Fair and Equitable Treatment: A Rejoinder to Martins Paparinskis

I don’t think that there’s all that much between Martins Paparinskis and me.   I certainly don’t decry the difference between treaty and custom in this field, or the important part that both play in encouraging investment and in the not inconsiderable task of balancing in that regard the interests of investors and the prerogatives of governments.

But Martins’s responses, valid as they all are, don’t provide an answer to my question, which is how his analysis helps in solving the individual dispute before the individual arbitral tribunal.   It may of course be that there will be cases (though I wouldn’t care to put a statistical probability on their likelihood) in which it can be conclusively established that the treaty Parties definitely did decide that what they wanted to have applied was the customary law standard (whatever that might be), or that they definitely didn’t want that but something else.   But in the normal run a tribunal is confronted with a general standard of protection expressed by agreement in treaty language.   The choice is whether that should be taken to mean what it says, or as hidden code for something else, and to that choice the Vienna Convention gives a clear answer in Articles 31(1) and 31(4).

Of course Martins is right when he says that he, for his part, doesn’t neglect the distinction to which I attach a lot of importance, that between interpretation of a treaty and its application.   But if you insist (as I think he does) on loading so much into the interpretation side of the basket, then you create for yourself the problem that so perplexes him, namely what theoretical underpinning you can properly attribute to the phenomenon of one arbitral tribunal being guided by the Awards of others, and what other material tribunals ought to be bringing into play.   I really think that that is a faux problème.   If on the other hand you make a clearer-headed recognition that only a very small proportion is ‘interpretation’ and the very great majority consists in the application of the appropriate standard to the obstinate variety of factual situations, then you can see more plainly that what is happening with arbitral cross-reference is the absolutely standard process of the sharing of judicial experience, only broadened to the contours of a more globalized world.   And if you can do that, then I doubt whether you need trouble yourself to excavate further for theoretical justifications in the highly-contested area of customary law formation.   And you make it much easier for tribunals themselves to conduct the winnowing process of highlighting the good arbitral awards (good, because they’re well-reasoned and offer actual help) and those which are not so good (because they don’t).

For his contribution to this debate, and the thoroughness of his research, I offer all praise to Martins and his book.   One can only hope that the ILC will also pay due attention to it in its continuing work.