An Analysis of the Use of ICJ Jurisprudence in Investor-State Dispute Settlement

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Last October 2018, the International Court of Justice (“ICJ” or “the Court”) issued its merits judgment in Obligation to Negotiate Access to the Pacific Ocean (Bolivia v. Chile). In a brief passage, the Court summarily dismissed Bolivia’s argument that the doctrine of “legitimate expectations” exists in general international law outside the context of fair and equitable treatment clauses. Despite the brevity of the Court’s analysis – and the minor importance of the legitimate expectations issue in that case – this finding drew attention from media outlets dedicated to investor-State dispute settlement (“ISDS”), including IAReporter. That the discussion of legitimate expectations in the Bolivia v. Chilejudgment was considered newsworthy in the ISDS sphere is a reflection of the importance that ISDS practitioners place on ICJ jurisprudence. As Professor Alain Pellet observed in a 2013 lecture, “[n]ot only do … investment tribunals… refer to the jurisprudence of the World Court, but they show a particular deference to it.”

There is some evidence, discussed below, to suggest that ISDS tribunals have referred to ICJ jurisprudence with increased frequency in recent years. Moreover, as ICJ President Abdulqawi Ahmed Yusuf highlighted in his October 2018 speech to the U.N. General Assembly, the Court today is particularly busy. There may thus be even more opportunities for jurisprudential cross-pollination in the near future. Now is an opportune time to consider why, when, and how investor-State tribunals refer to ICJ jurisprudence.

Frequently-Cited ICJ Decisions and Passages

According to Investor-State Law Guide (ISLG) data, the judgments with the most specific references are:

1) Factory at Chorzów(Germany v. Poland), 13 September 1928

2) Elettronica Sicula S.p.A. (ELSI) (United States v. Italy), 20 July 1989

3) Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v. Russia), 1 April 2011

4) Barcelona Traction, Light and Power Company, Ltd. (Belgium v.Spain), 5 February 1970

5) Fisheries Jurisdiction (Spain v. Canada), 4 December 1998

Factory at Chorzów, ELSI, and Barcelona Traction are all well-known. In each case, claims approximating contemporary investment-treaty claims (e.g.expropriation, fair and equitable treatment, denial of justice) were brought by States on behalf of companies or individual shareholders.

Factory at Chorzów – a decision of the Permanent Court of International Justice (PCIJ) – contains the single passage that ISDS tribunals cite more frequently than any other ICJ pronouncement: the famous statement that “reparation must, as far as possible, wipe out all the consequences of the illegal act…” (p. 47).  ELSI contains the second most frequently-cited passage – the definition of  “arbitrariness” as a “wilful disregard of due process of law…which shocks, or at least surprises, a sense of judicial propriety” (para. 128).

Barcelona Traction is best known for the Court’s finding that Belgium lacked standing to bring a claim on behalf of Belgian shareholders who indirectly owned the allegedly damaged investments at issue. Arbitral tribunals have often sought to distinguish this case, including by emphasizing that Barcelona Traction was decided in the context of diplomatic protection and by suggesting that the ICJ’s position on this issue may have since evolved (see Von Pezold v. Zimbabwe, paras. 319-21).

Georgia v. Russia and Fisheries Jurisdiction are less well-known. In Georgia v. Russia, the Court found that Article 22 of the CERD (providing that disputes “not settled by negotiation or by the procedures expressly provided for in this Convention” shall be referred to the ICJ at a Party’s request) established procedural preconditions that must be fulfilled before a party could bring a dispute before the ICJ. In particular, the Court focused on the requirement that there be prior negotiations between the parties. After a lengthy analysis of “what constitutes negotiations,” “their adequate form and substance,” and “to what extent they should be pursued” (see para. 156), the Court concluded that Georgia made no genuine attempt to negotiate its CERD dispute with Russia and thus dismissed Georgia’s Application on jurisdictional grounds.

Many investment treaties contain language similar to Article 22 of the CERD, leading ISDS respondents to argue that negotiations or other procedural steps must be taken before a claimant may have recourse to international arbitration. Remarkably, the Georgia v. Russia judgment – issued 8 years ago –  has received nearly as many specific references as the ELSI judgment – issued nearly 30 years ago.

The 1998 Fisheries Jurisdiction judgment involved extensive discussion of the standards for interpretation of unilateral declarations issued by States. In particular, the ICJ examined Canada’s declaration under Article 36(2) of the ICJ Statute recognizing the Court’s jurisdiction as compulsory. The Court rejected the direct applicability of the law of treaties to unilateral declarations (para. 46) and held instead that these declarations should be interpreted “in a natural and reasonable way, having due regard to the intention of the State concerned” (para. 49).

Fisheries Jurisdiction has repeatedly come up in cases where tribunals were tasked with interpreting a national investment law (particularly Venezuela’s). Tribunals have treated this investment law as if it were a unilateral declaration, through which Venezuela extended an offer to arbitrate to foreign investors (see Tidewater v. Venezuela, Decision on Jurisdiction, paras. 88, 95). These Venezuelan cases, including Tidewater (paras. 96-97), Mobil/Venezuela Holdings (para. 94), and several others have followed the interpretive principles laid down in Fisheries Jurisdiction.

Three of the cases with the most specific references – Factory at Chorzów, ELSI, and Barcelona Traction – also top the list of decisions with the most general references. On this latter list, however, Georgia v. Russia and Fisheries Jurisdiction are replaced by the decision on jurisdiction in Mavrommatis Palestine Concessions (another PCIJ decision) and Judge Rosalyn Higgins’ Separate Opinion on Preliminary Objections in Oil Platforms. Unlike the former two decisions, which are most relevant in specific scenarios, the latter two are known for pronouncements of more general applicability.

Mavrommatis is well-known for its definition of a legal dispute as “a disagreement on a point of law or fact, a conflict of legal views or of interests between two persons” (p. 11). Judge Higgins’ Opinion in Oil Platforms, meanwhile, famously elaborates upon the test applied by the Court for assessing jurisdiction ratione materiae in cases brought pursuant to a compromissory clause in a treaty. Judge Higgins explained that the Court would have to “accept pro tem the facts as alleged by Iran to be true and…see if on the basis of Iran’s claims of fact there could occur a violation” of the treaty provisions Iran had invoked (para. 32).

Overall, Factory at Chorzów, ELSI and Barcelona Traction stand apart as the most influential ICJ decisions in the ISDS sphere – likely as a result of their longstanding importance in international law as a whole and their relevant subject matter.

The Chevron Award as a Case Study

The Second Partial Award in Chevron and Texaco v. Ecuador, dated 30 August 2018, provides a useful example of how ICJ jurisprudence has influenced ISDS. In the Chevron award, the tribunal cited twelve decisions of the ICJ and PCIJ for a range of propositions. For instance, the tribunal discussed at some length (and rejected) Ecuador’s argument that the claimants’ claims were inadmissible by virtue of the ICJ’s Monetary Gold jurisprudence regarding indispensable third parties (see paras. 7.32-7.36).

Elsewhere in the Award, the Chevron tribunal referred to Djibouti v. France, Fisheries Jurisdiction (Germany v. Iceland), and LaGrand as part of its analysis of whether or not it had jurisdiction over the claimants’ amended claims (see Chevron, paras. 7.175-7.177).

The Chevron tribunal went on to cite ELSI in its discussion of the appropriate standard for a denial of justice (para. 8.38), and then proceeded to analyse Factory at Chorzów and Avena and Other Mexican Nationals in determining how to fashion an appropriate remedy for the internationally wrongful acts it found had been committed by Ecuadoran courts (see Chevron, paras. 9.6 et seq.). Given that Avena had similarly dealt with an internationally wrongful act that had stemmed from the “process of domestic court proceedings” (see Chevron, para. 9.8; Avena, paras. 121-22), the Chevron tribunal closely followed the approach taken by the ICJ in that case in determining an appropriate remedy.

The Chevron tribunal also cited ICJ jurisprudence for the proposition that Article 16 of the International Law Commission’s Articles on State Responsibility reflects customary international law (Chevron, para. 9.10, citing the Bosnian Genocide case).  


The recent Chevron award, and the breadth and depth of its treatment of ICJ jurisprudence, is a testament to the high regard in which the Court is held among arbitrators. It is now clear that the ICJ’s influence extends beyond that of the most well-known judgments, and the intensity with which tribunals have embraced the Georgia v. Russia judgment suggests that the Court’s influence in investment arbitration may even be on the rise.

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