QLLM397 – Investment Treaty Arbitration Question and Answers | Study Guides, Projects, Research Law

QLLM397

Tutorial Questions – for second and third tutorials

Question 1

The growing body of case law in the field of investment treaty arbitration has

resulted in some important and controversial decisions adding to the

principles of international law in this area.

Discuss some of these developments in respect of only THREE of the

following:

(a) The role, if any, of precedent in investment arbitration;

There’s no rule on precedent in ICSID arbitration. This is to maintain the

flexibility of the arbitration panels and to keep ICSID outside of what is

naturally known as the court system which exists domestically/internationally.

Precedent – could help in solving any future disputes, align system to avoid

lengthy arbitration. BUT no overhaul of the current system as we know it.

(b) Most-favoured-nation clause;

Publication of awards – limited, maintenance of balance between

confidentiality of the system and progressive reasoning for publicising awards.

Lady Gloucester comment in her speech about availability of ICSID awards.

(d) Challenge of arbitrators

Art 57.

Eureko v Poland – Poland challenging two of the arbitrators, one of the

arbitrators was acting as counsel for another case for a similar issue an issue

that was to be decided in Eureko. He had a vested interest in having a

decision that was given that was similar to the one where he acted as

counsel. The challenge here was unsuccessful.

Amco v Indonesia – claimant appointed arbitrator was challenged on two

grounds, prior to the arbitration he had given tax advice to the individual who

controlled the three corporate claimants and his firm and the claimants’

counsel had a joint office and a profit sharing arrangement. The two remaining

arbitrators held that the Convention required impartiality of all members but

acknowledged that the existence of a relationship was not sufficient to

disqualify the arbitrator. The lack of independence must be ‘manifest’ and that

appearance of partiality was not sufficient. Indonesia therefore failed to meet

this high threshold.

Vivendi v Argentina – Argentina challenged the President of the ad hoc

committee established by the Chairman of the ICSID admin council to

determine Argentina’s annulment request. The claim was that the President’s

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Tutorial Questions – for second and third tutorials Question 1 The growing body of case law in the field of investment treaty arbitration has resulted in some important and controversial decisions adding to the principles of international law in this area. Discuss some of these developments in respect of only THREE of the following: (a) The role, if any, of precedent in investment arbitration; There’s no rule on precedent in ICSID arbitration. This is to maintain the flexibility of the arbitration panels and to keep ICSID outside of what is naturally known as the court system which exists domestically/internationally. Precedent – could help in solving any future disputes, align system to avoid lengthy arbitration. BUT no overhaul of the current system as we know it. (b) Most-favoured-nation clause; (c) Transparency of the arbitral process; Publication of awards – limited, maintenance of balance between confidentiality of the system and progressive reasoning for publicising awards. Lady Gloucester comment in her speech about availability of ICSID awards. (d) Challenge of arbitrators Art 57. Eureko v Poland – Poland challenging two of the arbitrators, one of the arbitrators was acting as counsel for another case for a similar issue an issue that was to be decided in Eureko. He had a vested interest in having a decision that was given that was similar to the one where he acted as counsel. The challenge here was unsuccessful. Amco v Indonesia – claimant appointed arbitrator was challenged on two grounds, prior to the arbitration he had given tax advice to the individual who controlled the three corporate claimants and his firm and the claimants’ counsel had a joint office and a profit sharing arrangement. The two remaining arbitrators held that the Convention required impartiality of all members but acknowledged that the existence of a relationship was not sufficient to disqualify the arbitrator. The lack of independence must be ‘manifest’ and that appearance of partiality was not sufficient. Indonesia therefore failed to meet this high threshold. Vivendi v Argentina – Argentina challenged the President of the ad hoc committee established by the Chairman of the ICSID admin council to determine Argentina’s annulment request. The claim was that the President’s

firm had been working on Vivendi instructions for the entire time the arbitration was proceeding. The work he had undertaken before was neither related to the present case not was it general legal or strategic advice that he gave. ‘manifest’ imposes a heavy burden of proof on the party making the proposal. The test is therefore; whether a real risk of impartiality based upon the facts could reasonably be apprehended by either party. The arbitrators concluded that the President’s independence was not impaired by the disclosure of the client relationship and the challenge was rejected. Siemens v Argentina – Argentina challenged the appointment of Dr Andres Rigo Sureda as Chairman. They argued that his firm had been involved in cases against Argentina and challenged his impartiality. Dr Sureda resigned from his position at the firm while the challenge was being considered. The challenge was rejected and the decision in Siemens has not been published. The two remaining arbitrators however didn’t agree, one though that the resignation meant Dr Sureda was implicit of his lack of independence while the other thought that the resignation silenced any doubts relating to impartiality. The challenge was then referred to the ICSID admin council which then referred it to another organ (PCA) because Dr Sureda had previously been employed by the WB and so the chairman may be said to have a conflict of interest. The PCA rejected the challenge without giving any reasons. Suez v Argentina – Argentina made two separate challenges against Prof Kaufmann-Kohler (i) conflict, (ii) alleged bias arising out of her appointment as a non-exec director of an investment bank which had a relationship with the claimants. In the first challenge the tribunal emphasised that independence and impartiality are states of mind which can only be inferred from conduct. This is why art 57 requires a showing indicating a manifest lack of impartiality/independence. Prof Kaufmann-Kohler’s appointment to UBS two years after being appointed to the tribunal was alleged to have adversely affected her ability to be impartial due to the shareholding UBS had in Suez and Vivendi amongst other commercial activities. It also stated that she failed to disclose her position with UBS. The question to be answered was; would a reasonable, informed person viewing the facts be led to conclude that there is a justifiable doubt as to the challenged arbitrator’s independence/impartiality? They applied the four criteria developed in AWG v Argentina to evaluate the alleged connection between the professor and the claimants:

proximity – how closely connected is the challenged arbitrator to one of the parties by reason of the alleged connection? The closer the connection the more likely the relationship may influence an arbitrator’s independence.
intensity – how intense and frequent are the interactions between the arbitrator and the alleged party that they’re connected to? The more frequent and intense the interaction the more probable that such a relationship will affect the arbitrator’s independence.
dependence – to what extent is the challenged arbitrator dependent on one of the parties for benefits as a result of the connection? The more the dependence the more likely the relationship may influence the arbitrator’s independence.

“The current system of annulment of ICSID award is not effective.” Critically discuss this statement on the basis of decided cases and the two ICSID Reports on Annulment.

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