This document is the all-in-one companion ofr the International Trade & Investment Law course for Global Law students at Tilburg University and contains lots of useful information from legislation to case summaries.
The notes are structured into two main parts - International Trade Law and Inte...
International Trade and Investment Law
Notes and Course Summary
Prepared by and the exclusive copyright of GlobalLawyer on Stuvia.com
Part I: International Investment Law
Topic 1 – Introduction to International Investment
Law
Basic features of IIL and Arbitration
o Private investors are granted standing to claim that a sovereign State has
breached its obligations under an investment treaty in order to seek redress.
Not the same as dispute settlement in the WTO, which is State-to-State
o This is exercised through arbitration
“A method of dispute resolution involving one or more neutral third
parties who are usually agreed to by the disputing parties and whose
decision is binding and final”
o Advantages over traditional domestic litigation:
More efficient
Allows for an investor’s case to be heard in a neutral forum
Specialized arbitrators who possess expertise in specific fields directly
relevant to the dispute
Arbitral institutions
o Definition: a permanent organization to which parties to a dispute reserve some
decisional authority in order to facilitate an arbitration conducted in
accordance with a set of arbitration rules (R. Gerbay, The Functions of Arbitral
Institutions, 2016)
o Examples:
International Centre for Settlement of Investment Disputes (ICSID)
International Chamber of Commerce (ICC) in Paris
London Court of International Arbitration
Diplomatic protection
, o
Multilateral legal framework for investment
o GATT 1947 was applied, which does not address investment but trade
o Multilateral investment treaties not successful
Sources of international investment law
o BITs (bilateral investment treaties)
Most essential source of international investment law
More than 3000 in existence
o Customary International Law
o Case Law
No precedent per se, as each arbitral award is binding only to the
parties to the dispute
Each arbitral tribunal is constituted on an ad hoc basis
However, not irrelevant as arbitral tribunals do frequently refer to
previous awards and are influenced by them to a varying extent
o ICSID Convention
Provides a procedural framework to resolve disputes between host
States and foreign investors
Neutral forum
155 contracting States
Applicable law in IIL
o Sacred principle – party autonomy – first and foremost arbitrators will inquire
whether the parties have chosen the governing law
o Art. 42 ICSID:
“The Tribunal shall decide the dispute in accordance with such rules of
law as may be agreed by the parties. In the absence of such agreement,
the Tribunal shall apply the law of the Contracting State party to the
dispute (including its rules on conflict of laws) and such rules of
international law as may be applicable”
o The choice may be agreed by the parties even after the dispute has arisen
o Clause could be contained in the BIT
o Clarification: parties to the dispute are not the same as parties to the BIT
BIT: State-State
Dispute: State-Foreign Investor
,Jurisdictional Issues in ICSID Arbitration
Jurisdictional facts to be established before an arbitral tribunal in order for it to assume
jurisdiction (in ICSID arbitration) (source: Phoenix v. Czech Republic, ICSID Case
No. ARB/06/5, para. 54)
1. Condition ratione personae: the dispute must oppose a Contracting State and a
national of another Contracting State
With respect to a sovereign state:
Needs to be a contracting State Party to the ICSID convention
The State in question has that status at the time of the request
for Arbitration
With respect to the investor:
Private physical or legal person, national of a Contracting State
other than its counterparty
Tests:
o For individuals: domestic law of the State whose
nationality the investor claims to possess will be looked
at primarily
o For corporations: Place of incorporation & Seat of
business
2. Condition ratione materiae: the dispute must be a legal dispute arising directly
out of an investment
Determined based on the definition of ‘investment’ in the BIT
Article 25 ICSID – “The jurisdiction of the Centre shall extend to any
legal dispute arising directly out of an investment”
Approaches adopted by Arbitral Tribunals:
Objective criteria approach (restrictive approach)
o E.g., Salini Construttori S.p.A. v. Kingdom of
Morocco, ICSID Case No. ARB/00/4, 4 criteria
established:
Contributions of money or assets
Long duration
The presence of risk
The promotion of economic development
Party-based approach (deferential approach)
o E.g., Malaysian Historical Salvors SDN BHD v.
Malaysia, ICSID Case No. ARB/05/10:
“There is no basis for a rote, or overly strict
application of the Salini criteria in every case.
These criteria are not fixed or mandatory as a
matter of law”
3. Condition ratione voluntatis: the Contracting State and the investor must
consent in writing that the dispute be settled through ICSID arbitration
4. Condition ratione temporis: the ICSID convention must have been applicable
at the relevant time
, Tutorial notes: International Investment Law
Methods of dispute resolution in IIL:
o Arbitration: one or more neutral third parties, no appeals
More efficient
Allows for the investor’s case to be heard in a neutral forum
Specialized arbitrators who possess expertise in specific fields directly
relevant to the dispute
Very case-law based, despite the fact that there is no doctrine of stare
decisis
Test to determine the existence of a protected investment under ICSID (Phoenix, para
114):
1. A contribution in money or assets
2. A certain duration
3. An element of risk
4. An operation made in order to develop an economic activity in the host State
5. Assets invested in accordance with the laws of the host State (new)
6. Assets invested bona fide (new)
Topic 2 – Expropriation
On expropriation, in general:
1. International law recognizes the right of the host state to expropriate foreign-held,
private property, which is reflected today in BITs. However, the expropriation has to
be lawful.
2. Conditions for a lawful expropriation:
a. Public Purpose: The measure must serve a legitimate public interest. While
states have some leeway in defining "public purpose," this requirement is
rarely challenged in arbitral practice.
b. Non-discrimination: The expropriation must apply equally to all similarly
situated investors, regardless of nationality
c. Due Process: The process of expropriation must adhere to fair legal
procedures. This includes providing adequate notice, a fair hearing,
compliance with local laws, and a means for legal recourse if necessary.
d. Prompt, Adequate, and Effective Compensation: The expropriated investor
must receive fair compensation for their lost property. This compensation
should be:
i. Prompt: Paid without undue delay.
ii. Adequate: Equivalent to the market value of the expropriated
investment.
iii. Effective: Paid in convertible currency that the investor can readily use.
3. Direct vs Indirect Expropriation
a. Direct expropriation:
i. In international law, expropriation refers to the state taking private
property. Traditionally, this meant a clear, outright seizure of ownership
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