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Home International Tribunals Archive for category "Inter-State Arbitration"

The Shifting Landscape of Investor-State Arbitration: Loyalists, Reformists, Revolutionaries and Undecideds

Published on June 15, 2017        Author: 

The investor-state arbitration landscape is shifting under our feet. The utility and legitimacy of traditional investor-state arbitration have come under fire, but states have not converged on a viable alternative. In simplified terms, three main camps are developing, which I call the “loyalist,” “reformist,” and “revolutionary” camps. The vast majority of states, however, are yet to take a public position on whether and, if so, how to reform investor-state dispute settlement. These “undecided” states are not a homogenous group, nor are they necessarily passive. Many states within this group are actively watching these developments and debating the various reform proposals.

One of the big strategic questions for the investment treaty system in the next few years will be whether the loyalists, reformists or revolutionaries will be able to attract a critical number of the undecideds to their cause in order to create a reasonable measure of convergence on a particular approach. The alternative is that the undecideds will split among the existing camps and/or develop their own distinct or hybrid positions. Another question is whether any members of the existing camps will shift their alliances. It is unclear how this will ultimately play out. What is clear, however, is that the tide appears to be turning against the traditional model of investor-state arbitration as it has few – if any – real supporters among states.

Loyalists, Reformists and Revolutionaries Read the rest of this entry…

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Self-Appointment in International Arbitration

Published on June 7, 2017        Author: 

At first glance, paragraph 14 of the UNCLOS Annex VII tribunal’s Order on Provisional Measures in Enrica Lexie (Italy v. India) appears quite mundane. It states in relevant part that “on 30 September 2015, the President of ITLOS appointed … H.E. Judge Vladimir Golitsyn as arbitrator and President of the Arbitral Tribunal” (para. 14). It becomes much more interesting, however, when one realizes that on 30 September 2015, the President of ITLOS was none other than Judge Golitsyn himself.

A similar phenomenon appears to have occurred in another high-profile UNCLOS Annex VII arbitration: Ukraine v. Russia. On 23 December 2016, the Ministry of Foreign Affairs of Ukraine revealed that Judge Boualem Bouguetaia would be a member of the tribunal, “express[ing] its gratitude to the Vice-President of [ITLOS] for rapid formation of the tribunal”. The Ministry failed to note, however, that on 23 December 2016 the Vice-President of ITLOS was none other than Judge Bouguetaia himself.

If it is true that Judges Golitsyn and Bouguetaia appointed themselves to the tribunals, they should not necessarily be reprimanded. After all, these self-appointments would be in accordance with Annex VII of UNCLOS. Article 3 of Annex VII provides that the parties shall appoint three of the five members of the tribunal by agreement, but if they are unable to agree, the appointments shall be made by the President of ITLOS or, if he or she is a national of one of the parties to the dispute, the next most senior member of ITLOS. In Enrica Lexie, this power fell on President Golitsyn. And in Ukraine v. Russia, since President Golitsyn is a national of Russia, this power fell on Vice-President Bouguetaia. Nothing in Article 3 prohibits the appointing authority from appointing him or herself to the arbitral tribunal.

Three Concerns

Nevertheless, an appointing authority’s self-appointment as an arbitrator, as a general matter in international arbitration, is subject to three potential concerns. Read the rest of this entry…

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Would a Multilateral Investment Court be Biased? Shifting to a treaty party framework of analysis

Published on April 28, 2017        Author: 

I have recently been pondering a common complaint voiced against the EU and Canada’s proposal for a multilateral investment court, which is that it would be biased against investors because all of the judges would be selected by states (see, for example, the ABA’s Report here and Judge Schwebel’s speech here). In my view, this criticism is misguided because it confuses the role of states as disputing parties and as treaty parties. States have dual roles in the investment treaty system: they are treaty parties with a legitimate interest in the interpretation and application of their treaties and they are disputing parties with a desire to avoid liability in particular cases. When it comes to questions of institutional design, I think that we need to adopt a treaty party framework of analysis, not a disputing party one.

In a particular dispute, an investor can appoint one arbitrator and a state can appoint another. Once a case is filed, it is hardly surprising that both disputing parties would seek to appoint arbitrators who are broadly sympathetic to their positions. This tends to generate polarization within the field with arbitrators often being thought of (whether accurately or not) as having either a “pro-investor” or a “pro-state” bias. This division helps to explain why, when judged from the perspective of the dispute resolution framework, investors and members of the arbitral community have raised concerns that having tribunals selected by states only would lead to biased results. This is so even though neither the claimant investor nor the respondent state would appoint the particular tribunal members tasked with hearing the case.

When it comes to institutional design, however, we need to shift our focus from the disputing party framework to the treaty party framework. Read the rest of this entry…

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The South China Sea moves to the Indian Ocean: Conflicting Claims Over the Tromelin Islet and its Maritime Entitlements

Published on February 8, 2017        Author: 

The small, isolated, inhospitable (and inhabited) island of Tromelin, located in the Indian Ocean north of Mauritius and the French Reunion island, and east of Madagascar (see map), has been the subject of passionate debate in recent weeks in France, both in the media (here and here) and within the Parliament (transcript of the debate before the French National Assembly).

Tromelin is a flat and small feature, about 1,700 metres long and 700 metres wide, with an area of about 80 hectares (200 acres). Its flora is limited, while the site is known to host significant numbers of seabirds. There is no harbour nor anchorages on the island, but a 1,200-metre airstrip, and there appears to be no continuous human presence.

Tromelin was discovered by a French navigator in 1722, and France today claims sovereignty over it by virtue of historical title (discovery of terra nullius) dating back to that date. The islet was the scene of a sad – and little known – episode of history as the place where approximately 60 Malagasy men and women were abandoned for 15 years in the 18th century after a French ship transporting slaves eschewed on the island. Most of the slaves died within a few months. The survivors were finally rescued in 1776, when Bernard Boudin de Tromelin, captain of the French warship La Dauphine, visited the island and discovered seven women and an eight-month-old child. Captain Tromelin also raised a French flag on the island – and his name was given to it.

French possession of Tromelin was interrupted by Britain which took control of the island in 1810. Then in 1954, the British gave their consent to France’s effective control over Tromelin. But sovereignty over Tromelin is still disputed, and the island has been claimed by the newly independent Mauritius since 1976, and reportedly also by Madagascar and the Seychelles (see V. Prescott, ‘Indian Ocean Boundaries’ at 3462-63). The controversy in France over Tromelin has led to the postponing of the ratification by the Parliament of a framework agreement entered into by France and Mauritius in June 2010, providing for joint economic, scientific and environmental management (cogestion) of the island and of surrounding maritime areas. Read the rest of this entry…

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After Trump: China and Russia move from norm-takers to shapers of the international legal order

Published on November 10, 2016        Author: 

The Western media hardly reported that on Tuesday 8th November 2016, the Chinese Premier, LI Keqiang, visited Russia. Maybe the date of the visit (the day of the de facto election of the US President) was chosen to convey a message. The deepening Chinese-Russian partnership seeks to work towards an alternative to what is perceived by the leaders of those two powers to be a US-dominated world order. It is plausible that an unpredictable, inexperienced, and undiplomatic US President will contribute to a weakening of that order. It is also likely that all recent moves will entail some changes in international law.

Let us recapitulate the latest official statements. On the official English-language website of the Chinese government, the Chinese Premier commented yesterday’s meeting as follows: “China−Russia cooperation is not only beneficial to the two sides, but also to regional and world peace, stability, development, and prosperity.”

A more detailed exposition of this view was offered by Ms FU Ying, the co-chairperson of the Foreign Affairs Committee of the National People’s Congress of the People’s Republic of China, and the current vice minister of the Foreign Ministry of the People’s Republic of China. She gave a speech at a meeting of a Russian intellectual elite-discussion circle (the “Valdai Club”) which was quickly published in China Daily − European Weekly of October 28 – November 3, 2016, entitled “Major Countries Need to Build Trust”.

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The Doctrine of Indispensable Issues: Mauritius v. United Kingdom, Philippines v. China, Ukraine v. Russia, and Beyond

Published on October 14, 2016        Author: 

On 14 September 2016, Ukraine instituted proceedings against Russia under the United Nations Convention on the Law of the Sea (UNCLOS). Ukraine is requesting that an UNCLOS tribunal declare, inter alia, that Russia has violated the Convention by interfering with Ukraine’s rights in maritime zones adjacent to Crimea.

At first, there appears to be no jurisdictional problem. Aside from the exceptions laid out in Part XV of UNCLOS, the tribunal has jurisdiction over “any dispute concerning the interpretation or application of [the] Convention” (Art. 288(1) UNCLOS), which would permit a declaration that Russia has violated the Convention. Nevertheless, such a declaration would necessarily require a preliminary determination that Ukraine still has sovereignty over Crimea (under the “land dominates the sea” principle), and the tribunal does not have jurisdiction over territorial sovereignty disputes. Therefore, the tribunal must decide whether it may still exercise jurisdiction over the dispute concerning Russia’s violation of the Convention.

Ukraine v. Russia presents what one may call the “implicated issue problem.” Generally speaking, the implicated issue problem arises when an international court or tribunal has jurisdiction over a dispute, but the exercise of such jurisdiction would implicate an issue over which the court or tribunal does not have jurisdiction ratione materiae. The court or tribunal must therefore determine whether it may still exercise jurisdiction over the dispute. Read the rest of this entry…

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Philippines v China: first thoughts on the Award in the South China Seas Case

Published on July 12, 2016        Author: 

Any international lawyer looking at a news site in the last few hours will have seen that the final award has been handed down at the Permanent Court of Arbitration in the Philippines v China dispute brought under the UN Convention on the Law Sea Annex VII procedure. The arbitral tribunal’s decision is simply historic. While Philippines has lost on a number of smaller points, the scale of its win overall is much greater than most commentators were expecting.

What follows is a very preliminary comment – and I stress that faced with a 500 page decision I may well revise my views later. It is also more in the nature of an explainer than a deep dive on any of the many legal questions already highlighted below. (This is also an excessively long post, for which I apologise.) However, on a first, quite brief, examination the tribunal has attempted to be meticulously fair to China and has applied the UN Convention on the Law of the Sea strictly and thoroughly. It has delivered a result which was, by and large, predictable.

James Kraska of the US Naval College has summarised the key holdings as:

  • the nine dash line has no basis in law,
  • there are no islands in the disputed area within the meaning of Article 123, UNCLOS,
  • China has interfered in the Philippines’ EEZ; and
  • China’s actions have aggravated the dispute.

I would add to this list three matters. First, the Tribunal has concluded that Mischief Reef is a low tide elevation over which no State can claim sovereignty or possession. This means it is simply a maritime feature within the Philippines exclusive economic zone (EEZ). Chinese island-building activities there are thus not merely without legal effect but are in violation of the sovereign rights of the Philippines.

Second, it has found that China has breached various obligations under UNCLOS regarding the protection and preservation of the marine environment by having caused severe and irreparable harm to coral reef ecosystems in its construction of artificial islands in the South China Seas.

Third, international tribunals normally bend over backwards to avoid findings of bad faith against a state. That is, one cannot act in bad faith without violating some other substantive right. So most tribunals consider it sufficient to stop at determining that a right or duty has been violated. This tribunal has found China violated Article 300 of UNCLOS: the duty to act in good faith. This is an extraordinary rebuke and a clear indication that the law of the sea dispute resolution system will not be cowed by the posturing of the superpower. As a matter of principle, it takes a principled stand on the supremacy of the rule of law. As a matter of pragmatism, it flies in the face of the conventional wisdom that angering China over this dispute could jeopardise the stability of the law of the sea system.
Read the rest of this entry…

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Arbitration between Croatia and Slovenia: Leaks, Wiretaps, Scandal (Part 4)

Published on May 3, 2016        Author: 

Some six months since the publication of the third post on the Croatia v. Slovenia arbitration, as Bernard Woolley might say, ‘there has been movement’. To recapitulate, following Croatia’s note verbale of 24 July 2015 informing Slovenia and the Tribunal of its intention to terminate the Arbitration Agreement, Slovenia tendered its objection dated 13 August. In the aftermath of the successive resignations of the arbitrator of Slovenian nationality (Dr Jernej Sekolec) on 23 July, the arbitrator of Croatian nationality (Professor Budislav Vukas) on 30 July, and the replacement arbitrator for Sekolec (President Ronny Abraham of the ICJ) on 3 August, the Tribunal invited the parties to appoint replacements for Vukas and Abraham. Croatia declined to name a replacement, whereas Slovenia wrote to the Tribunal that, ‘in order to preserve the integrity, independence and impartiality of the Arbitral Tribunal and the ongoing proceedings, it will refrain from appointing a member of the Tribunal to replace Judge Abraham’. Instead, Slovenia requested ‘the President of the Arbitration Tribunal, Judge Gilbert Guillaume, in exercise of his powers under Article 2, paragraph 2, of the Arbitration Agreement, to appoint a member of the Tribunal’. In a press release dated 25 September, the Tribunal announced:

Since neither Party made an appointment within 15 days after the resignation of Professor Vukas and Judge Abraham, it fell to the President to appoint the remaining two members of the Tribunal. [Professor Nicolas Michel, of Swiss nationality] was appointed to succeed Professor Vukas on the Tribunal, and [H.E. Ambassador Rolf Fife, of Norwegian nationality] was appointed to succeed Judge Abraham. The Tribunal now intends to consider the Parties’ positions carefully, including in respect of the effect of Croatia’s stated intention to terminate the Arbitration Agreement and in respect of the possible implications for the present proceedings of the events reportedly underlying Croatia’s decision. In this regard, the Tribunal may invite further submissions from the Parties on questions of fact and law as may be necessary.

It is noteworthy that, for the first time in the history of the arbitration, the panel is now ‘wholly neutral’ in that all of the arbitrators are nationals of neither party. Although this appears to have eventuated faute de mieux, it is attractive on a systemic level, as covered in our last post.  

On 2 December, the Tribunal fixed deadlines for further submissions on the aforementioned issues. On 14 March, the Tribunal announced that it had fixed 17 March as the date for hearings on the matter, to be held (understandably) in camera pursuant to Article 6(5) of the Arbitration Agreement with a summary of the Parties’ positions to be published via press release. On the ground, tensions have been escalated by the decision of Slovenia to run a barbed wire fence along part of the disputed territory (see here). Reactions in Croatia, likening these actions to the Nazi occupation of the area during the Second World War, have not helped to ease tensions Read the rest of this entry…

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Arbitration between Croatia and Slovenia: Leaks, Wiretaps, Scandal (Part 3)

Published on August 25, 2015        Author: 

In our last post, we analysed Croatia’s denunciation of its arbitration with Slovenia emerging from the scandal of secret communications between the arbitrator of Slovenian nationality and the Slovenian agent. In this final post, we examine the ramifications of the scandal for the international judicial system: that is, the informal set of international courts and tribunals in which at least one of the parties is a State. We suggest that the scandal is not an isolated case but rather symptomatic of systemic problems. This, we argue, supports the case for the investment of energy by the college of international lawyers to investigate the case for procedural reform in international courts and tribunals.

If we may be permitted to indulge in a spot of shameless advertisement, we are co-editors (along with Dr Filippo Fontanelli (University of Edinburgh), and Dr Vassilis Tzevelekos (University of Hull)) of an edited volume entitled Procedural Fairness in International Courts and Tribunals due to be published in September by the British Institute of International and Comparative Law. As this story broke – just as we were putting the finishing touches to the concluding chapter to the volume (thus seeking to justify, if only to ourselves, the effort) – it occurred to us that we could not have concocted a more apt scenario encapsulating the subject if we had tried.

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Arbitration between Croatia and Slovenia: Leaks, Wiretaps, Scandal (Part 2)

Published on August 7, 2015        Author: 

As we described in our first post of last week, the completion of the arbitration between Croatia and Slovenia has been thrown into doubt by the revelation of illicit contacts between the Slovenian arbitrator (‘Slovenia’s arbitrator’? Or ‘the arbitrator of Slovenian nationality’? More on this in our next post) and the Slovenian agent. On 24 July, Croatia applied to the Tribunal to ‘suspend the proceedings with immediate effect’ and invited ‘the remaining members of the Tribunal to review the totality of the materials presented, and reflect on the grave damage that has been done to the integrity of the entire proceedings’. On 28 July, the Tribunal published a press release in which it announced that a hearing on the Croatian application would be arranged ‘in the coming days’. On 30 July, the arbitrator of Croatian nationality, Professor Budislav Vukas (formerly Vice-President of the International Tribunal for the Law of the Sea), resigned from the arbitration, and on July 31 Croatia itself formally informed the Tribunal that it ‘cannot continue the process in good faith’ and that ‘in accordance with the relevant provisions of the Vienna Convention on the Law of Treaties’ it ‘informed the other Signatory to the Agreement of its intention to terminate’ the Arbitration. On 3 August, ICJ President Abraham resigned from the Tribunal, informing it that he had agreed to his appointment to ‘help restore confidence between the Parties and the Arbitral Tribunal and to allow the process to continue normally, with the consent of both Parties’ but that ‘the current situation cannot meet that expectation’ so that ‘it was no longer appropriate’ for him to serve as arbitrator.

At the end of our first post, we posed a number of preliminary questions that this scandal raises. In this post, we shall attempt, if not to provide definitive answers, at least to illustrate the context and consequences of these issues, with specific attention to the immediate repercussions for the arbitration. We shall follow this with a Part 3 post, on the wider implications for the international legal profession and the international judicial system.

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