Arbitration under international investment agreements : a guide to the key issues

790 Pages·2010·2.52 MB·English

by  Yannaca-Small

A R B I T R AT I O N U N D E R
I N T E R N AT I O N A L
I N V E S T M E N T
A G R E E M E N T S
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A R B I T R AT I O N U N D E R
I N T E R N AT I O N A L
I N V E S T M E N T
A G R E E M E N T S
A GUIDE TO THE KEY ISSUES
Edited by
K A T I A Y A N N A C A - S M A L L
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Library of Congress Cataloging-in-Publication Data
Arbitration under international investment agreements :
a guide to the key issues / edited by Katia Yannaca-Small.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-19-534069-3 ((hardback) : alk. paper)
1. Investments, Foreign—Law and legislation. 2. Arbitration and award,
International. I. Yannaca-Small, Katia.
K3830.A75 2010
332.67'3—dc22 2009047952

_____________________________________________
1 2 3 4 5 6 7 8 9
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Foreword
International investment arbitration has a lineage that may be traced to concession and
other contracts of foreign investors with host governments. Disputes under those con-
tracts gave rise to a small number of large arbitrations between the two World Wars
and for some three decades after World War II. Only very large investors normally
were in a position to persuade host governments to agree to arbitration of disputes that
might arise under contracts between them. Implementation of the resultant arbitral
obligations was in some cases significant, in others frustrated.
Two developments transformed this episodic scene. The first was the conclusion of
the World Bank’s Washington Convention on the Settlement of Investment Disputes
between States and Nationals of Other States, the “ICSID Convention”, which came
into force in 1966. It provides a standing forum for the settlement of disputes between
foreign investors and host governments. The second was the conclusion of bilateral
investment treaties between States. By this writing, there are—counting agreements
arising not only bilaterally but those from the Energy Charter Treaty, NAFTA and
CAFTA—some 2,700 such treaties in force. They are the main source of the jurisdic-
tion of ICSID. But they are by no means simply procedural and jurisdictional in effect,
because they provide standards for the treatment and taking of foreign investment that
represent a remarkable advance on the contentious content of customary international
law. By together enabling the foreign investor to require a host government to arbitrate
disputes between them, on the basis of agreed international legal standards, a new era
in international dispute settlement has opened. ICSID currently deals with as many
cases as has the International Court of Justice in the whole of its history.
This cascade of international litigation has spawned a multiplicity of problems, pro-
cedural, jurisdictional, and substantive. This book analyzes recurrent issues that arise
in the disposition of those problems. Katia Yannaca-Small, drawing on her experience
as a senior lawyer both of the OECD and ICSID, has assembled a group of knowledge-
able and acute authors, many of them leading practitioners in this field, who address
the most salient and persistent of those issues. And she herself has written six of the
essays, which tackle some of the most sensitive questions.
In the last few years, international investment arbitration has come under attack.
The criticism, much of it uninformed, has a nationalistic and autarchic tinge. Two
South American States Members of ICSID, apparently under the influence of a third,
v
have withdrawn from the treaty, giving reasons that would have warmed the heart of
Carlos Calvo. The European Union is poised to displace bilateral investment treaties
between its members by its own rules.
The adoption by the United States of a revised model bilateral investment treaty in
2004 was regressive, and current reconsideration in the Congress may lead the U.S. to
resile further from its traditional support of foreign investment. Nevertheless, fresh
bilateral investment treaties are being concluded, and international investment arbitra-
tion flourishes.
This valuable volume will assist the student and practitioner of international invest-
ment arbitration in understanding and addressing its primary problems, which are as
complex as they are recurrent.
Stephen M. Schwebel,
former President of the International Court of Justice
vi FOREWORD
Acknowledgments
This book aims to serve as a guide on investment arbitration not only to the knowl-
edgeable sophisticated reader but also to the newcomer in this field. This challenging
task, to balance the educational and expert elements, could not have been achieved
without the wonderful group of top-of-the-line contributors who very graciously
undertook this task. I am grateful not only for their valuable contributions to this book
but also for the support, collegiality, and cooperation I have enjoyed with all of them
throughout the years.
I take this opportunity to thank the delegates of the OECD Investment Committee; its
Chair, Manfred Schekulin; the former OECD Deputy Director, Rainer Geiger; and the
Head of the OECD Investment Division, Pierre Poret for the stimulating context in which
they allowed me to operate and their confidence in and support for my work in this field.
I also greatly benefited from working with the ICSID team and getting first hand experi-
ence of the work of this leading institution in the field of investment arbitration.
I would like to make a special mention of the late Thomas Wälde, a brilliant and
generous mentor who always encouraged and challenged me. Thomas passed away
more than a year ago, in October 2008, after having put the last touch on a piece which,
as he said to me, “had always wanted to write.” I am deeply honoured that one of his
last, if not his very last intellectual contribution to this field is included in this
volume.
Nothing of all this would have ever been possible, without the constant encourage-
ment, support, and patience of my husband, David Small, who not only greatly assisted
with the editing of this volume but also held the fort at home during the long hours
I spent on the preparation of the book. His acute and critical legal mind has always
challenged me. Special thanks go to my three children, Alexander, Sophia, and Ileana,
who, despite their young age, understood and accepted the demands of the task on their
mom’s time and supported her in it. I could not close these acknowledgments without
respectfully saluting and wholeheartedly thanking my parents, who always encour-
aged me and pushed me forward. My father will see this book published. My mother,
who was the greatest inspiration in my life, will never do so.
Katia Yannaca-Small,
December 2009, Washington D.C.
vii
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About the Authors
Katia Yannaca-Small
Katia Yannaca-Small is a Senior Counsel with the International Centre for the
Settlement of Investment Disputes (ICSID), where she administers investment dis-
putes brought before the Centre and works on issues of outreach policy related to the
Centre’s activities. Prior to joining ICSID, she was the Legal Advisor to the OECD
Investment Division, where she was responsible for analytical work on all legal issues
related to international investment agreements and, in particular, developments in
investor-state dispute settlement. She is an often-cited writer and speaker on this
subject. Ms. Yannaca-Small holds a J.D. from the Athens University Law School,
Greece; two post-graduate degrees (D.E.A.) on Public International Law and
International Economic Law from the University of Paris I-Sorbonne and is a graduate
of the École Nationale d’Administration (E.N.A.), France.
Katia Yannaca-Small contributed as author and edited this book strictly in her
personal capacity. The views expressed do not engage ICSID or the OECD.
Stanimir Alexandrov
Stanimir Alexandrov is a partner at the Washington, DC office of Sidley Austin LLP
and Professorial Lecturer of Law at The George Washington University Law School.
He focuses his practice on international dispute resolution, including investor-State
arbitration, international commercial arbitration, and trade disputes before the World
Trade Organization (WTO). He has represented private parties and governments in
arbitration before the International Centre for Settlement of Investment Disputes
(ICSID), and in ICC, UNCITRAL, and AAA international arbitrations, and he has also
represented governments in WTO disputes. He has been appointed to the ICSID’s
Panel of Arbitrators and Panel of Conciliators and serves as an arbitrator in a number
of cases. He has authored several books and a number of articles on public interna-
tional law and international arbitration topics. He is a member of the Institut de Droit
International. Prior to entering private practice he served as vice minister of foreign
affairs of Bulgaria.
ABOUT THE AUTHORS ix