'Private investment claims for public international law rights: implementation and preclusion of claims' by Mr Alejandro A. Escobar

Private Investment Claims for Public International Law Rights: Implementation and Preclusion of Claims

Investment treaties typically allow investors to pursue remedies for treaty breaches through binding international arbitration. Final arbitration awards under an investment treaty are enforceable at local law. As a matter of fact and law, an investor may bring a treaty claim to the exclusion of the diplomatic protection of that investor by its national state. The investor owns and controls its treaty claim. The investor may also dispose of the claim, through settlement for example. By extension, the investor may agree to the modalities under which its claim will be heard and decided.

This presentation seeks to provide a brief account of the issues that may arise when an investor makes or pursues specific arrangements for dispute settlement with the host state and the impact those arrangements may have on the subsequent reliance by the investor on an investment treaty.

1. The Impact of Prior Contractual Stipulations
Investment treaty jurisprudence accepts a distinction between treaty claims and contract claims. It also accepts that both types of claims may be brought before a single international arbitration tribunal. This may be done, for example, if the investor-state provisions of an investment treaty are sufficiently broad to provide the state’s consent with respect to both types of claim.

Absent a common arbitral jurisdiction (for which consent is an essential element), each type of claim must be pursued in the agreed or legally disposed forum. This rule may apply even where an investment treaty contains a specific obligation to abide by contractual undertakings, i.e. an “umbrella clause.” See SGS Société Générale de Surveillance S.A. v. Republic of the Philippines, Decision on Jurisdiction, 29 January 2004. (Except where otherwise indicated, all awards decisions are available on italaw.com)

Query whether an investor could effectively stipulate with a host state to bring all claims, both treaty and contractual, under a single contractually agreed arbitration forum. Only some investment treaties provide expressly for this possibility. See also CSOB v Slovak Republic, Decision on Jurisdiction, 24 May 1999 (available at icsid.worldbank.org).

2. The Impact of Prior Recourse to Contractual Remedies
In principle, the use of a contractual remedy should not prevent the subsequent pursuit of a treaty claim, provided a distinct treaty claim can be made. The jurisprudence looks at the “essential basis of the claim” for this purpose. See Compañía de Aguas del Aconquija & Vivendi Universal S.A. v. The Argentine Republic, Decision on Application for Annulment, 3 July 2002, (also known as the First Vivendi Annulment Decision).

Two recent awards have held that the “essential basis” of a purported treaty claim was in fact contractual: (1) Pantechniki S.A. Contractor and Engineers v. Republic of Albania, Award, 30 July 2009; and (2) RSM Production Corporation et al. v. Grenada, Award 10 December 2010.

Query whether it remains open for the investor’s national state to pursue an umbrella clause claim after the investor’s claim has failed.

3. The Impact of Prior Recourse to Non-Contractual Remedies
a. National Law Remedies
Many investment treaties contain a “fork-in-the-road” provision or some variation thereof. A national law non-contractual remedy could trigger such a provision and thus preclude subsequent recourse to arbitration under the respective investment treaty.

Query whether diplomatic protection would still be available for the original grievance once the domestic remedy has been exhausted.

b. International Law Remedies

Other treaties might confer a right on the investor to bring an international claim against the host state. Historically, such treaties include those setting up mixed claims commissions, and the Algiers Accords setting up the Iran-US Claims Tribunal. Generally, these historic examples have not overlapped with the application of modern investment treaties. More recently, European investors may have recourse to the European Court of Human Rights to claim for breaches of the right to the peaceful enjoyment of their possessions under Article 1 of Protocol 1 of the ECHR.

Query whether a successful and compensated claim, or an unsuccessful claim, under such a treaty could preclude a subsequent claim under an investment treaty.

4. Provisional Conclusions?
Are the premises of this discussion valid and correct?

To what extent does the emerging arbitral jurisprudence provide helpful restatements of general principles of law and persuasive examples of the application of those principles to a given set of facts?

To what extent are arbitral awards and other decisions distinguishable as by-products of a specifically worded investment treaty?

If a set of rules or principles (established or emerging) can be ascertained with respect to the implementation and preclusion of investment treaty claims, do they provide a sufficiently certain basis for policy decisions on the part of investors and home and host states?