Summary of ALL READINGS INTERNATIONAL INVESTMENT LAW, this includes the book and the articles prescribed.
International Investment Law is a course taught at the University of Amsterdam (UvA) as part of the masters (LL.M.) International Trade and Investment Law.
Written bij an honours studen...
International Investment Law: Summary.
Week 1: Introduction and Jurisdictional Foundations,
Kriebaum: ‘Principles of International Investment Law.’
In order to be able to start an arbitration → both the state and the
investor should have consented.
a. By direct agreement.
In the agreement between the state and the investor is a consent
clause.
o Can be given with respect to existing disputes or future
disputes.
o Need not to be recorded in a single document.
May record consent by reference to another instrument.
o Broad inclusive clauses are the norm → “unity of the
investment”.
Tribunals have taken a broad view of expressions (Duke
Energy v. Peru).
b. By host state legislation.
Host state may offer consent in general terms. However, not every
reference in national legislation amounts to consent.
o Legislative provision → merely an offer to by the state to
investors.
o Clear terms used:
May or shall submit the dispute to arbitration.
State is required to give further action.
o Less clear:
Referring to subsequent agreement.
c. By BITs or MITs.
Provide a basis for consent only if they ae in force at the relevant
time.
o Needs acceptance by the investor.
Initiating proceedings (Abaclat v Argentina).
Express consent in writing.
o If accepted → remains in existence if the state amended /
terminated the treaty.
Consent is irrevocable → stems from pacta sunt servanda.
- Only after consent has been perfected.
- Applies to unilateral attempts at withdrawal.
- The doctrine of separability (Millicom v Senegal).
o Host state is free to change its legislation.
An offer that has not been accepted → lapses.
An offer that has been accepted → will remain.
o If a BIT or MIT is terminated.
, Will continue to apply for a certain period to
investments made before its termination due to the
sunset clause.
The parties to an arbitration agreement are free to circumscribe their
consent by defining it in general terms, covering any dispute that may
arise in connection with the agreement containing the clause (SGS v
Pakistan).
If there is an umbrella clause → all violations of a contract relating
to the investment become treaty violations.
Howe consent needs to be interpreted is debated:
i. Governed by their own system of law which is determined by the
instruments determining jurisdiction (CMS v Argentina).
ii. International law (CSOB v Slovakia).
iii. The convention which the arbitration is subject to (Mobil v
Venezuela).
iv. Rather objectively and in good faith (SPP v Egypt).
Sometimes other conditions have to be met in order to institute the
proceedings:
a. Waiting periods for amicable settlement.
Contain the condition that a negotiated settlement must be
attempted before resort can be had to arbitration.
o Merely procedural and not a condition for jurisdiction
(Biwater Gauff v Tanzania).
o Waiting periods do not need to be complied with by the time
of initiating but can be fulfilled before the tribunal decides on
jurisdiction.
o Claim can be inadmissible (Burlington v Ecuador).
b. Resort to domestic courts.
First exhausted local remedies offered by the host state’s legal
system.
o The usefulness of such a requirement is questionable (Helnan
v Egypt).
Undue delay and additional costs.
Can be avoided by invoking MFN clauses.
c. The fork in the road clauses.
Investor must choose between (a) litigation and (b) arbitration.
o Applicable if it involves the same cause of action, the same
object, and the same parties → triple identity test (Yukos v
Russian Federation).
o Look at the fundamental basis of the claim.
, d. Waiver clauses.
In order to start an arbitration, the investor must have waived the
right to access to domestic courts.
The jurisdiction of the tribunal can also be limited in respect to treaty /
contract claims.
- Distinguish between them.
o But the dispute may at the same time involve issues of the
interpretation and application of a treaty and a contract.
A state cannot rely on exclusive jurisdiction clause in a
contract to avoid the characterization of its conduct as
internationally unlawful under a treaty.
- A forum clause in a contract pointing to domestic courts will bot
oust jurisdiction of an arbitral tribunal based on a treaty (Vivendi v
Argentina I).
o Depends on the scope of the arbitration agreement.
o Tribunal is not necessarily restricted to applying the
substantive provisions of the treaty (Metal-Tech v
Uzbekistan).
Can be both claims at the same time (BG Group v
Argentina).
- Parallel proceedings are undesirable.
Foreign investments are subject to both international and national law →
the applicable law is diverse.
- Choice of law.
Parties may agree on the governing law.
o Often clauses in contracts include international law and host
state law.
o ICSID → own choice of law clause (art. 42 ICSID).
Primarily what the parties have agreed on.
Absence of agreement → host state law and
international law.
o By taking up the offer to arbitration, the investor also accepts
the choice of law clause contained in the dispute settlement
provision on the choice of law.
Becomes part of the arbitration agreement.
- Host state law and international law.
Often both are applied without attention to their relationship.
o Apply international law to fill up lacunae in the applicable
domestic law.
o International law prevails in case of conflict.
, Under international law reparation for a wrongful act (remedies) must
be granted:
- Satisfaction and restitution.
Remedy usually consists of monetary compensation.
o Satisfaction obtains a declaration of illegality.
o Restitution obliges the party to give back.
- Damages.
Reparation must restore the situation that would have existed in the
situation where the illegal act would not have been committed
(Chorzow Factory).
o Calculation of monetary reparation.
Methods:
Replacement value; actual losses; lost profits.
Investors are under an obligation to mitigate their
losses → failure would lead to reduction of damages
(Yukos v Russian Federation).
o Valuation date is the date of the award.
- Compensation for expropriation.
For lawful expropriation there must be (i) public purpose, (ii) non-
discrimination, (iii) fair procedure and (iv) compensation.
o Adequate and prompt.
o Based on the fair market value of the taken asset.
Amount that a willing buyer would normally pay for a willing
seller in a transaction.
Discounted Cash Flow (DCF) → look at the projected
likely income created by the investment in the future.
Liquidation value → price at which remaining assets
could be sold.
o Valuation date is the date immediately before the fact of
expropriation.
Difficulties with indirect or creeping expropriation.
- Arbitration costs.
Costs of the arbitration itself need to be paid (art. 61(2) ICSID).
o Bear own expenses and fees and expenses of the Centre and
arbitrators are shared equally (Eskosol v Italy).
o Award costs as a sanction to one of the parties → frivolous or
fraudulent claim (Churchill).
o Costs follow the event (ADC v Hungary).
Schill: ‘In Defense of International Investment Law.’
IIL and ISDS were once niche topics only known to experts.
Particularly those involved in
international commercial arbitration.
Has gained more attention with cases like Vattenfall v Germany, Philip
Morris v Australia and Lone Pine Resources v Canada.
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