 52Alcoa Minerals of Jamaica v Jamaica , ICSID Case No. ARB/74/2, 4 YB Com Arb 206 (1979) at 207. 53ICSID Case No. ARB/96/3, Award on Jurisdiction, 11 July 1997, excerpts in (1999) 24a YB Com Arb 23 (‘ Fedax’). 54Fedax , ibid at para 15. 55 Ibid . 56 Ibid at para 17. 57ICSID Case No. ARB/97/4, Decision on Jurisdiction, 24 May 1999, 14 ICSID Rev-FILJ 251 (1999) (‘ CSOB v Slovak’). 58 Ibid at para 12. 59 Ibid at para 65. 60 Ibid at para 66. 61 Ibid at para 68. 62 Ibid . 63ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004, available at <http://www.asil.org/ilib/JoyMining_Egypt.pdf> (‘ JoyMining’). 64 Ibid at para 44. 65 Ibid at para 53. 66 Ibid at para 56. 67 Ibid at para 58. 68 Ibid at para 62. 69Mihaly , above n 16. 70 J Michael Robinson, ‘ICSID Cases on its Jurisdiction: A Serious Problem for Public/Private Partnerships for Infrastructure in Developing Countries’, Int'l Bus Law 263 (2004). 71 BOOT projects are being used by developing states, notably Asian states, for large infrastructure projects. The projects include the buildings of highways, ports, dams, mass transit systems, power generation plants, water supply systems, and industrial estates. Their identifying feature is their connection with the economic development functions of the state, assigned to various ministries. Furthermore, legislation is usually passed to control the use of the projects. See M Sornarajah, The Settlement of Investment Disputes (The Hague, Kluwer Law International, 2000) at 46–8. 72Mihaly , above n 16 at para 32; emphasis in original. 73Individual Concurring Opinion by Mr David Suratgar, 17 ICSID Rev-FILJ 161 (2002). 74 Robinson, above n 70. 75 Ibid at 265. 76Individual Concurring Opinion by Mr David Suratgar, 17 ICSID Rev-FILJ 161 (2002). 77 Farouk Yala, ‘The Notion of “Investment” in ICSID Case Law: A Drifting Jurisdictional Requirement Some “Un-Conventional” Thoughts on Salini, SGS and Mihaly’, 2 J Int'l Arb 105 (2005) at 123. 78 Schreuer, above n 2 at 116. 79Fedax v Venezuela , Decision on Jurisdiction, above n 22 at para 10. 80ICSID Case No. ARB/02/8, Decision on Jurisdiction, 3 August 2004. 81 Amerasinghe, ‘Jurisdiction Ratione Personae’, above n 13 at 229. 82 Schreuer, above n 2 at 89. 83 Stephen Jagusch and Matthew Gearing, ‘International Centre for the Settlement of Investment Disputes (ICSID)’, in J William Rowley (ed), Arbitration World: Jurisdictional Comparisons (London, The European Lawyer Ltd, 2nd edn, 2006) p lxv. 84 Schreuer, above n 2 at 89. 85 Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration (London, Sweet & Maxwell, 4th student edn, 2004) at 563–4. 86ICSID Convention Art 68. 87 See <http://www.worldbank.org/icsid/constate/c-states-en.htm>. 88ICSID Convention Art 71. 89ICSID Convention Arts 71 and 72. 90 Lamm, above n 10 at 468. 91ICSID ARB/72/1, Decision on Jurisdiction, 12 May 1974 (‘ Holiday Inns’). The decision remains unpublished but a detailed description of the decision is provided by Pierre Lalive, ‘The First World Bank Arbitration (Holiday Inns v Morocco)—Some Legal Problems’, 51 BYIL 123 (1980). 92Holiday Inns , ibid at para 20. 93 Francisco Orrego Vicu?a, ‘Changing Approaches to the Nationality of Claims in the Context of Diplomatic Protection and International Dispute Settlement’, 15 ICSID Rev-FILJ 340 (2000) at 353. 94 Ibid. 95 Anthony C Sinclair, ‘Nationality of Individual Investors in ICSID Arbitration’, 6 Int'l Arb L Rev 191 (2004). 96 There is an exception in the Canada-Venezuela BIT which excludes persons of dual nationality from the definition of ‘investors’ for the purposes of the agreement. 97 Redfern and Hunter, above n 85 at 568; Sinclair, above n 95 at 193. 98 Ibid . 99ICSID Case No. ARB/02/07, Decision on Jurisdiction, 7 July 2004, 17 World Trade and Arbitration Materials 129 (2005) (‘ Soufraki’). 100ICSID Case No. ARB(AF)99/1, Interim Decision on Preliminary Jurisdictional Issues, 6 December 2000, in 18 ICSID Rev-FILJ 469 (2003) (‘ Karpa’). 101ICSID Case No. ARB/02/09, Decision on Jurisdiction, 21 October 2003, in 19 ICSID Rev-FILJ 275 (2004) (‘ Champion Trading’). 102Bilateral Treaty for the Promotion and Protection of Investments between Italy and the United Arab Emirates, opened for signature 22 January 1995, ICSID Investment Treaties Vol 6 (entered into force 29 April 1997) (‘UAE-Italy BIT’). 103Soufraki at para 55. 104 Ibid at para 63. 105Karpa at para 11(e). 106 Ibid at para 30. 107 Ibid at paras 34–5. 1081982 Treaty between the United States of America and the Arab Republic of Egypt Concerning the Reciprocal Encouragement and Protection of Investments (entered into force 1992) (USA-Egypt BIT). 109Nottebohm Case (Second Phase) [6 April 1955] International Court of Justice <http:// www.icj-cij.org/icjwww/idecisions/isummaries/ilgsummary550406.htm> (at 14 August 2006). (‘Nottebohm’). 110Declaration of the Government of the Democratic Popular Republic of Algeria concerning the Settlement of Claims by the government of the United States of America and the Government of the Islamic Republic of Iran. 111Case No. A/18 Concerning the Question of Jurisdiction over Claims of Persons with Dual Nationality, 5 Iran-US CTR 252 (1984 I). 112Champion Trading , above n 101 at 288. 113 Ibid at 290. 114 Lalive above n 91 at 140. 115 Schreuer, above n 2 at 276. 116 Ibid . 117 Aron Broches, ‘The Convention on the Settlement of Investment Disputes between States and Nationals of Other States’, 136 Receuil des Cours 331 (1972-II) at 361. 118 Schreuer, above n 2 at 277. 119 Ibid at 278. 120 Ibid at 281. 121ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004, (‘ Tokios’). For another decision which has dealt with the issue of corporate nationality see eg AES Corporation v The Argentine Republic , ICSID Case No. ARB/02/17, Decision on Jurisdiction, 26 April 2005. 122Agreement between the Government of Ukraine and the Government of the Republic of Lithuania for the Promotion and Reciprocal Protection of Investments, 8 February 1994. (entered into force 27 February 1995) (‘Ukraine-Lithuania BIT’). 123Tokios , above n 121 at para 30. 124 Ibid at para 46. 125 Ibid at para 50. 1261970 ICJ 3 (5 February). 127Dissenting Opinion of Professor Prosper Weil (‘Tokios Dissent’). 128Tokios Dissent, ibid at para 19. 129 Christoph Schreuer, ‘Commentary on the ICSID Convention’, 12 ICSID Rev-FILJ 59 (1997) at 94. 130Wena Hotels Limited v Arab Republic of Egypt , ICSID Case No. ARB/98/4 in [2002] 41 ILM 881, 888 (‘Wena Hotels’). As to the annulment proceedings, see: Wena Hotel Limited v Arab Republic of Egypt , 5 February 2002 in 41 ILM 933 (2002). For a commentary on the decision on application for annulment see Eric A Schwartz, ‘Finality at What Cost? The Decisions of the Ad Hoc Committee in Wena Hotels v Egypt’, in Emmanuel Gaillard and Yas Banifatemi (eds), Annulment of ICSID Awards (Huntington, NY, Juris Publishing Inc & IAI, 2004) at 43. 131Wena Hotels , above n 130 at 888. 132ICSID Case No. ARB/02/3, Decision on Respondent's Objections to Jurisdiction, 21 October 2005, available at < http://ita.law.uvic.ca/documents/AguasdelTunari-jurisdiction-eng_000.pdf> (at 17 August 2006) (‘ Aguas’). For another decision which has dealt with the issue of corporate nationality, see eg AES Corporation v The Argentine Republic , ICSID Case No. ARB/02/17, Decision on Jurisdiction, 26 April 2005. 133 The Agreement between the Arab Republic of Egypt and the United Kingdom of Great Britain and Northern Ireland for the Promotion and Protection of Investments (entered into force on 24 February 1976). 134Wena Hotels above n 130 at 889. 135ICSID Case No. ARB/72/1, Decision on Jurisdiction, 12 May 1974. 136Holiday Inns , above n 91 at 15, referred to in Tupman, above n 22 at 819. 137ICSID Case No. ARB/81/1, Decision on Jurisdiction, 25 September 1983, in 23 ILM 351 (1984) at para 14 (iii) (‘ Amco’). 138ICSID Case No. ARB/81/2, Award, 21 October 1983, 10 YB of Com Arb 71 (1985). This decision was then annulled by an Ad Hoc ICSID Committee on 3 May 1985, see 1 ICSID Rev-FILJ 89 (1986) and subsequently resubmitted to arbitration. The second Award on 26 January 2008 was also the subject of annulment proceedings; however they were unsuccessful. 139 Tupman, above n 22 at 835. 140Amco , above n 137 at para 14(ii). 141 Ibid at para 14(iii). 142 Ibid at para 14(ii). 143ICSID Case No. ARB/82/1, Decision on Jurisdiction, 1 August 1984, excerpts in 17 YB Com Arb 42 (1992) at 46–8 (‘ SOABI’). 144 Ibid at 48. 145Amco , above n 137 at para 14(iii). 146 Antonio Parra, ‘Provisions on the Settlement of Investment Disputes in Modern Investment Law’, ICSID Rev-FILJ 287 (1997) at 299. 147 The new restructure can be described as follows: the 55% owner of the Claimant was IW SARL (Luxembourg) which was 100% owned by International Water (Tunari) BV (Netherlands), in turn 100% owned by International Water Holdings BV (Netherlands), which was 50% owned by Baywater Holdings (Netherlands), which was 100% owned by Bechtel (USA). See Aguas , above n 132, at para 71 for a diagram showing the complicated ownership structure of the claimant. 148Aguas at para 165. 149Aguas at para 174. 150Aguas at para 91. 151Aguas at paras 225–48 and 264–323. 152Aguas at para 245. 153Aguas at para 246. 154Aguas at para 247. On this point, there was a dissent in which the dissentient disagreed with the majority's conclusion on the meaning of control, concluding that it required actual control. Therefore, given that no evidence of actual control had been submitted by the claimant, it did not meet the BIT criteria and was outside of ICSID's jurisdiction. 155Aguas at paras 266–314. 156 Alexandre de Gramont, ‘After the Water War: The Battle for Jurisdiction in Aguas del Tunari SA v Republic of Bolivia’, 3 TDM (2006). 157Aguas at para 330. 158 De Gramont, above n 156. 159 ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004. 160 UNCITRAL, Partial Award, 17 March 2006. 161 De Gramont, above n 156. 162 For a comprehensive discussion on the protection of shareholders in international investment law, see Christoph Schreuer, ‘Shareholder Protection in International Investment Law’, 2 TDM (2005). The text relies heavily on Professor Schreuer's lucid exposition of the topic. 163Case Concerning the Barcelona Traction, Light and Power Company Limited ( Belgium v Spain ), 5 February 1970 (1970) ICJ 3 (‘Barcelona Traction’). 164 See, eg Ian A Laird, ‘A Community of Destiny: The Barcelona Traction Case and the Development of Shareholder Rights to Bring Investment Claims’, in Todd Weiler (ed), International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law (London, Cameron & May, 2005) 77; Yoram Dinstein, ‘Diplomatic Protection of Companies under International Law’, in Karel Wellens (ed), International Law: Theory and Practice, Essays in Honour of Eric Suy (The Hague, Kluwer Law International, 1998) at 505. 165 As Professor Schreuer says: ‘the limited applicability of a doctrine denying rights to shareholders under international law is demonstrated by another judgment of the ICF in the subsequent ELSI case. That case concerned claims against Italy on behalf of the United States shareholders in a company incorporated in Italy. In that case, the ICJ took it for granted, without discussion in the judgment, that the United States was entitled to protect its shareholders in the Italian company.’ see Schreuer, above n 162. 166 Schreuer above n 2 at 91. 167 Ibid at 149. 168 Amerasinghe, above n 13 at 234. 169 Koa, above n 47 at 453. 170 Schreuer, above n 2 at 154. 171 Amerasinghe, above n 13 at 233. 172 Schreuer above n 2 at 151. 173 Amerasinghe, above n 13 at 233. 174 Ibid at 234. 175 Schreuer above n 2 at 151. 176 See eg New Zealand Bill of Rights 1990 s 3. 177 Paul Rishworth, Grant Huscroft, Scott Optican, and Richard Mahoney, The New Zealand Bill of Rights (Oxford, Oxford University Press, 2003) at 89. 178 Schreuer above n 2 at 151. 179 Amerasinghe, above n 13 at 234. 180 Ibid . 181 See, ibid ; Schreuer, above n 2 at 152. 182 Ibid . 183 Ibid at 155. 184 Ibid at 156. 185 Ibid at 157. 186 See eg Lamm, above n 10 at 469; Amerasinghe, above n 13 at 235; Schreuer, above n 2 at 153. 187 See eg Amerasinghe, above n 13 at 235; Schreuer, above n 2 at 153. 188 Amerasinghe, above n 13 at 235. 189 Schreuer, above n 2 at 154. 190 Ali Yesilirmak, ‘Jurisdiction of the International Centre for Settlement of Investment Dispute over Turkish Concession Contracts’, 14 ICSID Rev-FILJ 391 (1999) at 409. 191 Amerasinghe, above n 13 at 235. 192 See eg Schreuer, above n 2 at 153; Amerasinghe, above n 13 at 235. 193ICSID Case No. ARB/95/2, Award, 16 December 1996, 13 ICSID Rev-FILJ 328 (1998) (‘ Cable Television’). 194 Ibid, at para 2.04. 195 Ibid, at para 2.05. 196 Schreuer above n 2 at 153; Amerasinghe, above n 13 at 335. 197Convention on the Settlement of Investment Disputes between States and Nationals of Other States: Analysis of Documents Concerning the Origin and the Formulation of the Convention (1970) Vol 2, 860. 198 Amerasinghe, above n 13 at 236. 199 Ibid . 200 Ibid, at 237. 201 Schreuer, above n 2 at 336. But see Amerasinghe, above n 13 at 237–8. His approach is similar to an estoppel argument. He argues that an approval only becomes irrevocable ‘when one or both of the parties to the investment agreement have acted or changed their positions in reliance on it’. He does not refer to the prohibition on the unilateral withdrawal of consent found in Art 25(1). 202 The Additional Facility Rules were adopted 27 September 1978. 203ICSID Case No. ARB(AF)/97/1, Award, 30 August 2000 (‘ Metalclad’). For a commentary on the case see Williams, above n 4 at 444. 204 Sir Elihu Lauterpacht, ‘Arbitration between States and Foreign Investors: Retrospect and Prospect’, in Julian DM Lew and Loukas A Mistelis (eds), Arbitration Insights: Twenty Years of the Annual Lecture of the School of International Arbitration (The Hague, Kluwer Law International, 2007) at 307, 323. 205 The decision of the Supreme Court of British Columbia United Mexican States v Metalclad Corporation (2001) BCSC 664 is available at: <http://www.naftaclaims.com>. 206 Lauterpacht, above n 204 at 323. 207 A full discussion of this topic is beyond the scope of this chapter and reference should be made to the commentaries on the case for an intensive review of the subject. See eg Lauterpacht, above n 204 at 307; Guillermo Aguilar Alvarez and William W Park, ‘The New Face of Investment Arbitration: NAFTA Chapter 11’, 28 Yale J Int'l L 365 (2003) at 377 and Williams, above n 4 at 444. 208 Alvarez and Park, above 207 at 377. 209 Canada signed the ICSID Convention in December 2006 and ratified it in March 2008. 210 Investor-state arbitration under NAFTA can potentially take place under three sets of rules. First, the ICSID Convention if both the disputing state and the state of the investor are parties to the Convention. Neither Canada nor Mexico is a party to the ICSID Convention; therefore at this stage, ICSID arbitration is unavailable. Secondly, the ICSID Additional Facility Rules—as long as either the disputing state or the investor state but not both is a party to the ICSID Convention. Finally, the arbitration can take place under the UNCITRAL rules: Art 1120. 211Art 1138 NAFTA. 212 Alvarez and Park, above n 207 at 372. 213 Gillian Turner, ‘Investment Protection through Arbitration: The Dispute Resolution Provisions of the Energy Charter Treaty’, 5 Int'l Arb L Rev 166 (1998). 214 The SCC has been described as the ‘more generally available form of institutional arbitration for ECT cases’ compared to the other two forms: Antonio Parra, ‘Investments and Investors covered by the ECT and other Investment Protection Treaties’, in Clarisse Ribeiro (ed), Investment Arbitration and the Energy Charter Treaty (Huntington, NY, JurisNet LLC, 2006) at 54. 215 Stephen Jagush and Anthony Sinclair, ‘The Limits of Protection for Investments and Investors under the Energy Charter Treaty’, in Clarisse Ribeiro (ed), Investment Arbitration and the Energy Charter Treaty (Huntington, NY, JurisNet LLC, 2006) at 76. 216Energy Charter Secretariat, ‘The Energy Charter Treaty and Related Documents: A Legal Framework for International Energy Cooperation’ (2004) 26. 217Jagush and Sinclair, above n 215 at 81. 218 Ibid at 88. 219 27 ILM 612. The ASEAN Agreement is in force among the members of the Association of South East Asian Nations, namely, Brunei, Vietnam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, The Philippines, Singapore, and Thailand. 220 Emmanuel Gaillard, ‘Investments and Investors Covered by the Energy Charter Treaty’, presentation given at Stockhom, 9 June 2005. 221 Ibid. 222ARB No. 126/2003 (SCC), Award, 29 March 2005 (‘Petrobart’). 223 Ibid at 62–3. 224 Ibid at 71. 225Fedax NV v Republic of Venezuela , Award on Jurisdiction, above n 22. 226Salini Construttori SpA and Italstrade SpA v Kingdom of Morocco , ICSID Case No. ARB/00/4, Decision on Jurisdiction, 23 July 2001, 6 ICSID Rep 400 (2004). 227Soci?t? G?n?rale de Surveillance (SGS) v Republic of the Philippines , ICSID Case No. ARB/02/6, Decision on Jurisdiction, 29 January 2004. 228Petrobart, above n 222 at 72. 229Jagush and Sinclair, above n 215 at 86–7. 230 Ibid. 231 Ibid at 87. 232 Leading NAFTA cases decided under UNCITRAL Rules: GAMI Investments, Inc v the United Mexican States , Final Award, 15 November 2004; International Thunderbird Gaming Corporation v the United Mexican States , Final Award, 26 January 2006 with a dissenting opinion; Ethyl Corporation v Canada , Final Award, 24 June 1998; Methanex Corporation v United States of America , Final Award delivered on 9 August 2005. 233 Parra, above n 146 296. 234 Giorgio Sacerdoti, ‘Investment Arbitration Under ICSID and UNCITRAL Rules: Prerequisites, Applicable Law, Review of Awards’, 19 ICSID Rev-FILJ 1 (2004). 235 1991 BIT between Czech and Slovak Federal Republic and the Netherlands. 236 There were four grounds to the challenge: the exclusion of one of the arbitrators from the arbitrators' deliberations, non-application of applicable law, issues of lis pendens and res judicata, and finally excess of the arbitrators' mandate. The Court dismissed the challenge on all four grounds. Regarding the claim that the dissenting arbitrator had been excluded, the Court found that this allegation was not proved and had been close to groundless, a finding which has met with some controversy: see Stanislaw Soltysinski and Marcin Olechowski, ‘Observations’, in Sigvard Jarvin and Annette Magnusson, International Arbitration Court Decisions (Huntington, NY, Juris Net LLC, 2006) at 722. Also see eg Hans Bagner, ‘Swedish Appeals Court Strikes Delicate Balance in Czech Republic v CME’, 18(6) Mealey's Int'l Arb Rep 34 (2003). The text of the judgment of the SVEA Court of Appeal can be found in: Jarvin and Magnusson, International Arbitration Court Decisions above at 663 and in 18(6) Mealey's Int'l Arb Rep s A-1 (2003). 237UNCITRAL Rules, Partial Award, 17 March 2006, available at <http://www.pcacpa.org/ENGLISH/RPC/SAL-CZ%20Partial%20Award%20170306.pdf> (at 17 August 2006). 238 Parra, above n 146 at 296. 239 W Laurence Craig, William W Park, and Jan Paulsson, International Chamber of Commerce Arbitration (New York, Oceana Publications Inc, 3rd edn, 2000) at 155. 240 Ibid. 241 For a full analysis of jurisdictional aspects under the ICC Rules, see ibid. 242Case No. 9058/FMS/KGA, 21 October 1999. 243 The order to vacate the Award was issued by the US CA for the 5th Circuit on 21 April 2006, Case No. 04-20842. See commentary in 21(4) Mealey's Int'l Arb Rep 5 (2006). For a copy of the full text, see 21(4) Mealey's Int'l Arb Rep s A (2006) and <http://www.caselaw.lp.findlaw.com/data2/circs/5th/0420842cv0p.pdf>. 244Art 23(2) of the LCIA Rules. 245Case No. UN 348n1, Award dated 3 February 2006. 246Case No. UN 3467, Award dated 1 July 2004. 247ICSID Case No. ARB/03/24, Decision on Jurisdiction, 8 February 2005 (‘Plama Consortium’). 248 Ibid at paras 155–8. 249 Ibid at paras 161–2. 250 Ibid at para 170. 251ICSID Case No. ARB/98/7, Award, 1 September 2000, excerpts available at 17 ICSID Rev-FILJ 362 (2002) (‘Banro’). 252 Ibid at 391. 253 See eg Eureko BV v Republic of Poland , Partial Award and Dissenting Opinion, 19 August 2005, paras 92; ff Antoine Goetz et consorts c R?publique du Burundi , Award, 10 February 1999, paras 86 ff; Sempra Energy International v The Argentine Republic , ICSID Case No. ARB/02/16, Decision on Objections to Jurisdiction, 11 May 2005 at para 109. 254 Ian A Laird, ‘A Distinction without a Difference An Examination of the Concepts of Admissibility and Jurisdiction in Salini v Jordan and Methanex v USA’ in Todd Weiler (ed), International Investment Law and Arbitration (London, Cameron May, 2005) at 201. 255 Gerald Fitzmaurice, The Law and Practice of the International Court of Justice (Cambridge, Grotius, 2006) at 438–9. 256 Laird above n 254 at 203. 257 Ian Brownlie, Principles of Public International Law (Oxford, Clarendon Press, 5th edn, 1998) at 479. 258Methanex v United States , UNCITRAL, Partial Award on Jurisdiction, 7 August 2002 (‘Methanex’), at para 109. 259ICSID Case No. ARB/02/13 Decision on Jurisdiction, 15 November 2004 (‘Salini’). 260 Methanex, above n 258 at paras 123–4. 261Laird, above n 254 at 215. 262 Ibid at 211. 263 Salini, above n 259 at para 151. 264Laird, above n 254 at 215. 265 Ibid. 266ICSID Case No. ARB/02/6, Decision on Jurisdiction, 29 January 2004 (‘SGS v Philippines’). 267 Ibid. 268 Ibid, at para 154. 269 They contracted twice in 1986 and a third time in 1991. 270 Signed 31 March 1997, entered into force 23 April 1999. 271 This was the approach adopted in Lanco International Inc v Argentine Republic , 5 ICSID Reports 367 (1998). 272SGS v Philippines , above n 266 at paras 153–4. 273Impregilo SpA v Islamic Republic of Pakistan , ICSID Case No. ARB/03/03, Decision on Jurisdiction, 22 April 2005 (‘Impregilo’). 274 For a detailed treatment of this topic, see Jacomijn J van Haersolte-van Hof and Anne K Hoffmann, ‘The Relationship between International Tribunals and Domestic Courts’, ch 24 below and Katia Yannaca-Small ‘Parallel Proceedings’ ch 25 below. 275Impregilo , above n 273 at para 17. 276 Ibid at para 188. 277 Ibid at para 189. 278 Ibid at para 109. 279 Ibid at para 289. 280 Ibid at para 290. 281 Ibid at para 291. 282 For a full discussion of issues surrounding lis pendens or parallel proceedings, see Katia Yannaca-Small, ch 25 below. 283 Craig et al, above n 239 at 60. 284 For example, see CMS Gas Transmission Company v The Republic of Argentina , ICSID Case No. ARB/01/8, Decision on Jurisdiction, 17 July 2003, in 42 ILM 2003 788, 793 where an objection based on the claimant's locus standi was framed in terms of the ‘inadmissibility of the claim’ when it should more appropriately have been submitted in terms of whether or not the tribunal had jurisdiction over a person with disputable standing.

Authors: Audley Sheppard ? Keywords: Arbitral rules & institutions – ICSID (International Centre for Settlement of Investment Disputes) – Jurisdiction of arbitral tribunals – Admissibility This chapter considers the ‘prima-facie test’ that has been applied by investment treaty tribunals to the claimant's case as the threshold for jurisdiction. It examines its origins in the international courts. It observes the uncertainty as to the precise formulation of the test, and the more recent attempts to clarify how the test might apply to different aspects of the claimant's case. While the application by tribunals of the prima-facie test has shown it to be a low threshold, in a few cases tribunals have struck out some or all of the claimant's claims on the basis that the claimant's own articulation of its case would not fall within the provisions of or amount to a breach of the treaty invoked. Finally, provisions in some recent US investment protection agreements and the recent amendment to the ICSID Rules that incorporate a procedure akin to the ‘motion to dismiss’ in US law are noted.

0subscriber_article?script=yes&id=%2Fic%2FMonograph%2Flaw-iic-9780199231386&recno=62&searchType=browse Chapter 23 The Jurisdictional Threshold of a Prima-Facie Case

(1)Introduction933

(2)The Origin of the Prima Facie Test in Decisions of the International Court934

(a) Jurisdiction Ratione Materiae 934

(b) Jurisdiction to Grant Provisional Measures 939

(3)The Prima-Facie Test Applied by Arbitral Tribunals941

(4)Failure to Meet the Prima-Facie Test954

(5)Motion to Dismiss in Recent US Investment Protection Agreements957

Concluding Remarks960

(1) Introduction

IT is a common feature of investment protection cases for a respondent State to challenge the jurisdiction of the tribunal on grounds that the claimant does not satisfy the jurisdictional requirements of the investment treaty relied upon (be it a BIT, NAFTA, ECT, etc) and/or the applicable procedural rules (in particular, the additional jurisdictional requirements found in Article 25 of the ICSID Convention). In its response to the request for arbitration, the respondent State is also likely to have stated that it disputes much of the claimant's factual and legal case. If the tribunal decides to bifurcate jurisdiction and liability, as often happens in investment protection cases, the tribunal will have to decide whether it has jurisdiction before it has heard all of the evidence, and typically before the respondent has even submitted its detailed defence. In these circumstances, the issue arises as to what extent the tribunal should accept the claimant's substantive case when determining jurisdiction.

This question tends to arise less frequently when the challenge is to jurisdiction ratione personae or ratione temporis, for example the claimant is not a qualifying national or the dispute arose before the BIT entered into force, because the underlying facts are often largely uncontentious and only their legal significance is disputed. The question is more acute when the challenge is to jurisdiction ratione materiae (ie jurisdiction over the subject-matter), for example where the respondent contends that the claim is: (i) not one in relation to an investment of the claimant; and/or (ii) not one that concerns an obligation of the host State under the BIT. In addition, in several cases, the respondent State has also submitted that the claim should be dismissed because palpably no violation of the standards of protection in the applicable investment protection treaty has occurred.

In this chapter, we consider the ‘prima-facie test’ that has been applied by investment treaty tribunals to the claimant's case as the threshold for jurisdiction. We examine its origins in the international courts. We observe the uncertainty as to the precise formulation of the test and the more recent attempts to clarify how the test might apply to different aspects of the claimant's case. While the application by tribunals of the prima-facie test has shown it to be a low threshold, in a few cases tribunals have struck out some or all of the claimant's claims on the basis that the claimant's own articulation of its case would not fall within the provisions of or amount to a breach of the treaty invoked. Finally, we note the provisions in some recent US investment protection agreements and the recent amendment to the ICSID Rules that incorporate a procedure akin to the ‘motion to dismiss’ in US law.

end p.933

(2) The Origin of the Prima-Facie Test in Decisions of the International Court

The prima-facie test applied by investment treaty tribunals when considering their jurisdiction has its origins in decisions of the Permanent Court of International Justice (PCIJ) and the International Court of Justice (ICJ). The test has been applied in the context of both challenges to jurisdiction ratione materiae and applications for provisional measures.

(a) Jurisdiction Ratione Materiae

In 1924, in the Mavrommatis case, 1 the PCIJ considered the threshold for ratione materiae for the purposes of jurisdiction. The Greek government had brought a diplomatic protection claim on behalf of Mr Mavrommatis, a Greek citizen, against the UK government, in the latter's capacity as Mandatory for Palestine, for allegedly refusing to recognize rights granted by the Ottoman authorities in two concession contracts (the Jerusalem and Jaffa concessions) for the construction of certain public works in Palestine. The Greek government based jurisdiction on the Mandate of Palestine of 1922 and the Statutes of the PCIJ. The United Kingdom contested jurisdiction on the grounds, inter alia, that the claim did not relate to the interpretation or application of the provisions of the Mandate, as required by Article 26 of the Mandate. 2

In its decision, the Court addressed the exact scope of the investigation that it had to pursue to arrive at a conclusion that the dispute before it did or did not relate to the interpretation or application of the Mandate. The Court stated: 3

Neither the Statute nor the Rules of Court contain any rule regarding the procedure to be followed in the event of an objection being taken in limine litis to the Court's jurisdiction. The Court therefore is at liberty to adopt the principle which it considers best calculated to ensure the administration of justice, most suited to procedure before an international tribunal and most in conformity with the fundamental principles of international law.

end p.934

For this reason, the Court acknowledged that it was required to determine whether or not it had jurisdiction before it considered the merits of the dispute and that in doing so it must examine the facts, but not prejudge them. It stated: 4

The Court, before giving judgment on the merits of the case, will satisfy itself that the suit before it, in the form in which it has been submitted and on the basis of the facts hitherto established, falls to be decided by application of the clauses of the Mandate. (Emphasis added.)

The Court added moreover: 5

At the present stage of the proceedings the question whether there really has been a breach of these obligations can clearly not be gone into; to do so would involve a decision as to the responsibility of the respondent, a thing which the two Governments concerned do not at the moment ask the Court to do. But, in accordance with the principles set out above, the Court is constrained at once to ascertain whether the international obligations mentioned in Article II [of the Mandate] affect the merits of the case and whether any breach of them would involve a breach of the provisions of this article.

After a detailed analysis of the various claims and the factual allegations, the Court found that it had jurisdiction to hear those claims relating to the Jerusalem concession, but not those relating to the Jaffa concession. 6

The ICJ considered the jurisdictional threshold for accepting a claim in 1953 in the Ambatielos case. 7 This was another diplomatic protection claim brought by the Greek government against the United Kingdom, this time under the Treaty of Commerce and Navigation of 1886 between Greece and the United Kingdom and a subsequent Declaration of 1926 (safeguarding the interests of parties with respect to claims based on the 1886 Treaty). The claim had been brought in arbitration, not before the Court, and the issue for the Court was whether the United Kingdom was under an obligation to submit to arbitration. 8 The question was whether there was a dispute based on the 1886 Treaty. The United Kingdom sought to argue that the Court had to decide whether the claim was ‘actually or genuinely’ based on the Treaty such that the facts alleged by Greece, if true, would constitute a violation of the Treaty. The Court rejected the United Kingdom's interpretation of its task, stating that to determine whether the alleged acts would constitute a violation would be to stray into the merits of the claim and so encroach upon the jurisdiction of the arbitral tribunal. It would be enough if the Greek government's interpretation of the

end p.935

Treaty was, in the Court's opinion, one of the possible interpretations that could be placed upon it. The Court stated: 9

In order to decide, in these proceedings, that the Hellenic Government's claim on behalf of Mr. Ambatielos is ‘based on’ the Treaty of 1886 within the meaning of the Declaration of 1926, it is not necessary for the Court to find—and indeed the Court is without jurisdiction to do so—that the Hellenic Government's interpretation of the Treaty is the correct one. The Court must determine, however, whether the arguments advanced by the Hellenic Government in respect of the treaty provisions on which the Ambatielos claim is said to be based, are of a sufficiently plausible character to warrant a conclusion that the claim is based on the Treaty. It is not enough for the claimant Government to establish a remote connection between the facts of the claim and the Treaty of 1886. On the other hand, it is not necessary for that Government to show, for present purposes, that an alleged treaty violation has an unassailable legal basis. … If the interpretation given by the Hellenic Government to any of the provisions relied upon appears to be one of the possible interpretations that may be placed upon it, though not necessarily the correct one, then the Ambatielos claim must be considered, for the purposes of the present proceedings, to be a claim based on the Treaty of 1886. (Emphasis added)

The Court found in favour of Greece.

The jurisdictional threshold was again considered by the ICJ in 1996 in the Oil Platforms case 10 and in some detail in the separate opinions of Judge Higgins and Judge Shahabuddeen. Iran alleged that attacks by the USA on three Iranian oil platforms breached provisions of the Treaty of Amity, Economic Relations and Consular Rights of 1955 between the two countries. The USA objected to jurisdiction ratione materiae on the grounds that Iran's claim was not a dispute ‘as to the interpretation or application’ of the Treaty as required by Article XXI(2). The Court stated: 11

In order to answer that question, the Court cannot limit itself to noting that one of the Parties maintains that such a dispute exists, and the other denies it. It must ascertain whether the violations of the Treaty of 1955 pleaded by Iran do or do not fall within the provisions of the Treaty and whether, as a consequence, the dispute is one which the Court has jurisdiction ratione materiae to entertain, pursuant to Article XXI, paragraph 2.

The objection raised by the USA comprised two facets: one concerned the applicability of the Treaty in the event of force; and, the second related to the scope of various articles of the Treaty. The Court concluded that matters relating to force were not per se excluded from the reach of the Treaty. 12 It then went on to examine the provisions of the Treaty that Iran claimed were breached by the platform attacks and

end p.936

held that the alleged acts, if proven to be true, could amount to a breach of one of the provisions (Art X), but not of others. The ICJ therefore had jurisdiction to consider the claims made by Iran for breach of Article X only. 13

In a Separate Opinion, Judge Higgins took the opportunity to comment on the ‘methodology for determining whether a particular claim falls within the compromisory clause of a specific treaty’. 14 Judge Higgins reviewed the cases mentioned above and others, and noted that the approach in the Ambatielos case marked ‘both a different standard and a different methodology from that employed in the Mavrommatis case’. 15 Judge Higgins indicated a clear preference for the Mavrommatis approach, stating it to be ‘more compelling’ 16 and ‘powerfully established’ 17 as opposed to the ‘relative modest [sic] one of “plausible interpretation”’ 18 articulated in Ambatielos. However, Judge Higgins disagreed with the formulation of the test in Mavrommatis in which it was held that it was necessary to consider if the claimant's claims ‘would’ involve a breach of the treaty: 19

This would seem to go too far. Only at the merits, after deployment of evidence, and possible defences, may ‘could’ be converted to ‘would’. The Court should thus see if, on the facts as alleged by Iran, the United States actions complained of might violate the Treaty articles. (Emphasis added)

Thus, Judge Higgins rejected ‘sufficiently plausible’ in favour of ‘might’.

She added that nothing in her approach put at risk the obligation to keep separate the jurisdictional and merits phases: the determination of what exactly the facts are remained pristine and untouched, she said. 20 Using phraseology that has been adopted in several investment treaty cases, she said: ‘The United States has told the Court that the platforms were being used for hostile military purposes. The question to be resolved is whether, even taking pro tem Iran's version of the facts, their destruction could violate [the Treaty]’. 21

Judge Higgins emphasized the absence of any jurisdictional bias: 22

It is clear from the jurisprudence of the Permanent Court and of the International Court that there is no rule that requires a restrictive interpretation of compromisory clauses. But equally, there is no evidence that the various exercises of jurisdiction by the two Courts really indicate a jurisdictional presumption in favour of the plaintiff. … The Court has no judicial policy of being either liberal or strict in deciding the scope of compromisory clauses: they are judicial decisions like any other.

end p.937

Judge Shahabuddeen also considered the jurisdictional test at some length, in a separate opinion that is often overlooked. He started his opinion as follows: 23

The question before the Court is whether the Applicant has a right to have its claim adjudicated. The Respondent says there is no such right. The objection presents the Court with the delicate problem of ensuring, on the one hand, that the Respondent is not given cause to complain that it has been brought before the Court against its will, and, on the other hand, that the Applicant is not left to feel that it has been needlessly driven from the judgment seat. It is necessary to navigate carefully between these perils.

He concluded that, while agreeing with the dispositif, the majority of the Court had erred in seeking to make a definitive determination of the meaning of the 1955 Treaty and should have merely asked whether Iran's construction of the Treaty was ‘an arguable one, even if it might eventually turn out to be incorrect’. 24

A quite different approach was favoured by the ICJ in its 1998 decision in the Fisheries Jurisdiction case 25 between Spain and Canada. In that case, Spain objected to the arrest of a Spanish fishing vessel on the high seas and claimed that the ICJ had jurisdiction as a result of Canada's declaration of acceptance of the ICJ's compulsory jurisdiction. Canada contended that the dispute was of a different nature to that alleged by the claimant and fell within an exception to Canada's acceptance of compulsory jurisdiction. The ICJ stated: 26

It is for the Court itself, while giving particular attention to the formulation of the dispute chosen by the Applicant, to determine on an objective basis the dispute dividing the parties, by examining the position of both parties.

…

The Court points out that the establishment or otherwise of jurisdiction is not a matter for the parties but for the Court itself. Although a party seeking to assert a fact must bear the burden of proving it, this has no relevance for the establishment of the Court’s jurisdiction, which is a ‘question of law to be resolved in the light of the relevant facts’.

That being so, there is no burden of proof to be discharged in the matter of jurisdiction. Rather, it is for the Court to determine from all the facts and taking into account all the arguments advanced by the Parties, ‘whether the force of the arguments militating in favour of jurisdiction is preponderant, and to ascertain whether an intention on the part of the Parties exists to confer jurisdiction upon it’.

No mention was made of Oil Platforms or the earlier cases mentioned above. It is arguable that the Fisheries Jurisdiction case was a different species of jurisdictional objection to that in Oil Platforms, in that there was essentially no dispute over the facts and the argument centred on the nature of the dispute and the effect of Canada's reservation,

end p.938

which were legal issues. Nevertheless, it is somewhat surprising that no attempt was made to explain the perceived differences between the two species of cases. 27

(b) Jurisdiction to Grant Provisional Measures

The ICJ has expressly applied a prime-facie test when determining whether it has jurisdiction to grant provisional measures. 28 Although similar language is used as found in cases concerning jurisdiction ratione materiae, it is a subtly different test. As the ICJ has explained, in an application for provisional measures, the Court is only determining whether it has jurisdiction for the purposes of granting such measures and not jurisdiction to hear the merits. The former is arguably a ‘softer test’.

The application of a prima-facie test for purposes of jurisdiction to grant provisional measures was first referred to in the submissions of Sir Frank Soskice, appearing on behalf of the United Kingdom at the oral proceedings in respect of interim measures of protection in the Anglo-Iranian Oil Co case 29 in 1951. In their decision, the majority held that the ICJ had jurisdiction to issue provisional measures, but they did not expressly refer to a prima-facie test. In their dissenting opinion, Judges Winiarski and Badawi Pasha wrote that an applicant for interim measures of protection should have to do more than show that prima-facie the total lack of jurisdiction of the Court is not patent. 30

Subsequent provisional measures decisions applied a prima-facie test and it is now established as the threshold to be met when considering jurisdiction in such cases. 31 For example, in Nicaragua v United States of America , the Court in 1984 stated: 32

end p.939

Whereas on a request for provisional measures the Court need not, before deciding whether or not to indicate them, finally satisfy itself that it has jurisdiction on the merits of the case, or, as the case may be, that an objection taken to jurisdiction is well-founded, yet it ought not to indicate such measures unless the provisions invoked by the applicant appear, prima facie, to afford a basis on which the jurisdiction of the Court might be founded. (Emphasis added)

And in the Case concerning the Legality of Use of Force in Yugoslavia ( Yugoslavia v Italy ), 33 the Court in 1999 adopted the wording just quoted and also stated: 34

Whereas, in order to determine, even prima facie, whether a dispute within the meaning of Article IX of the Genocide Convention exists, the Court cannot limit itself to noting that one of the Parties maintains that the Convention applies, while the other denies it; … the Court must ascertain whether the breaches of the Convention alleged by Yugoslavia are capable of falling within the provisions of that instrument and whether, as a consequence, the dispute is one which the Court has jurisdiction ratione materiae to entertain pursuant to Article IX (cf. Oil Platforms…). (Emphasis added)

The ICJ used a formulation of the prima-facie test, namely whether the alleged breaches are ‘capable of falling within’ the applicable treaty, that was different again to the formulations in the cases referred to earlier in this chapter, such as that of Judge Higgins, but it is the ‘capable of falling within’ formulation that has become widely adopted by investment treaty tribunals.

The Court concluded that it was not in a position to find that the acts imputed by Yugoslavia to Italy were capable of falling within the provisions of the Genocide Convention and therefore Article IX could not ‘constitute a basis on which the jurisdiction of the Court could prima facie be founded in this case’. 35

In cases concerning provisional measures, the ICJ has emphasized that the prima-facie test it is applying is for the purposes of determining jurisdiction to issue interim relief and it is not determining whether it has jurisdiction to hear the merits nor is it making any binding determination on the merits: 36

[T]he findings reached by the Court in the present proceedings in no way prejudge the question of the jurisdiction of the Court to deal with the merits of the case under Article IX of the Genocide Convention, or any questions relating to the admissibility of the Application, or relating to the merits themselves.

end p.940

(3) The Prima-Facie Test Applied by Arbitral Tribunals

In investment protection cases, the jurisdiction of the arbitral tribunal is prescribed by the treaty and in particular the provisions concerning the settlement of disputes between the investor and the host State. For example, BITs typically provide that any dispute between a national or company of one contracting party and the other contracting party in relation to an investment of the former may be referred to international arbitration. Some such provisions add that the dispute must concern an obligation of the latter under the treaty. Each treaty will have a date on which it comes into force.

A claimant must satisfy all the prescribed jurisdictional requirements. The facts relating to the nationality of the claimant, whether it made an investment, and whether the alleged breaches occurred after the treaty came into force, are generally uncontroversial, although the legal consequences may be disputed (for example, where a claimant has dual nationality or where the investment was made indirectly). Respondent States will also often argue that the claimant has not shown that the dispute is in relation to the investment and/or concerns an obligation of the host State and/or there is a violation of the investment treaty sufficient to establish jurisdiction ratione materiae. The claimant will respond that it is not appropriate, when assessing the question of jurisdiction, for the tribunal to go into the merits, and that it is sufficient to establish jurisdiction for the claimant simply to characterize its claim as a violation of the BIT and to meet the formal requirements, such as nationality.

Where the ICSID procedural rules are applicable, Article 25(1) of the ICSID Convention prescribes that the jurisdiction of the Centre shall extend (only) to legal disputes arising directly out of an investment, between a contracting state and a national of another contracting state, provided that the parties to the dispute consent in writing to submit it to the Centre. 37 Again, when confronted with a challenge to ICSID jurisdiction, a claimant will typically submit that it is not appropriate for the tribunal to consider the merits, and that it should accept the claimant's characterization of the claim as a legal dispute arising directly out of an investment.

In both investment treaty cases and/or ICSID cases, the question arises as to what extent the tribunal should review the claimant's factual and legal case for the purposes of establishing jurisdiction. This question does not arise when jurisdiction is joined with the merits, because in those circumstances the tribunal can assess jurisdiction in the context of all the evidence. Where jurisdiction and the merits

end p.941

are bifurcated, as often occurs in investment treaty cases, 38 the tribunal may have only received the claimant's case and its version of the facts, together with a general but factually unparticularized objection from the respondent State. In such circumstances, investment treaty and ICSID tribunals have consistently borrowed and applied the prima-facie test articulated by the PCIJ and ICJ. We shall observe, however, that tribunals have sought to articulate that test in several different ways.

We consider that there is no real distinction to be made concerning jurisdiction between ICISD and non-ICSID cases, or between NAFTA, BIT, and ECT cases; therefore we describe the cases chronologically (more or less). The cases referred to below are illustrative only and are not exhaustive of all cases over the past 25 years that have considered jurisdiction as a preliminary issue or applied a prima-facie test.

One of the first arbitration decisions to apply a prima-facie test was that in Amco Asia v Indonesia in 1983, 39 which was a non-BIT ICSID case. In that arbitration, the claim had been brought pursuant to an investment authorization granted by the Indonesian government under its Foreign Capital Investment Law. The claimant alleged nationalization or expropriation of its investment. The respondent contended that the case was a lease dispute between two private parties. The tribunal stated in its decision on jurisdiction: 40

The Tribunal is of the view that in order for it to make a judgement at this time as to the substantial nature of the dispute before it, it must look firstly and only at the claim itself as presented to ICSID and the Tribunal in the Claimants' Request for Arbitration. If on its face (that is, if there is no manifest or obvious misdescription or error in the characterization of the dispute by the Claimants) the claim is one ‘arising directly out of an investment’, then this Tribunal would have jurisdiction to hear such claims. In other words, the Tribunal must not attempt at this stage to examine the claim itself in any detail, but the Tribunal must only be satisfied that prima facie the claim, as stated by the Claimants when initiating this arbitration, is within the jurisdictional mandate of ICSID arbitration, and consequently of this Tribunal. (Emphasis added)

The tribunal concluded that it could not see any manifest or obvious misdescription or error in the claimant's characterization of its claim.

It is also worth quoting what the tribunal said concerning the approach to interpretation, because its echo is heard through the next 25 years: 41

… like any other conventions, a convention to arbitrate is not to be construed restrictively, nor, as a matter of fact, broadly or liberally. It is to be construed in a way which leads to find

end p.942

out and to respect the common will of the parties: such a method of interpretation is but the application of the fundamental principle pacta sunt servanda, a principle common, indeed, to all systems of internal law and to international law.

In Tradex Hellas SA v Albania , 42 the tribunal in its 1996 decision confirmed that determination of jurisdiction should not extend to an analysis of the merits and where the two are closely linked the appropriate course is to join jurisdiction with the merits. The claimant had brought a claim for expropriation before ICSID under Albania's foreign investment law and the Greece-Albania BIT. Albania argued that Tradex had to produce at least prima-facie evidence to show that an expropriation had occurred. Tradex, on the other hand, contended that its explanation of Albania's conduct fulfilled the requirements of the dispute settlement provision in the 1993 Law (Art 8(2) ) and would be supported by full evidence proving expropriation in the procedure on the merits. The tribunal stated: 43

The Tribunal notes that the question of whether the alleged conduct of Albania can be considered an expropriation is on the one hand relevant under Art. 8(2) for the jurisdiction of the Tribunal and is on the other hand the decisive issue relevant under Articles 4 and 5 of the 1993 Law or Articles 9 and 10 of the 1992 Law to decide on the merits of Tradex's claim. At least it cannot be excluded that under certain circumstances it would be considered an expropriation if a state permits the deprivation of land use from a joint venture based on foreign investment or fails to grant protection against interference if a legal duty for protection can be found to exist. But the Tribunal feels a further examination of this matter in the context of establishing jurisdiction according to Art. 8 (2) would be so closely related to the further examination of the merits in this case that this jurisdictional examination should be joined to the merits. (Emphasis added)

In Wena Hotels v Egypt , 44 a claim was brought before ICSID for breach of the BIT between the United Kingdon and Egypt. The respondent contested jurisdiction on various grounds, including an objection that there was no legal dispute between the parties. The tribunal in its 1999 decision on jurisdiction quoted the same passage from Amco Asia as is quoted above concerning prima-facie satisfaction, and stated: 45

From a jurisdictional perspective, the Tribunal believes that Wena has satisfied this burden. Wena has raised allegations against Egypt—of assisting in, or at least failing to prevent, the expropriation of Wena's assets—which, if proven, clearly satisfy the requirement of a ‘legal dispute’ under Article 25(1) of the ICSID Convention. In addition, Wena has presented at least some evidence that suggests Egypt's possible culpability. (Emphasis added.)

end p.943

NAFTA tribunals that have been constituted under the UNCITRAL Arbitral Rules have similarly recognized that the appropriate methodology for determining jurisdiction ratione materiae is the prima-facie test. In Ethyl Corporation v Canada , 46 the claimant alleged a number of breaches of NAFTA, including expropriation. Canada contested jurisdiction. The tribunal's award on jurisdiction in 1998 noted that the major facts were undisputed, however the parties disagreed regarding the legal conclusions to be drawn from those facts. The tribunal stated: 47

On the face of the Notice of Arbitration and the Statement of Claim, Ethyl states claims for alleged breaches by Canada of its obligations under Article 1102 (National Treatment), Article 1106 (Performance Requirements) and Article 1110 (Expropriation and Compensation). The Claimant indisputably is an ‘investor of a Party’, namely the United States, and alleges that it has ‘incurred loss or damage by reason of, or arising out of,’ such breaches, all as required by Article 1116(1). It is likewise beyond doubt that Claimant has acted within three years of the time when it ‘first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that [it] incurred loss or damage’ as stipulated in Article 1116(2). Claimant's Statement of Claim satisfies prima facie the requirements ofArticle 1116to establish the jurisdiction of this Tribunal. … (See also Ambatielos Case… ). (Emphasis added)

Subsequent NAFTA decisions, such as those in Pope & Talbot v Canada48 in June 2000, Methanex v USA49 in August 2002, and UPS v Canada50 in November 2002, have adopted a similar approach.

Interestingly, in Methanex , the tribunal carefully considered the judgments in Oil Platforms and rejected the submission of the claimant that it need only establish an ‘arguable’ interpretation of the treaty provisions (based on the separate opinion of Judge Shahabuddeen). The Methanex tribunal concluded that it had to interpret definitively the procedural provisions of Chapter 11 of NAFTA in order to establish jurisdiction, but it need not interpret definitively the substantive provisions (which was for the merits stage). 51 It also highlighted that the test applied by the ICJ in Oil Platforms was ‘to be contrasted with the ICJ's approach towards provisional

end p.944

measures, where a claimant need only establish prima facie jurisdiction’. Thus, the Methanex tribunal sought to apply a higher standard. 52

In UPS , the tribunal declined to draw conclusions from the semantic differences in the wording used by the ICJ and stated that ‘[t]he reference to the facts alleged being “capable” of constituting a violation of the invoked obligations, as opposed to their “falling within” the provisions, may be of little or no consequence’. 53 This approach has found favour with subsequent tribunals.

Many BIT tribunals have applied a prima-facie test, although some have not.

In Maffezini v Spain , 54 a claim brought before ICSID under the Argentina-Spain BIT, the tribunal in its 2000 decision on jurisdiction applied a prima-facie test to the issue of the claimant's standing.

The decision in Salini v Morocco , 55 in July 2001, evidences another approach. A claim was brought before ICSID under the Italy-Morocco BIT. The respondent objected to jurisdiction ratione materiae on grounds that there had been no investment and also that the claims were merely contractual in nature. The tribunal gave careful consideration to whether there had been an investment and concluded in favour of the claimant. The explanation for the detailed investigation undertaken by the tribunal may be that the tribunal was considering the more objective issue of whether there had been an investment rather than the more evidentiary issue of the conduct of the state. It dealt cursorily with the second argument and concluded that, whilst it had jurisdiction under the BIT, it did not have jurisdiction over mere breaches of contract that did not simultaneously constitute a violation of the BIT.

Link-Trading v Moldova , 56 concerned a claim brought under the US-Moldova BIT and UNCITRAL Rules. The tribunal in its decision in 2001 did not refer to the prima-facie test, but held that the claimant had made ‘a colourable claim of indirect expropriation’ 57 and concluded that it had jurisdiction.

In Mihaly v Sri Lanka , 58 a claim for expropriation was brought before ICSID under the US-Sri Lanka BIT. The respondent objected to the tribunal's jurisdiction ratione materiae on grounds that there had been no investment for the purposes of Article 25(1) ICSID Convention. In its March 2002 award, the tribunal showed

end p.945

particular respect for the respondent State and observed that: ‘the question of jurisdiction of an international instance involving consent of a sovereign State deserves a special attention at the outset of any proceedings against a State Party to an international convention creating the jurisdiction’. 59 The tribunal went on to conclude that it lacked jurisdiction, because of the absence of any proof of admission of an investment out of which a legal dispute could possibly have arisen. No mention was made of applying a prima-facie test.

CMS v Argentina60 was the first of the many ICSID cases brought against Argentina following the measures taken during the country's economic crisis. The case was brought under the US-Argentina BIT. In its decision on jurisdiction in July 2003, the tribunal noted that it did not have jurisdiction to consider ‘questions of general economic policy not directly related to the investment, as opposed to measures specifically addressed to the operations of the business concerned’, 61 but in respect of the latter it applied a prima-facie test, stating: 62

For the time being, the fact that the Claimant has demonstrated prima facie that it has been adversely affected by measures adopted by the Republic of Argentina is sufficient for the Tribunal to consider that the claim, as far as this matter is concerned, is admissible and that it has jurisdiction to examine it on the merits.

The tribunal held that it had jurisdiction to hear all of the claims brought by CMS. 63

The extent to which a tribunal should accept, for purposes of jurisdiction, the claimant's formulation of its claims as violations of the relevant investment treaty has been considered several times in the context of claims under so-called ‘umbrella clauses’. In SGS v Pakistan , 64 a claim was brought before ICSID under the Switzerland-Pakistan BIT, for monies alleged to be owing following termination of an agreement between the parties. When considering the question of ‘what effect may be given to the Claimant's characterization of its own claims, for purposes of these proceedings on jurisdiction’, the tribunal in its 2003 decision on jurisdiction stated: 65

The parties disagree on this threshold point, each adverting to passages in the various cases that are adduced to support their respective contentions. The Respondent asks the Tribunal

end p.946

to subject the claims to a certain degree of scrutiny to determine whether they are properly characterized as alleged violations of the Treaty. For its part, SGS argues that Pakistan and the Tribunal must accept, at this stage, the claims as these have been formulated by SGS; the determination as to whether there truly have been breaches of the BIT is for the merits phase of the present proceedings.

At this stage of the proceedings, the Tribunal has, as a practical matter, a limited ability to scrutinize the claims as formulated by the Claimant. Some cases suggest that the Tribunal need not uncritically accept those claims at face value, but we consider that if the facts asserted by the Claimant are capable of being regarded as alleged breaches of the BIT, consistently with the practice of ICSID tribunals [footnoting Amco Asia ], the Claimant should be able to have them considered on their merits. We conclude that, at this jurisdiction phase, it is for the Claimant to characterize the claims as it sees fit. We do not exclude the possibility that there may arise a situation where a tribunal may find it necessary at the very beginning to look behind the claimant's factual claims, but this is not such a case. (Emphasis added)

The formulation used by this tribunal was: ‘capable of being regarded as alleged breaches’. The tribunal acknowledged that it was for the claimant to characterize its claims, but in some cases the tribunal may need to test that characterization. As is well known, the SGS v Pakistan tribunal held that it had jurisdiction over breaches of the BIT and did not have jurisdiction over breaches of the parties' agreement.

The dispute in SGS v Philippines66 raised very similar issues. It was again a claim before ICSID, this time under the Switzerland-Philippines BIT. While the tribunal in its January 2004 decision on jurisdiction agreed with the Pakistan tribunal as to the application of a prima-facie test to jurisdictional questions, it gave a different explanation of the approach and formulated the test as ‘fairly raising questions of breach’. It stated: 67

The Tribunal's jurisdiction, if it exists, must arise by virtue of the ICSID Convention associated with the BIT. It was not disputed by the parties that at the jurisdictional stage the Tribunal may deal with all issues of law that are necessary in order to determine its jurisdiction. It is not enough that the Claimant raises an issue under one or more provisions of the BIT which the Respondent disputes. To adapt the words of the International Court in the Oil Platforms case, the Tribunal ‘must ascertain whether the violations of the [BIT] pleaded by [SGS] do or do not fall within the provisions of the Treaty and whether, as a consequence, the dispute is one which the [Tribunal] has jurisdiction ratione materiae to entertain’ pursuant to Article VIII(2) of the BIT. 68

end p.947

And: 69

In accordance with the basic principle formulated in the Oil Platforms case … it is not enough for the Claimant to assert the existence of a dispute as to fair treatment or expropriation. The test for jurisdiction is an objective one and its resolution may require the definitive interpretation of the treaty provision which is relied on. On the other hand, as the Tribunal in SGS v Pakistan stressed, it is for the Claimant to formulate its case. Provided the facts alleged by the Claimant and as appearing from the initial pleadings fairly raise questions of breach of one or more provisions of the BIT, the Tribunal has jurisdiction to determine the claim. (Emphasis added)

The tribunal appears to lean towards a more definitive determination and to accept that some testing of the claimant's case is appropriate. The reference to Oil Platforms was to a passage in the decision of the majority. Also, as is well known, the SGS v Philippines tribunal held that it had jurisdiction in respect of SGS's claims of breach of fair and equitable treatment and breach of the umbrella clause, but held that it did not have jurisdiction over the expropriation claim. It stated: ‘A mere refusal to pay a debt is not an expropriation of property, at least where remedies exist in respect of such a refusal’. 70 Accordingly, the tribunal accepted the claimant's formulation of the facts, but did not accept the claimant's formulation of the legal consequences.

The relationship between contract claims and treaty claims for pursposes of jurisdiction was also considered in Siemens AG v Argentina . 71 This was a claim before ICSID under the Germany-Argentina BIT. The tribunal in its August 2004 decision on jurisdiction, without referring to previous authorities or expressly mentioning the prime-facie test, adopted a similar approach, but used different wording again in concluding that it had jurisdiction: 72

Arbitral tribunals have found that a dispute arising out of a contract may give rise to a claim under a bilateral investment treaty. The dispute formulated by the Claimant is a dispute under the Treaty. At this stage of the proceedings, the Tribunal is not required to consider whether the claims under the Treaty made by Siemens are correct. This is a matter for the merits. The Tribunal simply has to be satisfied that, if the Claimant's allegations would be proven correct, then the Tribunal has jurisdiction to consider them. (Emphasis added)

In Joy Mining v Egypt , 73 which was a claim before ICSID under the UK-Egypt BIT, the tribunal in its August 2004 decision departed somewhat from the customary approach. The tribunal acknowledged the prima-facie test, but stated that it needed to consider the allegations in a broader perspective also taking into account Egypt's

end p.948

views. After referring to the prima-facie test applied by the NAFTA tribunals in UPS and Methanex , it stated: 74

The Tribunal notes that the prima facie test has also been applied in a number of ICSID cases, including Maffezini , CMS , Azurix , SGS v Pakistan and Salini v Morocco . As a prima facie approach to jurisdictional decisions this is no doubt a useful rule. However, it is a rule that must always yield to the specific circumstances of each case. If, as in the present case, the parties have such divergent views about the meaning of the dispute in the light of the Contract and the Treaty, it would not be appropriate for the Tribunal to rely only on the assumption that the contentions presented by the Claimant are correct. The Tribunal necessarily has to examine the contentions in a broader perspective, including the views expressed by the Respondent, so as to reach a jurisdictional determination. This is the procedure the Tribunal will adopt. (Emphasis added)

The dispute arose out of a contract for phosphate. The tribunal found that there was no ‘investment’. In addition, the claims were all contractual and not treaty-based.

The relationship between contract claims and treaty claims was again the focus in Salini v Jordan , 75 which was a case before ICSID under the Italy-Jordan BIT. The tribunal in its November 2004 decision analysed the previous decisions applying a prima-facie test in some detail and agreed with the approach of the ICJ in Ambatielos , Oil Platforms (but quoting from the majority decision, and omitting any reference to that of Judge Higgins) and the Legality of Use of Force cases 76 as well as the ICSID tribunals in Wena Hotels v Egypt , SGS v Pakistan , SGS v Philippines , and the NAFTA tribunal in UPS v Canada . The tribunal emphasized that the test for jurisdiction is an objective one. The tribunal also noted that under the jurisprudence referred to, the ICJ and individual arbitral tribunals had arrived at decisions which vary from one case to another, including a number of decisions in which the Court/tribunal had held that it did not have jurisdiction. The tribunal concluded: 77

The Tribunal is in full agreement with this jurisprudence. It reflects the balance to be struck between two opposing preoccupations: to ensure that courts and tribunals are not flooded with claims which have no chance of success and sometimes are even of an abusive nature; but to ensure equally that, in considering issues of jurisdiction, courts and tribunals do not go into the merits of cases without sufficient prior debate. In conformity with this jurisprudence, the Tribunal will accordingly seek to determine whether the facts alleged by the Claimants in this case, if established, are capable of coming within those provisions of the BIT which have been invoked.

end p.949

Thus, the Salini tribunal adopted a test very similar to the one in Legality of Use of Force in Yugoslavia (‘capable of falling within the provisions of the instrument’). Judge Guillaume, the President of the tribunal, had been a judge in Oil Platforms , which explains the quote in Salini from the majority decision, and he had also been a judge in Legality of Use of Force in Yugoslavia, which may explain the move in Salini towards that formulation. The Salini tribunal went on to find that the claimant had presented ‘no argument, and no evidence whatsoever, to sustain their treaty Claim and they do not show that the alleged facts are capable of falling within the provisions of Article 2(3) [fair and equitable treatment]’, and concluded that the tribunal therefore did not have jurisdiction to hear that claim. 78 However, in respect of the claimant's other claims, the tribunal concluded that it did not believe that ‘it must rule out from the outset that the alleged facts, if established, may constitute breaches of Articles 2(3) [discriminatory treatment] and 2(4) [compliance with all undertakings] of the BIT’ and that, consequently, it had jurisdiction over those claims. 79

Through 2005, a prima-facie test was adopted by a number of ICSID tribunals, including those in Plama v Bulgaria80 in February 2005, Impregilo v Pakistan81 in April 2005, and Bayindir v Pakistan82 in November 2005.

The tribunal in Plama , which was a case under the Energy Charter Treaty, 83 noted that it did ‘not understand that Judge Higgins’ approach [in Oil Platforms ] is in any sense controversial, either at large or as between the parties to these proceedings', 84 and concluded: 85

In the Tribunal's view, it is not necessary, at the jurisdictional stage of the proceedings, for the Claimant to prove positively actual violations by the Respondent: the unambiguous wording of Article 26 ECT is met by the Claimant's allegations of such violations. Referring again to Judge Higgins' test in Oil Platforms, if on the facts alleged by the Claimant, the Respondent's action might violate the ECT, then the Tribunal has jurisdiction to determine exactly what the facts are and see whether they do sustain a violation of the Treaty. (Emphasis added)

It may have been an overstatement, however, to state that Judge Higgins' approach in Oil Platforms was not in any sense controversial given that the tribunals

end p.950

in SGS v Philippines and in Salini had both preferred to quote from the majority decision in Oil Platforms and not to mention Judge Higgins' opinion and the tribunal in Salini had adopted a formulation used in a series of ICJ cases dealing with provisional measures.

The formulation adopted in Impregilo was the same as in Salini v Jordan , namely whether the facts alleged by the claimant, if established, are capable of coming within those provisions of the BIT which have been invoked, 86 and it is this formulation that has been approved and adopted in several subsequent cases. (The respective cases had two arbitrators in common: Judge Guillaume and Professor Cremades.) Again, the tribunal quoted from the majority decision in Oil Platforms . Unlike in Salini, the Impregilo tribunal did acknowledge Judge Higgins' separate opinion, but only in a footnote. 87 It also noted that the tribunal must determine whether the claims ‘fall within the scope of the BIT, assuming pro tem that they may be sustained on the facts’, 88 although it did not make reference to the similar phrase used by Judge Higgins in Oil Platforms.

The formulation adopted in Bayindir was whether the facts alleged ‘fall within those provisions [invoked] or are capable, if proved, of constituting breaches of the obligations they refer to’. 89

A new approach was taken by the tribunal in Continental Casualty Company v Argentina , 90 in its award on jurisdiction in February 2006. The tribunal identified three aspects of the prima-facie test that need to be satisfied in order to determine jurisdiction ratione materiae: (i) the facts of the case; (ii) the legal foundation of the case; and (iii) the relief sought. 91 Continental's claim was brought before ICSID for breaches of the US-Argentina BIT. The tribunal stated: 92

60. In order to determine its jurisdiction, the Tribunal must consider whether the dispute, as presented by the Claimant, is prima facie, that is at a summary examination, a dispute that falls generally within the jurisdiction of ICSID and specifically within that of an ICSID Tribunal established to decide a dispute between a U.S investor and Argentina under the BIT. The requirements of a prima facie examination for this purpose have been elucidated by a series of international cases [footnoting Impregilo ]. The object of the investigation is to ascertain whether the claim, as presented by the Claimant, meets the jurisdictional requirements, both as to the factual subject matter at issue, as to the legal norms referred to as applicable and having been allegedly breached, and as to the relief sought. For this purpose

end p.951

the presentation of the claim as set forth by the Claimant is decisive. The investigation must not be aimed at determining whether the claim is well founded, but whether the Tribunal is competent to pass upon it.

61. As to the facts of the case, the presentation of the Claimant is fundamental: it must be assumed that the Claimant would be able to prove to the Tribunal satisfaction in the merit phase the facts that it invokes in support of its claim. This does not mean necessarily that the ‘Claimant's description of the facts must be accepted as true,’ without further examination of any type. The Respondent might supply evidence showing that the case has no factual basis even at a preliminary scrutiny, so that the Tribunal would not be competent to address the subject matter of the dispute as properly determined. In such an instance the Tribunal would have to look to the contrary evidence supplied by the Respondent and should dismiss the case if it found such evidence convincing at a summary exam. …

63. As to the legal foundation of the case, in accordance with accepted judicial practice, the Tribunal must evaluate whether those facts, when established, could possibly give rise to the Treaty breaches that the Claimant alleges, and which the Tribunal is competent to pass upon [footnoting Oil Platforms and SGS v Philippines ]. In other words those facts, if proved to be true, must be ‘capable’ of falling within the provision of the BIT and of having provoked the alleged breach [footnoting Legality of Use of Force in Yugoslavia ]. It is of course a question for the merits whether the alleged facts constitute breaches of the BIT for which the Respondent must be held liable.

64. As to the relief sought, there is no challenge here as to the admissibility of the request for relief that the Claimant has sought against and from Argentina (notably a declaratory judgment concerning various BIT violations and the adjudication of alleged damages stemming therefrom)… . .

The tribunal went on to conclude that all the jurisdictional requirements laid down in the ICSID Convention and the BIT had been met.

The three-element approach proposed in Continental v Argentina was also adopted, virtually word-for-word, in Total v Argentina,93 in a decision on jurisdiction in August 2006, perhaps not surprisingly given that both tribunals had the same chairman (Professor Sacerdoti).

BIT/ICSID tribunals have continued to adopt a prima-facie test when jurisdiction ratione materiae has been contested, as illustrated by a number of decisions issued in 2006 and 2007, such as El Paso v Argentina , 94Jan de Nul v Egypt,95

end p.952

Telenor v Hungary,96Helnan v Egypt,97Saipem v Bangladesh,98Siag and Vecchi v Egypt,99 and Kardassopoulos v Georgia , 100 although different formulations of the test have been articulated. The formulation most favoured in these cases is taken from Impregilo v Pakistan : 101 whether the facts as alleged by the claimant, if established, are capable of coming within the provisions of the BIT which have been invoked.

For example, referring to the Impregilo formulation, the tribunal in Saipem v Bangladesh stated: 102

The Tribunal agrees with this test, which is in line with the one proposed by Judge Higgins in her dissenting opinion in Oil Platforms . The test strikes a fair balance between a more demanding standard which would imply examining the merits at the jurisdictional stage, and a lighter standard which would rest entirely on the Claimant's characterization of its claims.

The Tribunal must now determine whether the claims ‘fall within the scope of the BIT, assuming pro tem that they may be sustained on the facts’. In other words, the Tribunal should be satisfied that, if the facts alleged by Saipem ultimately prove true, they would be capable of constituting a violation of Article 5 of the BIT. In this respect, the Tribunal agrees with the observation in United Parcel Service v Government of Canada that ‘the reference to the facts alleged being “capable” of constituting a violation of the invoked obligations, as opposed to their “falling within” the provisions, may be of little or no consequence …’.

The Saipem tribunal also held that the PCIJ/ICJ decisions in Mavrommatis and the Fisheries Jurisdiction Case ( Spain v Canada ) (see the summaries of those cases earlier in this chapter) could not be interpreted as justifying a different approach, although ‘it is undisputable that the Tribunal determines its jurisdiction without

end p.953

being bound by the arguments of the parties’. 103 Given the different approach in the Fisheries Jurisdiction case, it would have been interesting to have had an explanation of the tribunal's reasoning on this point.

While it might appear that a prima-facie test imposes a very low threshold, tribunals have been willing to examine a claimant's claims and the prima-facie test has proved a sufficient bar for tribunals to reject jurisdiction over some or all of the claimant's claims in a number of cases. These are considered in the next section of this chapter.

(4) Failure to Meet the Prima-Facie Test

In a number of cases, international courts and tribunals have accepted objections to jurisdiction ratione materiae and, accordingly, have held that claims, or parts of claims, should not proceed to be considered on their merits. Objections have been upheld on both legal and factual grounds.

For example, in Mavrommatis , 104 the PCIJ rejected Greece's claim that the actions of the United Kingdom in relation to the Jaffa concession were capable of amounting to a breach of Article II of the Mandate of Palestine. Similarly, in Oil Platforms , 105 the ICJ found that the facts put forward by Iran were not sufficient to establish a prima-facie breach of Article I or Article IV, paragraph 1, of the Treaty of Amity. However, the facts were capable of forming a breach of Article X of the Treaty and the case proceeded to a merits hearing on that aspect only.

In Legality of Use of Force ( Yugoslavia v Italy ), 106 the ICJ rejected Yugoslavia's application for provisional measures because Yugoslavia was unable to persuade the Court, even prima facie, that the acts imputed to the respondent were capable of coming within the provisions of the Genocide Convention. Similarly in Armed Activities on the Territory of the Congo , 107 the ICJ rejected a request for provisional measures because Congo had failed to demonstrate that the Court had prima-facie jurisdiction under any of the conventions or treaties that had allegedly been breached.

A number of BIT/ICSID tribunals have also accepted objections to jurisdiction ratione materiae. For example, in Mihaly v Sri Lanka , 108 the tribunal concluded that

end p.954

it lacked jurisdiction, because of the absence of any proof of admission of an investment out of which a legal dispute could possibly have arisen. In Joy Mining v Egypt , 109 the tribunal concluded that there had been no investment.

In a series of cases, BIT/ICSID tribunals have addressed the question of jurisdiction over breaches of contract. 110 For example, in Salini v Morocco , 111 the tribunal concluded that it did not have jurisdiction over mere breaches of contract that did not also amount to breaches of the BIT, but that it did have jurisdiction over those breaches of contract that would constitute at the same time a violation of the BIT; in SGS v Pakistan , 112 the tribunal concluded that the umbrella clause was not capable of transforming the breaches of contract into breaches of the BIT; in SGS v Philippines , 113 the tribunal rejected SGS's claim for expropriation, but held that it did have jurisdiction to hear claims that the Philippines had failed to provide fair and equitable treatment, and that it had breached its obligations under the umbrella clause; in Joy Mining v Egypt , 114 the claimant failed to establish, prima facie, that the actions complained of could amount to expropriation, or that they could amount to a breach of the obligations to provide free transfer of funds, fair and equitable treatment, and full protection and security; in Salini v Jordan , 115 the claimant failed to demonstrate, prima-facie, that the alleged breaches of contract could also amount to breaches of BIT by operation of an umbrella clause, but it was able to establish prima-facie claims against Jordan for discriminatory treatment and lack of compliance with all undertakings by refusing to accede to Salini's request to refer the dispute to arbitration; in Impregilo v Pakistan , 116 the tribunal held that it had no jurisdiction over claims based on breach of contract, but it did have jurisdiction in respect of certain of the claims of violation of fair and equitable treatment and expropriation.

Several tribunals have been asked to find that they did not have jurisdiction because the facts alleged could not amount to expropriation. For example, the tribunals in Amco Asia v Indonesia , 117Link-Trading v Moldova , 118 and Impregilo v Pakistan119 concluded that a sufficient case of expropriation had been made out to found jurisdiction. But in Pope & Talbot v Canada , 120 the tribunal concluded that a prima-facie

end p.955

case of expropriation had not been established. And in SGS v Philippines , 121 the tribunal concluded that a mere refusal to pay a debt is not an expropriation of property, at least where remedies exist in respect of such a refusal, and concluded that it did not have jurisdiction.

Similarly, a claim for expropriation was rejected at the jurisdiction stage in Telenor v Hungary . 122 Telenor's local subsidiary (Pannon) had entered into a concession agreement with the Hungarian government for the provision of mobile telephone services. Telenor complained that various regulatory measures implemented by the Hungarian government amounted to unlawful expropriation, albeit that such acts had not deprived Telenor of control of its investment nor deprived Pannon of substantial value. The tribunal stated: 123

Telenor has quite rightly made the point that at a hearing on a challenge to jurisdiction it is not required to go into the merits of the case. Indeed, Hungary quite properly made no pleading as to the merits. Accordingly for the purpose of the jurisdictional challenge allegations of admissible fact by the Claimant are to be assumed to be true. The onus is on the Claimant to show what is alleged to constitute expropriation is at least capable of so doing. There must, in other words, be a prima facie case that the BIT applies.

The tribunal noted the difficulties faced in analysing Telenor's claim due to the inconsistencies and lack of particularity in Telenor's various pleadings. However, it held: 124

… it is evident that the effect of the measures by Hungary of which Telenor complains fall far short of the substantial economic deprivation of its investment required to constitute expropriation. … Beyond the compulsory collection of the 2002 and 2003 ETTA levies from Pannon's bank account, none of Pannon's assets has been seized. Pannon's management has been left in the hands of its Board without governmental interference, the concession agreement remains in full force, and Pannon has not been denied access to its assets, its revenues or any of its other resources. Moreover, Pannon is, and in its annual reports proclaims itself to be, a highly profitable company whose net income and asset value has increased steadily year by year. There is no evidence before the Tribunal to suggest any activity on the part of the Hungarian Government that remotely approaches the effect of expropriation. There has been no suggestion of government interference with Telenor's network or its relations with its customers.

After referring to Pope & Talbot , the tribunal concluded: 125

The Tribunal therefore concludes that Telenor has failed to make out a prima facie case of expropriation. It follows that the Tribunal has no jurisdiction over claims for expropriation made under Article VI of the BIT.

end p.956

The outcome in Telenor is similar to a successful motion to dismiss in US court proceedings and such an approach in investment protection cases has received recent support from some governments.

(5) Motion to Dismiss in Recent US Investment Protection Agreements

A new generation of investment treaties involving the USA includes an express provision allowing a respondent State to make an application akin to a motion to dismiss.

For example, the Central America-Dominican Republic-US Free Trade Agreement (CAFTA-DR), signed on 5 August 2004, states at Article 10.20:

4. Without prejudice to a tribunal's authority to address other objections as a preliminary question, a tribunal shall address and decide as a preliminary question any objection by the respondent that, as a matter of law, a claim submitted is not a claim for which an award in favor of the claimant may be made under Article 10.26.

(a) Such objection shall be submitted to the tribunal as soon as possible after the tribunal is constituted, and in no event later than the date the tribunal fixes for the respondent to submit its counter-memorial (or, in the case of an amendment to the notice of arbitration, the date the tribunal fixes for the respondent to submit its response to the amendment).

(b) On receipt of an objection under this paragraph, the tribunal shall suspend any proceedings on the merits, establish a schedule for considering the objection consistent with any schedule it has established for considering any other preliminary question, and issue a decision or award on the objection, stating the grounds therefor.

(c) In deciding an objection under this paragraph, the tribunal shall assume to be true claimant's factual allegations in support of any claim in the notice of arbitration (or any amendment thereof) and, in disputes brought under theUNCITRAL Arbitration Rules, the statement of claim referred to inArticle 18 of the UNCITRAL Arbitration Rules. The tribunal may also consider any relevant facts not in dispute.

(d) The respondent does not waive any objection as to competence or any argument on the merits merely because the respondent did or did not raise an objection under this paragraph or make use of the expedited procedure set out in paragraph 5.

5. In the event that the respondent so requests within 45 days after the tribunal is constituted, the tribunal shall decide on an expedited basis an objection under paragraph 4 and any objection that the dispute is not within the tribunal's competence. The tribunal shall suspend any proceedings on the merits and issue a decision or award on the objection(s), stating the grounds therefor, no later than 150 days after the date of the request. However, if a disputing party requests a hearing, the tribunal may take an additional 30 days to issue the decision or award. Regardless of whether a hearing is

end p.957

requested, a tribunal may, on a showing of extraordinary cause, delay issuing its decision or award by an additional brief period, which may not exceed 30 days.

6. When it decides a respondent's objection under paragraph 4 or 5, the tribunal may, if warranted, award to the prevailing disputing party reasonable costs and attorney's fees incurred in submitting or opposing the objection. In determining whether such an award is warranted, the tribunal shall consider whether either the claimant's claim or the respondent's objection was frivolous, and shall provide the disputing parties a reasonable opportunity to comment. (Emphasis added)

A short explanation of CAFTA-DR produced by the Office of the United States Trade Representative 126 states:

The CAFTA-DR includes safeguards to ensure that investors cannot abuse the arbitration process, including provisions (based on U.S. court rules) that allow tribunals to dismiss frivolous claims at an early stage of the proceedings or to award attorneys' fees and costs as a deterrent to such claims.

Article 10.20 was inspired by the ‘motion to dismiss’ procedure, in which the defendant asserts that the plaintiff has failed to state a claim upon which relief can be granted (Rules of Federal Procedure, Rule 12(b)(6) ). In Pope & Talbot , 127 the application made by Canada that the tribunal did not have jurisdiction on the grounds that the claimant's claims fell outside the scope of NAFTA Chapter 11, because the measures did not relate to an investment, was entitled a ‘Motion to Dismiss'.

As explained in Westlaw's Federal Practice & Procedure, 128 a motion for dismissal of a claim raises only an issue of law. Such a motion tests the sufficiency of the pleaded claim and the court's investigation when considering the motion is based upon the content of the statement of claim. However, the court may also consider other matters integral to, or incorporated by reference into, the claim, provided that such matters are uncontested. Such a motion only contemplates dismissal of the proceedings, not a judgment on the merits (as is the case in a successful motion for summary judgment). 129

For the purposes of considering a motion to dismiss, the court will:

(i) construe the statement of claim in the most favourable light for the claimant;

(ii) take, as a general rule, the allegations of the claimant as true; and

(iii) draw all reasonable inferences that can be drawn from the pleadings in favour of the claimant.

end p.958

However, the court is not obliged to accept every allegation made by the claimant as being true and will disregard conclusory allegations if they do not reasonably follow from the pleader's description of what happened.

A motion to dismiss will be granted only in exceptional circumstances. It is justified only when the court feels that, even taking the facts as alleged by the claimant, there is no way in which the claim could succeed.

The test most often applied comes from the leading Supreme Court case of Conley v Gibson : 130

[I]n appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

The commentary notes that the complaint should not be dismissed merely because the court believes that the case is legally or factually doubtful or that it is unlikely that the plaintiff will prevail in the action on the merits. And that dismissal is justified only when the allegations of the complaint itself clearly demonstrate that whatever interpretation is given to the facts the plaintiff does not have a claim that is legally redressable.

An example that is given in the commentary of a successful motion to dismiss is where the plaintiff claimed damages for wrongful termination of a contract, but the contract on its face showed that the defendant had the right to terminate the agreement with or without cause. Given that there could not be an actionable claim, the motion to dismiss was granted. 131

However, a motion to dismiss is not a challenge to the court's jurisdiction, but a challenge to the legal sustainability of the claim at a very early stage of the proceedings. Nevertheless, there are clear parallels with a challenge to jurisdiction ratione materiae.

The wording of Article 10.20 of CAFTA quoted above is reproduced in Article 28 of the US Model BIT, which was completed in November 2004. This wording is also contained in the US-Uruguay BIT (4 November 2005), US-Peru FTA (12 April 2006), the US-Colombia FTA (22 November 2006), and the US-Panama FTA (28 June 2007).

It is also notable that the recent amendments to the ICSID Rules have introduced a procedure for determining an initial objection from a respondent that a claim is without legal merit. Rule 41.1 provides that a party may object that the dispute or any ancillary claim is not within the jurisdiction of the Centre or, for other reasons, is not within the competence of the tribunal. Rule 41.5 provides:

end p.959

Unless the parties have agreed to another expedited procedure for making preliminary objections, a party may, no later than 30 days after the constitution of the Tribunal, and in any event before the first session of the Tribunal, file an objection that a claim is manifestly without legal merit. The party shall specify as precisely as possible the basis for the objection. The Tribunal, after giving the parties the opportunity to present their observations on the objection, shall, at its first session or promptly thereafter, notify the parties of its decision on the objection. The decision of the Tribunal shall be without prejudice to the right of a party to file an objection pursuant to paragraph (1) or to object, in the course of the proceeding, that a claim lacks legal merit. (Emphasis added.)

Accordingly, a distinction is made between an objection to jurisdiction and an objection that the claim is without legal merit, the latter being akin to a motion to dismiss.

Concluding Remarks

The prima-facie test is firmly established as the threshold test for establishing jurisdiction ratione materiae in investment treaty cases. The formulation of the approach and of the prima-facie test, which appears to find most favour, is the following:

The tribunal should be satisfied that, if the facts alleged by the claimant ultimately prove true, they would be capable of falling within (or coming within) (or constituting a violation of) the provisions of the investment treaty.

This formulation has received particular endorsement by the tribunals in Salini v Jordan , 132Impregilo v Pakistan , 133 and Saipem v Bangladesh . 134 The semantic differences in wording between ‘falling within’ or ‘coming within’ or ‘constituting a violation of’ have been said to be of little importance.

The prime-facie test has its origin in decisions of the PCIJ and ICJ. While reference is often made to the separate opinion of Judge Higgins in Oil Platforms, 135 Judge Higgins' formulation of the test was whether the actions complained of ‘might’ violate the applicable treaty. The phrase ‘capable of falling within the provisions’ of the treaty comes from decisions of the ICJ concerning provisional measures, and could be said to have been intended as a softer test given the relatively preliminary stage at which it is applied in such cases.

end p.960

It has been questioned whether tribunals should apply the prima-facie test both to the more objective issues requiring treaty interpretation and to factual issues (such as whether the alleged facts can amount to expropriation) or just the latter. Judge Shahabuddeen, in his separate opinion in Oil Platforms , favoured applying the prima-facie test to both issues. However, it appears that tribunals, where possible, seek to give a definitive interpretation of the treaty provisions at the jurisdiction stage, but apply the prima-facie test to factual issues going to jurisdiction.

Judge Higgins emphasized the absence of any jurisdictional bias in favour of claimant or respondent and this has been reiterated in a number of cases. Whether this was the case in practice in the ICJ was questioned by Judge Schwebel in his separate opinion in the Nicaragua case. 136 While some arbitral tribunals have suggested that particular regard should be given to the position of the respondent State (eg Mihaly v Sri Lanka , 137 and Joy Mining v Egypt138 ), the consensus is that jurisdictional neutrality is to be preferred.

The identification of the three elements of the claimant's case to which the prima-facie test should be applied, namely the facts of the case, the legal foundation of the case, and the relief sought, and the different approaches to each, as proposed in Continental v Argentina , 139 is a very welcome refinement of the prima-facie test and it is hoped that this formulation will be adopted by tribunals.

The wording favoured by the USA and adopted in CAFTA-DR and other treaties, and the recent amendments to the ICSID Rules, suggests that some State parties want to encourage tribunals to be more robust in dismissing claims at an early stage. It will be interesting to observe whether tribunals take up this challenge by modifying the application of the prima-facie test.

Selected Bibliography

OECD, ‘Interpretation of the Umbrella Clause in Investment Agreements’, OECD Working Papers on International Investment (3, 2006)

__ , The Law and Practice of the International Court (The Hague, Martinus Nijhoff, 2006)

Rosenne, Shabtai, Provisional Measures in International Law (Oxford, Oxford University Press, 2005)

Schreuer, Christoph, The ICSID Convention: A Commentary (Cambridge, Cambridge University Press, 2001)

Shore, Laurence, ‘The Jurisdiction Problems in Energy Charter Treaty Claims’ Int'l', ALR (2007) 58 Footnotes ?The author was greatly assisted by colleagues Jo Delaney and Paul Coates. Any and all errors are the author's alone. 1The Mavrommatis Palestine Concessions, Judgment No. 2, 1924, PCIJ Series A — No. 2 p. 6. 2 Art 26 states: ‘The Mandatory agrees that, if any dispute whatever should arise between the Mandatory and another Member of the League of Nations relating to the interpretation or application of the provisions of the Mandate, such dispute, if it cannot be settled by negotiation, shall be submitted to the [PCIJ]’. 3Above n 1 at 16. 4 Ibid at 16. 5 Ibid at 23. 6 Ibid at 29. 7 The Ambatielos case (Merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, 10. 8 There had been a previous decision of the Court in which it had held, in answer to Greece's request that the Court itself adjudicate upon the validity of the Ambatielos claim, that it did not have jurisdiction to determine the merits of the claim, but that it did have limited jurisdiction to decide whether the United Kingdom was obliged to accept arbitration. 9 Above n 7 at 18. In the next paragraph, the Court also refers to ‘an arguable construction which can be defended, whether or not it ultimately prevails’. 10Oil Platforms ( Islamic Republic of Iran v United States of America ), Preliminary Objection, Judgment, ICJ Reports 1996, p. 803. The Court included Judge Bedjaoui (President) and Judge Schwebel and Judge Higgins. 11Above n 10 at 810 at para 16. 12 Ibid at 812 at para 21. 13 Ibid at 820–1 at paras 53–5. 14 Ibid at 847 at para 2. 15 Ibid at 851 at para 17. 16 Ibid at 852 at para 18. 17 Ibid at 855 at para 31. 18 Ibid at 853 at para 23. 19 Ibid at 856 at para 33. 20 Ibid at 856–7 at para 34. 21 Ibid at 858 at para 38. 22 Ibid at 857 at para 35. 23 Ibid at 822. 24 Ibid at 840 (emphasis added). 25Fisheries Jurisdiction Case ( Spain v Canada ), Judgment, 4 December 1998, ICJ Reports 1998, 432. The Court included Judge Schwebel (President) and Judge Guillaume and Judge Higgins. 26 Above n 25 at paras 30 and 37 (case references omitted). 27 The Court comprised 12 of the same judges as in Oil Platforms , including Judge Higgins, but not Judge Shahabuddeen. 28 See Shabtai Rosenne, Provisional Measures in International Law (Oxford, Oxford University Press, 2005) at 91–123, and The Law and Practice of the International Court (The Hague, Martinus Nijhoff, 2006). 29Anglo-Iranian Oil Co Case ( United Kingdom v Iran ), Statement of Sir Frank Soskice, 30 June 1951, ICJ Reports 1951, 401, at 411. 30Anglo-Iranian Oil Co Case ( United Kingdom v Iran ), Order of 5 July 1951, ICJ Reports 1951, 96 at 97. 31 Following Anglo-Iranian , the prima facie-test was adopted in several subsequent ICJ decisions in respect of provisional measures. In addition to those referred to in the text above, see: Nuclear Tests Cases ( New Zealand v France ), Interim Measures of Protection, Order of 22 June 1973, ICJ Reports 1973 135 at p 139, para 22; Application of the Genocide Convention ( Bosnia and Herzegovina v Yugoslavia ), Provisional Measures, Order of 8 April 1993, ICJ Reports 1993, 3, at 11, para 14; Arrest Warrant of 11 April 2000 ( Democratic Republic of Congo v Belgium ), Provisional Measures, Order of 8 December 2000, ICJ Reports 2000, 182, at 200, para 67; Armed Activities on the Territory of the Congo (New Application: 2002) ( Democratic Republic of the Congo v Rwanda ), Provisional Measures, Order of 10 July 2002, ICJ Reports 2002, 219 at 241, para 58. 32Military and Paramilitary Activities in and against Nicaragua ( Nicaragua v United States of America ), Provisional Measures, Order of 10 May 1984, ICJ Reports 1984, 169 at 179, para 24. See also the dissenting opinion of Judge Schwebel, at 206–7 in which he notes that the meaning of ‘might’ in this context is a controversial issue (cf Judge Higgins's formulation in Oil Platforms ) and he criticizes giving the benefit of the doubt to the applicant. 33Legality of Use of Force ( Yugoslavia v Italy ), Provisional Measures, Order of 2 June 1999, ICJ Reports 1999, 481 at 490, para 25. The Court included Judge Weeramantry (President), Judge Schwebel, Judge Guillaume, and Judge Higgins. This was one of a set of orders, the others involving Belgium, Canada, France, Germany, Netherlands, Portugal, Spain, and the UK. 34 Ibid at 490 at para 25. 35 Ibid at 491 at para 28 and at 492 at para 32. 36 Above n 33 at 492 at para 33. This wording is found in many of the other ICJ decisions on provisional measures, above n 31. 37 See Christoph Schreuer, The ICSID Convention: A Commentary (Cambridge, Cambridge University Press, 2001) Art 25. 38 The ICSID Rules prior to their recent amendment encouraged tribunals to determine jurisdiction as a preliminary issue, rule 41; see also Canadian Model BIT Art 37. 39Amco Asia Corp Inc v The Republic of Indonesia , ICSID Case No. ARB/81/1, Decision on Jurisdiction, 25 September 1983. The tribunal comprised Goldman (President), Foighel, and Rubin. 40 Above n 39 at para 38. 41 Above n 39 at paras 14 and 18. 42Tradex Hellas SA v Republic of Albania , ICSID Case No. ARB/94/2, Decision on Jurisdiction, 24 December 1996. The tribunal comprised Bockstiegel (President), Fielding, and Giardina. 43 Above n 42 at 185. 44Wena Hotels Limited v Arab Republic of Egypt , Decision on Jurisdiction, 28 June 1999, (2002) 41 ILM 881. The tribunal comprised Leigh (President), Fadlallah, and Haddad. 45 Above n 44 at 890-1. 46Ethyl Corporation v The Government of Canada , Award on Jurisdiction, 24 June 1998. The tribunal comprised Bockstiegel (President), Brower, and Lalonde. 47 Above n 46 at para 61. 48Pope & Talbot Inc. v The Government of Canada , Award on Motion to Dismiss (re whether measures relate to the investment), 26 January 2000. The tribunal comprised Dervaird (President), Greenberg, and Belman. The tribunal stated: ‘Whether or not the claims of the Investor will turn out to be well founded in fact or law, at the present stage it cannot be stated that there are not investment disputes before the Tribunal’ (para 25). 49Methanex Corporation v United States of America , Preliminary Award on Jurisdiction and Admissibility, 7 August 2002. The tribunal comprised Rowley (President), Veeder, and Christopher. 50United Parcel Service of America Inc v Government of Canada , Award on Jurisdiction, 22 November 2002, paras 32–7. the Tribunal comprised Keith (President), Cass, and Fortier. 51Above note 49 at paras 110–21. The tribunal stated: ‘It follows that the correct approach is to assume that Methanex's factual contentions are correct (insofar as they are not incredible, frivolous or vexatious) and to apply, under whatever appropriate test, the relevant legal principles to those assumed facts’ (para 112). 52 Ibid at para 118. 53 Above n 50 at para 36. 54Maffezeni v The Kingdom of Spain , ICSID Case No. ARB/97/7, Decision on Objections to Jurisdiction, 25 January 2000 at paras 69–70. The tribunal comprised Orrego Vicu?a (President), B?rgenthal, and Wolf. 55Salini Costruttori SpA and Italstrade SpA v Kingdon of Morocco , ICSID Case No. ARB/00/04, Decision on Jurisdiction, 16 July 2001. The tribunal comprised Briner (President), Cremades, and Fadlallah. 56Link-Trading v Department for Customs Control of Republic of Moldova , Award on Jurisdiction, 16 February 2001. The tribunal comprised Hertzfeld (President), Buruiana, and Zykin. 57 Above n 56 at 11. 58Mihaly International Corp v Democratic Socialist Republics of Sri Lanka , ICSID Case No. ARB/00/2, Award, 15 March 2002. The tribunal comprised Sucharitkul (President), Rogers, and Suratgar. 59 Above n 58 at para 56. 60CMS Gas Transmission Company v The Republic of Argentina , ICSID Case No. ARB/01/8, Decision on Jurisdiction, 17 July 2003. The tribunal comprised Orrego Vicu?a (President), Lalonde and Rezek. 61Above n 60 at para 27. 62 Ibid at para 35. 63 Similarly, a prima-facie test was applied in Azurix Corp v The Republic of Argentina , ICSID Case No. ARB/01/12, Decision on Jurisdiction, 8 December 2003, para 76. The tribunal comprised Sureda (President), Lauterpacht, and Martins. 64SGS Soci?t? G?n?rale de Surveillance SA v Islamic Republic of Pakistan , ICSID Case No. ARB/01/13, Decision on Objections to Jurisdiction, 6 August 2003. The tribunal comprised Feliciano (President), Faures, and Thomas. 65 Ibid at paras 144–5. 66SGS Soci?t? G?n?rale de Surveillance SA v Republic of the Philippines , ICSID Case No. ARB/02/6, Decision on Objections to Jurisdiction, 29 January 2004. The tribunal comprised El-Kosheri (President), Crawford, and Crivellaro. 67 Ibid at para 26. This may be an example tribunal ‘testing the characterization of the claimant's claims’, as envisaged in SGS v Pakistan , above n 64. 68 At the end of that passage, the tribunal footnoted not only the Oil Platforms case (majority decision), but also the Case concerning Legality of Use of Force ( Yugoslavia v Belgium ), ICJ Reports 1999, 124 at 137, para 38, which is a different decision to the one usually referred to as authority for the application of the prima-facie test in the context of jurisdiction to grant provisional measures, namely Yugoslavia v Italy , above n 33; however, the wording in the two cases is identical. 69Above n 66 at para 157. 70 Ibid at para 161. 71Siemens AG v The Argentine Republic , ICSID Case No. ARB/02/8, Decision on Jurisdiction, 3 August 2004. The tribunal comprised Sureda (President), Brower and Janeiro. 72 Ibid at para 180. 73Joy Mining Machinery Ltd v The Arab Republic of Egypt , ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004. The tribunal comprised Orrego Vicu?a (President), Craig, and Weeramantry. 74 Ibid at para 30. 75Salini Costruttori SpA and Italstrade SpA v The Hashemite Kingdom of Jordan , ICSID Case No. ARB/02/13, Decision on Jurisdiction, 29 November 2004. The tribunal comprised Guillaume (President), Cremades and Sinclair. 76 The Salini tribunal made no distinction between the prima-facie test in the ICJ's provisional measures decisions and the test in jurisdiction ratione materiae decisions. 77Above n 75 at para 151. 78 Ibid at para 163. 79 Ibid at para 166. 80Plama Consortium Limited v Bulgaria , ICSID Case No. ARB/03/24, Decision on Jurisdiction, 8 February 2005, paras 118–19 and 132. The tribunal comprised Salans (President), van den Berg, and Veeder. 81Impregilo SpA v Pakistan , ICSID Case No. ARB/03/3, Decision on Jurisdiction, 22 April 2005, paras 237–54. The tribunal comprised Guillaume (President), Cremades, and Landau. 82Bayindir Insaat Turizm Ticaret Ve Sanayi AS v Pakistan , ICISD Case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005, paras 193–7. The tribunal comprised Kaufmann-Kohler (President), Berman, and Bockstiegel. 83 See Laurence Shore, ‘The Jurisdiction Problems in Energy Charter Treaty Claims’, Int'l ALR (2007) 58. 84Above n 80 at para 119. 85 Ibid at para 132. 86 Above n 81 at para 108. The Impregilo case raised similar issues to those in Salini , above note 75. Paras 237–54 of the Impregilo decision are virtually identical to paras 137–151 of the Salini decison. 87Above n 81 at para 239 n 103. 88 Ibid at para 263. 89 Above n 82 at para 197. 90Continental Casualty Company v The Argentine Republic , ICSID Case No. ARB/03/9, Decision on Jurisdiction, 22 February 2006. The tribunal comprised Sacerdoti (President), Veeder, and Nader. 91Above n 90 at para 60. The tribunal noted that these three aspects correspond to the traditional law description of the elements of a claim: factum, causa petendi, and petitum (footnote 3). 92 Ibid at paras 60–4. Emphasis in original. 93Total SA v The Argentine Republic , ICSID Case No. ARB/04/1, Decision on Objections to Jurisdiction, 25 August 2006, paras 51–7. The tribunal comprised Sacerdoti (President), Marcano and Alvarez. 94El Paso Energy International Company v The Argentine Republic , ICSID Case No. ARB/03/15, Decision on Jurisdiction, 27 April 2006, paras 40–5. The tribunal comprised Caflisch (President), Bernardini, and Stern. In its decision, the tribunal rejected the suggestion that the determination of jurisdiction was in some way conditional upon the claimant subsequently proving the facts upon which its claim is based (para 45). The tribunal, while approving the prima-facia test, also noted that if everything was to depend on characterizations made by the claimant alone, the limits to jurisdiction would be reduced to naught (para 109). 95Jan de Nul NV. and Dredging International NV v the Arab Republic of Egypt , ICSID Case No. ARB/04/13, Decision on Jurisdiction, 16 June 2006, paras 69–71. The tribunal comprised Kaufmann-Kohler (President), Mayer, and Stern. The tribunal expressly adopted the test as articulated in Impregilo v Pakistan , and also referred to Oil Platforms (Judge Higgins' Opinion) and Bayindir v Pakistan . 96Telenor Mobile Communications AS v The Republic of Hungary , ICSID Case No. ARB/04/15, Award, 13 September 2006, paras 34, 53, 68, and 80. The tribunal comprised Goode (President), Allard, and Marriott. See also below in this chapter. The decision refers to Oil Platforms , but to Judge Shadabuddeen's formulation of ‘arguable contention’, as well as to Salini v Jordan , Plama v Bulgaria , and SGS v Philippines . 97Helnan International Hotels A/S v The Arab Republic of Egypt , ICSID Case No. ARB/05/19, Decision on Jurisdiction, 17 October 2006, paras 73 and 81. The tribunal comprised Derains (President), Dolzer, and Lee. The decision refers to Bayindir v Pakistan and Jan de Nul v Egypt . 98Saipem SpA v the People's Republic of Bangladesh , ICSID Case No. ARB/05/07, Decision on Jurisdiction and Recommendation on Provisional Measures, 21 March 2007, paras 84–91. The tribunal comprised Kaufmann-Kohler (President), Schreuer, and Otton. The tribunal referred to a number of authorities and agreed with the test as formulated in Impregilo v Pakistan . 99Siag and Vecchi v the Arab Republic of Egypt , ICSID Case No. ARB/05/15, Decision on Jurisdiction, 11 April 2007, paras 139–41. The tribunal comprised Williams (President), Pryles, and Orrego Vicu?a. The tribunal approved the test proffered by Judge Higgins in Oil Platforms , as applied in Plama v Bulgaria and Salini v Jordan . 100Kardassopoulos v the Republic of Georgia , ICSID Case No. ARB/05/18, Decision on Jurisdiction, 6 July 2007, paras 103–4. The tribunal comprised Fortier (President), Orrego Vicu?a and Watts. 101 Above n 81. 102Above n 98 at paras 85-6. 103 Ibid at para 90. 104 Above n 1. 105 Above n 10. 106 Above n 33. 107 Above n 31. 108 Above n 58. 109 Above n 73. 110 See eg OECD, ‘Interpretation of the Umbrella Clause in Investment Agreements’, OECD Working Papers on International Investment (3, 2006). 111 Above n 55. 112 Above n 64. 113 Above n 66. 114 Above n 73. 115 Above n 75. 116 Above n 81. 117 Above n 39. 118 Above n 56. 119 Above n 81. 120 Above n 48. 121 Above n 66. 122 Above n 96. 123 Above n 96, at para 68. This passage referred in footnotes to Oil Platforms , Salini v Jordan , Plama v Bulgaria , and SGS v Philippines . 124Above n 96 at para 79. 125 Ibid at para 81. 126 Available at <http://www.ustr.gov/assets/Trade_Agreements/Regional/CAFTA/Briefing_Book/ asset_upload_file996_13199.pdf>. 127 Above n 48. 1285B Federal Practice & Procedure Civ 3d para 1357 (Westlaw, 2007 update). 129 For motions for summary judgment in the US see Federal Rules of Civil Procedure, Rule 56, and 10A Federal Practice & Procedure Civ 3d para. 2711 (Westlaw, 2007 update). A motion for summary judgment may be made by either a plaintiff or a defendant, and will succeed if there is no genuine issue of material fact, with the legal consequence that the plaintiff's claim or defendant's defence must succeed. In England, summary judgment may also be given in favour of a defendant, if the court considers that there is no real prospect that the plaintiff will succeed on the claim or issue: Civil Procedure Rules, Part 24. 130Conley v Gibson , 355 US 41 (1957) at 45–6. 131Case v State Farm Mutual Insurance Automobile Company CA 5th, 1961, 294 F 2d 676. 132 Above n 75. 133 Above n 81. 134 Above n 98. 135 Above n 10. 136 Above n 32. 137 Above n 58. 138 Above n 73. 139 Above n 90. Selected Bibliography

OECD, ‘Interpretation of the Umbrella Clause in Investment Agreements’, OECD Working Papers on International Investment (3, 2006)

__ , The Law and Practice of the International Court (The Hague, Martinus Nijhoff, 2006)

Rosenne, Shabtai, Provisional Measures in International Law (Oxford, Oxford University Press, 2005)

Schreuer, Christoph, The ICSID Convention: A Commentary (Cambridge, Cambridge University Press, 2001)

Shore, Laurence, ‘The Jurisdiction Problems in Energy Charter Treaty Claims’ Int'l', ALR (2007) 58 Footnotes ?The author was greatly assisted by colleagues Jo Delaney and Paul Coates. Any and all errors are the author's alone. 1The Mavrommatis Palestine Concessions, Judgment No. 2, 1924, PCIJ Series A — No. 2 p. 6. 2 Art 26 states: ‘The Mandatory agrees that, if any dispute whatever should arise between the Mandatory and another Member of the League of Nations relating to the interpretation or application of the provisions of the Mandate, such dispute, if it cannot be settled by negotiation, shall be submitted to the [PCIJ]’. 3Above n 1 at 16. 4 Ibid at 16. 5 Ibid at 23. 6 Ibid at 29. 7 The Ambatielos case (Merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, 10. 8 There had been a previous decision of the Court in which it had held, in answer to Greece's request that the Court itself adjudicate upon the validity of the Ambatielos claim, that it did not have jurisdiction to determine the merits of the claim, but that it did have limited jurisdiction to decide whether the United Kingdom was obliged to accept arbitration. 9 Above n 7 at 18. In the next paragraph, the Court also refers to ‘an arguable construction which can be defended, whether or not it ultimately prevails’. 10Oil Platforms ( Islamic Republic of Iran v United States of America ), Preliminary Objection, Judgment, ICJ Reports 1996, p. 803. The Court included Judge Bedjaoui (President) and Judge Schwebel and Judge Higgins. 11Above n 10 at 810 at para 16. 12 Ibid at 812 at para 21. 13 Ibid at 820–1 at paras 53–5. 14 Ibid at 847 at para 2. 15 Ibid at 851 at para 17. 16 Ibid at 852 at para 18. 17 Ibid at 855 at para 31. 18 Ibid at 853 at para 23. 19 Ibid at 856 at para 33. 20 Ibid at 856–7 at para 34. 21 Ibid at 858 at para 38. 22 Ibid at 857 at para 35. 23 Ibid at 822. 24 Ibid at 840 (emphasis added). 25Fisheries Jurisdiction Case ( Spain v Canada ), Judgment, 4 December 1998, ICJ Reports 1998, 432. The Court included Judge Schwebel (President) and Judge Guillaume and Judge Higgins. 26 Above n 25 at paras 30 and 37 (case references omitted). 27 The Court comprised 12 of the same judges as in Oil Platforms , including Judge Higgins, but not Judge Shahabuddeen. 28 See Shabtai Rosenne, Provisional Measures in International Law (Oxford, Oxford University Press, 2005) at 91–123, and The Law and Practice of the International Court (The Hague, Martinus Nijhoff, 2006). 29Anglo-Iranian Oil Co Case ( United Kingdom v Iran ), Statement of Sir Frank Soskice, 30 June 1951, ICJ Reports 1951, 401, at 411. 30Anglo-Iranian Oil Co Case ( United Kingdom v Iran ), Order of 5 July 1951, ICJ Reports 1951, 96 at 97. 31 Following Anglo-Iranian , the prima facie-test was adopted in several subsequent ICJ decisions in respect of provisional measures. In addition to those referred to in the text above, see: Nuclear Tests Cases ( New Zealand v France ), Interim Measures of Protection, Order of 22 June 1973, ICJ Reports 1973 135 at p 139, para 22; Application of the Genocide Convention ( Bosnia and Herzegovina v Yugoslavia ), Provisional Measures, Order of 8 April 1993, ICJ Reports 1993, 3, at 11, para 14; Arrest Warrant of 11 April 2000 ( Democratic Republic of Congo v Belgium ), Provisional Measures, Order of 8 December 2000, ICJ Reports 2000, 182, at 200, para 67; Armed Activities on the Territory of the Congo (New Application: 2002) ( Democratic Republic of the Congo v Rwanda ), Provisional Measures, Order of 10 July 2002, ICJ Reports 2002, 219 at 241, para 58. 32Military and Paramilitary Activities in and against Nicaragua ( Nicaragua v United States of America ), Provisional Measures, Order of 10 May 1984, ICJ Reports 1984, 169 at 179, para 24. See also the dissenting opinion of Judge Schwebel, at 206–7 in which he notes that the meaning of ‘might’ in this context is a controversial issue (cf Judge Higgins's formulation in Oil Platforms ) and he criticizes giving the benefit of the doubt to the applicant. 33Legality of Use of Force ( Yugoslavia v Italy ), Provisional Measures, Order of 2 June 1999, ICJ Reports 1999, 481 at 490, para 25. The Court included Judge Weeramantry (President), Judge Schwebel, Judge Guillaume, and Judge Higgins. This was one of a set of orders, the others involving Belgium, Canada, France, Germany, Netherlands, Portugal, Spain, and the UK. 34 Ibid at 490 at para 25. 35 Ibid at 491 at para 28 and at 492 at para 32. 36 Above n 33 at 492 at para 33. This wording is found in many of the other ICJ decisions on provisional measures, above n 31. 37 See Christoph Schreuer, The ICSID Convention: A Commentary (Cambridge, Cambridge University Press, 2001) Art 25. 38 The ICSID Rules prior to their recent amendment encouraged tribunals to determine jurisdiction as a preliminary issue, rule 41; see also Canadian Model BIT Art 37. 39Amco Asia Corp Inc v The Republic of Indonesia , ICSID Case No. ARB/81/1, Decision on Jurisdiction, 25 September 1983. The tribunal comprised Goldman (President), Foighel, and Rubin. 40 Above n 39 at para 38. 41 Above n 39 at paras 14 and 18. 42Tradex Hellas SA v Republic of Albania , ICSID Case No. ARB/94/2, Decision on Jurisdiction, 24 December 1996. The tribunal comprised Bockstiegel (President), Fielding, and Giardina. 43 Above n 42 at 185. 44Wena Hotels Limited v Arab Republic of Egypt , Decision on Jurisdiction, 28 June 1999, (2002) 41 ILM 881. The tribunal comprised Leigh (President), Fadlallah, and Haddad. 45 Above n 44 at 890-1. 46Ethyl Corporation v The Government of Canada , Award on Jurisdiction, 24 June 1998. The tribunal comprised Bockstiegel (President), Brower, and Lalonde. 47 Above n 46 at para 61. 48Pope & Talbot Inc. v The Government of Canada , Award on Motion to Dismiss (re whether measures relate to the investment), 26 January 2000. The tribunal comprised Dervaird (President), Greenberg, and Belman. The tribunal stated: ‘Whether or not the claims of the Investor will turn out to be well founded in fact or law, at the present stage it cannot be stated that there are not investment disputes before the Tribunal’ (para 25). 49Methanex Corporation v United States of America , Preliminary Award on Jurisdiction and Admissibility, 7 August 2002. The tribunal comprised Rowley (President), Veeder, and Christopher. 50United Parcel Service of America Inc v Government of Canada , Award on Jurisdiction, 22 November 2002, paras 32–7. the Tribunal comprised Keith (President), Cass, and Fortier. 51Above note 49 at paras 110–21. The tribunal stated: ‘It follows that the correct approach is to assume that Methanex's factual contentions are correct (insofar as they are not incredible, frivolous or vexatious) and to apply, under whatever appropriate test, the relevant legal principles to those assumed facts’ (para 112). 52 Ibid at para 118. 53 Above n 50 at para 36. 54Maffezeni v The Kingdom of Spain , ICSID Case No. ARB/97/7, Decision on Objections to Jurisdiction, 25 January 2000 at paras 69–70. The tribunal comprised Orrego Vicu?a (President), B?rgenthal, and Wolf. 55Salini Costruttori SpA and Italstrade SpA v Kingdon of Morocco , ICSID Case No. ARB/00/04, Decision on Jurisdiction, 16 July 2001. The tribunal comprised Briner (President), Cremades, and Fadlallah. 56Link-Trading v Department for Customs Control of Republic of Moldova , Award on Jurisdiction, 16 February 2001. The tribunal comprised Hertzfeld (President), Buruiana, and Zykin. 57 Above n 56 at 11. 58Mihaly International Corp v Democratic Socialist Republics of Sri Lanka , ICSID Case No. ARB/00/2, Award, 15 March 2002. The tribunal comprised Sucharitkul (President), Rogers, and Suratgar. 59 Above n 58 at para 56. 60CMS Gas Transmission Company v The Republic of Argentina , ICSID Case No. ARB/01/8, Decision on Jurisdiction, 17 July 2003. The tribunal comprised Orrego Vicu?a (President), Lalonde and Rezek. 61Above n 60 at para 27. 62 Ibid at para 35. 63 Similarly, a prima-facie test was applied in Azurix Corp v The Republic of Argentina , ICSID Case No. ARB/01/12, Decision on Jurisdiction, 8 December 2003, para 76. The tribunal comprised Sureda (President), Lauterpacht, and Martins. 64SGS Soci?t? G?n?rale de Surveillance SA v Islamic Republic of Pakistan , ICSID Case No. ARB/01/13, Decision on Objections to Jurisdiction, 6 August 2003. The tribunal comprised Feliciano (President), Faures, and Thomas. 65 Ibid at paras 144–5. 66SGS Soci?t? G?n?rale de Surveillance SA v Republic of the Philippines , ICSID Case No. ARB/02/6, Decision on Objections to Jurisdiction, 29 January 2004. The tribunal comprised El-Kosheri (President), Crawford, and Crivellaro. 67 Ibid at para 26. This may be an example tribunal ‘testing the characterization of the claimant's claims’, as envisaged in SGS v Pakistan , above n 64. 68 At the end of that passage, the tribunal footnoted not only the Oil Platforms case (majority decision), but also the Case concerning Legality of Use of Force ( Yugoslavia v Belgium ), ICJ Reports 1999, 124 at 137, para 38, which is a different decision to the one usually referred to as authority for the application of the prima-facie test in the context of jurisdiction to grant provisional measures, namely Yugoslavia v Italy , above n 33; however, the wording in the two cases is identical. 69Above n 66 at para 157. 70 Ibid at para 161. 71Siemens AG v The Argentine Republic , ICSID Case No. ARB/02/8, Decision on Jurisdiction, 3 August 2004. The tribunal comprised Sureda (President), Brower and Janeiro. 72 Ibid at para 180. 73Joy Mining Machinery Ltd v The Arab Republic of Egypt , ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004. The tribunal comprised Orrego Vicu?a (President), Craig, and Weeramantry. 74 Ibid at para 30. 75Salini Costruttori SpA and Italstrade SpA v The Hashemite Kingdom of Jordan , ICSID Case No. ARB/02/13, Decision on Jurisdiction, 29 November 2004. The tribunal comprised Guillaume (President), Cremades and Sinclair. 76 The Salini tribunal made no distinction between the prima-facie test in the ICJ's provisional measures decisions and the test in jurisdiction ratione materiae decisions. 77Above n 75 at para 151. 78 Ibid at para 163. 79 Ibid at para 166. 80Plama Consortium Limited v Bulgaria , ICSID Case No. ARB/03/24, Decision on Jurisdiction, 8 February 2005, paras 118–19 and 132. The tribunal comprised Salans (President), van den Berg, and Veeder. 81Impregilo SpA v Pakistan , ICSID Case No. ARB/03/3, Decision on Jurisdiction, 22 April 2005, paras 237–54. The tribunal comprised Guillaume (President), Cremades, and Landau. 82Bayindir Insaat Turizm Ticaret Ve Sanayi AS v Pakistan , ICISD Case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005, paras 193–7. The tribunal comprised Kaufmann-Kohler (President), Berman, and Bockstiegel. 83 See Laurence Shore, ‘The Jurisdiction Problems in Energy Charter Treaty Claims’, Int'l ALR (2007) 58. 84Above n 80 at para 119. 85 Ibid at para 132. 86 Above n 81 at para 108. The Impregilo case raised similar issues to those in Salini , above note 75. Paras 237–54 of the Impregilo decision are virtually identical to paras 137–151 of the Salini decison. 87Above n 81 at para 239 n 103. 88 Ibid at para 263. 89 Above n 82 at para 197. 90Continental Casualty Company v The Argentine Republic , ICSID Case No. ARB/03/9, Decision on Jurisdiction, 22 February 2006. The tribunal comprised Sacerdoti (President), Veeder, and Nader. 91Above n 90 at para 60. The tribunal noted that these three aspects correspond to the traditional law description of the elements of a claim: factum, causa petendi, and petitum (footnote 3). 92 Ibid at paras 60–4. Emphasis in original. 93Total SA v The Argentine Republic , ICSID Case No. ARB/04/1, Decision on Objections to Jurisdiction, 25 August 2006, paras 51–7. The tribunal comprised Sacerdoti (President), Marcano and Alvarez. 94El Paso Energy International Company v The Argentine Republic , ICSID Case No. ARB/03/15, Decision on Jurisdiction, 27 April 2006, paras 40–5. The tribunal comprised Caflisch (President), Bernardini, and Stern. In its decision, the tribunal rejected the suggestion that the determination of jurisdiction was in some way conditional upon the claimant subsequently proving the facts upon which its claim is based (para 45). The tribunal, while approving the prima-facia test, also noted that if everything was to depend on characterizations made by the claimant alone, the limits to jurisdiction would be reduced to naught (para 109). 95Jan de Nul NV. and Dredging International NV v the Arab Republic of Egypt , ICSID Case No. ARB/04/13, Decision on Jurisdiction, 16 June 2006, paras 69–71. The tribunal comprised Kaufmann-Kohler (President), Mayer, and Stern. The tribunal expressly adopted the test as articulated in Impregilo v Pakistan , and also referred to Oil Platforms (Judge Higgins' Opinion) and Bayindir v Pakistan . 96Telenor Mobile Communications AS v The Republic of Hungary , ICSID Case No. ARB/04/15, Award, 13 September 2006, paras 34, 53, 68, and 80. The tribunal comprised Goode (President), Allard, and Marriott. See also below in this chapter. The decision refers to Oil Platforms , but to Judge Shadabuddeen's formulation of ‘arguable contention’, as well as to Salini v Jordan , Plama v Bulgaria , and SGS v Philippines . 97Helnan International Hotels A/S v The Arab Republic of Egypt , ICSID Case No. ARB/05/19, Decision on Jurisdiction, 17 October 2006, paras 73 and 81. The tribunal comprised Derains (President), Dolzer, and Lee. The decision refers to Bayindir v Pakistan and Jan de Nul v Egypt . 98Saipem SpA v the People's Republic of Bangladesh , ICSID Case No. ARB/05/07, Decision on Jurisdiction and Recommendation on Provisional Measures, 21 March 2007, paras 84–91. The tribunal comprised Kaufmann-Kohler (President), Schreuer, and Otton. The tribunal referred to a number of authorities and agreed with the test as formulated in Impregilo v Pakistan . 99Siag and Vecchi v the Arab Republic of Egypt , ICSID Case No. ARB/05/15, Decision on Jurisdiction, 11 April 2007, paras 139–41. The tribunal comprised Williams (President), Pryles, and Orrego Vicu?a. The tribunal approved the test proffered by Judge Higgins in Oil Platforms , as applied in Plama v Bulgaria and Salini v Jordan . 100Kardassopoulos v the Republic of Georgia , ICSID Case No. ARB/05/18, Decision on Jurisdiction, 6 July 2007, paras 103–4. The tribunal comprised Fortier (President), Orrego Vicu?a and Watts. 101 Above n 81. 102Above n 98 at paras 85-6. 103 Ibid at para 90. 104 Above n 1. 105 Above n 10. 106 Above n 33. 107 Above n 31. 108 Above n 58. 109 Above n 73. 110 See eg OECD, ‘Interpretation of the Umbrella Clause in Investment Agreements’, OECD Working Papers on International Investment (3, 2006). 111 Above n 55. 112 Above n 64. 113 Above n 66. 114 Above n 73. 115 Above n 75. 116 Above n 81. 117 Above n 39. 118 Above n 56. 119 Above n 81. 120 Above n 48. 121 Above n 66. 122 Above n 96. 123 Above n 96, at para 68. This passage referred in footnotes to Oil Platforms , Salini v Jordan , Plama v Bulgaria , and SGS v Philippines . 124Above n 96 at para 79. 125 Ibid at para 81. 126 Available at <http://www.ustr.gov/assets/Trade_Agreements/Regional/CAFTA/Briefing_Book/ asset_upload_file996_13199.pdf>. 127 Above n 48. 1285B Federal Practice & Procedure Civ 3d para 1357 (Westlaw, 2007 update). 129 For motions for summary judgment in the US see Federal Rules of Civil Procedure, Rule 56, and 10A Federal Practice & Procedure Civ 3d para. 2711 (Westlaw, 2007 update). A motion for summary judgment may be made by either a plaintiff or a defendant, and will succeed if there is no genuine issue of material fact, with the legal consequence that the plaintiff's claim or defendant's defence must succeed. In England, summary judgment may also be given in favour of a defendant, if the court considers that there is no real prospect that the plaintiff will succeed on the claim or issue: Civil Procedure Rules, Part 24. 130Conley v Gibson , 355 US 41 (1957) at 45–6. 131Case v State Farm Mutual Insurance Automobile Company CA 5th, 1961, 294 F 2d 676. 132 Above n 75. 133 Above n 81. 134 Above n 98. 135 Above n 10. 136 Above n 32. 137 Above n 58. 138 Above n 73. 139 Above n 90. 285Redfern and Hunter, above n 85 at 163. 286 Ibid at 164. 287 Although see the Mitsubishi Motors Corp v Soler Chrysler Plymouth Inc , 473 US 614, where an antitrust issue was held to arbitration under the Federal Arbitration Act despite the existence of public policy considerations to the contrary. 288 For a more detailed analysis of each category, please see Redfern and Hunter, above n 85 at 165–72. 289SGS v Philippines , above n 266 at para 154. 0 hors: Jacomijn J Van Haersolte-Van Hof, Anne K Hoffmann ? Keywords: Arbitral rules & institutions – Preliminary proceedings – Parallel proceedings – Fork in the road clause – Claims – Contract claims – Treaty claim – Umbrella clause – Enforcement – Enforcement in domestic courts This chapter examines the issue of the interaction of contract claims and treaty claims, their classification, and subsequent adjudication. It also considers related arbitral decisions and their consequences. Topics discussed include the distinction between contract claims and treaty claims, further issues arising from the interrelation between international tribunals and domestic courts, and waiver of the protection granted by investment treaties.

0subscriber_article?script=yes&id=%2Fic%2FMonograph%2Flaw-iic-9780199231386&recno=62&searchType=browse Chapter 24 The Relationship between International Tribunals and Domestic Courts

(1)The Distinction between Contract Claims and Treaty Claims964

(a) The ‘Modern-Classic’ Approach 964

(b) Broader Jurisdiction of ICSID Tribunals 968

(2)Further Issues Arising from the Interrelation between International Tribunals and Domestic Courts971

(a) Characterization of Claims as Contract or Treaty Claims 971

(b) Application of Umbrella Clauses by International Tribunals 974

(i) The Development in Recent Case-Law 974

(ii) Umbrella Clauses—The Future 979

end p.962

(3)The Waiver of the Protection Granted by Investment Treaties984

(a) The Individual as Subject of International Law 985

(b) The Investment Treaty Regime as a Source of Rights for the Individual 990

(i) Control over the Claims Brought by the Investor 994

(ii) The Nationality of Claims 994

(iii) The Law Applicable to the Procedure 998

(iv) The ‘Fork-in-the-Road’ Provisions of Treaties 998

(v) The Exhaustion of Local Remedies 1000

(vi) The Damages Claimed 1001

(vii) Challenge and Enforcement of Awards 1001

(c) Conclusion 1002

Concluding Remarks1005

THE relationship between international tribunals deriving their existence from bilateral investment and other treaties and domestic courts is one of the most important and also interesting issues of modern investment arbitration. Tribunals have frequently struggled to address this relationship and the contradictions potentially arising from it.

The relationship between international arbitration tribunals and local courts, and to some extent even the dichotomy between those two, finds its expression in many contemporary issues surrounding investment arbitration today. The most obvious issue is of course the interaction of contract claims and treaty claims, their classification, and subsequent adjudication. This chapter addresses this issue and discusses related arbitral decisions and their consequences.

The implications of the dichotomy between the competing fora frequently found in investment arbitration influence a variety of issues arbitral tribunals—and to a lesser extent courts—have to deal with: the meaning of the so-called umbrella clause, fork-in-the-road provisions, the exhaustion of local remedies, the issue of a possible waiver of the investor's rights, and, last but not least, the review of domestic judgments by arbitral tribunals and vice versa.

Apart from providing an overview of the current state of affairs with regard to the contract claim/treaty claim issue and the problem of the characterization of these claims, this chapter will restrict itself to addressing in some detail the issue of umbrella clauses and whether the right to arbitrate under a BIT can be waived by an investor.

While addressing these issues and, wherever possible, trying to identify the current ‘trend’ in the decision-making of arbitral tribunals, we recognize that, at the same time, one should refrain from over-generalizing. But for certain general

end p.963

features, BITs are worded differently and although a certain issue may appear to arise in the same disguise more than once, the circumstances of each case will always be different.

(1) The Distinction between Contract Claims and Treaty Claims

The case-law in investment treaty arbitration has increased enormously over the past few years and has thereby dramatically eclipsed the earlier development of the past 20 years or so. One of the central points of debate which reappears in arbitral decisions—and to some degree one might say haunts the tribunals having to address it—is the issue of the relationship between contract claims and treaty claims. This issue usually arises out of circumstances in which an investment agreement—providing for resort to local courts in case of a dispute—is entered into and exists alongside the BIT concluded between the home state of the investor and the host state. When a dispute occurs, the question arises whether it should be submitted to the local courts—as usually argued by the respondent state—or whether the investor is entitled to commence international arbitration proceedings based on the BIT. Different tribunals have answered this question in different ways, but one explicit approach has been the introduction of the distinction between so-called contract claims and treaty claims. Nevertheless, the issue as to where to draw this distinction and the implications resulting therefrom is still not fully settled.

(a) The ‘Modern-Classic’ Approach

In his article ‘Investment Treaty Arbitration and Jurisdiction over Contract Claims—The Vivendi I Case Considered’, Schreuer succinctly sums up the state of law on this point by stating: ‘Compa??a de Aguas del Aconquija S.A. & Compagnie G?n?rale des Eaux v. Argentine Republic (the Vivendi I case) is the most important case on the relationship between claims based on a treaty and claims based on a contract’. 1

end p.964

Although the distinction between treaty and contract claims was first addressed in Vivendi I, 2 it was the decision of the ad hoc committee deciding on the annulment request that formulated the distinction that was to become a classic within a short time-frame. 3

The Vivendi case arose from a concession contract of 1995 concluded by a French company (CGE), and its Argentine affiliate, with Tucum?n, a province of Argentina, concerning the operation of a water and sewage system. CGE alleged that the guarantees offered by the BIT between Argentina and France had been violated, both because the Republic of Argentina was responsible for provincial actions (including expressing inflammatory statements and other acts encouraging customers not to pay for services rendered by CGE) as the federal government had not intervened and because actions were attributable to the Republic. Article 16.4 of the concession contract contained a forum selection clause referring the parties to the administrative tribunals of Tucum?n.

The tribunal distinguished between claims based on the BIT and claims based on the concession contract. The forum selection clause in the latter did not affect the claimant's right to go to international arbitration on the basis of the BIT. Crucially, the tribunal held that the claims filed by CGE against the Republic of Argentina were based on violation by Argentina of the BIT through acts or omissions of the government and acts of the provincial authorities supposedly attributable to the central government.

As formulated, these claims against the Argentine Republic are not subject to the jurisdiction of contentious administrative tribunals of Tucum?n, if only because, ex hypothesi, those claims are not based on the Concession Contract but allege a cause of action under the BIT. 4

The tribunal then confirmed its jurisdiction. On the merits of the claim, the tribunal encountered considerable difficulties in drawing a distinction between treaty claims and contract claims. Because these claims were so closely linked, the tribunal held that it was unable to form an independent view of the alleged violations of the BIT. It therefore held that resort to ICSID arbitration would be open to claimants only after

end p.965

they had failed in the pursuit of their claims before the administrative tribunals of Tucum?n. 5

Subsequently, the award was partially annulled on the basis that the tribunal had manifestly exceeded its powers. 6 The fact that a particular investment dispute may at the same time involve issues of contract and interpretation and application of the BIT's standard may (but does not have to) impair the jurisdiction of the ICSID tribunal:

This being so, the fact that the Concession Contract referred contractual disputes to the contentious administrative courts of Tucum?n did not affect the jurisdiction of the Tribunal with respect to a claim based on the provisions of the BIT. Article 16(4) of the Concession Contract did not in terms purport to exclude the jurisdiction of an international tribunal arising under article 8(2) of the BIT; at the very least, a clear indication of an intention to exclude the jurisdiction would be required. 7

The ad hoc committee emphasized the distinction between a breach of contract and a breach of treaty and the effect of a contractual forum selection clause:

… where ‘the fundamental basis of the claim’ is a treaty laying down an independent standard by which the conduct of the parties is to be judged, the existence of an exclusive jurisdiction clause in a contract between the claimant and the respondent state or one of its subdivisions cannot operate as a bar to the application of the treaty standard.

A state cannot rely on an exclusive jurisdiction clause in a contract to avoid the characterisation of its conduct as internationally unlawful under a treaty.

… [I]t is one thing to exercise contractual jurisdiction (arguably exclusively vested in the administrative tribunals of Tucum?n by virtue of the Concession Contract) and another to take into account the terms of a contract in determining whether there has been a breach of a distinct standard of international law, such as that reflected in Article 3 of the BIT. 8

The distinction thus made in focusing on the cause of action (breach of treaty versus breach of contract) and the parallel distinction between the dispute resolution clauses contained in the BIT (usually ICSID arbitration) and in the underlying investment agreement (the contractual forum selection clause) is now well established. 9 Numerous tribunals have confirmed this distinction, often citing some or many other tribunals which had previously confirmed this basic distinction. 10

end p.966

Before discussing a number of cases which display a somewhat different approach, it should be mentioned that some tribunals, notably Joy Mining v Egypt and Enron v Argentina , adopted additional reasoning supplementing the Vivendi II criterion. These tribunals refer to the so-called triple identity test, which is usually applied in the context of establishing a lis pendens defence.

In part, the distinction between these different types of claims [contract versus treaty] has relied on the test of triple identity. To the extent that a dispute might involve the same parties, object and cause of action it might be considered to be a dispute where it is virtually impossible to separate the contract issues from the treaty issues and to draw any jurisdictional conclusions from the distinction between them. A purely contractual claim, however, will normally find difficulty in passing the jurisdictional test of treaty-based tribunals, which will of course require allegation of a specific violation of treaty rights as the foundation of their jurisdiction. 11

The application of this triple identity test in the context of a fundamental basis-analysis is not very helpful. As will be seen below, some tribunals have

end p.967

attached importance to whether the dispute resolution clause was concluded by the same party that is also the (central) government party to the arbitration. Nevertheless, the essence of the Vivendi II test is the emphasis on the nature of the claim and the right on which the claim is based. This is, if anything, an element of the triple identity test. 12 It seems inappropriate to imply that the other elements of this test are also relevant for distinguishing between contract and treaty claims.

(b) Broader Jurisdiction of ICSID Tribunals

Some tribunals have deviated from this, by now classic, way of approaching the distinction between contract and treaty claims. They have held that in the event of a broadly drafted BIT dispute resolution clause, a BIT tribunal's jurisdiction is not restricted to BIT claims but also extends to contractual claims. 13

One of the main proponents of this view is the tribunal in Salini v Morocco , in which the dispute resolution clause contained in Article 8 of the relevant BIT was held to extend to ‘[a]ll disputes or differences … between a Contracting Party and an investor of the other Contracting Party concerning an investment’. Based on this, the tribunal found that:

Art. 8 compels the State to respect the jurisdiction offer in relation to violations of the Bilateral Treaty and any breach of a contract that binds the State directly. The jurisdiction offer contained in Article 8 does not, however, extend to breaches of a contract to which an entity other than the State is a named party. …

But this restriction of the Arbitral Tribunal's jurisdiction only applies to claims that are based solely on a breach of contract. However, the Arbitral Tribunal retains jurisdiction in relation to breaches of contract that would constitute, at the same time, a violation of the Bilateral Investment Treaty by the State. 14

Thus, the tribunal drew a distinction between contract claims arising out of contracts concluded directly with the state and those concluded with another entity. It extended the jurisdiction of BIT tribunals over contract claims—which under the ‘modern-classic’ approach is limited to those contract claims which at the same

end p.968

time amount to treaty claims—to claims based on contracts with the state directly. However, by doing so, it simply stated that the offer contained in Article 8 of the treaty does not extend to breaches of contract entered into with another entity but the state. The tribunal did not give any explicit reasons on which it based this conclusion.

At almost exactly the same time, a different tribunal came to a very similar conclusion in the case RFCC v Morocco . 15 Addressing the issue of the tribunal's jurisdiction over contract claims, it stated:

En d'autres termes, l'article 8 oblige l'Etat ? respecter l'offre de compet?nce ? raison des violations de l'Accord bilat?ral et de tout manquement ? un contrat qui le lierait directement. L'offre de comp?tence de l'article 8 ne s'?tend pas par contre aux violations d'un contrat auquel une entit? autre que l'Etat est nomm?ment partie.

Mais cette restriction ? la comp?tence du Tribunal arbitral ne s'applique qu'aux demandes qui reposent sur la seule violation du contrat. En revanche, le Tribunal arbitral demeure comp?tent pour les violations du contrat qui constitueraient en m?me temps, ? la charge de l'Etat, une violation de l'Accord bilat?ral. 16

Lastly, by explicit reference to the Salini decision, the tribunal in Impregilo v Pakistan followed a similar approach. It held:

Given that the Contracts at issue were concluded between Claimant and WAPDA, and not between the Claimant and Pakistan; that under the law of Pakistan, which governs both the Contracts and the status and capacity of WAPDA for the purposes of the Contracts, WAPDA is a legal entity distinct from the State of Pakistan; and given that Article 9 of the BIT does not cover breaches of contracts concluded by such an entity, it must follow that this Tribunal has no jurisdiction under the BIT to entertain Impregilo's claims based on alleged breaches of the Contracts. 17

When addressing the connection between contract and treaty claims, it nevertheless also explicitly endorsed the Vivendi annulment decision. The tribunal stated that in determining whether a breach of treaty occurred, one should take into account the terms of the contract. 18

A final case to be mentioned in this overview is SGS v Philippines , where the tribunal was, in principle and at first sight, inclined to follow a path similar to Vivendi by accepting that the general wording of the BIT dispute resolution provision could allow the exercise of jurisdiction over contractual claims. 19 Certainly in light of the

end p.969

expansive language of the relevant treaty provision, accepting such a broad jurisdiction appears appropriate. 20 By ruling so, it did not even draw the distinction between contracts concluded by the state or other entities and seemed therefore to broaden BIT tribunals' jurisdiction even further.

Although the tribunal positively concluded that it had jurisdiction, it then denied the admissibility of the claims as it decided that the submission of an ICSID claim was premature and that the claimant should first address the Philippine courts to hear SGS's contract claim to determine the scope of the respondent's obligation. 21

As Gaillard states, giving effect to the parties' contractual arrangements while simultaneously respecting the general language of BIT dispute resolution provisions creates an impossible situation to the extent that it attempts to render compatible two contradictory intentions. The result of the SGS v Philippines decision, that is, accepting jurisdiction but immediately mitigating this conclusion by referring the claimant to the local courts, is thus hardly satisfactory. 22 It is noted that the SGS v Philippines decision was made in the context of the application of an umbrella clause. Even though this may not render the decision more satisfactory, it may—partially—explain the paradoxical approach of the tribunal. 23

The aforementioned decisions constitute an approach with regard to the interrelationship between contract and treaty claims which is different from the ‘classic-modern’ approach by explicitly allowing purely contractual breaches to be arbitrated by BIT tribunals (as long as the contract at issue was concluded directly with the state). This approach raises questions some of which will surely be answered in due course, that is, with further awards rendered. One of them is the issue of attribution which has been raised and which relates to the fact that although the contract was concluded by an entity separate from the state, one might have to look at the nature of this entity and whether its actions might be attributable to the state before drawing the above-mentioned distinction between contract and treaty claims. 24 Furthermore, the implications of this approach appear to entail that

end p.970

purely contractual claims will be arbitrated by tribunals constituted under the BIT, that is they might decide a case completely detached from the substantive provisions of the treaty, as not every breach of contract by the state amounts to a breach of international law. Their sole point of reference within the treaty frame will be a broad jurisdiction clause. The scope of the state's obligations will be measured solely on the basis of the contract. Effectively, this would render any umbrella clause—potentially—redundant. 25 The practical application of this approach will be worth monitoring closely in the future.

(2) Further Issues Arising from the Interrelation between International Tribunals and Domestic Courts

(a) Characterization of Claims as Contract or Treaty Claims

Having discussed above the relationship between contract claims and treaty claims and tribunals' jurisdiction in that regard, the question arises how and in accordance with which standard tribunals decide whether a claim presented is a claim falling under the jurisdiction of a BIT tribunal.

The formula increasingly used in recent investment arbitration jurisprudence states:

When considering its jurisdiction to entertain the Treaty claims, the Tribunal considers that it must not make findings on the merits of those claims, which have yet to be argued, but rather must satisfy itself, that it has jurisdiction over the dispute as presented by the Claimant. 26

end p.971

Two ICJ decisions provide the basis for this approach. In the Ambatielos case the Court stated:

In order to decide, in these proceedings, that the Hellenic Government's claim on behalf of Mr. Ambatielos is ‘based on’ the Treaty of 1886 within the meaning of the Declaration of 1926, it is not necessary for the Court to find and indeed the Court is without jurisdiction to do so—that the Hellenic Government's interpretation of the Treaty is the correct one. The Court must determine, however, whether the arguments advanced by the Hellenic Government in respect of the treaty provisions on which the Ambatielos claim is said to be based, are of a sufficiently plausible character to warrant a conclusion that the claim is based on the Treaty. It is not enough for the claimant Government to establish a remote connection between the facts of the claim and the Treaty of 1886. 27

The subsequent decision in the Oil Platforms case used a more objective standard:

[T]he parties differ on the question whether the dispute between the two States with respect to the lawfulness of the actions carried out by the United States against the Iranian oil platforms is a dispute ‘as to the interpretation or application of the Treaty 1955’. In order to answer that question, the Court cannot limit itself to noting that one of the Parties maintains that such a dispute exists, and that the other denies it. It must ascertain whether the violations of the Treaty of 1955 pleaded by Iran do or do not fall within the provisions of the Treaty and whether, as a consequence, the dispute is one which the Court has jurisdiction rationae materiae to entertain, pursuant to Article XXI, paragraph 2. 28

On the basis of these and subsequent decisions, arbitral tribunals have increasingly developed a similar line of reasoning. It is not enough to simply assert the breach of a treaty obligation. 29 The test for jurisdiction is ultimately an objective one which entails that:

it is for the Claimant to formulate its case. Provided that the facts alleged by the Claimant and as appearing from the initial pleadings fairly raise questions of breach of one or more provisions of the BIT, the Tribunal has jurisdiction to determine the claim. 30

Therefore, the current and most effective way for a tribunal to characterize the claims before it may best be summarized in the words of the tribunal in Bayindir v Pakistan , which held:

end p.972

In performing this task, the Tribunal will apply a prima facie test standard, both to determination of the meaning and scope of the BIT provisions and to the assessment whether the facts alleged may constitute breaches. If the result is affirmative, jurisdiction will be established, but the existence of breaches will remain to be litigated on the merits. 31

This approach essentially addresses and balances two concerns: on the one hand, tribunals will not be flooded with claims which apparently have no chance of success or may even be abusive, and, on the other hand, by considering issues of jurisdiction, they do not address the merits of cases without sufficient prior debate.

However, this balance will only be achieved if a standard such as the one set out above is adhered to. The tribunal in Eureko v Poland decided to be more liberal and held:

Claimant in the present arbitration advances claims for the breach of the Treaty and, applying the teaching of the decision of the ad hoc Committee in the Vivendi annulment case, every one of those claims must be heard and judged by this Tribunal. 32

The result of this approach is that there is no true prima-facie test as to whether the claims presented might constitute a treaty breach, effectively rendering the distinction introduced by the Vivendi annulment committee useless. This can hardly be said to be in the interest of ensuring an effective investment arbitration regime.

end p.973

(b) Application of Umbrella Clauses by International Tribunals

(i) The Development in Recent Case-Law

As indicated above, quite apart from the discussion as to whether BIT tribunals may accept jurisdiction over contractual claims on the basis of broadly drafted dispute resolution clauses, it is arguable that such expanded jurisdiction could be effected by incorporating specific undertakings in the BIT. Such clauses, which have also been referred to as ‘observance of undertakings’ clauses, 33 are more commonly referred to as ‘umbrella clauses’. 34 An example of such a clause can be found in the Dutch/Venezuelan BIT, which provides:

4. Each Contracting Party shall observe any obligation it may have entered into with regard to the treatment of investments of nationals of the other Contracting Party. 35

Investors have invoked this type of clause in arguing that they transform or elevate breaches of contract into breaches of treaty, even if, strictly speaking, the requirements for a breach of international law under the relevant treaty had not been fulfilled. This topic has triggered substantial debate and the case-law on this point is far from consistent.

The main issue of debate is whether or not such clauses result in such an ‘elevation’ and if so, to what extent. A closely related issue that has been explored even less fully is whether the corollary of elevation should be the conclusion that all contractual rights and obligations are elevated, including any contractually agreed upon dispute resolution mechanism.

The first ICSID case in which an umbrella clause was actually applied was Fedax v Venezuela , 36 which concerned Venezuela's failure to honour a promissory note issued by the Venezuelan government. The tribunal did not explicitly address the issue of the umbrella clause but held that the failure to pay the contractually agreed upon amounts constituted a violation of the BIT:

… the Republic of Venezuela is under the obligation to honor precisely the terms and conditions governing such investment, laid down mainly in Article 3 of the Agreement, as well as to honor the specific payments established in the promissory note issued … . 37

end p.974

The next ICSID decision involving an umbrella clause, and the first case in which the concept was extensively debated, was SGS v Pakistan . 38 The umbrella clause in Article 11 of the relevant Pakistan-Switzerland BIT provides:

Either Contracting Party shall constantly guarantee the observance of the commitments it has entered into with respect to the investments of the investors of the other Contracting Party.

The tribunal refused to accept that this clause resulted in elevation of breaches of contract into breaches of the treaty. 39 It considered that the legal significance of accepting such elevation would be far-reaching in scope and burdensome and required clear and convincing evidence that the parties had intended such interpretation. An important consideration was that the interpretation as presented by the claimant would effectively make the BIT's substantive provisions superfluous because the mere breach of contract would suffice to trigger a liability under the treaty. 40

Similarly, in Joy Mining v Egypt , 41 the tribunal rejected an argument that an umbrella clause should have the effect of transforming all contract disputes into investment disputes under the relevant treaty. The tribunal's short reasoning emphasizes the innocuous appearance but far-reaching effect of such a clause:

In this context, it could not be held that an umbrella clause inserted in the Treaty, and not very prominently, could have the effect of transforming all contract disputes into investment disputes under the Treaty, unless of course there would be a clear violation of the Treaty rights and obligations or a violation of contract rights of such a magnitude as to trigger the Treaty protection, which is not the case. 42

In Salini v Jordan , 43 the tribunal also concluded that the provision relied upon by the claimant should not have the effect of transforming contractual undertakings into international law obligations. In this case, the tribunal's main argument was the wording of the provision which it characterized, using the terms of the decision in SGS v Philippines , 44 as ‘a kind of without prejudice clause’. 45

end p.975

A very different approach was applied by the Tribunal in SGS v Philippines46 where the tribunal had to interpret the umbrella clause contained in the Philippines-Switzerland BIT. Article X(2) of this BIT provides:

2. Each Contracting Party shall observe any obligation it has assumed with regard to specific investments in its territory by investors of the other Contracting Party.

The tribunal's analysis was based on a textual interpretation of the clause and a review of the BIT's object and purpose, which it determined supported an effective interpretation of the clause: 47 the clause ‘means what it says’. 48 The tribunal explicitly rejected the reasoning of the tribunal in SGS v Pakistan and in particular criticized the tribunal for failing to give any clear meaning to the umbrella clause. 49

However, the tribunal in SGS v Philippines subsequently retracted much of what it had said before by qualifying the scope of the umbrella clause and limiting the effect of the provision to the performance of obligations entered into with regard to specific investments, once those obligations are ascertained. 50 Specifically, that meant that the basic obligation on the state would be to pay what was due under the contract, but determining the amount owed by the Philippines did not become a treaty matter. The extent of the obligation would still be governed by the contract, and could only be determined by reference to the terms of the contract, 51 that is, to be determined by the Philippine courts. 52

Consequently, this case might be seen as opening the door for a broad interpretation of umbrella clauses. Indeed, a number of cases seem to have used this opening and appear to support a broad definition of umbrella clauses. In LESI-DIPENTA v Algeria , the tribunal referred to the classic distinction between contract and treaty claims and held that not every breach of contract would amount to a treaty breach. In this context, it considered that this interpretation was confirmed a contrario by the fact that while other BITs contained so-called umbrella clauses, which have the effect of transforming mere contract breaches into breaches of international law, the one between Italy and Algeria did not. 53 Although this tribunal therefore seemed to have embraced the notion of elevation in theory, it did not actually elevate any contractual provision.

end p.976

Another case, which at least at first sight looks like an example of actual elevation of contractual breaches onto the international plane, is Eureko v Poland . 54 Here, the tribunal gave a detailed overview of cases dealing with umbrella clauses and spoke out in favour of the analysis of the tribunal in SGS v Philippines, describing its reasoning as ‘cogent and convincing’. 55 The tribunal emphasized that giving effect to the plain meaning of an umbrella clause by no means rendered the other substantive protections of the BIT superfluous. 56 After its clear and straightforward analysis, the tribunal's conclusion is quite remarkable and less clear:

In view of the foregoing analysis, the Tribunal concludes that the actions and inactions of the Government of Poland that are in breach of Poland's obligations under the Treaty—those that have been held to be unfair and inequitable and expropriatory in effect—also are in breach of its commitment under Article 3.5 of the Treaty to ‘observe any obligations it may have entered into with regards to the investments of investors’ of the Netherlands. 57

The practical effect of the umbrella clause is hereby effectively decimated. The tribunal refers back, in one sentence, to its previous analysis that a breach of the substantive treaty provisions had been demonstrated, and concludes that that breach is sufficient also to constitute a breach of the commitment under the umbrella clause. This reasoning turns the purpose of an umbrella clause on its head: the whole point of a broad interpretation of such a clause is that any conduct which merely constitutes a breach of contract, while not sufficient to constitute a breach of any substantive provision of a treaty, may indirectly amount to a breach of the treaty. If an umbrella clause does nothing more than form another basis for a previous finding that a BIT breach was committed, its actual value is highly limited.

The last decision in this line of cases that in principle uphold the elevation of contractual claims is Noble Ventures v Romania . 58 After a careful overview of case-law and the various arguments presented therein, the tribunal concluded that the formulation of the present BIT:

clearly falls into the category of the most general and direct formulations tending to an assimilation of contractual obligations to treaty ones; not only does it use the term ‘shall observe’ but it refers in the most general terms to ‘any’ obligations that either Party may have entered into ‘with regard to investments’. 59