(Lars Markert) States Strike Back-Old and New Ways For Host States To Defend Against Investment Arbitrations

States
Strike Back—Old and New Ways for Host

States to Defend against Investment Arbitrations
Lars Markert, Catharine Titi
Content type: Yearbook articles

Citation(s): (2015) Yearbook on International Investment Law and Policy 2013–2014
401–436 (Other Reference)
OUP r efer ence: IC-JA 123 (2015)
Pr oduct: Investment Claims [IC]
Subject(s):
Investment — Most-favoured-nation treatment (MFN) — Admissibility — Host state law —
Counterclaims — Fork in the road clause — Waiver — Annulment — Corruption of arbitrator
From: Investment Claims (http://oxia.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: FDI Moot 2018; date: 18 October
2018
In modern day investment arbitrations, states can no longer be seen as passive players suffering
through a process conducted at their expense. They possess an impressive arsenal of means which
enable them to “strike back” 1 once an investor contemplates or has initiated arbitration. Although
still traditionally cast in the role of respondent in investor-state dispute resolution, as we will
show, states are increasingly involved in and exert considerable influence during all phases of the
arbitral process. Namely, state involvement and influence are manifest before and during the
initiation of arbitral proceedings (Part A), in the merits phase (Part B), during the enforcement
stage, and even afterward (Part C). Indeed, a closer look reveals the latter phase as part of a
continuous cycle (what’s past is prologue and post-arbitration may equal a new pre-arbitration
stage) (Part D), which goes hand in hand with states’ efforts to shape the arbitral system itself
(Part E).
(p. 402) The purpose of the present contribution is to give an overview of measures available to
states for reacting to investment arbitrations, as well as to identify new trends by exploring the
different options states possess at various stages of the arbitral proceedings. The analysis will
show that states are by no means resourceless vis-à-vis claimant investors and that they have
begun to adjust in ways that often place them on an equal, if not superior, footing with investors
in disputes.
A. Jurisdiction and Admissibility

Disputing the jurisdiction of an arbitral tribunal called upon to adjudicate the case is the first—
and a commonly employed—step in a state’s defensive positioning against a claimant investor,
which can potentially prevent the dispute from being heard. Despite the growth of investment
arbitration conducted on the basis of an ever-expanding universe of investment agreements2 and
the concomitant increase in the investment arbitral caseload,3 until a decade ago it seemed that
the jurisdiction and admissibility phase4 was not a real hurdle for investors, although it was often
heavily disputed.5 The wind has changed and today this phase has become a serious obstacle for
investors on their way to the merits phase of an investment arbitration.6
(p. 403) 1. Definition and Legality of the Investment

This is particularly so because what for a long time seemed to be a near consensus on the
definition of investment in Article 25 of the Convention on the Settlement of Investment Disputes
between States and Nationals of Other States (ICSID Convention) and the usual understanding of
the term in international investment agreements has been replaced by increasing legal
uncertainty. Host countries have been able to challenge the formerly rather broad reading of
jurisdictional criteria, and have succeeded more and more in having cases dismissed as early as
the jurisdictional phase.
Objections to jurisdiction revolving around the existence of a protected investment have been
raised ever since the first arbitration administered by the International Centre for Settlement of
Investment Disputes (ICSID), the Holiday Inns case.7 The most frequently used assessment of
what an investment is, for the purposes of an ICSID arbitration, follows the so-called Salini test,8
which set widely accepted ground rules for the interpretation of the term “investment” in Article
25 of the ICSID Convention. Relied upon by a considerable number of subsequent tribunals in
order to determine the existence of a covered investment, the test perceives investment as
requiring “contributions, a certain duration of performance of the contract and a participation in
the risks of the transaction” as well as a “contribution to the economic development of the host
State of the investment.” 9 For quite a while, the main discussion turned around how much weight,
if any, had to be given to the requirement for a “contribution to the economic development of the
host state,” 10 and whether the Salini criteria were to be considered strict jurisdictional
requirements or typical features of an investment.11 Depending on which view arbitral tribunals
follow, states have occasionally been successful in (p. 404) arguing for a narrow scope of arbitral
jurisdiction,12 even if that might not have been the intent of the drafters of the ICSID
Convention.13
2018
An additional degree of complexity was introduced by the Phoenix tribunal, which added the
legality and the bona fide character of an investment to the then-reigning list of criteria required
for an investment for the purposes of Article 25 of the ICSID Convention.14 Although the
requirement that an investment be compliant with host state’s laws is not new when a provision to
this effect is found in an international investment agreement,15 the Phoenix tribunal’s reading of
the criterion into Article 25 of the ICSID Convention certainly constituted a novelty. While it
remains doubtful that these criteria will become widely accepted,16 the “precedent” of the Phoenix
case gives states additional defensive arguments which will make it more difficult for investors to
successfully navigate through the jurisdictional phase.
Investors will also have been surprised to find that opting out of the ICSID system and the
strictures of Article 25 of the ICSID Convention will not always help them surpass the
jurisdictional hurdle of the Salini test. In two investment arbitrations under the UNCITRAL
Arbitration Rules, the tribunals declined jurisdiction, finding that the investors’ economic activities
in the host state did not meet the definition of investment contained in the applicable bilateral
investment treaties (BITs).17 In both cases the host countries had argued that either the Salini test
or criteria similar to those used for arbitrations under the ICSID Convention should be read into
the generally wide definitions of investment in the respective BITs.18 Applying this line of
reasoning, the tribunals concluded that there was no investment and declined (p. 405)
jurisdiction.19 While other arbitral tribunals have rejected this approach,20 future claimant
investors face significant legal uncertainty. One-off commercial transactions—which would not be
covered under Article 25 of the ICSID Convention21 but arguably would be under the often very
broad “ all kinds of economic activities” clauses in the definition of investment under BITs—have
ceased to be jurisdictionally straightforward, even if investors choose (often for precisely this
reason) arbitral rules other than those of the ICSID Convention.
2. Corruption
Illegality of an investment or the lack of good faith may not form part of an accepted state
defense where the state has been cognizant of or partly responsible for the illegality or lack of
good faith. This qualification, however, seems not to apply in the case of corruption. As a
particular case of illegality against international public policy (ordre public international),
corruption has been taken into account as a ground for refusing investment protection, even
where the state has been ab initio aware of—or indeed has colluded in—the illegality of the
investment.22 Further, there may be a tendency to lower the burden of proof for host states and to
accept the allegation of corruption if the investor cannot provide cogent explanations for
circumstances “redolent of” corruption.23 This makes it a powerful defensive tool for host states,
and it is to be expected that corruption allegations on the part of host states will become more
frequent.24 However, at the same time it raises the question “whether a corrupted state may
benefit from its own acts and omissions or even maintain a system of corruption in order to shield
itself from claims by an investor.” 25 Ultimately, arbitral tribunals may attenuate the corruption
defense through a balancing test which takes into account the responsibility of the host state for
participating in, tolerating, or even instigating corruption.26
(p. 406) 3. Hurdles at the Jurisdictional Stage

Before recourse to arbitration becomes available to an aggrieved investor, many investment
treaties impose a number of procedural or jurisdictional requirements.27 These tried and tested
means for host states to defend themselves against investment arbitrations seem to have “lacked
teeth” for a long time and were often discarded by arbitral tribunals as mere procedural
obstacles. However, as host states become more assertive in their defenses and arbitral awards
are subject to more public scrutiny, there is an increased tendency to give an “ effet utile”
interpretation to such clauses and to render them operative in practice.
a. Fork-in-the-Road Clauses
2018
So-called fork-in-the-road (or electa una via) clauses require the investor to decide between
instituting proceedings in the domestic courts of the host state and resorting to international
arbitration. A choice of domestic or international remedies, once made, becomes final and the
investor is barred from using the other forum—although in the majority of cases the investor may
be assumed to have preferred international arbitration to the domestic courts of the respondent
host country. The purpose of this type of clause is to prevent costly parallel proceedings against
the host country. Until recently, the invocation of fork-in-the-road clauses in investment
arbitrations remained largely ineffective for host states.28 In order to assess whether the investor
had brought the “same dispute” to two different fora, arbitral tribunals employed the triple
identity or lis pendens test, requiring that the parties, the object, and the cause of action of a
dispute be the same.29 As the cause of action before national courts is usually based on
contractual or administrative law and not on an international investment agreement, investors
have generally been able to institute arbitral proceedings under the latter.30 A number of arbitral
tribunals have also focused on the fact that the parties in the arbitration were different from those
in local proceedings.31 However, (p. 407) the sole arbitrator in the Pantechniki case disagreed
with this distinction. He held that the claimant could not adopt the same “ fundamental basis” for
the treaty claim and for a claim before the national courts.32 Having elected proceedings in the
national courts, the claimant could not bring “ the same contention” before the arbitral tribunal,
and, as a consequence, the arbitrator denied jurisdiction.33 Should this example be followed,
states will find it easier to make effective use of fork-in-the-road clauses by arguing that disputes
before local courts and before the investment tribunal have the same fundamental basis.
b. Waiver Clauses
A variant of the fork-in-the-road clause is the so-called waiver clause, which, for example, can be
found in Article 1121(2) NAFTA, Article 26(2)(b) U.S. Model BIT (2012) and Article 10.18(2)(b)
U.S.-Dominican Republic-Central America Free Trade Agreement (hereinafter CAFTA). Pursuant
to these provisions, waiving the right to pursue proceedings in domestic courts or tribunals or in
another arbitration forum becomes a prerequisite to submitting a claim to arbitration.
Interestingly, these provisions have already been given effect in a number of cases. When investors
agreed to waive proceedings in local jurisdictions but made the waiver subject to conditions or did
not actually cease local proceedings, investment tribunals have in several instances denied
jurisdiction.34 The greater effectiveness of waiver clauses compared to fork-in-the-road clauses
may be due to their arguably broader scope; instead of requiring the same dispute, they mainly
focus on the same “ measure,” 35 which could be seen as only one prong of the triple identity test.36
Investors should therefore bear in mind that this kind of state defense will work in many, although
not in all,37 cases. States, on the other hand, must be aware that successfully invoking this defense
may imply that they are only winning a “battle” but not the “war,” as rejection of jurisdiction by
an arbitral tribunal does not have res judicata effect and the investor can reinstitute proceedings
with a newly constituted tribunal once a proper waiver has been issued.38
(p. 408) c. Local Remedies Clauses

Local remedies provisions are another pre-condition for access to arbitration. They can take the
form of a requirement to exhaust local remedies or require the investor to pursue local
proceedings for a certain amount of time before access to arbitration is granted (limited local
remedies clauses).39 Exhaustion of local remedies clauses are rather rare in modern investment
agreements because in contrast with the traditional framework of diplomatic protection, the idea
of investor-state dispute settlement presupposes direct access to an arbitral tribunal without the
detour of prior exhaustion of local remedies.40 In this respect, however, Article 26 of the ICSID
Convention expressly provides that states may require the exhaustion of local remedies as a
condition of their consent to arbitration under the Convention.41 Limited local remedies clauses
are more common42 and have occasionally constituted a successful state defense in the
jurisdictional phase.43 At the same time, investors, particularly in cases involving Argentina, have
sometimes successfully argued that the clauses should not apply because they are mere procedural
requirements44 or because resort to local courts was effectively hindered by the host country.45 As
2018
we will point out below, another way of circumventing limited local remedies clauses has been to
rely on most-favored nation clauses. However, in light of the current case law, investors could
face difficulties when arguing that resort to local courts would obviously be futile—an accepted
customary international law exception to the exhaustion of local remedies rule.46 While one
arbitral tribunal rejected this line of argumentation because it found that, as a legal matter,
customary international law exceptions did not apply in the case,47 in the Kılıç v. Turkmenistan
case, the arbitral tribunal decided that the claimant had not sufficiently demonstrated the obvious
futility of local remedies and ultimately denied jurisdiction.48 In (p. 409) some instances, arbitral
tribunals may—to the surprise of the investor—also read local remedies requirements into
substantive BIT provisions,49 even though such an interpretation may give rise to annulment if not
justified by the BIT under interpretation.50
d. Waiting Clauses
Waiting clauses, or cooling-off clauses, impose on investors waiting times from the moment the
dispute arises until recourse to international arbitration is permitted. This “cooling-off” period,
often lasting between three and six months, is intended to encourage an amicable settlement of
disputes through consultations between the parties in order to avoid arbitration or domestic
litigation.
Typically, waiting clauses have not presented impediments to investors in the jurisdictional
phase,51 since they have often been discarded as mere procedural and not mandatory
requirements.52 However, recent arbitral decisions indicate that the trend may have started to
reverse. The arbitral tribunal in the Burlington Resources v Ecuador case emphasized that the
purpose of the waiting clause is to offer the host state the opportunity to redress the issue before
submission of the dispute to international arbitration and so to avoid arbitration.53 If the investor
deprives the host state of this opportunity provided for in the BIT, the arbitral tribunal lacks
jurisdiction.54 Similarly, the arbitral tribunal in Murphy Exploration v Ecuador observed that the
waiting clause is not merely a procedural rule but constitutes “a fundamental requirement” that
the claimant needs to comply with “compulsorily” before instituting arbitral proceedings.55 If
arbitral tribunals start recognizing waiting clauses as full-fledged jurisdictional requirements,56
invoking non-compliance with a waiting clause will turn into another valid first line of defense for
host states. However, just like with waiver clauses, once the requirements of the waiting clause
have been complied with, the investor would be able to file a new claim.57
(p. 410) e. Procedural Trends

The above-described treatment of procedural requirements by arbitral tribunals may be
considered coincidental when viewed in isolation. However, the bigger picture shows that in
recent years procedural or jurisdictional hurdles contained in international investment agreements
(IIAs) have received more attention by arbitral tribunals than before. The clauses discussed here
are no longer “mere procedural requirements” easily dispensed with by arbitral tribunals—they
have turned into veritable defenses, often halting investment arbitration proceedings in their
tracks in the jurisdictional phase. At the same time, states tend to introduce higher procedural or
jurisdictional thresholds for bringing claims under investment treaties as another means of
circumscribing investor access to international arbitration. Norway’s never-adopted Draft Model
BIT contains an exceptionally long (36-month) local remedies clause and is exemplary of the
propensity to consider higher thresholds for access to arbitration.58 Other states, such as Canada,
ensure compliance with its IIAs’ procedural or jurisdictional requirements by making compliance
with them a pre-condition to the state’s consent to arbitrate an investment dispute.59 Others,
again, introduce special administrative review procedures before arbitration proceedings can be
instituted60 or, as we will show below, discontinue the use of investor-state dispute settlement
provisions altogether.61
4. Most-Favored Nation Clauses and Procedural or Jurisdictional

Requirements
2018
A necessary caveat here is that some of the states’ procedural requirements may be frustrated to
some extent by the application of most-favored nation (MFN) clauses to dispute settlement
clauses.62 Starting with the decision in Maffezini v Spain,63 arbitral tribunals have used MFN
clauses to import into the applicable investment treaty more favorable elements found in third-
party BITs in order to bypass procedural requirements, such as limited local remedies (p. 411)
clauses.64 While the application of MFN clauses to some jurisdictional requirements has always
been seen more critically,65 even the Maffezini line of cases, which initially seemed less
controversial, has recently met with opposition in both arbitral case law and legal scholarship.66
The extension of the MFN standard to dispute settlement provisions67 may not long ago have
seemed a convenient avenue for investors to overcome procedural hurdles by invoking lower
thresholds in other IIAs. However, the current legal uncertainty has to some extent reversed this
trend. In any case, states have begun to address the issue by including in their investment
agreements specific language that excludes the application of MFN clauses to dispute settlement
provisions.68
5. Pre-Jurisdictional Phase Summary Dismissal of Cases

In 2006, ICSID Arbitration Rule 41(5), providing for summary dismissal of an investment
arbitration at an early stage of the proceedings if the host country can show that the claim
manifestly lacks legal merit, was introduced.69 A number of recent international investment (p.
412) agreements, some pre-dating the ICSID amendment, contain similar clauses.70 Since their
introduction, the provisions have been successfully invoked by host countries several times,71 and
requests for summary dismissal could set a new trend in the defense against investment claims—
either to attack a manifest lack of merit or to, at least, create an initial obstacle to the
proceedings.72 Host countries will have to be aware that they bear the burden of persuasion and
that arbitral tribunals generally agree that the threshold for successfully invoking the manifest
lack of merit objection is high.73 Nevertheless, the outcome of the above-mentioned cases and the
overall success rate of invoking the objection74 show that host countries can now, at an early
stage of the proceedings, effectively prevail over claims that are fully or partially manifestly
without legal merit. This is all the more so because it is generally accepted that preliminary
objection provisions, including ICSID Arbitration Rule 41(5), not only apply to a manifest lack of
substantive merits, but also to a manifest lack of jurisdiction.75
6. Conclusion on Jurisdiction and Admissibility

In conclusion, in recent years the jurisdictional phase has become a much larger stumbling block
for investors than it used to be. While host states have always insisted that investors comply with
jurisdictional, admissibility, and procedural requirements, arbitral tribunals seem to have become
much more receptive to giving such provisions an effective interpretation. This has led to a
number of victories for host states in the jurisdictional phase and belies the (p. 413) perception
that the jurisdictional stage is merely a lengthy and costly - but usually easily surmountable -
hurdle for investors. It is to be expected that the recent successes for host states will also motivate
other states to take a tougher stance in the jurisdictional phase.
B. Merits
Not only the jurisdictional phase but also the merits phase provides a range of defenses for host
states. While it is common to dispute the scope of application of the substantive protections in
international investment agreements or investment laws, the “battleground” has been broadened
by an increased focus on host states’ right to regulate and a renewed focus on the interpretation
of substantive provisions.
1. Right to Regulate
The advent of “new generation” investment agreements and the discussion of host states’ right to
76
2018
regulate in the public interest76 signal the dawning of a new era. States rely both on explicit
exceptions in their international investment agreements demarcating policy pockets that elude the
protective coverage of an investment agreement and also on customary international law in order
to claim more policy space. The right to regulate is increasingly present in new bilateral
investment treaties and investment chapters in free trade agreements,77 including in the
negotiating documents relating to the new EU investment agreements and the Trans-Pacific
Partnership Agreement (TPPA).78 Its growing salience will probably lead to its increased
invocation as a defense in investor-state arbitrations that involve regulation in the public interest,
such as in the Vattenfall II case that has arisen out of Germany’s nuclear phase-out and the two
Philip Morris cases against Uruguay and Australia, involving restrictions on the labeling of
cigarette packaging.79
Treaty-based exceptions providing for a right to regulate may be introduced in particular

substantive standards, such as exceptions relating to indirect expropriation,80 or they may be
applicable to an entire treaty, such as in the case of exceptions for the protection of a state’s (p.
414) essential security interests81 or “general exceptions” modeled after GATT Article XX.82 Also,
states will likely consider further sector-specific exceptions in future agreements, given that, for
example, bail-out measures in the financial sector and sovereign debt restructuring seem
increasingly prone to lead to investment arbitration proceedings.83
In the absence of an explicit right to regulate, states may invoke a legitimate right to regulate in
the public interest under customary international law.84 The International Law Commission (ILC)
Articles on the Responsibility of States for Internationally Wrongful Acts (hereinafter ILC Articles)
are the prime relevant legal document typically construed as codifying customary international
law.85 Article 25 of the ILC Articles provides for a number of limited circumstances, the
occurrence of which “precludes” state responsibility for the violation of an international
obligation. This “necessity defense” and its relationship with treaty-based exceptions have
received considerable attention in the context of investment disputes arising out of the Argentine
economic crisis in 2001.86 However, the inconsistent arbitral jurisprudence produced on this topic,
including the often restrictive interpretation of the necessity defense, does not give reason to
assume that in practice the defense will always be available to host states.87 It is further doubtful
whether future tribunals, in the absence of a relevant treaty-based exception, will interpret
economic crises as “excusing” states from complying with obligations assumed under
international investment treaties.88
(p. 415) Exceptions and customary law defenses are likely to be further discussed in the aftermath
of recent cycles of financial crises involving, for example, Belgium, Cyprus, and Greece,89 as well
as resulting from political uprisings, such as the Arab Spring. The latter may also trigger the
invocation of defenses regarding political unrest and armed conflict.90 The first cases directly or
indirectly linked to these events have already been registered at ICSID.91
2. Delineating the Scope of Substantive Provisions

Even without an explicit right to regulate, host states are discovering ways and means to delineate
the protective scope of substantive provisions. In doing so, they limit the freedom of arbitral
tribunals to shape the scope of particular provisions as a matter of interpretation. For example, a
provision mostly encountered in North American treaty practice is one allowing for a joint
interpretative statement on the part of the contracting parties or by a special commission
established under an investment treaty, which shall be binding upon a tribunal adjudicating a case
on the basis of such a provision. The model for this trend is the binding interpretation of the
North American Free Trade Agreement (NAFTA) Free Trade Commission pursuant to Article
1131(2) of the NAFTA, which produced an interpretative statement that equated the fair and
equitable treatment standard contained in Article 1105 of the NAFTA with the minimum standard
of treatment under customary international law.92 The option of a joint interpretative statement93
as well as the express linking of the fair and equitable treatment standard to the minimum
standard under customary international law94 has since been emulated in (p. 416) the U.S. and
2018
Canadian Model BITs and in treaties concluded on their bases, such as the U.S.-DR-CAFTA. Like
the NAFTA, these treaties provide for a possibility to refer to the contracting parties or to a joint
committee with the request for an interpretation95 or to allow the disputing parties to request the
tribunal to send its proposed award to them and to the non-disputing state party to the investment
agreement for comments.96 Similar provisions in the context of taxation measures and
expropriation exist in North American treaty practice and the Energy Charter Treaty.97 For
instance, pursuant to the NAFTA, and the U.S. and Canadian Model BITs of 2012, investor
assertions that a taxation measure constitutes an expropriation have to be submitted to the
competent tax authorities of the contracting parties for a determination. Only if the tax
authorities fail to agree that the taxation measure is not an expropriation within six months may
the investor proceed to international arbitration.98
Apart from binding interpretative statements, some treaties provide for joint interpretations of the
contracting parties with no direct effect on the award. This is true in the case of the Czech
Republic-Netherlands BIT, which provides for consultations “on any matter concerning the
interpretation or application of the Agreement.” 99 The Czech Republic-Netherlands BIT formed
the basis of the CME v the Czech Republic dispute, and its provision on consultations led to the
adoption of the contracting parties’ “common position,” 100 which was later evoked by the tribunal
delivering the Final Award101 in support of its position.102
Another provision permitting non-disputing parties’ submissions regarding interpretation of a

given treaty exists under the U.S.-DR-CAFTA103 and was employed in the context of the Railroad
Development dispute with respect to the contracting parties’ understanding of the minimum
standard of treatment provision contained in Article 10.5 of the same agreement.104 The United
States, El Salvador, and Honduras argued for a restrictive interpretation of the standard and
warned against confusion with the wider scope of the fair and equitable treatment standard
contained in many other international investment agreements.105 While taking the arguments into
account, the arbitral tribunal ultimately found that the minimum standard of treatment has
evolved over time and that an overly narrow interpretation was not justified.106
Treaty-based interpretative statements aside, it is also possible that, on the basis of general
international law, that is, Article 31(3)(a) of the Vienna Convention on the Law of Treaties, states
have a right to offer authoritative interpretations of the treaties they have concluded,107(p. 417)
given that interpretations “by the parties […] must be read into the treaty for purposes of its
interpretation.” 108 At least where this is done during an ongoing investment dispute, the “dual
role” of host states as treaty parties (with an interest in interpretation) and actual respondents in
investor-state disputes (with an interest in avoiding liability) can influence the complex balance of
powers of interpretation between arbitral tribunals and states,109 and lead to an emphasis on the
host state’s interpretative views.
These various choices and possibilities show that host states aim to retain a greater influence over
the arbitral tribunals’ reading and interpretation of substantive standards of protection.110 As the
linking of the fair and equitable standard to the minimum standard of treatment shows, states
tend to give protective provisions a narrower scope where they feel such provisions could interfere
with their regulatory freedom.
Apart from delineating standards that may directly influence the direction of an arbitral tribunal’s
decision in a given proceeding, states have the possibility of making their views known in order to
influence future interpretations of a provision in question. The SGS v Pakistan case111 constitutes
a prominent example in this respect. After the arbitral tribunal had issued an award unfavorable
to the Swiss claimant investor, the Swiss authorities addressed a letter to the ICSID Secretariat
expressing their concern with regard to the arbitral tribunal’s interpretation of the treaty’s
umbrella clause in the case. The Swiss authorities criticized the arbitral tribunal for not
considering it necessary to consult with Switzerland (but only with Pakistan) when interpreting
the umbrella clause, despite attaching great significance to the contracting parties’ intentions.
Switzerland also expressed concern that the arbitral tribunal’s narrow interpretation of the
112
2018
umbrella clause ran counter to the intention of the Swiss treaty negotiators.112 The letter spelled
out Switzerland’s interpretation of the protective scope of the umbrella clause.113 Such post-
award interpretative notes may both serve as guidance in future disputes and indirectly invite
tribunals to include the contracting parties when examining their original intentions.114
Switzerland’s rare example of a claimant investor’s home state actually arguing for a wider
protective scope of a substantive provision is counterbalanced by examples of states explicitly
narrowing protections.115 In the aftermath of the Siemens v (p. 418) Argentina case, which had
allowed the application of an MFN clause to import more favorable dispute settlement provisions
into the dispute, Argentina and Panama reacted by exchanging diplomatic notes. The notes
contained an “interpretative declaration” of the MFN clause in the investment treaty concluded
between them, stating that the MFN clause did not extend to dispute settlement provisions and
that this had always been the parties’ intention.116 Such a bilateral statement possesses a stronger
binding force than Switzerland’s unilateral declaration. It can be considered a subsequent
agreement regarding the interpretation of the investment treaty pursuant to Article 31(3)(a) of the
Vienna Convention on the Law of Treaties, leaving arbitral tribunals little room for interpretative
maneuver regarding the scope of the MFN clause in question.117
Thus, where states perceive that arbitral tribunals have misinterpreted substantive protection
provisions, they have the option of adjusting the system. This may be done by including safeguards
in investment agreements, such as an explicit right to regulate, or through mechanisms of treaty
interpretation by the contracting parties during the arbitral proceedings. Beyond such safeguards,
states can bind or guide future arbitral tribunals through joint or unilateral statements about the
intended scope of certain treaty clauses. As the examples show, this is not mere theory but
actually a practice occasionally employed by host states.
C. Post-Award Phase/Enforcement
With the rendering of an award that is unfavorable to the host state, the “game” is by no means
over. Host states have access to set-aside or annulment proceedings for a limited review of the
award. Even if host states do not follow this route, they can simply decide not to pay up. This
leaves the investor in a difficult position. Since the investor will likely not be able to enforce the
award in the territory of the host state, it is left with “asset tracing” and other efforts to enforce
the arbitral award elsewhere.
1. Fundamental Use of the Annulment Process or Set-Aside

Proceedings
Host states putting up vigorous defenses in investment arbitrations display a growing tendency to
institute set-aside118 or annulment proceedings against adverse arbitral awards. While perceptions
about the use of annulment at ICSID vary,119 empirical data seem to suggest that in (p. 419)
about one-third of all cases annulment proceedings are instituted against final awards.120 In 57%
of these cases annulment is pursued by the respondent host state.121 To give an illustration,
Argentina, respondent in the largest number of investment claims initiated against a single host
state,122 has regularly filed set-aside or annulment applications as part of its defense strategy. In
light of recent—not uncontroversial123—annulments and set-asides, it has been noted that
“Argentina’s legal strategy of pursuing all possible avenues of appeal [sic] against arbitral
verdicts […] has paid dividends.” 124
Recourse to domestic courts in an attempt to set aside an investment arbitral award is not a novel
device. A delicate matter susceptible to inviting questions over the relationship between domestic
courts and arbitral tribunals,125 recourse to the national judge needs to be evaluated against the
backdrop of the forum delivering the arbitral award. A necessary distinction has to be drawn
between ICSID and non-ICSID awards: pursuant to Article 53(1) of the ICSID Convention, ICSID
awards are not subject to appeal or to any remedy other than those provided therein. The case is
different for awards delivered through other fora, including the ICSID Additional Facility.126 The
127
2018
British Columbia Supreme Court’s partial set-aside of the Metalclad award,127 where the court
read its own requirements into the fair and equitable treatment standard under Article 1105 of
NAFTA, is seen as a criticized example of a court overstepping the boundaries of judicial
review128—something host states may encourage if they are to have unfavorable awards set
aside.129 The difficulty in investment arbitration is that reviewable issues of jurisdiction and
procedure are often hard to distinguish from merits-like assessments of the scope and provisions
of the IIAs. The line between jurisdictional and substantive issues will often—sometimes quite
deliberately—be blurred. This makes it necessary for national courts to apply the correct standard
of review in set-aside proceedings, that is, not to conduct a full de (p. 420) novo review of the
arbitral tribunal’s decision on the merits while at the same time guaranteeing fundamental
procedural rights and principles.130 It remains to be seen whether set-aside proceedings will
become an effective host state defense, also in light of Argentina’s only temporary success in the
BG Group case.131 While state courts follow different approaches in their standard of review,
most of them have shown deference to the findings of arbitral tribunals and have resisted a merits
review of investment awards. Eventual “outliers” have sometimes been vacated in the next
instance or come under critical scrutiny132—making the set-aside “option” one of uncertain
outcome for host states.
2. Non-payment of Arbitral Awards

Another popular “defense” for host states is non-compliance with arbitral awards.133 As
Alexandroff and Laird point out,134 historical examples of refusals to pay include the cases of
Benvenuti & Bonfant v Congo,135 SOABI v Senegal,136 and LETCO v Liberia.137 More recent
examples are Kazakhstan’s,138 Kyrgyzstan’s,139 and Thailand’s140 refusals to pay arbitral awards.
In an ad hoc (p. 421) investment arbitration, Russia also became notorious for refusing to comply
with the Sedelmayer award.141 More recently, Argentina has made headlines for not
compensating successful claimants in awards finding against it in the wake of its 2001 financial
crisis.142
With respect to non-payment of arbitral awards, an important distinction has to be made. Host
states’ non-payment may be seen as legitimate during the recourse against arbitral awards in set-
aside or annulment proceedings, given the fact that the arbitral award may subsequently lose its
binding force. However, once all forms of recourse against arbitral awards are exhausted, non-
payment becomes a “defense” that is not envisaged by the system. As such it is to be seen more
critically, if only for the fact that it undermines the depoliticization aimed at by the investor-state
dispute settlement system. Article 27(1) of the ICSID Convention provides that investor home
states can resort to diplomatic protection if a contracting party to the ICSID Convention fails to
“abide by and to comply with” ICSID arbitral awards. Recently, other channels beyond formal
diplomatic protection143 have been used in order to “sanction” failures to pay arbitral awards,
occasionally putting a strain on bilateral relations between investor host and home state.144
3. Initiation of State-to-State Dispute Settlement

Two further trends may be observed in the context of recent investment arbitrations where the
losing state continues the legal battle either by turning against its treaty partner, in state-to-state
arbitration, or by resorting to legal proceedings against the state that has enforced an arbitral
award against assets of the host state.
A rather recent development is the use of state-to-state arbitration over the interpretation of the
investment agreement that has formed the basis of an arbitration. In the context of the Chevron
dispute,145 state-to-state arbitration was initiated by Ecuador against the United States on the
basis of the U.S.-Ecuador BIT 146 with a view to clarifying the scope of the latter’s substantive
provisions. At first sight, such proceedings may seem to target future investment arbitrations
brought on the basis of the same BIT. However, in Ecuador’s case, it may have also been an
attempt to use it as a “defense,” considering that Ecuador had instituted set-aside proceedings
against the arbitral award in Dutch courts. Any finding favorable to Ecuador in the state-to-state
2018
(p. 422) arbitration could have been presented in the national court proceedings in the hope of
exerting a positive influence on the national judge.147 Ultimately Ecuador did not prevail in the
state-to-state arbitration, with the tribunal denying jurisdiction, which might explain why the
outcome is not mentioned in the set-aside proceedings before the Dutch courts.148
Another quite interesting avenue is for a respondent host state to institute “retaliatory”
proceedings against a state that has aided an investor in enforcing an investment award against
it. In a recent case, the Russian region of Kaliningrad resorted to investment arbitration against
Lithuania, alleging that enforcement of an earlier commercial arbitral award against its assets
amounted to expropriation.149 The case was filed under the investor-state mechanism of the
Russia-Lithuania BIT, with the regional Russian Government purporting to qualify as an investor
under the treaty.150 While the claim was ultimately dismissed, this type of proceeding could make
states hesitant about assisting in enforcement proceedings against other states. Much will surely
depend on the international standing of the enforcing state and the independence of its judiciary.
However, even then there may be diplomatic implications for the enforcing state. This can be seen
in the case of Russia, which apparently voiced strong objections to the assistance of Swedish
courts in enforcement efforts by a German investor over an unpaid arbitral award delivered
against Russia.151
It is doubtful whether state-to-state arbitration triggered during an existing investor-state dispute

may directly impact an already delivered award,152 and acceptance of jurisdiction in such
proceedings has been described by one legal expert as a renegotiation of a treaty by means of
arbitration.153 Nonetheless, it remains a possible response available to a losing respondent state.
D. Other Defenses
Apart from the common objections to jurisdiction and admissibility, defenses regarding the merits
(including the emphasis on greater regulatory freedom), and the various strategies in the post-
award phase, host states have been known to employ a number of procedural and (p. 423) extra-
procedural strategies and tactics in order to gain advantages in investment arbitrations. While
many of these belong to the common arsenal of litigation strategies, some may invite criticism.
Even if legitimate under the law and policies of the host state, investors may perceive some of the
measures that will be discussed here as violating “international procedural fair play,” or in some
instances consider them as bordering on what has been coined as “guerilla tactics.” 154
1. Anti-suit Injunctions and Interference by Host State Courts and

Authorities
A tool of sometimes doubtful legitimacy originating from the common law system is the anti-suit
injunction. Anti-suit injunctions can be imposed on investors, arbitrators, or arbitral institutions by
state courts, and host states have generally used them in order to block the commencement,
progress, or enforcement of arbitral awards.155 Salient examples of anti-suit injunctions in
investment arbitration proceedings include the SGS v. Pakistan156 and the Salini v. Ethiopia157
cases. Anti-suit injunctions had also initially been issued in the context of arbitrations against
Belize. National legislation imposing severe penalties on those disregarding injunctions issued by
Belizean courts at least delayed proceedings in three UNCITRAL cases, until the Court of Appeal
of Belize decided that the injunction had to be lifted.158
Host state courts’ interference with international arbitration may sometimes take a less structured
form falling short of constituting an anti-suit injunction but very closely resembling one. In the
context of the Tethayn Copper Company Pty Limited v. Pakistan dispute, the Supreme Court of
Pakistan, in a matter pending before it at the time of initiation of (p. 424) proceedings, delivered
an order to stay proceedings on application by one of the parties for contempt of court,
specifically directing Pakistan
to make a request to the ICC and ICSID Washington D.C. not to take further steps and
2018
extend the period for nomination of the Arbitrator, so that in the meantime this Court,
which is already seized […] and is hearing the petitions filed subsequently on the same
subject […], may dispose of the same finally.159
The Court’s request to halt arbitration proceedings until it has itself pronounced on the case is
qualitatively different from preventing a claimant from pursuing proceedings because an arbitral
tribunal does not have jurisdiction in the first place.160 Nevertheless, it creates complications and
delays that the investor may not have foreseen when contemplating proceedings against the host
state.
Another means of interference with investment arbitration proceedings by courts or public

officials, at least in theory, is the institution of bad faith criminal proceedings. It is difficult to
single out particular cases, especially as criminal proceedings are usually instituted for certain
reasons, and it is difficult to determine with any detachment whether the reasons are valid or not.
However, anecdotal evidence suggests that at least some criminal proceedings have been
instituted more in response to an investment dispute than from a need for prosecution. In the
Faruk Bozbey v. Turkmenistan case, the Human Rights Committee, established under Article 28
of the International Covenant on Civil and Political Rights, found that Mr. Bozbey’s trial had
violated Article 14 of the Covenant on the right to a fair trial,161 which raises the question of
whether the criminal proceedings were unconnected to the investment dispute which Mr. Bozbey
had brought against Turkmenistan. In Ruby Roz Agricol LLP v. Kazakhstan, the host state
requested the state of residence of some key witnesses affiliated with the investor to instigate
criminal proceedings against them. This led to the witnesses’ refusal to testify in the arbitral
proceedings. Taken together with other factors, the ensuing lack of “live” witness testimony was
one of the reasons for the arbitral tribunal’s ultimate denial of jurisdiction.162
2. Counterclaims
Counterclaims are means often used by respondents in order to “strike back” in litigation and
international arbitration proceedings. However, in investment arbitrations counterclaims by
host states have been rare. This may be explained by the fact that counterclaims in investment
arbitrations usually fail.163 Despite the reference to counterclaims in Article 46 of the ICSID
(p. 425) Convention,164 often neither the substantive provisions in investment agreements nor the
arbitration clauses contain a valid basis for host states to bring claims against investors.165
However, after a partial dissent by W. M. Reisman in the context of the Spyridon Roussalis v.
Romania arbitration, the discussion has been rekindled. The partial dissent noted that “when the
States Parties to a BIT contingently consent, inter alia, to ICSID jurisdiction, the consent
component of Article 46 of the Washington Convention is ipso facto imported into any ICSID
arbitration which an investor then elects to pursue.” 166 Reisman further argued that
[i]n rejecting ICSID jurisdiction over counterclaims , a neutral tribunal […] perforce
directs the respondent State to pursue its claims in its own courts where the very investor
who had sought a forum outside the state apparatus is now constrained to become the
defendant. (And if an adverse judgment ensues, that erstwhile defendant might well
transform to claimant again, bringing another BIT claim.) Aside from duplication and
inefficiency, the sorts of transaction costs which counter-claim and set-off procedures
work to avoid, it is an ironic, if not absurd, outcome, at odds […] with the objectives of
international investment law.167
While this mainly policy-driven opinion is certainly not shared by everyone, it could encourage
host states to bring more counterclaims in the hope that the above reasoning may resonate
with future arbitral tribunals. The Goetz v. Burundi and Inmaris v. Ukraine cases demonstrate
that counterclaims could become a viable defensive tactic for host states in investment
arbitrations. Both arbitral tribunals admitted jurisdiction over the respondent’s counterclaims ,
although they eventually rejected them on the merits.168
Furthermore, the debate could lead host states to rethink the drafting of their future IIAs. For
2018
instance, an explicit reference to counterclaims could be included in the dispute settlement
clause, and investor obligations that may form the basis of a counterclaim could be expressly
incorporated either in the IIA or in national legislation, combined in the latter case with a
requirement of compliance with such obligations in the definition of covered investment in the IIA.
Either way, counterclaims —as the procedural means to “strike back” par excellence—are
certainly a device that host states may be able to use and may want to explore further.
(p. 426) 3. Delay

In the past, host states have sporadically tried to influence proceedings in their favor by refusing
to participate in investment arbitration proceedings. However, as it became apparent that arbitral
rules contain safeguards against such behavior and renouncing one’s right to be heard in an
ongoing arbitration creates a disadvantage rather than an advantage, such tactics have been
abandoned in favor of new ways to make investment arbitrations more difficult for investors.
Requests for amicus curiae participation in support of the respondent,169 as well as arbitrator
challenges,170 can be raised for valid reasons. Given the increasingly complex nature of
investment disputes relating to sensitive policy issues, the involvement of amicus curiae may often
be justified. Also, the small investment arbitrator community and the interchange of roles between
counsel and arbitrator, or the assumption of a repeat role as “state arbitrator” or “investor
arbitrator,” may raise concerns about the independence and impartiality of the actors involved.
Nevertheless, it cannot be excluded that the—intended or unintended—side effect of amicus curiae
briefs and arbitrator challenges, resulting in an increase of the length of proceedings and related
cost, may at times be a rather welcome outcome for respondent host states. A case-by-case
assessment will have to show whether host states raise valid concerns or abuse the generally
legitimate approaches as purely tactical defense tools.
4. Political Pressure
Political pressure on the investor is another instrument to which states may occasionally resort in
order to come to an amicable, or other, settlement out of arbitration. This pressure has to be
distinguished from potential host state pressure on investors as a precursor to investment
arbitration proceedings, which will often be considered by the arbitral tribunal as part of the
asserted violations of an IIA. The political pressure examined here comes after issuance of an
arbitral award and may range from subtle to clear or sometimes plainly forceful. In general,
however, discussion of political pressure is speculative in nature, since pressure may rarely be
surmised with any certainty.
The existence of political pressure is plausibly discernible in some cases. In the context of the
Ecuador v. Chevron dispute, an Ecuadorian national court issued an $18.2 billion judgment
against Chevron.171 Worldwide enforcement efforts against Chevron172 may be seen as an
attempt to influence Chevron’s position in its ongoing investment arbitration proceedings. (p. 427)
Even if such claims are not initiated by Ecuador but by the indigenous Ecuadorian communities
that obtained the judgment, one may wonder whether there has not been some form of
encouragement on the part of the Ecuadorian government. In the case of Ioannis Kardassopoulos
and Ron Fuchs v. Georgia,173 Mr. Fuchs had obtained a favorable investment award against
Georgia174 when he was invited for settlement discussions in the host state. Upon his arrival the
authorities accused him of attempted bribery and had him imprisoned.175 Reportedly, Mr. Fuchs
was subsequently requested to abandon his claim in exchange for his freedom.176 He was released
following diplomatic intervention and a settlement was reached.177 While it is not possible to
ascertain what really happened, there is at least a possibility that the host state used the pressure
of criminal proceedings to gain a bargaining advantage over Mr. Fuchs.
E. Influence of States on the System: Changing the Rules of the

Game
2018
The approaches examined here have little or no impact on ongoing cases initiated against the host
state, but purport to alter the parameters of state involvement in the dispute settlement system for
the future.
1. Denunciation of ICSID Convention and Termination of BITs

One obvious “defense” for host states is to altogether abandon the investment protection system
as it exists right now. Denunciations of the ICSID Convention by Bolivia in 2007,178 Ecuador in
2009,179 and Venezuela in 2012180 point in this direction. Apart from the question of how quickly
such denunciation comes into effect under Article 72 of the ICSID Convention,181 the
denunciation is, of course, effective as a defensive weapon only insofar as applicable IIAs do not
(p. 428) contain other dispute settlement options, such as the UNCITRAL Arbitration Rules or
rules of other arbitral institutions. Therefore, a second option is the termination of IIAs containing
substantive protection and dispute settlement clauses. This path has been pursued by Bolivia,
Ecuador, and Venezuela,182 between El Salvador and Nicaragua, and by South Africa.183 At the
same time, with the debate on the future of intra-EU BITs, some EU member states, notably the
Czech Republic, have terminated some of their bilateral investment treaties.184 Although this is
primarily driven by particular EU law considerations, it is possible that some intra-EU BIT
terminations have also had as a second raison d’être the prevention of future claims. Here again,
the termination is only a partial defense against investment treaty claims, given that many IIAs
contain so-called “sunset” or “survival” clauses that protect the legitimate interest of investors in
the validity of such agreements by stipulating that they shall apply for an additional 10 to 20
years to investments existing at the time of termination. The cumulative effect of a surviving
unilateral host state consent to arbitration in an IIA, the variety of dispute settlement options
contained therein,185 and Article 72 of the ICSID Convention potentially preserving an expressed
host state consent despite a denunciation of the ICSID Convention could make the above-
mentioned measures defensively weaker than they appear at first sight.
2. Treaty Renegotiation and Revision of Model Treaties

During treaty renegotiation or when developing a new Model BIT, host states can modify or
introduce provisions that allow them to better defend themselves against future investment claims.
Treaty renegotiation in particular is a tool that allows states to alter seemingly unfavorable
provisions, to clarify the meaning of provisions that have been interpreted in a manner contrary to
the parties’ intentions, or to escape from previous obligations without going so far as (p. 429) to
terminate the treaty. While they have been rare in the past, the last couple of years have witnessed
an increasing number of treaty renegotiations.186 The Czech Republic has been involved in a
number of treaty renegotiations,187 while, according to 2012 UNCTAD data, 20 out of 45 treaty
conclusions by EU member states since the entry into force of the Treaty of Lisbon were, in fact,
treaty renegotiations.188 However, it has to be borne in mind that most of these renegotiations
have taken place not as a defensive measure against potential investment claims but in the EU
member states’ efforts to bring their bilateral investment treaties in line with EU law.189
While treaty renegotiations require the consent of one’s treaty partner or partners and can
therefore be difficult to achieve, host states can also unilaterally shift their initial negotiating
position by operating on the basis of modernized Model BITs and making them the basis of
discussions. In the case of the more influential negotiating partners, changes in their Model BITs
are closely followed and subsequently influence the legal investment protection landscape on a
larger scale. The 2004 revisions of the U.S. and Canadian Model BITs contained far-reaching
amendments as part of an attempt to safeguard more host state policy space,190 while more
recent changes have been incremental, such as in the case of the 2012 U.S. Model BIT 191 and the
2012 version of the Canadian Model BIT 192. Other recent Model BIT revisions, such as the one
that gave birth to Colombia’s 2007 Model BIT, have aimed to strengthen host state regulatory
flexibility,193 while the same was true of Norway’s 2007 Draft Model BIT, which however was
never adopted. With the new EU negotiations of investment agreements and investment
2018
chapters in comprehensive economic partnership agreements, further changes are likely to be
witnessed. While these negotiations point to the conclusion of new generation investment treaties
in partial convergence with the North American model,194 it would not be surprising if they
resulted in novel provisions not previously encountered in investment agreements. An example in
this respect is an exception to indirect expropriation proposed by the European Union during the
Comprehensive Economic and Trade Agreement (CETA) negotiations, which introduced a
requirement for proportionality, a term never before encountered in this context.195
(p. 430) 3. Discontinuing Investor-State Dispute Settlement

The advent of the Australia-U.S. Free Trade Agreement (AUSFTA), raises the question whether in
the future recourse to investor-state dispute settlement mechanisms may be absent from new
investment treaty provisions—at least in the relations between industrialized states. In April 2011,
the Australian Government announced its intent to discontinue investor-state dispute settlement in
its future investment agreements.196 Although it seems that this stance may not be upheld by
subsequent governments,197 Australia also initially expressed its opposition to the inclusion of
investor-state dispute settlement in the context of the Trans-Pacific Partnership Agreement,
currently under negotiation.198 Australia is not the only state have to re-considered its consent to
investment arbitration. A number of Asian IIAs, such as the India-Singapore Comprehensive
Economic Cooperation Agreement (CECA), the Japan-Philippines and Japan-Australia Economic
Partnership Agreements (EPA), and the cross-strait bilateral investment agreement between China
and Taiwan, equally exclude investor-state arbitration from their provisions—although in the
latter case the lack of a regular dispute settlement clause is probably due to the sensitivity of
cross-strait relations.199 The question of the inclusion of investor-state dispute settlement also
came up in the discussions about the revision of the 2012 U.S. Model BIT,200 although ultimately
without impact on the outcome, and is one of the most controversial issues in the public debate
surrounding the negotiations of free trade agreements between, on the one hand, the European
Union, and, on the other, Canada and the United States respectively.
Removing the possibility of recourse to dispute settlement offers host states greater flexibility
because it discards an important control mechanism guaranteeing enforceability of the investor
rights protected under an investment treaty. However, this defensive measure puts into question
the whole investment protection regime and may lead to a partial re-politicization of investment
disputes.
4. Influence on the ICSID Mechanism

ICSID member states tried to exercise influence during the annual meeting of the World Bank’s
Administrative Council, venturing proposals on how the ICSID Convention should be changed or
interpreted, apparently with a view to better serving their policy agenda. These “interventions”—
which have not entirely eluded criticism201—are exemplified by attempts on the part of (p. 431)
Argentina and the Philippines. Apparent discontent with the Vivendi Decision on Annulment202
and an “Additional Opinion” by a member of the annulment committee deploring the Secretariat’s
“influence” on the decision on annulment,203 prompted Argentina’s reaction in 2010. Three items
were added to the agenda of the annual ICSID Administrative Council meeting at Argentina’s
request, namely the propriety of arbitration and annulment proceedings, the neutrality of ICSID
officials, and an assessment of internal ICSID procedures for the appointment of arbitrators and
members of ad hoc committees.204
One year later, the Philippines wrote to the ICSID Administrative Council205 in relation to the
Fraport annulment decision,206 which had annulled an award favorable to the Philippines on
grounds of “a serious departure from the fundamental rule of procedure entitling the parties to be
heard.” 207 The Philippines argued that the Decision on Annulment “was taken in excess of the ad
hoc Committee’s limited power under Article 52 of the ICSID Convention” 208 and therefore
presented “a threat to the continued utility and acceptance of the ICSID arbitration system.” 209
The Philippines further advanced seven guidelines to “ensure fair and effective annulment
210 211
2018
proceedings” 210 for the consideration of the Administrative Council.211 The guidelines generally
focus on the extraordinary and limited scope of Article 52 on annulment.212
Although it is too early to determine whether these precedents are likely to set a trend, states’
efforts to adjust the ICSID system through the ICSID Administrative Council will probably have
little or no effect. It is noteworthy that the “influence” states try to exert is shaped by their
respective experiences as parties in the proceedings and therefore may end in contradictory
suggestions. One state may be dissatisfied with a committee’s rejection of an annulment request
and therefore push for a wider scope for annulment (e.g., Argentina), while another state unhappy
about the annulment of a favorable award may push for stricter annulment criteria (e.g.,
Philippines). By the same token, these fact-based or ad hoc suggestions, even if endorsed by the
ICSID Administrative Council, would be of general application and do not appear per se to favor
states over investors, since they could work to both the benefit as well as to the detriment of
states, depending on which procedural role they find themselves in.
(p. 432) 5. Adoption of National Legislation Hostile to Investment

Protection
Although in general, domestic law may not override a state’s obligations assumed on the basis of
international investment agreements, the adoption of national legislation hostile to the investment
protection system is no doubt a device that may have a considerable impact on the latter. Recent
amendments of national constitutions and investment legislation in some Latin American
countries testify to this approach. The case of Ecuador is the one most widely discussed, with a
2008 revision of its constitution imposing limitations on arbitration and introducing a
controversial provision213 on the basis of which the state’s Constitutional Court has declared a
number of arbitration clauses in Ecuadorian BITs to be unconstitutional.214 The aforementioned
Belizean anti-suit injunction legislation is another example of national legislation that may present
impediments to international investment arbitration, although in that case the impact on
protected investment may occur only once a dispute has arisen. Even in the developed world
national legislation pertaining to investments has been subject to some restrictions,215 also where
this does not affect investment protection per se but rather the establishment of investments. The
amended strengthened national security review process for mergers and acquisitions in the United
States and the revised Investment Canada Act allowing review of proposed investment on grounds
of national security216 are some examples of this, as are other measures taken in light of the
financial crisis to assist ailing industries or to limit inter-bank lending activity.217
(p. 433) 6. Introducing Investor Obligations, Including CSR

Recent years have seen a kindling of the idea of including corporate social responsibility (CSR)
standards or other investor obligations in investment treaties.218 Gradually, but increasingly, CSR
standards are starting to be incorporated in newer treaties, including some Model BITs.219 This
has notably been the case for Norway’s 2007 Draft Model BIT and the new Austrian Model
Treaty.220 Remarkably, a CSR provision is to be found in Canada’s 2012 version of its Model
BIT,221 and a draft of the currently negotiated investment chapter of the Trans-Pacific
Partnership Agreement leaked in 2012 appears to incorporate a provision on corporate social
responsibility.222
Corporate social responsibility is also a topic of relevance to the future EU investment policy. In
its Resolution of 6 April 2011, the European Parliament called for the inclusion of corporate
social responsibility provisions in future EU IIAs.223 Although the Council’s negotiating mandates
authorizing the Commission to negotiate FTAs with prospective treaty partners, such as Canada
and the United States, and the draft treaty texts that have so far resulted from these
negotiations224 have not incorporated considerations for CSR, insistence on such standards
appears to be a recurrent theme. More recently, in October 2013, the European Parliament
insisted on the need for an “effective corporate social responsibility clause” in the future EU-
China investment agreement.225
2018
Although such standards are sometimes drafted as legally binding, in the majority of cases,
compliance with them remains voluntary.226 In the Canadian Model BIT, corporate social
responsibility is not subject to the investor-state dispute settlement provisions of this
agreement.227 Sometimes, mention of corporate social responsibility is linked to the Organisation
for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises or
to the UN Guiding Principles on Business and Human Rights,228 thereby being backed up (p. 434)
by the “enforcement” mechanisms with which these other legal instruments are endorsed.229 The
presence of corporate social responsibility as a predominantly “soft” obligation does not detract
from the fact that a new trend appears to have been set that may render CSR provisions
increasingly pertinent to investment disputes. Should such clauses become sufficiently concrete in
future IIAs, they could develop into the basis for a state counterclaim in a given dispute.
7. Professionalization of Defenses/Financing of Arbitration Claims

One important structural “defense” is for host states to reach a level playing field in investment
arbitration in areas that are outside the purely legal investment framework. Regarding expertise,
this is already happening to some extent. UNCTAD regularly sponsors sessions directed at states,
advising on treaty drafting and other matters involving investment protection. The increasing level
of success of host states in investment arbitration may in no small measure be due to the fact that
more and more experienced lawyers are handling their investment arbitrations. These can be
government lawyers who have acquired their knowledge defending a multitude of claims, law
firms that specialize in state representation in investment claims, or a “dream team” panel of
lawyers230 a state will choose for a particular dispute.
Another structural disadvantage states had faced for a long time was the lack of access to outside
financing of such investment arbitration claims. While states may be considered to have the
“deeper pockets” compared to the average investor, this is not necessarily the case when a
developing state is confronted with a large multinational corporation. But even in such cases host
states will have a hard time accessing outside third-party funding, because the funding model is
usually based on a success fee to be taken out of any monies awarded by an arbitral tribunal,
which would not accrue if the host state successfully defends an investment arbitration claim.
Nevertheless, there have been recent instances where states have been provided with outside
funding. Uruguay, for example, has received non-governmental organization (NGO) funding for
its ongoing dispute with Philip Morris.231 Also, third-party funders have commented that they may
be willing to finance either side of the dispute,232 although in the cases of host state funding, the
concrete modalities would certainly need to be worked out. Furthermore, the influence a third-
party funder would gain over case strategy might raise concerns about whether this leaves
sufficient consideration for public policy or other interests of the host state.233
(p. 435) An ambitious and interesting suggestion is to create a legal assistance center for
developing states in investment arbitration, similar to the Advisory Centre on WTO Law
(ACWL).234 Its services could range from providing legal resources and training, to legal advice
and even legal representation in investment disputes.235 The realization of the center would likely
depend as much on its proposed structure as on its funding, and would require a certain degree of
solidarity among states in helping other host states defend themselves against investment claims.
Conclusion
States have a variety of means available to them to forestall, respond to or shape investor-state
dispute settlement. These means or “defenses”—some legitimate and others sometimes less so—
span the entire arbitral process, including objections to jurisdiction, defenses in the examination
of the merits, and tactics in the post-award or enforcement phase, but they may also be external
to a given investment dispute. It is important to remember that states are the creators of the
system of investment protection. As such they have the leading role in developing the system, and
they can change it to their benefit when they are unhappy with it.
2018
As the system evolves, it is plausible that states and investors alike will come up with
groundbreaking and more complex techniques of defense—or attack. On their part, states are
likely to employ more sophisticated means, given their greater awareness and experience as
respondents in investment disputes. The increased deployment of techniques used supports the
assumption that the years to come will witness an even wider array of state defenses, leading to a
further development and refinement of the international investment protection system.(p. 436)
Footnotes:
* The authors would like to thank the reviewers of the Yearbook, as well as Jeremy Bloomenthal,
for useful comments on a draft of this chapter . The views presented, as well as any mistakes,
are the authors’ own.
1. Should the reader be reminded of a science fiction movie entitled Star Wars: The Empire
Strikes Back from the 1980s, this is not entirely coincidental. While the allegory is by no means
meant to associate host states with the evil empire depicted in the movie, host states are powerful
players in that they have created much of today’s system of investment arbitration by concluding
international investment agreements and by signing on to the ICSID Convention. It is within their
prerogative as subjects of public international law to make use of, change, or abandon the system
in order to deal with overly ‘rebellious’ investor claimants. For a similar title in the context of the
NAFTA, see Charles H Brower II, ‘Investor-state disputes under NAFTA: the Empire strikes back’
(2001–2002) 40 Columbia Journal of Transnational Law 43.
2. By the end of 2013, UNCTAD counted 3,236 international investment agreements, UNCTAD,
World Investment Report 2014 (Sales No E.14.II.D.1, 2014) 114.
3. See e.g., UNCTAD, World Investment Report 2014 (n 2); ICSID, ICSID 2012 Annual Report
(ICSID, 2012).
4. On the distinction between jurisdiction and admissibility, see Jan Paulsson, ‘Jurisdiction and
admissibility’ in Gerald Aksen and others (eds), Global Reflections on International Law,
Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Britner (ICC Publishing
2005) 601; Lars Markert, Streitschlichtungsklauseln in Investitionsschutzabkommen (Nomos
2010) 82–118; David A. R. Williams, ‘Jurisdiction and admissibility’ in Peter Muchlinski, Federico
Ortino and Christoph Schreuer (eds), The Oxford Handbook of International Investment Law
(Oxford University Press 2008) 919–927.
5. K. McArthur and P. A. Ormachea, ‘International investor-state arbitration: an empirical

analysis of ICSID decisions on jurisdiction’ (2009) 28 Review of Litigation 559, 568, pointing out
that in their analysis of all ICSID decisions and awards on jurisdiction up until 1 March 2007, in
only 15% of the cases had jurisdiction been declined. For a generally critical view, see Mahnaz
Malik, ‘The Expanding Jurisdiction of Investment-State Tribunals: Lessons for Treaty Negotiators’
(2007) Issues in International Investment Law: Background Papers for the Developing Country
Investment Negotiators’ Forum—Singapore, 1–2 October 2007, at 2,
http://www.iisd.org/pdf/2007/inv_expanding_jursidiction.pdf, accessed 9 February 2015.
6. In 2012, 42% of all publicly available decisions at the jurisdictional phase fully denied
jurisdiction. In the other 58% of cases that went on to the merits phase, jurisdiction was
sometimes partially denied, UNCTAD, IIA Issues Note No. 1: Recent Developments in Investor-
State Dispute Settlement (ISDS) (2013) 5, 31–32; in 2011, 63% of all decisions at the
jurisdictional phase fully denied jurisdiction, UNCTAD, IIA Issues Note No. 1: Latest
Developments in Investor-State Dispute Settlement (2012) 2, 19; in 2010, only one out of nine
cases (11%) was halted at the jurisdictional phase, UNCTAD, IIA Issues Note No. 1: Latest
Developments in Investor-State Dispute Settlement (2011) 1. While these changes in percentages
show that for each individual year the numbers are subject to unpredictable circumstances, the
general trend over three years (39%) shows that the jurisdictional phase has become a higher
hurdle than it used to be, see McArthur and Ormachea (n 5).
2018
7. Holiday Inns v Kingdom of Morocco (Decision on jurisdiction, 1974) ICSID Case No ARB/72/1;
see Pierre Lalive, ‘The first “World Bank” arbitration (Holiday Inns v. Morocco)—some legal
problems’ in Rosemary Rayfuse and Elihu Lauterpacht (eds), ICSID Reports 1 (Grotius
Publications Limited 1993) 645. The dispute eventually settled.
8. The Salini test is derived from the Decision on Jurisdiction in the case Salini Costruttori S.p.A.
and Italstrade S.p.A. v Kingdom of Morocco (Decision on jurisdiction, 2001) ICSID Case No
ARB/00/4, [52] (Salini v Morocco). While the Salini decision is nowadays conveniently referred to
for a number of particular criteria, it was—as the Salini tribunal pointed out—by no means the
first time that arbitral tribunals or scholars had grappled with the definition of investment for
purposes of Article 25 of the ICSID Convention, see e.g., Fedax N.V. v Venezuela (Decision on
objections to jurisdiction, 11 July 1997) ICSID Case No ARB/96/3, [43]; Christoph Schreuer, ‘Art.
25 (Jurisdiction)’ (1996) 11 ICSID Review—Foreign Investment Law Journal 318; Emmanuel
Gaillard, ‘La jurisprudence du CIRDI’ (1999) Journal du droit international 278, 292; Consortium
R.F.C.C. v Kingdom of Morocco (Décision sur la competence, 2001) ICSID Case No ARB/00/6,
[60].
9. Salini v Morocco (n 8) [52]. Many tribunals have employed the Salini test, often with slight
modifications.
10. For a summary and a new approach, see Phoenix Action Ltd. v Czech Republic (Award,
2009) ICSID Case No ARB/06/5, [84] (Phoenix).
11. For a summary of this particular discussion, see Emmanuel Gaillard, ‘Identify or define?
Reflections on the evolution of the concept of investment in ICSID practice’ in Christina Binder,
Ursula Kriebaum, August Reinisch and Stephan Wittich (eds), International Investment Law for
the 21st Century—Essays in Honour of Christoph Schreuer (Oxford University Press 2009) 403,
407. Interestingly, Christoph Schreuer, who was one of the first to point out certain criteria of an
‘investment’ in the first edition of his commentary to the ICSID Convention, felt the need to clarify
in the second edition that these had been meant as indicators, not as a cumulative test, see
Christoph Schreuer, Loretta Malintoppi, August Reinisch and Anthony Sinclair, The ICSID
Convention: A Commentary (2nd ed., Cambridge University Press, 2009) 128; see also Rudolf
Dolzer and Christoph Schreuer, Principles of International Investment Law (Oxford University
Press 2008) 69.
12. Patrick Mitchell v Democratic Republic of Congo (Decision on the application for annulment
of the award, 2006) ICSID Case No ARB/99/7, [39]–[41]; Malaysian Historical Salvors Sdn, Bhd v
Government of Malaysia (Award on jurisdiction, 2007) ICSID Case No ARB/05/10, [125], [143];
annulled on this ground (Decision on annulment, 2009) [74].
13. Julian D Mortensson, ‘The meaning of “investment”: ICSID’s travaux and the domain of
international investment Law’ (2010) 51 (1) Harvard International Law Journal 257, 301; see also
Biwater Gauff (Tanzania) Ltd. v United Republic of Tanzania (Award, 2008) ICSID Case No
ARB/05/22, [312] (Biwater).
14. Phoenix (n 10) [100]–[114] approving Gustav F W Hamester GmbH & Co KG v Republic of
Ghana (Award, 2010) ICSID Case No ARB/07/24, [123]–[124] (Gustav F. W. Hamester)
(coincidentally presided over by the same arbitrator as in the Phoenix case).
15. See e.g., Inceysa Vallisoletana S.L. v Republic of El Salvador (Award, 2006) ICSID Case No
ARB/03/26, [207]; Fraport AG Frankfurt Airport Services Worldwide v Republic of the Philippines
(Award, 2007) ICSID Case No ARB/03/25, [344]–[401] (meanwhile annulled, however on different
grounds); but compare the Dissenting Opinion of Bernardo M. Cremades attached to this award.
Some arbitral tribunals read the legality criterion into international investment agreements even if
it is not explicitly contained therein, see Plama Consortium Limited v Republic of Bulgaria
(Award, 2008) ICSID Case No ARB/03/24, [138]–[139] (Plama).
16. For a critical view on the Phoenix test, see Saba Fakes v Republic of Turkey (Award, 2010)
2018
ICSID Case No ARB/07/20, [110]. The Saba Fakes arbitral tribunal considered the term
‘investment’ under Article 25 of the ICSID Convention to be endowed with an objective scope that
is not simply linked to the consent of the parties (ibid 108) and opined that this objective definition
does not encompass good faith and legality (ibid 112). See also on the topic Catharine Titi, ‘The
arbitrator as a lawmaker: jurisgenerative processes in investment arbitration’ (2013) 14 (5)
Journal of World Investment & Trade 829, 835–837; Stephan Schill, ‘Illegal investments in
investment treaty arbitration’ 11 (2) The Law and Practice of International Courts and Tribunals
(2012) 281.
17. Romak S.A. v Republic of Uzbekistan (Award, 2009) UNCITRAL, PCA Case No AA280, [242]
(Romak); Alps Finance v Slovak Republic (Award, 2011) UNCITRAL, [246] (Alps Finance).
18. Romak (n 17) [104–105]; Alps Finance (n 17) [103].
19. Romak (n 17) [207]; Alps Finance (n 17) [241].
20. White Industries Australia Ltd. v Republic of India (Award, 2011) UNCITRAL, [7.3.8];
Société Générale v Dominican Republic (Award on preliminary objections to jurisdiction, 2008)
UNCITRAL, LCIA Case No UN 7927 [32].
21. See e.g., Global Trading Resource Corp. and Globex International, Inc. v Ukraine (Award,
2010) ICSID Case No ARB/09/11, [57] (Global Trading).
22. See World Duty Free Company Limited v Republic of Kenya (Award, 2006) ICSID Case No
ARB/00/7, [157], [179]–[188]. On the effects of corruption on investment contracts, see generally
Hilmar Raeschke-Kessler and Dorothee Gottwald, ‘Corruption’ in Peter Muchlinski, Federico
Ortino and Christoph Schreuer (eds), The Oxford Handbook of International Investment Law
(Oxford University Press 2008) 584.
23. Metal-Tech Ltd. v Republic of Uzbekistan (Award, 2013) ICSID Case No ARB/10/3, [337]–
[352]; for an analysis, Deyan Draguiev, ‘Proving Corruption in Arbitration: Lessons to be Learned
from Metal-Tech v. Republic of Uzbekistan’ Kluwer Arbitration Blog (11 February 2014)
<http://kluwerarbitrationblog.com/blog/2014/02/11/proving-corruption-in-arbitration-lessons-to-
be-learned-from-metal-tech-v-republic-of-uzbekistan/>.
24. Jason W. Yackee, ‘Investment treaties and investor corruption: an emerging defense for host
states?’ (2012) 52 (3) Virginia International Law Journal 723, 745 (‘In short, investor corruption
seems to be an emerging state defense in investment treaty arbitration.’); Stephan Wilske,
‘Sanctions for unethical and illegal behavior in international arbitration: a double-edged sword?’
(2010) 3 (2) Contemporary Asia Arbitration Journal 214.
25. Wilske (n 24) 214.
26. Raeschke-Kessler and Gottwald (n 22) 584, 598; Wilske (n 24) 224; but see Yackee (n 24)
742–745 (suggesting that corruption should work to the detriment of the investor).
27. For discussion of a number of these mechanisms or requirements, see e.g., Christoph
Schreuer, ‘Travelling the BIT route—of waiting periods, umbrella clauses and forks in the road’
(2004) 5 (2) Journal of World Investment & Trade 231; Christoph Schreuer, ‘Calvo’s
grandchildren: the return of local remedies in investment arbitration’ (2005) 4 The Law and
Practice of International Courts and Tribunals 1; Christoph Schreuer, ‘Interaction of international
tribunals and domestic courts in investment law’ in Arthur W. Rovine (ed), Contemporary Issues in
International Arbitration and Mediation—The Fordham Papers 2010 (Martinus Nijhoff 2010) 71;
Katja Yannaca-Small, ‘Parallel proceedings’ in Peter Muchlinski, Federico Ortino and Christoph
Schreuer (eds), The Oxford Handbook of International Investment Law (Oxford University Press
2008) 1025–1029; Markert, Streitschlichtungsklauseln in Investitionsschutzabkommen (n 4) 118–
261; Jacomijn van Haersolte-van Hof and Anne K. Hoffmann, ‘The relationship between
international tribunals and domestic courts’ in Peter Muchlinski, Federico Ortino and Christoph
2018
Schreuer (eds), The Oxford Handbook of International Investment Law (Oxford University Press
2008) 998–1001.
28. For a listing of the relevant case law, see Gerhard Wegen and Lars Markert, ‘Food for
thought on fork-in-the-road—A clause awakens from its hibernation’ in Christian Klausegger,
Peter Klein and others (eds), Austrian Arbitration Yearbook 2010 (Vienna, Manz 2010) 269, 273
(n 23); for details on a number of cases, see Schreuer, ‘Travelling the BIT route’ (n 27) 231, 239–
249.
29. Chevron Corporation (USA) and Texaco Petroleum Corporation (USA) v Republic of
Ecuador, (Third interim award on jurisdiction and admissibility, 2012) UNCITRAL, PCA Case No
2009-23 [475].
30. Chevron (n 29) [476].
31. Ronald. Lauder v Czech Republic (Award, 2001), UNCITRAL [162]; CMS Gas Transmission
Co. v Republic of Argentina (Decision on Jurisdiction, 2003) ICSID Case No ARB/01/8, [80];
Azurix Corp. v Republic of Argentina (Decision on Jurisdiction, 2003) ICSID Case No ARB/01/12,
[90]; Alex Genin, Eastern Credit Limited, Inc. and A.A. Baltoil v Republic of Estonia (Award,
2001) ICSID Case No ARB/99/2, [331].
32. Pantechniki S.A. Contractors & Engineers v Republic of Albania (Award, 2009) ICSID Case
No ARB/07/21, [67] (Pantechniki); for a critical analysis of the case, see Wegen and Markert (n
28) 282.
33. Pantechniki (n 32) [67], [68]. For a similar fact pattern, reasoning, and outcome, see H&H
Enterprises Investments, Inc. v Arab Republic of Egypt (Award, 2014) ICSID Case No ARB 09/15
(unpublished).
34. Waste Management v United Mexican States (Award, 2000) ICSID Case No ARB(AF)/98/2,
[27(b)]; Commerce Group Corp. and San Sebastian Gold Mines, Inc. v Republic of El Salvador
(Award, 2011) ICSID Case No ARB/09/17, [115], [128]. Particularly effective in this respect is the
Canadian Model BIT, which specifically qualifies its waiver clause as a sine qua non of the host
state’s consent to arbitration, see art 22(2)(e) and 25 Canadian Model BIT (2012).
35. Art 1121 (1) NAFTA; art 10.18 (2) (b) (ii) DR-CAFTA; art 26 2) (b) (ii) U.S. Model BIT
(2012).
36. Céline Lévesque, ‘Investor state arbitration under NAFTA Chapter 11: what lies beneath
jurisdictional challenges’ (2002) 17 ICSID Review—Foreign Investment Law Journal 320, 372.
37. Pac Rim Cayman LLC v Republic of El Salvador (Decision on the respondent’s preliminary
objections under CAFTA Articles 10.20.4 and 10.20.5, 2010) ICSID Case No ARB/09/12, [252]-
[254]; Railroad Development Corp v Republic of Guatemala (Decision on objection to jurisdiction
under CAFTA Article 10.20.5, 2008) ICSID Case No ARB/07/23, [75].
38. Waste Management v United Mexican States (Decision on jurisdiction, 2002), ICSID Case No
ARB(AF)/98/2 [37] (‘In the Tribunal’s view, neither the express terms of NAFTA nor the applicable
rules of international law preclude a claimant who has failed to comply with the prerequisites for
submission to arbitration under Article 1121 (1) from commencing arbitration a second time in
compliance with those prerequisites. That is what the Claimant has done here.’).
39. On local remedies clauses in various forms, see Schreuer, ‘Calvo’s grandchildren’ (n 27) 1.
40. Some treaties make this explicit. For instance, art 15(2) of the Austrian Model BIT (2011
version) provides that ‘[t]he consent [to the submission of a dispute to international arbitration]
implies the renunciation of the requirement that the internal administrative or juridical remedies
should be exhausted.’
2018
41. Such a requirement would typically need to be found in the investment treaty. Guatemala is
the only state to have given ICSID notice pursuant to art 25(4) of the ICSID Convention that it
requires exhaustion of local remedies.
42. Schreuer, ‘Calvo’s grandchildren’ (n 27) 3–5.
43. See e.g., ICS Inspection and Control Services Limited (United Kingdom) v Republic of
Argentina (Award on jurisdiction, 2012) UNCITRAL, PCA Case No 2010-9, [273] (ICS
Inspection). The tribunal denied jurisdiction due to the investor’s failure to comply with a limited
(18-month) local remedies requirement.
44. TSA Spectrum de Argentina SA v Republic of Argentina (Award, 2008) ICSID Case No
ARB/05/5, [112]; similarly Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del
Sur S.A. v Republic of Argentina (Decision on jurisdiction, 2012) ICSID Case No ARB/09/1, [135].
45. BG Group Plc. v Republic of Argentina, (Final Award, 2007) UNCITRAL [147] (BG Group).
46. Claim of Finnish shipowners against Great Britain in respect of the use of certain Finnish
vessels during the war (Finland, Great Britain), (Award), UNRIAA vol III 1479, 1496;
International Law Association, Diplomatic Protection of Persons and Property, First Report
(2002) 19; see also Biwater (n 13) [343].
47. BG Group (n 45) [146].
48. Kılıç İnşaat İthalat İhracat Sanayi ve Ticaret Anonim Şirketi v Turkmenistan (Award, 2013)
ICSID Case No ARB/10/1, [8.1.21]; similarly ICS Inspection (n 43) [269]; contra Philip Morris
Brands SARL, Philip Morris Products S.A. and Abal Hermanos S.A. v Oriental Republic of
Uruguay (Decision on jurisdiction, 2013) ICSID Case No ARB/10/7, [148], [234]; Abaclat and
Others (Case formerly known as Giovanna a Beccara and Others) v Republic of Argentina
(Decision on jurisdiction and admissibility, 2011) ICSID Case No ARB/07/5, [583] (deciding in
light of the special aspect of mass claims).
49. Helnan International Hotels A/S v Arab Republic of Egypt, ICSID Case No ARB/05/19
(Award, 2008) [148]; on the issue generally, see Ursula Kriebaum, ‘Local remedies and the
standards for the protection of foreign investment’ in Christina Binder, Ursula Kriebaum, August
Reinisch and Stephan Wittich (eds), International Investment Law for the 21st Century—Essays in
Honour of Christoph Schreuer (Oxford University Press 2009) 417.
50. Helnan International Hotels A/S v Arab Republic of Egypt (Decision on annulment, 2010)
ICSID Case No ARB/05/19, [34]–[57].
51. Christoph Schreuer, ‘Consent to arbitration’ in Peter Muchlinski, Federico Ortino and
Christoph Schreuer (eds), The Oxford Handbook of International Investment Law (Oxford
University Press 2008) 844–846 (including extensive references to case law); the only exception in
older case law seems to have been the Goetz v Burundi case, in which the arbitral tribunal
sanctioned the non-compliance with a particular waiting clause requiring diplomatic intervention
with a partial denial of its jurisdiction, Goetz and others v Republic of Burundi, ICSID Case No
ARB/95/3 (Award, 1999) [91]–[93] (Goetz).
52. Markert, Streitschlichtungsklauseln in Investitionsschutzabkommen (n 4) 174–175.
53. Burlington Resources Inc. v Ecuador (Decision on jurisdiction, 2010) ICSID Case No
ARB/08/5, [316]–[318], [336].
54. Burlington Resources Inc. v Ecuador (Decision on Jurisdiction, 2010) ICSID Case No
ARB/08/5, [315], [335]; similarly, but in an obiter dictum, Enron Corporation and Ponderosa
Assets LLP v Argentina (Decision on jurisdiction, 2004) ICSID Case No ARB/01/3, [88].
55. Murphy Exploration and Production Company International v Ecuador (Award on
2018
jurisdiction, 2010) ICSID Case No ARB/08/4, [149].
56. ibid [156]. Cf. H. A. Grigera Naόn’s Partial Dissenting Opinion attached to the Award.
57. See (n 38).
58. Art 15 of the Norway Draft Model BIT (2007) first provides for the possibility of amicable
settlement through consultation, imposing no time limit (para 2), and subsequently provides for
the state’s consent to arbitration subject to the fulfillment of certain criteria, including that
‘agreement cannot be reached between the parties to this dispute within 36 months from its
submission to a local court for the purpose of pursuing local remedies, after having exhausted any
administrative remedies’ (para 3(i)).
59. Art 26(5) of the Canadian Model BIT (2004) (‘Failure to meet any of the conditions precedent
provided for in paragraphs 1 through 3 shall nullify the consent of the Parties given in Article 28
(Consent to Arbitration).’). However, this provision is absent from the 2012 version of the
Canadian Model BIT.
60. For a description of the mechanism in China’s BITs, see Lars Markert, ‘Arbitrating under
China’s investment treaties—Does it really work?’ (2012) 5(2) Contemporary Asia Arbitration
Journal 205, 216.
61. See below, Section E.3.
62. On the taxonomy of dispute settlement clauses as either ‘admissibility’ or ‘jurisdictional’

requirements and the different MFN treatment by arbitral tribunals associated with it, see
UNCTAD, ‘Most-Favoured-Nation Treatment’ (UNCTAD Series on International Investment
Agreements II, UNCTAD/DIAE/IA/2010/1, 2010) 66; Teinver S.A., Transportes de Cercanías S.A.
and Autobuses Urbanos del Sur S.A. v Argentina (n 44) [168]–[172]; Markert,
Streitschlichtungsklauseln in Investitionsschutzabkommen (n 4) 278–283.
63. Emilio Agustín Maffezini v Kingdom of Spain (Decision on Jurisdiction, 2000) ICSID Case No
ARB/97/7, [64] (Maffezini)
64. See e.g., Siemens A.G. v Republic of Argentina (Decision on Jurisdiction, 2004) ICSID Case
No ARB/02/8, [94]; Gas Natural SDG, S.A. v Republic of Argentina (Decision on Preliminary
Questions on Jurisdiction, 2005) ICSID Case No ARB/03/10, [31]; National Grid v Republic of
Argentina, (Decision on Jurisdiction, 2006) UNCITRAL [79] (National Grid); Impregilo S.p.A. v
Republic of Argentina (Award, 2011) ICSID Case No ARB/07/17, [79]; Hochtief AG v Republic of
Argentina (Decision on Jurisdiction, 2011) ICSID Case No ARB/07/31, [77].
65. See e.g., Plama Consortium Limited v Bulgaria (Decision on Jurisdiction, 8 February 2005)
ICSID Case No ARB/03/24.
66. ICS Inspection (n 43); Wintershall Aktiengesellschaft v Argentina (Award, 8 December 2008)
ICSID Case No ARB/04/14; Concurring and Dissenting Opinion of Brigitte Stern in Impregilo
S.p.A. v Argentina (Award, 21 June 2011) ICSID Case No ARB/07/17; Separate and Dissenting
Opinion of J. Christopher Thomas to Hochtief AG v Argentina (Decision on Jurisdiction, 24
October 2011) ICSID Case No ARB/07/31. For some of the relevant literature, for and against the
Maffezini line, see Christoph Schreuer, ‘Consent to Arbitration’ (n 51) 851–855 and, among the
more recent literature, Zachary Douglas, ‘The MFN clause in investment arbitration: treaty
interpretation off the rails’ (2011) 2(1) Journal of International Dispute Settlement 97; Stephan W
Schill, ‘Allocating adjudicatory authority: most-favoured-nation clauses as a basis of jurisdiction—
A reply to Zachary Douglas’ (2011) 2(2) Journal of International Dispute Settlement 353; Titi,
‘The arbitrator as a lawmaker’ (n 16) 834; Catharine Titi, The Right to Regulate in International
Investment Law (Nomos and Hart Publishing, 2014) 136–138; Marc Bungenberg and Catharine
Titi, ‘Developments in international investment law’ in C. Herrmann and J. P. Terchechte (eds),
European Yearbook of International Economic Law 2013 (Springer 2013) 458.
2018
67. For a novel case in which an investor, by way of an MFN clause, was allowed to avail itself
of the ICSID arbitration regime instead of the UNCITRAL arbitration regime, see Garanti Koza
LLP v Turkmenistan (Decision on Jurisdiction, 2013) ICSID Case No ARB/11/20 [96].
68. See UNCTAD, ‘Most Favoured-Nation Treatment’ (n 62) 84–86 and, for some more recent
examples, Titi, The Right to Regulate in International Investment Law (n 66) 136–138.
69. ICSID Arbitration Rule 41(5) provides:
Unless the parties have agreed to another expedited procedure for making preliminary
objections, a party may, no later than 30 days after the constitution of the Tribunal, and
in any event before the first session of the Tribunal, file an objection that a claim is
manifestly without legal merit. The party shall specify as precisely as possible the basis for
the objection. The Tribunal, after giving the parties the opportunity to present their
observations on the objection, shall, at its first session or promptly thereafter, notify the
parties of its decision on the objection. The decision of the Tribunal shall be without
prejudice to the right of a party to file an objection pursuant to paragraph (1) or to
object, in the course of the proceeding, that a claim lacks legal merit.
See also art 45(6) of the ICSID Additional Facility Rules for an analogous provision.
70. See e.g., art 10.20.4 and 10.20.5 of the DR-CAFTA; art 28.4 and 28.5 of the U.S. Model BIT
(2004); for further examples from U.S. treaty practice, see Michele Potestà and Marija Sobat,
‘Frivolous claims in international adjudication: a study of ICSID Rule 41(5) and of procedures of
other courts and tribunals to dismiss claims summarily’ (2012) 3 (1) Journal of International
Dispute Settlement 137, 159 (n 149).
71. As of August 2013, there have been full or partial summary dismissals in the following cases:
Global Trading (n 21) [58]; Rachel S. Grynberg, Stephen M. Grynberg, Miriam Z. Grynberg and
RSM Production Corporation v Grenada (Award, 2010) ICSID Case No ARB/10/6, [7.2.1]
(Grynberg); Commerce Group (n 34) [115, 128]; Accession Mezzanine Capital L.P. et al. v
Hungary (Decision on respondent’s objection under ICSID Arbitration Rule 41(5), 16 January
2013) ICSID Case No ARB/12/3, [77]; Emmis International Holding, B.V. et al. v Hungary
(Decision on respondent’s objection under ICSID Arbitration Rule 41(5), 2013) ICSID Case No
ARB/12/2, [85]. For a case in which the investor withdrew one of its claims after the arbitral
tribunal had indicated that it manifestly lacked legal merit, see Trans-Global Petroleum, Inc. v
Hashemite Kingdom of Jordan (Decision on the respondent’s objection under Rule 41(5) of the
ICSID Arbitration Rules, 2008) ICSID Case No ARB/07/25, [118]–[120] (Trans-Global Petroleum).
72. See Lars Markert, ‘Preliminary objections pursuant to ICSID Arbitration Rule 41(5)—Soon
to become the preliminary objection of choice?’ (2012) 9 (3) Transnational Dispute Management
23; Chester Brown and Sergio Puig, ‘The Power of ICSID Tribunals to Dismiss Proceedings
Summarily: An Analysis of Rule 41(5) of the ICSID Arbitration Rules’ (2011) 10 Law and Practice
of International Courts and Tribunals, Sydney Law School Legal Studies Research Paper No
11/33, 33, <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1859446>.
73. Trans-Global Petroleum (n 71) [88]; Brandes Investment Partners, LP v Venezuela (Decision
on the Respondent’s Objection under Rule 41(5) of the ICSID Arbitration Rules, 2009) ICSID Case
No ARB/08/3, [63]; Global Trading (n 21) [35]; Grynberg (n 71) [6.1.1]–[6.1.2].
74. As of August 2013, about 42%, or five (see n 71) of the 12 preliminary objection proceedings,
had been fully or partially successful. In one additional case, Mobile TeleSystems OJSC v
Turkmenistan, ICSID Case No ARB(AF)/11/4, a preliminary objection had been filed pursuant to
Article 45(6) of the ICSID Additional Facility Rules but did not have to be decided because
proceedings were discontinued.
75. Global Trading (n 21) [30]; Brandes Investment Partners, LP v Venezuela (n 73) [52].
2018
76. See generally on this issue Titi, The Right to Regulate in International Investment Law (n 66);
Lars Markert, ‘The crucial question of future investment treaties: balancing investors’ rights and
regulatory interests of host States’ in Marc Bungenberg, Jörn Griebel and Steffen Hindelang (eds),
European Yearbook of International Economic Law 2011, Special Issue: International Investment
Law and EU Law (Springer 2011) 145; Andrew Newcombe, ‘General exceptions in international
investment agreements’ in M.-C. Cordonier Segger, M. W. Gehring and A. Newcombe (eds),
Sustainable Development in World Investment Law (Kluwer Law International 2011) 351.
77. For examples, see Markert, ‘The crucial question of future investment treaties: balancing
investors’ rights and regulatory interests of host States’ (n 76) 168–169.
78. Titi, The Right to Regulate in International Investment Law (n 66) 61–62. See further
Catharine Titi, ‘EU investment agreements and the search for a new balance: a paradigm shift
from laissez-faire liberalism toward embedded liberalism?’ (2013) Columbia FDI Perspectives and
Marc Bungenberg and Catharine Titi, ‘Developments in international investment law’ in C.
Herrmann and J. P. Terchechte (eds), European Yearbook of International Economic Law 2014
(Springer 2014).
79. See e.g., UNCTAD, ‘Latest Developments in Investor-State Dispute Settlement’ (2012) (n 6)
1–2.
80. E.g., Annex B of the U.S. Model BIT (2012) and Annex B.10 of the Canadian Model BIT
(2012).
81. E.g., art 18(4) of the Canadian Model BIT (2012) and art 18 of the U.S. Model BIT (2012).
82. E.g., art 18(1) of the Canadian Model BIT (2012) and, especially, art 10(1) of the Canadian
Model BIT (2004). On the use of exceptions in investment treaties, see generally Titi, The Right to
Regulate in International Investment Law (n 66); Markert, “The crucial question of future
investment treaties: balancing investors’ rights and regulatory interests of host states” (n 76) 159–
163; Peter Muchlinski, ‘Trends in international investment agreements: balancing investor rights
and the right to regulate—the issue of national security’ in K. P. Sauvant (ed), Yearbook on
International Investment Law and Policy (Oxford University Press 2009) 35; see generally
Newcombe, ‘General exceptions in international investment agreements’ (n 76).
83. See e.g., Ping An Life Insurance Company of China, Limited and Ping An Insurance (Group)
Company of China, Limited v Kingdom of Belgium (Registered on 19 September 2012) ICSID
Case No ARB/12/29; Poštová banka, a.s. and Istrokapital SE v Hellenic Republic (registered on
May 20, 2013) ICSID Case No ARB/13/8. For reports about two further cases (Cyprus Popular
Bank v Hellenic Republic and Marfin Investment Group v Cyprus) in their early stages in mid-
2013, see Sebastian Perry, ‘Bondholders pursue Greece over debt haircut’ Global Arbitration
Review News (May 7, 2013) [on file with authors].
84. From the extensive literature on state defenses under general international law, see
selectively Andrea K. Bjorklund, ‘Emergency exceptions: state of necessity and force majeure’ in
Peter Muchlinski, Federico Ortino and Christoph Schreuer (eds), The Oxford Handbook of
International Investment Law (Oxford University Press 2008) 459; William W. Burke-White and
Andreas von Staden, ‘Investment protection in extraordinary times: the interpretation and
application of non-precluded measures provisions in bilateral investment treaties’ 48(2) Virginia
Journal of International Law (2008) 307, 320; Titi, The Right to Regulate in International
Investment Law (n 66) 235.
85. See e.g., CMS Gas Transmission Co. v Republic of Argentina (Award, 2005) ICSID Case No
ARB/01/8, [315]; Enron Creditors Recovery Corporation (formerly Enron Corporation) and
Ponderosa Assets, L.P. v Republic of Argentina (Award, 2007) ICSID Case No ARB/01/3, [303];
CMS Gas Transmission Co. v Argentina (Decision on Annulment, 2007) ICSID Case No ARB/01/8
[130] (CMS Annulment). For a discussion and extensive literature, see Catharine Titi, The Right to
Regulate in International Investment Law (n 66) 236.
2018
86. See e.g., CMS Annulment (n 85) [120]–[136].
87. For a discussion of this topic and extensive bibliography, see Titi, The Right to Regulate in
International Investment Law (n 66) 235.
88. ibid.
89. For these cases, see (n 91). However, it may be assumed that sovereign debt restructuring
within the European Union is less apt to create a wave of arbitrations than the Argentine financial
crisis. This is less because of the complex interaction between EU law and international
investment law or the current uncertainty about the future of intra-EU BITs, and it is more due to
the fact that the majority of the EU member states’ BITs are treaties concluded with developing
countries, traditional capital importers, while traditional capital exporters, with considerable
investment in the European Union, such as the United States, have not protected their investors
by way of investment treaties. It is also not to be expected that investment treaties currently under
negotiation between developed countries will enable such types of investment disputes in the
future. It should further be noted that some intra-EU BITs, such as the Germany-Greece BIT, are
old treaties that do not provide for access to investor state dispute settlement, thereby limiting
further the potential for arbitration between EU member states.
90. On the effect of armed conflict on treaties, see generally ILC, ‘Effects of Armed Conflicts on
Treaties’ in Report of the International Law Commission, Sixty-third session (26 April–3 June and
4 July–12 August 2011) UN Doc A/66/10 (New York: United Nations 2011); see also Christoph
Schreuer, ‘The protection of investments in armed conflicts’ (2012) 9(3) Transnational Dispute
Management 1–18 (with a focus on Libya).
91. E.g., Hussain Sajwani, Damac Park Avenue for Real Estate Development S.A.E., and Damac
Gamsha Bay for Development S.A.E. v Arab Republic of Egypt (Registered on 20 June 2011)
ICSID Case No ARB/11/16; Ping An Life Insurance Company of China, Limited and Ping An
Insurance (Group) Company of China, Limited v Kingdom of Belgium (Registered on 19
September 2012) ICSID Case No ARB/12/29; Poštová banka, a.s. and ISTROKAPITAL SE v
Hellenic Republic (Registered on 20 May 2013) ICSID Case No ARB/13/8; Marfin Investment
Group Holdings S.A., Alexandros Bakatselos and others v Republic of Cyprus (Registered on 27
September 2013) ICSID Case No ARB/13/27.
92. NAFTA, ‘Free Trade Commission Clarifications Related to NAFTA Chapter 11, 31 July
2001,’ <http://www.worldtradelaw.net/nafta/chap11interp.pdf>.
93. Art 30(3) of the U.S. Model BIT (2012) and art 33(1) of the Canadian Model BIT (2012),
respectively.
94. Art 5 in connection with Annex A of the U.S. Model BIT (2012); art 6 of the Canadian Model
BIT (2012).
95. Art 31 U.S. Model BIT (2012). See also art 89 Japan-Mexico FTA.
96. Art 28(9)(a) U.S. Model BIT (2012). See also, e.g., art 10.20(8) Taiwan-Nicaragua FTA, art
25(14)(a) Colombia-Peru BIT (2007).
97. Art 21(5) Energy Charter Treaty.
98. Art 2103(6) of the NAFTA; art 21(2) U.S. Model BIT (2012); art 14(7) of the Canadian Model
BIT (2012).
99. Art 9 Czech Republic-Netherlands BIT.
100. CME Czech Republic B.V. (The Netherlands) v the Czech Republic (Final Award, 2003)
UNCITRAL, [87].
2018
101. ibid [87] (the contracting parties’ common position had been adopted after an earlier
partial award).
102. ibid [437].
103. See in particular art 10.20(2) CAFTA.
104. See Railroad Development Corporation (RDC) v Guatemala (Award, 2012) ICSID Case No
ARB/07/23, [207]–[211]. See also Matthew Pountney, ‘States weigh-in on DR-CAFTA claim’
Global Arbitration Review News (23 February 2012).
105. RDC v Guatemala (n 104) [207]–[211].
106. RDC v Guatemala (n 104) [218]–[219].
107. UNCTAD, IIA Issues Note No. 3: Interpretation of IIAs: What States Can Do (2011) 3, with
citations.
108. ILC, ‘Yearbook of the International Law Commission 1966, Vol. II’ 221, [14], UN Doc
A/CN.4/SER.A/1966/Add.l,
<http://untreaty.un.org/ilc/publications/yearbooks/Ybkvolumes%28e%29/ILC_1966_v2_e.pdf>.
109. For a conceptualization of the issue, see Anthea Roberts, ‘Power and persuasion in
investment treaty interpretation: the dual role of states’ (2010) 104 The American Journal of
International Law 179, 180.
110. For a critical view of some of these developments, Brower (n 1), 43, 85.
111. SGS Société Générale de Surveillance S.A. v Islamic Republic of Pakistan (Award, 2003)
ICSID Case No ARB/01/13 (SGS Société Générale).
112. Note on the Interpretation of Article 11 of the BIT between Switzerland and Pakistan in the
light of the Decision of the Tribunal on Objections to Jurisdiction of ICSID in SGS Société
Générale (n 111), attached to the Letter of the Swiss Secretariat for Economic Affairs to the
ICSID Deputy-Secretary General dated 1 October 2003, cited in Emmanuel Gaillard, ‘Investment
treaty arbitration and jurisdiction over contract claims—the SGS cases considered’ in Todd Weiler
(ed), International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA,
Bilateral Treaties and Customary International Law (London 2005) 341–342.
113. ibid.
114. UNCTAD (n 107) 15.
115. As Kaufmann-Kohler interestingly points out, most often the home states tend to side with
the defending host state’s view of the proper interpretation of an IIA, not with the investor’s
perspective, Gabrielle Kaufmann-Kohler, ‘Non-disputing state submissions in investment
arbitration: resurgence of diplomatic protection?’ in Laurence Boisson de Chazournes and others
(eds), Diplomatic and Judicial Means of Dispute Settlement (Leiden 2013) 305.
116. For an account, see National Grid (n 64) [85].
117. UNCTAD (n 107) 11. For a temporal differentiation, Roberts (n 109) 216.
118. On setting aside proceedings in international investment law, see Lars Markert and Helene
Bubrowski, ‘National setting aside proceedings’ in Marc Bungenberg and others (eds),
International Investment Law (Baden-Baden 2015) 1460.
119. In a 2012 survey, ICSID explained on the basis of empirical data that the rate of
annulments from 2001 to 2012 was 7%, while the rate of annulments from 1971 to 2000 was
13%, ICSID, Background Paper on Annulment for the ICSID Administrative Council 2012, [37].
2018
According to Burgstaller and Rosenberg, almost half of all examined awards for which annulment
proceedings had been instituted up until 2010 had ended up wholly or partially annulled, Markus
Burgstaller and Charles B. Rosenberg, ‘Challenging international arbitral awards: to ICSID or
not to ICSID?’ (2011) 27 Arbitration International 91, 97.
120. As of August 2012, there had been 150 ICSID Convention awards rendered, for which 53
annulment proceedings had been instituted, ICSID, Background Paper on Annulment (n 119) [36].
121. ICSID, Background Paper on Annulment (n 119) [39].
122. UNCTAD, ‘IIA Issues Note No. 1: Recent Developments in Investor-State Dispute
Settlement (ISDS)’ (n 6) 29, Annex 2.
123. Christoph Schreuer, ‘From ICSID annulment to appeal—Half way down the slippery slope’
(2011) 10 The Law and Practice of International Courts and Tribunals 211, 218. (with respect to
the annulments in the Enron and Sempra cases); BG Group PLC v Argentina, Motion for Leave to
file Amicus Curiae Brief and Brief of Professors and Practitioners of Arbitration Law as Amici
Curiae in Support of Petition for a Writ of Certiorari, 29 August 2012, 9, available at
<http://italaw.com>.
124. Luke Eric Peterson, ‘U.S. Court tears up $185+ million award due to failure of arbitrators
to respect treaty’s call for 18 months of local litigation in Argentina’ (2012) 5 IAReporter.
125. On this topic, see Schreuer, ‘Interaction of international tribunals and domestic courts in
investment law’ (n 27) 87–88.
126. See Schreuer, ‘Interaction of international tribunals and domestic courts in investment law’
(n 27) 91–92.
127. Metalclad Corporation v United Mexican States (Award, 2000) ICSID (Additional Facility)
Case No ARB(AF)/97/1.
128. Todd Weiler, ‘Good faith and regulatory transparency: the story of Metalclad v. Mexico’ in
Todd Weiler (ed), International Investment Law and Arbitration: Leading Cases from the ICSID,
NAFTA, Bilateral Treaties and Customary International Law (Cameron May 2005) 713, 729; see
also Henri C. Alvarez, ‘Judicial review of NAFTA Chapter 11 arbitral awards’ in Frédéric
Bachand and Emmanuel Gaillard (eds), Fifteen Years of NAFTA Chapter 11 Arbitration (Juris
Publishing 2011) 103, 108; Chris Tollefsen, ‘Metalclad v. United Mexican States revisited: judicial
oversight of NAFTA’s Chapter Eleven investor-state claim process’ (2002) Minnesota Journal of
Global Trade 183, 211.
129. For examples, see Markert and Bubrowski (n 118), fn 24 and accompanying text.
130. Markert and Bubrowski (n 118) 1467.
131. BG Group PLC v Argentina, U.S. Supreme Court, opinion (5 March 2014) reversed the
lower instance decision which had set aside the arbitral award.
132. See Petrobart Limited v Kyrgyzstan, Svea Court of Appeal, Judgment, 13 April 2006 (set
aside on this ground by Svea Supreme Court, Judgment, 28 March 2008); Kyrgyzstan. Petrobart
Limited, Svea Court of Appeal, Judgment, 19 January 2007 (all three court decisions as reported
in Kaj Hobér and Nils Eliasson, ‘Review of investment treaty awards by municipal courts’ in Katia
Yannaca-Small (ed), Arbitration under International Investment Agreements (Oxford University
Press 2010) 635, 651–54); Czech Republic v Pren Nreka, Cour d’Appel de Paris, Judgment, 25
September 2008, 4; Région Kaliningrad v Lituanie, Cour d’Appel de Paris, 1ère Ch. civ, 18
November 2010; Mexico v Cargill Inc., Ontario Court of Appeal, Judgment, 4 October 2011, [42]
(‘the standard of review of the award the court is to apply is correctness, in the sense that the
tribunal had to be correct in its determination that it had the ability to make the decision it
made.’); see also BG Group PLC v Argentina, Motion for Leave to file Amicus Curiae Brief (n
2018
123).
133. See generally Alan S. Alexandroff and Ian A. Laird, ‘Compliance and enforcement’ in Peter
Muchlinski, Federico Ortino and Christoph Schreuer (eds), The Oxford Handbook of International
Investment Law (Oxford University Press 2008) 1171–1187.
134. Alexandroff and Laird (n 133) 1171, 1177–1185.
135. S.A.R.L. Benvenuti & Bonfant v People’s Republic of the Congo (Award, 1980) ICSID Case
No ARB/77/2.
136. Société Ouest Africaine des Bétons Industriels (SOABI) v Senegal (Award, 1988) ICSID
Case No ARB/82/1.
137. Liberian Eastern Timber Corp. (LETCO) v Liberia (Award, 1986) ICSID Case No ARB/83/2.
138. AIG Capital Partners, Inc. and CJSC Tema Real Estate Company v Republic of Kazakhstan
(Award, 2003) ICSID Case No ARB/01/6.
139. See Petrobart Limited v Kyrgyz Republic (Award, 2005) SCC Arbitration No 126/2003. As a
result of diplomatic pressure, in 2011 Kyrgyzstan eventually gave in and paid up on the arbitral
award. However, it continued to refuse payment on another investment arbitral award rendered
against it two years earlier, Sistem Muhendislik Insaat Sanayi ve Ticaret A.S. v Kyrgyz Republic
(Award, 2009) ICSID Case No ARB(AF)/06/1. See Luke Eric Peterson, ‘Lengthy debt collection
battle ends, as former Soviet state pays arbitral award; unusual form of diplomatic assistance
seen’ (2011) 4 IAReporter; Jarrod Hepburn and Luke Eric Peterson, ‘As new arbitral claim is
brought against Kyrgyzstan, an ICSID award remains unpaid’ (2011) 4 IAReporter.
140. See Walter Bau AG v Kingdom of Thailand (Award, 2009) UNCITRAL. See Luke Eric
Peterson, ‘Thailand comes out swinging in fight over non-payment of BIT arbitral award;
government alleges that minority shareholder in highway project had contract obligation not to
sue under treaty’ (2011) 4 IAReporter.
141. Sedelmayer v Russian Federation (Award, 1998) SCC. On Russia’s failure to pay in the
Sedelmayer case, see Alexandroff and Laird (n 133) 1182.
142. It appears, however, that a post-award settlement has been reached at least for a number of
cases, Kyriaki Karadelis, ‘Argentina ‘close’ to settling treaty awards’ (2013) Global Arbitration
Review, 20 September 2013. On these topics, see generally Catharine Titi, ‘Investment arbitration
in Latin America: the uncertain veracity of preconceived ideas’ (2014) Arbitration International 31
(2).
143. For an overview of state measures that fall short of the diplomatic protection principle
under public international law, Lars Markert and Stephan Wilske, ‘The use of diplomatic
channels’ in Guenther Horvath and Stephan Wilske (eds), Guerilla Tactics in International
Arbitration (Wolters Kluwer 2013) 298, 303.
144. ‘United States initiates suspension of Argentina’s trade benefits because of nonpayment of
U.S. companies arbitration awards’ in John R Crook, ‘Contemporary practice of the United States
relating to international law’ (2012) 106 American Journal of International Law 678–680. For a
critical analysis, see Titi, ‘Investment arbitration in Latin America’ (n 142).
145. Chevron (n 29).
146. Treaty between United States of America and the Republic of Ecuador Concerning the
Encouragement and Reciprocal Protection of Investment (entered into force 11 May 1997) (U.S.-
Ecuador BIT).
147. On the Ecuador-U.S. arbitration, see Luke Eric Peterson, ‘Ecuador initiates unusual state-
2018
to-state arbitration against United States in bid to clarify scope of investment treaty obligation’
(2011) 4 IAReporter; Sebastian Perry, ‘US and Ecuador Battle over BIT’ (2012) Global
Arbitration Review, <http://globalarbitrationreview.com/news/article/30693/us-ecuador-battle-
bit>.
148. Ecuador v Chevron Corporation (USA) and Texaco Petroleum Company (USA), District
Court of The Hague, Civil Division, Judgment, 2 May 2012.
149. Kaliningrad Region v Lithuania, ICC Arbitration Case No 14651/JHN (Final Award, 2009).
See also Kaliningrad Region v Lithuania, Paris Court of Appeal, Pôle 1, Chambre 1 No 09/19535
(Arrêt, 18 November 2010) and Luke Eric Peterson, ‘Lithuania prevails in investor-state BIT claim
brought by Russian regional government; ICC tribunal rules that enforcement of commercial
arbitration award in Lithuania cannot be challenged as an expropriation under BIT’ (2009) 2
IAReporter.
150. ibid.
151. See e.g., Sergei Balmasov and Vadim Trukhachev, ‘Sedelmayer: Russia will pay me,’
http://www.pravda.ru (8 July 2011) <http://english.pravda.ru/business/finance/08-07-2011/118432-
Franz_Sedelmayer-0/>).
152. Michael Reisman’s Opinion with respect to jurisdiction in the interstate arbitration initiated
by Ecuador against the United States (2012) in Republic of Ecuador v United States of America,
PCA Case No 2012-5 [53] (Michael Reisman Opinion in Ecuador v United States).
153. Michael Reisman Opinion in Ecuador v United States (n 152) [52].
154. See Stephan Wilske, ‘Arbitration guerrillas at the gate: preserving the civility of arbitral
proceedings when the going gets (extremely) tough’ in Christian Klausegger and others (eds),
Austrian Yearbook on International Arbitration (Manz’sche Verlags-und
Universitätsbuchhandlung 2011) 315–319; Catherine Rogers, ‘Guerilla tactics and ethical
regulation’ in Günther Horvath and Stephan Wilske (eds), Guerilla Tactics in International
Arbitration: Ethics, Practice and Remedies (Kluwer International 2013).
155. On anti-suit injunctions, see the dedicated volume Emmanuel Gaillard (ed), IAI Series on
International Arbitration No. 2: Anti-Suit Injunctions in International Arbitration (Juris Publishing,
Inc. and International Arbitration Institute (IAI) 2005); see also Emmanuel Gaillard, ‘Reflections
on the use of anti-suit injunctions in international arbitration’ in Loukas A. Mistelis and Julian D.
M. Lew (eds), Pervasive Problems in International Arbitration (Kluwer Law International 2006);
Emmanuel Gaillard, ‘Il est interdit d’interdire: réflexions sur l’utilisation des anti-suit injunctions
dans l’arbitrage commercial international’ (2004) 1 Revue de l’arbitrage 47.
156. SGS Société Générale (n 111). See Gaillard, ‘Reflections on the use of anti-suit injunctions
in international arbitration’ (n 157) 205.
157. Salini Costruttori S.P.A. v Federal Democratic Republic of Ethiopia, Addis Ababa Water
and Sewerage Authority, ICC Arbitration Case No 10623/AER/ACS. See Gaillard, ‘Reflections on
the use of anti-suit injunctions in international arbitration’ (n 157) 206.
158. See Dunkeld International Investment Ltd. v Attorney General, Belize Court of Appeals,
Judgment (1 November 2013). For the arbitral proceedings, see Dunkeld International Investment
Ltd. v The Government of Belize (I), UNCITRAL, British Caribbean Bank Limited v The
Government of Belize, UNCITRAL and Dunkeld International Investment Ltd. v Government of
Belize (II), UNCITRAL. See also Luke Eric Peterson, ‘Belize manages to stall trio of treaty
arbitrations by foreign investors’ (2012) 5 IAReporter; Luke Eric Peterson, ‘Threat of severe
sanctions under Belize law exerting chill on debt-collection efforts of foreign investors in telecoms
and airport projects’ (2012) 5 IAReporter; Luke Eric Peterson, ‘U.S. Appeals Court rules that
lower court should not have stayed award enforcement proceedings in Belize dispute’ (2012) 5
2018
IAReporter.
159. Supreme Court of Pakistan, Order (7 February 2012) [6],

http://www.supremecourt.gov.pk/web/user_files/File/C.P.796of2007.pdf, accessed 9 February
2015).
160. See Umer Akram Chaudhry, ‘Pakistani court interference in arbitration proceedings— yet
again!’ Kluwer Arbitration Blog (27 February 2012)
http://kluwerarbitrationblog.com/blog/2012/02/27/pakistani-court-interference-in-arbitration-
proceedings-yet-again/, accessed 18 March 2014.
161. See Omar Faruk Bozbey v Turkmenistan, Communication No. 1530/2006, U.N. Doc.
CCPR/C/100/D/1530/2006 (2010), 7.2.
162. Ruby Roz Agricol LLP v Kazakhstan (Award on Jurisdiction, August 2013) UNCITRAL,
[190]. According to the claimant, the circumstance leading to the witnesses’ prosecution for
murder had originally been classified as a suicide before the case was reopened during the ICSID
arbitration. ibid [126(2)].
163. See e.g., Genin (n 31) [378]; Gustav F W Hamester (n 14) [358]; Spyridon Roussalis v
Romania (Award, 2011) ICSID Case No ARB/06/1 (Roussalis) [876]. On counterclaims , see
Hege Elisabeth Veenstra-Kjos, ‘ Counterclaims by host states in investment treaty arbitration’
(2007) 4 Transnational Dispute Management; Pierre Lalive and Laura Halonen, ‘On the
availability of counterclaims in investment treaty arbitration’ in Alexander J. Belohlável and
Nadežda Rozehnalová (eds), Czech Yearbook of International Law Vol. II 2011: Rights of the
Host States within the System of International Investment Protection (Juris 2011).
164. Art 46 of the ICSID Convention provides, inter alia, that, unless otherwise agreed by the
parties, a tribunal, where so requested by a party, shall decide on ‘ counterclaims arising
directly out of the subject-matter of the dispute provided that they are within the scope of the
consent of the parties and are otherwise within the jurisdiction of the Centre.’ It is noteworthy
that art 46 of the ICSID Convention expressly states that hearing counterclaims presupposes
that these fall within the scope of the parties’ consent.
165. The Roussalis award constitutes a pertinent example of the common reasoning. The
majority of the arbitral tribunal rejected the respondent’s counterclaim by determining that the
latter lay outside the parties’ consent to arbitration as encapsulated in the applicable Greece-
Romania BIT. The tribunal noted that the BIT’s dispute settlement clause provided for the
settlement of disputes concerning obligations of the host state but not for counterclaims
introduced by the state with respect to investor obligations. Therefore, it held that, where the BIT,
as the applicable law, imposes no obligations on investors, counterclaims do not fall within the
tribunal’s jurisdiction, Roussalis (n 163) [864]–[872].
166. W. M. Reisman’s partial dissent (Declaration) to the Roussalis award.
167. ibid.
168. Goetz v Burundi (n 51) [267]; Inmaris Perestroika Sailing Maritime Services GmbH and
Others v Ukraine (Award, 2012) ICSID Case No ARB/08/8, [431]–[432].
169. For examples, see Bernhard von Pezold and Others v Republic of Zimbabwe, ICSID Case
No ARB/10/15 and Border Timbers Limited, Border Timbers International Limited, and Hangani
Development Co. Limited v Republic of Zimbabwe (Procedural Order No 2, 2012) ICSID Case No
ARB/10/25.
170. On arbitrator challenges, see Lars Markert, ‘Challenging arbitrators in investment

arbitration: the challenging search for relevant standards and ethical guidelines’ (2010) 3
Contemporary Asia Arbitration Journal 237, 239, (n 2–3); see also Karel Daele, Challenge and
2018
Disqualification of Arbitrators in International Arbitration (Kluwer Law International 2012);
Christopher Harris, ‘Arbitrator challenges in international investment arbitration’ (2008) 5
Transnational Dispute Management.
171. See CNN Wire Staff, ‘Supreme Court won’t consider blocking $18B judgment against
Chevron’ (2012) CNN .
172. These enforcement efforts have so far been unsuccessful because they were considered as
directed against subsidiaries of Chevron, which were not parties to the court proceedings in
Ecuador, see e.g., Superior Court of Justice Ontario, Docket No CV-12-9808-00CL, Decision (1
May 2013) 42; Supreme Court of Argentina, Docket No A. 253. XLIX, Decision (4 June 2013) [6]
(both courts refusing to pierce the corporate veil).
173. Ioannis Kardassopoulos and Ron Fuchs v Georgia, ICSID Case No ARB/05/18 and
ARB/07/15 (Ioannis Kardassopoulos and Ron Fuchs).
174. Ioannis Kardassopoulos and Ron Fuchs (n 173) (Award, 2010).
175. See Paul M. Barrett, ‘Trapped in Tbilisi’ (2011) Bloomberg Businessweek Magazine (24
February 2011), http://www.businessweek.com/magazine/content/11_10/b4218058741193.htm,
accessed 18 March 2014; Paul M. Barrett, ‘The surprise ending to the Ron Fuchs affair’ (2011)
Bloomberg Businessweek Magazine (8 December 2011),
<http://www.businessweek.com/magazine/the-surprise-ending-to-the-rony-fuchs-affair-
12082011.html>.
176. Barrett, ‘Trapped in Tbilisi’ (n 175).
177. Barrett, ‘The surprise ending to the Ron Fuchs affair’ (n 175).
178. ‘Bolivia submits a notice under Article 71 of the ICSID Convention’ ICSID News Release
(16 May 2007).
179. ‘Ecuador submits a notice under Article 71 of the ICSID Convention’ ICSID News Release
(9 July 2009).
180. ‘Venezuela submits a notice under Article 71 of the ICSID Convention’ ICSID News Release
(26 January 2012).
181. It can be said that an IIA contains a unilateral offer of consent by the host state which,
pursuant to art 72 of the ICSID Convention, cannot unilaterally be revoked by a denunciation of
the ICSID Convention, see UNCTAD, IIA Issues Note, No. 2: Denunciation of the ICSID
Convention and BITs: Impact on Investor-State Claims (2010) 6, 7. The investor in the Pan
American Energy LLC v Bolivia case (ICSID Case No ARB/10/8), which had brought a claim two
years after Bolivia’s denunciation, in 2013 ‘survived’ an ICSID Arbitration Rule 41(5)–challenge
to the arbitral tribunal’s jurisdiction which was based on this issue, see Sebastian Perry, ‘Bolivia
denied early exit from ICSID claim’ Global Arbitration Review News (30 April 2013) [on file with
authors]. On the effects of denunciation of the ICSID Convention on the denouncing state’s
consent to arbitration, see Christoph Schreuer, ‘Denunciation of the ICSID Convention and
consent to arbitration’ in Michael Waibel, Asha Kaushal, Kyo-Hwa Chung and Claire Balchin
(eds), The Backlash against Investment Arbitration (Kluwer Law International 2010); Oscar M.
Garibaldi, ‘On the denunciation of the ICSID Convention, consent to ICSID jurisdiction, and the
limits of the contract analogy’ in Christina Binder, Ursula Kriebaum, August Reinisch and
Stephan Wittich (eds), International Investment Law for the 21st Century—Essays in Honour of
Christoph Schreuer (Oxford University Press 2009).
182. See also Titi, ‘Investment arbitration in Latin America’ (n 142).
183. UNCTAD (n 181) 1 (n 3); ‘News in brief: South Africa begins withdrawing from EU-
member BITs’ Investment Treaty News (30 October 2012),
2018
<http://www.iisd.org/itn/2012/10/30/news-in-brief-9/#_ftn1>; and Speech of the Minister of Trade
and Industry, Dr. Rob Davies, at the Discussion of UNCTAD’s Investment Policy Framework for
Sustainable Development (IPFSD) in Geneva, Switzerland (25 September 2012),
<http://www.thedti.gov.za/editspeeches.jsp?id=2506>. On BIT terminations, see also Titi,
‘Investment arbitration in Latin America’ (n 142).
184. See e.g., with respect to the Czech Republic, Cecilia Olivet, ‘A test for European solidarity—
the case of intra-EU bilateral investment treaties’ (2013) 6,
<http://www.tni.org/sites/www.tni.org/files/download/briefing_on_intra-eu_bits_0.pdf>. It is
noteworthy that one of the terminated BITs is Ireland’s sole BIT with the Czech Republic, leaving
Ireland currently without any BITs in force, see UNCTAD, Country-specific Lists of Bilateral
Investment Treaties,
<http://unctad.org/en/Pages/DIAE/International%20Investment%20Agreements%20%28IIA%29/Country-
specific-Lists-of-BITs.aspx>.
185. For an interesting matrix of these factors in the cases of Bolivia and Ecuador, see the
Annexes 1 and 2 to UNCTAD (n 181) 9–10.
186. UNCTAD, World Investment Report 2012 (Sales no E.12.II.D.3, 2012) 85–86.
187. UNCTAD, World Investment Report 2012, (n 186) 85–86; Olivet (n 184) 6.
188. UNCTAD, World Investment Report 2012 (n 186) 85–86.
189. UNCTAD, World Investment Report 2013 (Sales No E.13.II.D.5, 2013) 108.
190. For a critical view, Steven Schwebel, ‘The United States 2004 Model Bilateral Investment
Treaty: an exercise in the regressive development of international law’ in G. Aksen and others
(eds), Global Reflections on International Law, Commerce and Dispute Resolution—Liber
Amicorum in honour of Robert Briner (International Chamber of Commerce 2005) 815.
191. For a more detailed analysis, see Mark Kantor, ‘The new US Model BIT: if both sides are
angry with you, you must be doing something right’ 7 (2012) Transnational Dispute Management
1.
192. See Catharine Titi, ‘The evolving BIT: a commentary on Canada’s model agreement’ (2013)
Investment Treaty News, <http://www.iisd.org/itn/2013/06/26/the-evolving-bit-a-commentary-on-
canadas-model-agreement/>.
193. See e.g., art II-VIII of Colombia’s Model BIT.
194. Marc Bungenberg and Catharine Titi, ‘The evolution and future of EU-China investment
relations’ in W. Shan (ed), China and International Investment Law: Twenty Years of ICSID
Membership (Brill 2014), passim; Titi, ‘The arbitrator as a lawmaker’ (n 16) 843.
195. See ‘Annex []: Expropriation’ as proposed by the EU in the Draft CETA Investment Text of
7 February 2013. This document was leaked at <http://www.tradejustice.ca/leakeddocs/.>
Proportionality has been used in different contexts, such as in the jurisprudence of the European
Court of Human Rights. See for example, Y. Arai-Takahashi, The Margin of Appreciation Doctrine
and the Principle of Proportionality in the Jurisprudence of the ECHR (Intersentia 2001).
196. Australian Government, Department of Foreign Affairs and Trade, Gillard Government
Trade Policy Statement: Trading our way to more jobs and prosperity (2011),
<http://www.acci.asn.au/getattachment/b9d3cfae-fc0c-4c2a-a3df-3f58228daf6d/Gillard-
Government-Trade-Policy-Statement.aspx>.
197. See ‘Frequently asked questions on Investor-State Dispute Settlement (ISDS)’ on the
website of the Department of Foreign Affairs and Trade of the Australian Government,
<http://dfat.gov.au/fta/isds-faq.html>.
2018
198. See n. 20 of Section B: Investor-State Dispute Settlement of the Draft TPPA investment
chapter draft (June 2012), leaked at <http://www.citizenstrade.org/ctc/wp-
content/uploads/2012/06/tppinvestment.pdf>.
199. See ‘China-Taiwan bilateral investment protection agreement: dispute resolution

mechanisms exclude international arbitration’ Herbert Smith Freehills Dispute Resolution—
Arbitration News 2012, <http://hsf-arbitrationnews.com/2012/08/23/china-taiwan-bilateral-
investment-protection-agreement-dispute-resolution-mechanisms-exclude-international-
arbitration/>.
200. J. E. Alvarez, ‘Why are we “re-calibrating” our investment treaties?’ (2010) World
Arbitration & Mediation Review 4 (2).
201. See Luke Eric Peterson, ‘ICSID to prepare “background paper” on annulment process,
following request by Philippines; German investor criticizes effort by Philippines’ (2011) 4
IAReporter.
202. Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. v Republic of Argentina
(Decision on Annulment, 2007) ICSID Case No ARB/97/3.
203. See Additional Opinion of Professor J. H. Dalhuisen under art 48(4) of the ICSID
Convention, ibid.
204. Luke Eric Peterson ‘Argentina calls for discussion at upcoming World Bank meeting
following Annulment Committee Member allegation of meddling by ICSID Secretariat in
annulment process’ (2010) 3 IAReporter.
205. ICSID, Background Paper on Annulment (n 119).
206. Fraport AG Frankfurt Airport Services Worldwide v Republic of the Philippines (Decision
on Annulment, 2010) ICSID Case No ARB/03/25.
207. ibid [218].
208. ICSID, Background Paper on Annulment (n 119) Annex 2, also 1, [3].
209. ICSID, Background Paper on Annulment (n 119) Annex 2.
210. ICSID, Background Paper on Annulment (n 119) 1.
211. ICSID, Background Paper on Annulment (n 119) 2; see also Luke Eric Peterson, ‘As ICSID
member-states prepare to convene for annual meeting, functioning of annulment process is put on
the agenda’ (2011) 4 IAReporter.
212. For the guidelines, see ICSID, Background Paper on Annulment (n 119) 2 and Annex 2.
213. This is art 422 of Ecuador’s Constitution (2008), which provides, inter alia, that the state
may not enter into agreements through which it waives ‘sovereign jurisdiction’ in favor of arbitral
institutions in ‘contractual or commercial disputes’ between the state and individuals or private
corporations (‘No se podrá celebrar tratados o instrumentos internacionales en los que el Estado
ecuatoriano ceda jurisdicción soberana a instancias de arbitraje internacional, en controversias
contractuales o de índole comercial, entre el Estado y personas naturales o jurídicas privadas.
[…]’).
214. See Rodrigo Jijón-Letort and others, ‘Ecuador’ in GAR (ed), The Arbitration Review of the
Americas 2012 (GAR 2012); UNCTAD (n 181) 1, (n 3); Titi, ‘Investment arbitration in Latin
America’ (n 142). On Ecuador and investment law, see generally Karsten Nowrot, ‘International
investment law and the Republic of Ecuador: from arbitral bilateralism to judicial regionalism’
(2010) 96 Beiträge zum Transnationalen Wirtschaftsrecht.
2018
215. See UNCTAD, World Investment Report 2011 (Sales No. E.11.II.D.2, 2011), however,
stating that despite concerns about protectionism the overall trend is one of liberalization.
216. Mark E. Plotkin and David N. Fagan, ‘The revised national security review process for FDI
in the US’ (2009) Columbia FDI Perspectives, <http://www.vcc.columbia.edu/content/revised-
national-security-review-process-fdi-us>; Subrata Bhattacharjee, ‘National security with a
Canadian twist: the Investment Canada Act and the new national security review test’ (2009)
Columbia FDI Perspectives, <http://www.vcc.columbia.edu/content/national-security-canadian-
twist-investment-canada-act-and-new-national-security-review-test>; Karl P. Sauvant, ‘The
regulatory framework for investment: where are we headed?’ in Ravi Ramamurti and Niron
Hashai (eds), The Future of Foreign Direct Investment and the Multinational Enterprise (Emerald
Group Publishing Limited 2011); Alvarez (n 200) 143.
217. OECD, Freedom of Investment Process—Inventory of investment measures taken between

16 February 2011 and 31 October 2011 (OECD, 2012) 5; OECD, Freedom of Investment Process
—Inventory of investment measures taken between 1 November 2011 and 29 February 2012
(OECD 2012) 6.
218. See generally the OECD dedicated site at

http://www.oecd.org/department/0,3355,en_2649_33765_1_1_1_1_1,00.html, accessed 18 March
2014; see further Peter Muchlinski, ‘Corporate Social Responsibility’ in Peter Muchlinski,
Federico Ortino and Christoph Schreuer (eds), The Oxford Handbook of International Investment
Law (Oxford University Press 2008), and Titi, The Right to Regulate in International Investment
Law (n 66) passim.
219. Titi, The Right to Regulate in International Investment Law (n 66) 60; UNCTAD, World
Investment Report 2012 (n 186) 119–120.
220. ibid.
221. Art 16 Canadian Model BIT (2012).
222. Draft Article 12.15 bis. <http://www.citizenstrade.org/ctc/wp-

content/uploads/2012/06/tppinvestment.pdf> (June 2012).
223. European Parliament, Resolution of 6 April 2011 on the future European international
investment policy (2010/2203(INI)). P7-TA-PROV(2011)0141—A7-0070/2011 (provisional edition)
[28].
224. Notably, see the Draft CETA Investment Text of 21 November 2013.
225. European Parliament, Resolution of 9 October 2013 on the EU-China negotiations for a
bilateral investment agreement (2013/2674(RSP)), P7_TA-PROV(2013)0411 B7-0436/2013
(provisional edition) [33].
226. See UNCTAD, World Investment Report 2010 (Sales No. E.10.II.D.2, 2010) 88. The (never
implemented) Draft Norway Model BIT (2007) was a treaty sensitive to CSR concerns, evidenced
both in its preamble, as well as in a dedicated ‘Corporate Social Responsibility’ provision, art [32]
Draft Norway Model BIT (2007).
227. Art 21(1)(a) Canadian Model BIT (2012).
228. E.g., European Parliament, Resolution of 9 October 2013 (n 225) [33].
229. For some examples concerning the OECD Guidelines for Multinational Enterprises, see
Catharine Titi, ‘Les clauses de stabilisation dans les contrats d’investissement: une entrave au
pouvoir normative de l’Etat d’accueil?’ Journal du droit international 141 (2), 2014, p. 555 et seq.
230. Olivet (n 183) 7.
2018
231. See Luke E Peterson, ‘Uruguay hires law firm and secures outside funding to defend
against Philip Morris claim; not the first time an NGO offers financial support for arbitration
costs’ (2012) IAReporter, <http://www.iareporter.com/articles/20101023_4>.
232. Alison Ross, ‘The dynamics of third-party funding’ (2012) 7(1) Global Arbitration Review
14.
233. Munir Maniruzzaman, ‘Third-party funding in international arbitration—a menace or

panacea?’ (2012) Kluwer Arbitration Blog,
<http://kluwerarbitrationblog.com/blog/2012/12/29/third-party-funding-in-international-
arbitration-a-menace-or-panacea/>.
234. Eric Gottwald, ‘Leveling the playing field: is it time for a legal assistance center for
developing nations in investment treaty arbitration?’ (2007) 22(2) American University
International Law Review 227, 264.
235. ibid 269.
2018

(Lars Markert) States Strike Back-Old and New Ways For Host States To Defend Against Investment Arbitrations

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

(Lars Markert) States Strike Back-Old and New Ways For Host States To Defend Against Investment Arbitrations

Încărcat de

Drepturi de autor:

Formate disponibile

States

Strike Back—Old and New Ways for Host

Content type: Yearbook articles

A. Jurisdiction and Admissibility

(p. 403) 1. Definition and Legality of the Investment

(p. 406) 3. Hurdles at the Jurisdictional Stage

(p. 408) c. Local Remedies Clauses

(p. 410) e. Procedural Trends

4. Most-Favored Nation Clauses and Procedural or Jurisdictional

5. Pre-Jurisdictional Phase Summary Dismissal of Cases

6. Conclusion on Jurisdiction and Admissibility

Treaty-based exceptions providing for a right to regulate may be introduced in particular

2. Delineating the Scope of Substantive Provisions

Another provision permitting non-disputing parties’ submissions regarding interpretation of a

1. Fundamental Use of the Annulment Process or Set-Aside

2. Non-payment of Arbitral Awards

3. Initiation of State-to-State Dispute Settlement

It is doubtful whether state-to-state arbitration triggered during an existing investor-state dispute

1. Anti-suit Injunctions and Interference by Host State Courts and

Another means of interference with investment arbitration proceedings by courts or public

(p. 426) 3. Delay

E. Influence of States on the System: Changing the Rules of the

1. Denunciation of ICSID Convention and Termination of BITs

2. Treaty Renegotiation and Revision of Model Treaties

(p. 430) 3. Discontinuing Investor-State Dispute Settlement

4. Influence on the ICSID Mechanism

(p. 432) 5. Adoption of National Legislation Hostile to Investment

(p. 433) 6. Introducing Investor Obligations, Including CSR

7. Professionalization of Defenses/Financing of Arbitration Claims

5. K. McArthur and P. A. Ormachea, ‘International investor-state arbitration: an empirical

18. Romak (n 17) [104–105]; Alps Finance (n 17) [103].

19. Romak (n 17) [207]; Alps Finance (n 17) [241].

25. Wilske (n 24) 214.

30. Chevron (n 29) [476].

42. Schreuer, ‘Calvo’s grandchildren’ (n 27) 3–5.

47. BG Group (n 45) [146].

52. Markert, Streitschlichtungsklauseln in Investitionsschutzabkommen (n 4) 174–175.

55. Murphy Exploration and Production Company International v Ecuador (Award on

57. See (n 38).

61. See below, Section E.3.

62. On the taxonomy of dispute settlement clauses as either ‘admissibility’ or ‘jurisdictional’

69. ICSID Arbitration Rule 41(5) provides:

97. Art 21(5) Energy Charter Treaty.

99. Art 9 Czech Republic-Netherlands BIT.

102. ibid [437].

103. See in particular art 10.20(2) CAFTA.

105. RDC v Guatemala (n 104) [207]–[211].

106. RDC v Guatemala (n 104) [218]–[219].

114. UNCTAD (n 107) 15.

116. For an account, see National Grid (n 64) [85].

121. ICSID, Background Paper on Annulment (n 119) [39].

130. Markert and Bubrowski (n 118) 1467.

134. Alexandroff and Laird (n 133) 1171, 1177–1185.

145. Chevron (n 29).

153. Michael Reisman Opinion in Ecuador v United States (n 152) [52].

159. Supreme Court of Pakistan, Order (7 February 2012) [6],

166. W. M. Reisman’s partial dissent (Declaration) to the Roussalis award.

170. On arbitrator challenges, see Lars Markert, ‘Challenging arbitrators in investment

174. Ioannis Kardassopoulos and Ron Fuchs (n 173) (Award, 2010).

176. Barrett, ‘Trapped in Tbilisi’ (n 175).

182. See also Titi, ‘Investment arbitration in Latin America’ (n 142).

188. UNCTAD, World Investment Report 2012 (n 186) 85–86.

193. See e.g., art II-VIII of Colombia’s Model BIT.