The role of international law in Article 42(1) of the Washington Convention on the Settlement of Investment Disputes


Master's Thesis, 2011

59 Pages, Grade: 19


Excerpt

Table of Contents

List of abbreviations

Abstract

I. Introduction
A. What is the ICSID Convention?
B. What regulates Article 42(1)?
C. Overview of the problem

II. Literature Survey
A. Role of international law in Article 42(1), first sentence
1. International law as the chosen law by the parties
2. International law in the absence of its choice
a) Implicit negative choice to exclude the application of international law
b) Application of international law to a certain extent
3. Conclusion and open questions concerning the role of international law under Article 42(1), first sentence
B. Role of international law under Article 42(1), second sentence
1. Supplemental and corrective role
a) Arguments
b) Criticism
2. Limited supplemental and corrective role (ius cogens)
3. Applicability at all times
a) Precedence of international law at all times
b) Autonomous application of international law
4. Conclusion and open questions concerning the role of international law under Article 42(1), second sentence

III. Research
A. Research methodology
B. Analysis
1. Textualist interpretation
a) Literal interpretation: wording
aa) Different languages
bb) “and”
b) Systematic interpretation
aa) Position of international law within Article 42(1)
bb) Other articles and provisions of the ICSID Convention
c) Conclusion from the textualist interpretation
2. Historical interpretation of the wording: preparatory work
a) Original aims
b) Preliminary and first draft
c) Discussion
d) Final vote
e) Conclusion from the historical interpretation
3.Casuistic interpretation: development of ICSID case-law
a) Article 42(1), first sentence
b) Article 42(1), second sentence
aa) Earlier decisions
bb) Supplemental and corrective role
cc) Change to a broader formulation
c) Conclusion from the casuistic interpretation
4. Comparative interpretation: analysis of external sources
a) Former practice
b) Arbitration rules
c) Multilateral treaties
d) Bilateral treaties: BITs
e) Conclusion from the comparative analysis
5.Teleological interpretation: parties’ interests
a) Claimed interests
b) Underlying interests
c) Conclusion from the teleological interpretation

IV. Conclusion and Future outlook
A. Conclusions on Article 42(1), first sentence
B. Conclusions on Article 42(1), second sentence
C. Future Outlook

Bibliography

Table of ICSID cases

Short summary of contents

The role of international law in Article 42(1) of the ICSID Convention is not very clear and has caused many debates. Scholarly opinions have therefore developed different theories. Some want to reduce the application to a minimum, the international ius cogens, whereas others argue that international law should prevail in all cases over the host state’s law. Some authors as well as the case-law also establish different limits. This paper analyses the role of international law with many different interpretative methods from civil law and common law. It concludes that no artificial limits can be maintained, but the current version of Article 42(1) leaves the determination of the scope of international law to the discretion of the tribunal. In order to clarify the notion entirely, more harmonisation of the substantive rules on foreign investment would be needed, either on the national or on the international level. Some future approaches are presented in this paper.

KEY WORD 1: ICSID

KEY WORD 2: Applicable Law

KEY WORD 3: Article 42(1) of the ICSID Convention

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

Abstract

The objective of this research project is to clarify the notion of international law in the context of Article 42(1) of the ICSID Convention, which states:

The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

The Convention’s wording does not make the scope and interaction of the application of national and international law very clear. Scholarly opinions have therefore developed different theories. Some want to reduce the application to a minimum, the international ius cogens, whereas others argue that international law should prevail in all cases over the host state’s law. Some authors as well as the case-law also establish different limits, e.g. that international law should only be applied in order to fill lacunae in the host state law or to correct the host state law where it violates international law. This contentious notion is therefore analysed in this paper by using methods of interpretation from common law and civil law systems. First, the original aims of Article 42(1) of the Convention, the literal meaning and the systematic position of the wording, the preparatory work for the ICSID Convention as well as all ICSID jurisprudence since the foundation of ICSID are examined. Likewise, similar provisions in other comparable conventions and agreements are consulted as well as the underlying interests of the parties. This analysis leads to the clarification of the role of international law in a situation where parties have explicitly chosen a certain national law to apply: Here international minimum standards must still be respected. In the absence of choice-of-law, in some cases the application of international law is widely accepted. Furthermore, the different theories do not lead to a satisfying result. The scope of international law’s application is currently left to the discretion of the tribunal, which might not be the most desirable solution. There are only a few possible solutions for entirely clarifying the issue in the future, such as more precise choice-of-law clauses by the parties, the elaboration of certain substantive international rules in the field of foreign investments, or at least the harmonisation of national law in this field, in order to diminish the disputes arising because of the uncertainty in applicable law.

I. Introduction

More and more legal relations today involve more than one state and thus arise on the international level. This also leads to rapidly increasing numbers of international disputes. Since there are few specific norms for dispute resolution on the international level, one question always arises right at the beginning: Which law shall be applied in order to solve the dispute? It goes without saying that the answer to this question is essential for the solution of an international dispute and should therefore be clearly predictable. Unfortunately, this is not always the case, due to many factors, like the desire of each party to apply its own national law and its reluctance to submit a dispute to the national law of its adversary, which it does not know and may not be able to understand. Thus the parties often look for compromises and declare a mix of different legal systems applicable to their dispute (their own legal systems, third national legal systems, rules of international law). This process complicates the search for the applicable law, which should normally be clear, being at the very foundation of dispute resolution. This paper will deal with this question of applicable law in a field where it is far from clear – international investment disputes under the ICSID Convention–and will attempt to provide a clear method of attaining the answer.

A. What is the ICSID Convention?

For a long time, people have been deciding to outlay money to foreign countries in order to make profit. This is the definition of a foreign investment[1]. Primarily, those investments are made in less developed countries (host states) by investors coming from more developed countries. The idea behind foreign investment is a win-win situation where the investor can realise profit and the host state can benefit as well, for example from a flow of money into its territory, an improvement of infrastructure, the creation of new jobs and the transfer of technology and know-how. There are two types of foreign investment. An investor can outlay money to a foreign country by purchasing shares or granting loans, often only in the short term (so-called portfolio investment), or by establishing something in the host state, usually for a longer term (so-called foreign direct investment or FDI). This paper only concerns the latter, FDI.

In order to regulate these foreign investments, different bodies of law have developed during the last decades because both parties have strong interests to protect this kind of long-term relationship. One type of agreement is so-called Bilateral Investment Treaties, or BITs, which are agreements between two states establishing the terms and conditions of private investments. For the first time in 1959 such an agreement was made concretely for FDIs, between Germany and Pakistan. Likewise, some multilateral agreements have developed or included investment issues, like the Energy Charter Treaty (ECT) or the North American Free Trade Agreement (NAFTA). But these agreements only contain a general framework and some procedural issues. They do not provide sufficient substantive rules for disputes which can arise during the lifetime of long term investments. Attempts at establishing such general bodies of substantive rules have failed to date[2].

Since disputes between investors and host states nevertheless kept arising and were mostly solved by arbitral tribunals, by reason of their neutrality, more and more arbitral organisations developed in this field. They laid down some of their own procedural rules in order to deal with foreign investment issues.

In 1966, the World Bank Group founded the International Centre for the Settlement of Investment Disputes (ICSID), which is an international arbitral institution providing facilities for the conciliation and arbitration of disputes between host states and foreign private investors[3]. Other arbitral tribunals generally don’t have the juridical status of an international institution, but are private bodies, creations of single states, or contractual creations of the parties to the dispute (so-called ad hoc tribunals).[4] The cases brought before ICSID have always been increasing in number, and currently most BITs concluded between host states and investors’ states refer to ICSID when determining the jurisdiction over disputes arising from their investment relationship. ICSID is considered to be the leading international arbitration institution devoted to investor-state dispute settlement.

The difference between ICSID and other arbitral tribunals is that it operates on the basis of an international convention.[5] It is based on a convention concluded in October 1966 in Washington D.C., which is called the Washington Convention or, as it shall be referred to hereafter, the ICSID Convention. The ICSID Convention principally sets up procedural rules for the arbitration proceedings before its arbitral courts, concerning for example the question of jurisdiction, the constitution of the arbitral courts and the course of the proceedings. Hence, in general, the ICSID Convention does not contain any substantial rules to solve the dispute.[6]

B. What regulates Article 42(1)?

But the dispute still has to be solved according to some rules of law. Since no substantive rules on investments exist on an international or multilateral level, ICSID tribunals have to apply national law or some non-specific rules of international law. Therefore, the only provision of the ICSID Convention that concerns the substantial solution of the dispute is Article 42(1), which governs the question of which law shall be applied by the arbitrators to find a solution for the dispute. The wording of Article 42(1) is the following:

The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

The Article therefore consists of two different rules. The first sentence contains a choice-of-law rule which gives the parties the ability to choose the applicable law in a bilateral agreement. This is what often happens in BITs that provide for such a choice-of-law clause. The second sentence regulates which law will be applied by the arbitrators whenever the host state and the investor have not chosen the law applicable to an eventual dispute.

C. Overview of the problem

In both of these cases, with and without a choice-of-law, international law can play a role and be applied under certain circumstances.

With regards to the first sentence, in case of a valid choice-of-law clause, international law can, on the one hand, be applied if it has been chosen by the parties. On the other hand, even when the choice-of-law does not mention international law rules, at least some international standards may nevertheless apply and it remains to be examined to what extent this is possible. These questions shall be discussed in the present paper.

The second sentence, i.e. the situation in which there is an absence of choice-of-law, has been very contentious since and even before the conclusion of the ICSID Convention. The most discussed problem within this question is the extent to which international law can be applied by ICSID arbitrators and nature of the relationship between the application of the national law of the host state and the application of international law. This question, also called the question about the word "and” in the second sentence of Article 42(1)[7], shall be treated in this paper as well.

Therefore, first an overview over the current state of the literature shall be given, outlining the different theories were developed to answer the question of the role of international law, showing the different argumentations (Part II – Literature Survey). Second, different established methods of analysis of legislation shall be used in order to clarify the notion of international law and in order to show which of the presented theories fits best in the actual state of ICSID jurisprudence (Part III – Research). In the concluding section, future possibilities of clarifying the problem shall be identified (Part IV – Conclusion and Future).

II. Literature Survey

In this part of the paper, the literature and scholarly opinions on the question shall be presented. This presentation will sometimes include the development of the prevailing opinion as well as some examples from case law which apply and illustrate the respective opinions.

Preliminarily, in order to clarify the term “rules of international law” as used by Article 42(1), we should examine which sources of international law are included by this expression. A former draft of Article 42(1) included an explicit reference to Article 38 of the Statute of the ICJ. Later on, this reference was transferred to the Report of the Executive Directors, which stated

The term ‘international law’ as used in this context should be understood in the sense given to it by Article 38 (1) of the Statute of the International Court of Justice, allowance being made for the fact that Article 38 was designed to apply to inter-State disputes. [8]

Hence, international law in this context is defined by this Article 38, which lists:

a) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states;
b) international custom, as evidence of a general practice accepted as law;
c) the general principles of law recognized by civilized nations;
d) subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law. [9]

This definition has been broadly accepted by scholars and jurisprudence[10] and will be used hereafter. In the practice, essentially the rules of international conventions, and particularly those of BITs, are applied by ICSID tribunals.[11] But within this consensus, it remains contentious to what extent rules of international law which are contained in these sources should be taken into consideration in the context of Article 42(1).Therefore, the literature survey will be divided into the two main topics: the role of international law in case of a choice-of-law between the parties (Article 42(1), first sentence) as part (A), and the role of international law in the absence of a choice-of-law (Article 42(1), second sentence) as part (B).

A. Role of international law in Article 42(1), first sentence

The first sentence of Article 42(1) does not explicitly mention the application of international law, but only states:

The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties.

Nevertheless, there appears to be some room for the application of international law. One the one hand, international law can apply as the law chosen by the parties (1) and on the other hand it has to be examined to what extent, even in presence of choice-of-law not including international law, there could still be some room for international law to apply (2).

1. International law as the chosen law by the parties

International law can apply as the law chosen by the parties, for this choice has to be respected by the tribunal[12]. There are different ways to choose international law as the applicable law. One the one hand, parties can choose a clause of combined application of national and international law. This leads to a similar result as the application of Article 42(1), second sentence and is the most common agreement including international law[13]. In this case, the exact role of international law should be defined as precisely as possible in the choice-of-law clause.

On the other hand, the parties can agree upon an exclusive reference to international law. Such clauses can, for example, be found in some multilateral agreements and BITs[14]. The question nevertheless remains whether, in the field of investment law, international law alone can suffice to solve a dispute. A number of commentators have argued that international law is indeed capable of regulating contracts between a sovereign state and a private investor, for it “contains the basic rules necessary for this purpose (such as international responsibility [...])”.[15]

However, most scholars do not advise parties to conclude such an agreement on the exclusive application of international law in the field of international investment law. For example, Schreuer warns that international law may “lack the clarity and the technical detail that is desirable” [16]. Furthermore, he alludes to the fact that the investor’s activities are “closely linked to the administrative law, labour law, tax law, foreign exchange regulations, real property legislation and many other areas of the host state’s legal system” [17].Therefore, an exclusive reference to international law may not be the best choice for the parties to make, although at least in this case, the role of international law seems clear.

Generally, in such cases of explicit choice-of-law, no difficulties concerning the role of international law seem to arise, apart from cases where a combined choice-of-law clause does not define the relationship precisely enough between the application of national and international law. In this latter case, the same problems as in the second sentence of Article 42(1) arise. An example from the ICSID jurisprudence is the case of AGIP v. Congo [18] from 1979where the parties chose the applicable law as follows: “The law of Congo, supplemented if need be by any principles of international law, will be applicable.” [19] In this case, the problem was that the wording “supplemented” was not very precise and thus the tribunal again had to interpret the exact role of international law. One can therefore see that even when there is an explicit choice of international law, there are some difficulties left in defining the role of international law. Hence drafters of treaties can only be advised to make this role clear in the formulation of the choice-of-law clause, in addition due to the uncertainties of this relation in the context of the second sentence of Article 42(1) (see B).

2. International law in the absence of its choice

In the case where the parties explicitly choose the application of a certain national law, at first glance it appears to be paradoxical to consider the application of international law, especially when juxtaposing the first and the second sentence of Article 42(1). Since the second sentence explicitly refers to the application of international law, the consequence seems to be that when the first sentence, which does not mention international law, is applied, the latter cannot be applied. Nevertheless, when examining the literature and the prevailing case law, the solutions that they provide are sometimes different, and the question of applicable law is a contentious one.

a) Implicit negative choice to exclude the application of international law

Some scholars, for example Nassar, do in fact argue for such an exclusion of the applicability of international law in case of a choice-of-law clause only referring to national law. This means that as soon as the parties agree upon a certain national law, they have implicitly made a negative choice-of-law, excluding the applicability of any other rules, especially of international law.[20] This shall even hold true for implied consent on the applicable law according to Nassar[21], which constitutes for him a valid choice-of-law that can thus exclude any other laws, including international law. The argument for this view is the emphasis on the force of the agreement between the parties[22] who can choose to apply “any law to their relationship regardless of how reasonable or relevant such a choice is” [23].

b) Application of international law to a certain extent

Other authors argue in favour of some kind of application of international law, even in the case of such an explicit choice of a certain national law. Here one could first think of an application through the incorporation of international law into the host state’s law. But since the status of international law varies under domestic law[24], it does not appear to be a good solution to rely on a general applicability of international law through the host state’s law, but rather to keep this possibility for cases where a concrete international rule is explicitly mentioned by national law for a specific context.

With regard to the drafting of the Convention, Broches explained the different wordings of sentences 1 and 2 by pointing out that since the first sentence refers to “rules of law” instead of referring to a legal system, national as well as international rules are included. Thus, according to him, a separate reference to international law was not necessary.[25] He also explains that “parties may admittedly exclude any recourse at all to international law, but it is unreasonable to assume that the specification of an applicable national law is intended to or should have this effect” [26].

Already in 1968, Lauterpacht found that it could be a solution, in order to “mitigate the rigours of the situation flowing from an express choice of the law of the State party to the agreement”[27], to argue that is inherent in the very status of an ICSID tribunal to take international law into consideration since it is a tribunal made to decide issues of international investment contracts.[28] In the same way, Griebel remarks that ICSID was created through an international treaty, which could be an indication of the general applicability of international law to its proceedings.[29]

Another argument is invoked by Schreuer with regard to the goals of the ICSID Convention and especially the aim of

[...] promoting an atmosphere of mutual confidence and thus stimulating a larger flow of private international capital into those countries which wish to attract it. [30]

Schreuer argues that signing away the minimum standards for the protection of aliens and their property developed in customary international law would hardly be in accordance with this goal of the ICSID Convention.[31] He emphasises that at least the mandatory rules of international law “exist independently of any choice-of-law”, and thus each choice-of-law has to be kept in check by them.

Manciaux and other authors[32] argue in a similar way that as an international jurisdiction, an ICSID tribunal has the obligation to assure respect for the so-called “international public order” [33], i.e. the fundamental and universal principles that are considered to be essential by the international community.[34] He highlights, inter alia, the prohibition of discriminatory measures as well as the prohibition of the spoliation of goods and rights that have been acquired regularly by any economic actor.[35] Manciaux comes to the conclusion that in case of violation of this international public order, the eventual choice of the parties should be ignored and Article 42(1), second sentence of the ICSID Convention should be exclusively applied.[36]

3. Conclusion and open questions concerning the role of international law under Article 42(1), first sentence

Regarding the presented opinions, the role which international law plays in the choice-of-law process is still not entirely clear. The conclusion appears to be that regardless of the chosen applicable law (whether or not the applicable law is mentioned and whether or not national law is mentioned) both national and international law seem to apply in all cases to a certain extent. Particularly for international law, the prevailing opinion seems to argue in favour of its application, only differing in the extent and manner of this application.

So with regard to the literature survey on this first question it seems interesting to examine in how far it is reasonable to apply international law when the parties have explicitly chosen a certain national law to apply. Particularly it will be analysed which sources and rules of international law should be taken into consideration (all sources of international law or only minimum standards/fundamental principles/public order). This shall be examined in the research section below.[37]

B. Role of international law under Article 42(1), second sentence

A question that is even more contentious, and in fact the most discussed question in connection with Article 42, is the determination of the exact role of international law in the second sentence of Article 42(1), i.e. in the absence of choice-of-law. On this question the second sentence only states that:

In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

At the present states, three major opinions can be found on the question of the relationship between national and international law in the absence of choice-of-law.

First, some scholars, together with the prevailing practice of ICSID tribunals, take the view that international law has a supplemental and corrective role with regard to the law of the host state.[38] This means that international law can only be applied in order to fill lacunae in the law of the host state (supplemental role) and/or when the host state’s law is inconsistent with international law (corrective role)[39].

The second theory, which does not find support in the ICSID jurisprudence, is similar to this approach but applies a considerably more limited interpretation of the supplemental and corrective function. Representatives of this opinion argue for a very narrow interpretation of the existence of a lacuna[40]. Furthermore, they argue that the corrective role of international law should only apply to cases of conflict between the host state’s law and ius cogens principles, i.e. the peremptory provisions of international law[41].

A third and more recent approach, finding more and more support in recent ICSID decisions, holds that international law always applies. Different explanations are invoked to support this opinion. Some authors state that either national law is consistent with international law, or if this is not the case, international law supersedes it, rendering the discussion pointless[42]. Others see international law as an “independent body of substantive rules” that applies by itself with no need for a “filter of the law of the host state” [43].

The second part of this literature survey shall identify all of the arguments that scholars espousing these three theories bring forward to defend their point of view.

1. Supplemental and corrective role

The majority of the authors writing about the role of international law in the second sentence of Article 42(1) argue in favour of the supplemental and corrective role[44]. This view mainly arises from case law, which, at least until 2002, has constantly argued in favour of a corrective and supplemental role of international law[45].

a) Arguments

The supplemental and corrective role was applied for the first time in the 1985 annulment decision in the Klöckner v. Cameroon case. In this case the ad hoc Committee stated, with regards to the mention of “principles of international law” in the context of the second sentence of Article 42(1), that it

[...] gives these principles [...] a dual role, that is, complementary (in the case of a "lacuna" in the law of the State), or corrective, should the State's law not conform on all points to the principles of international law. In both cases, the arbitrators may have recourse to the 'principles of international law' only after having inquired into and established the content of the law of the State party to the dispute (which cannot be reduced to one principle, even a basic one) and after having applied the relevant rule of the State's law. [46]

Many scholars simply accepted this view applied by the tribunals, which appears to be a useful compromise interpretation of the unclear wording.[47] This holds particularly true when looking at scholarly work until the end of the 20th century, but even today it appears to be the prevailing opinion.[48] The scholars often rely on the preparatory work, which clarifies that in the case of a contradiction between international law and the law of the host state, international law has priority[49]. They also rely on the history of the ICSID Convention, which states as follows:

The final provision relating to international law (which would bring it into play both in the case of lacuna in domestic law as well as in the case of inconsistency between the two) was adopted by a majority of 24 to 6. [50]

One of the first representatives of this opinion has been Broches, one of the founders of ICSID, holding that international law is superior to national law and thus supporting the corrective role. He explains that the ICSID tribunal should in the first instance apply the host state’s law, which will then be tested against international law. If it violates international law, it will not be applied.[51]

[...]


[1] Cf. Merriam Webster dictionary: <http://www.merriam-webster.com/dictionary/investment>.

[2] See below, under IV.C.

[3] Cf. <http://icsid.worldbank.org>.

[4] See Sornarajah, M., The international law on foreign investment, 2nd edition, Cambridge University Press, Cambridge, 2004 (hereinafter “Sornarajah, 2004”), pp. 429, 430.

[5] See Sornarajah, 2004, p. 429.

[6] Cf. Schreuer, C. H. “Streitbeilegung im Rahmen des ICSID”, in: Kronke, H./Melis, W./Schnyder, A., Handbuch des Internationalen Wirtschaftsrechts, Schmidt (Otto), Köln, 2005, pp. 2012-2035 (hereinafter “Schreuer, 2005“), p. 2027.

[7] See e.g. Gaillard, E./Banifatemi, Y., “The Meaning of "and" in Article 42(1), Second Sentence, of the Washington Convention: The Role of International Law in the ICSID Choice of Law Process”, 18 ICSID Review – Foreign Investment Law Journal 375 (2003) , pp. 375-411 (hereinafter “Gaillard/Banifatemi, 2003“), p. 375.

[8] International Centre for the Settlement of Investment Disputes, History of the ICSID Convention – Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of other States, Vol. I–IV, 1968–1970 (hereinafter “History of the ICSID Convention”), Vol. II, part 2, p. 962.

[9] Article 38 (1) of the Statute of the ICJ (emphasise added).

[10] Cf. e.g. Nassar, N., “Internationalization of State Contracts: ICSID, The Last Citadel”, 14 (3) Journal of International Arbitration 185 (1997), pp. 185-208 (hereinafter “Nassar, 1997”), p. 203; see also Broches, A., “Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 – Explanatory Notes and Survey of its Application”, in: van den Berg, A. J., Yearbook Commercial Arbitration, Vol. XVIII, Kluwer Law International, The Hague, 1993, pp. 627-715 (hereinafter “Broches, 1993”), p. 667.

[11] Cf. Manciaux, S., Investissements étrangers et arbitrage entre Etats et ressortissants d’autres Etats – Trente années d’activité du CIRDI, Vol. 24, LexisNexis, Litec, Paris, 2004 (hereinafter “Manciaux, 2004”), p. 316.

[12] Cf. Schreuer, C. H., The ICSID Convention: A Commentary, 2nd edition, Cambridge University Press, Cambridge, 2009 (hereinafter “Schreuer, Commentary“), p. 580.

[13] Cf. Schreuer, Commentary, pp. 580, 581.

[14] See below, under III.B.4.d.

[15] Avramovich, M. P., “The protection of international investment at the start of the twenty-first century: Will anachronist notions of business render irrelevant the OECD’s multilateral agreement on investment?”, 31 John Marshall Law Review, Summer 1998, pp. 1201-1278, p. 1225.

[16] Schreuer, Commentary, p. 562.

[17] Schreuer, Commentary, p. 559.

[18] AGIP S.p.A. v. People's Republic of the Congo, ICSID Case No. ARB/77/1, Award, 30 November 1979, 1 ICSID Reports 306 (1993) (hereinafter “AGIP v Congo, Award”).

[19] Article 15 of the Agreement of January 1974 of the AGIP v. Congo, Award.

[20] Nassar, 1997, pp. 200, 201.

[21] Idem, p. 201.

[22] Cf. Schreuer Commentary, p. 583.

[23] Nassar, 1997, p. 196.

[24] Cf. Kreindler, R. H., “Parallel Proceedings: A Practitioner’s Perspective”, in: Waibel, M./Kaushal, A., et.al., The Backlash against Investment Arbitration, Kluwer Law International, The Hague, pp. 127-150, 2010, p. 136.

[25] Cf. Broches, 1993, p. 666.

[26] Idem, p. 668.

[27] Lauterpacht, E., “The World Bank Convention on the Settlement of International Investment Disputes“, in: Faculté de droit de l'Université de Genève, Recueil d’études de droit international en hommage à Paul Guggenheim, Imprimerie de la Tribune de Genève, Geneva, 1968, pp. 642-664 (hereinafter “Lauterpacht, 1968”), p. 657.

[28] Cf. idem, p. 658.

[29] Griebel, D. E. S., Internationales Investitionsrecht, C.H. Beck, München, 2008, p. 138.

[30] Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, see <http://icsid.worldbank.org/ICSID/ StaticFiles/basicdoc/partB-section01.htm >, part III, para. 9.

[31] Schreuer, Commentary, p. 586.

[32] Like e.g. Bjorklund, A. K., “Mandatory Rules of Law and Investment Arbitration”, 18 American Review on International Arbitration 175 (2007), pp. 175-203, pp. 200, 201.

[33] See Manciaux, 2004, p. 287 (original wording in French: “ordre public international “).

[34] Cf. idem, p. 287, who explains that this consideration of the international public order is justified if it is “légitime de vouloir empêcher que l’application du droit interne choisi par les parties (celui de l’Etat hôte par hypothèse) conduise à ce qui serait considéré par tous (à l’exception dudit Etat) comme un déni de justice”.

[35] Idem, p. 288.

[36] Idem, but he also remarks that until now this hypothesis of a violation of international public order has never happened.

[37] See below under III.B.

[38] Cf. Bishop, R.D./Crawford, J./Reisman, W.M., Foreign Investment Disputes – Cases, Materials and Commentary, Kluwer Law International, The Hague, 2005 (hereinafter “Bishop/Crawford/Reisman, 2005”), p. 14.

[39] Gaillard/Banifatemi, 2003, p. 381.

[40] Cf. Reisman, W. M., “The Regime for Lacunae in the ICSID Choice of Law Provision and the Question of Its Threshold”, 15 ICSID Review – Foreign Investment Law Journal 362 (2000), pp. 362-381 (hereinafter “Reisman, 2000”), p. 374.

[41] Cf. Idem, p. 375.

[42] Cf. Bishop/Crawford/Reisman, 2005, p. 14; Weil, P., “The State, the Foreign Investor and International Law: The no longer stormy Relationship of a Ménage à Trois”, 15 ICSID Review – Foreign Investment Law Journal 401 (2000) , pp. 401 et seq. (hereinafter “Weil, 2000”), p. 409.

[43] Gaillard/Banifatemi , 2003, p. 381.

[44] E.g. Shihata, I.F.I./Parra, A.R., “Applicable Substantive Law in Disputes Between States and Private Foreign Parties: The Case of Arbitration under the ICSID Convention”, 9 ICSID Review – Foreign Investment Law Journal 183 (1994), pp. 183-213 (hereinafter “Shihata/Parra, 1994”), p. 192; Schreuer, 2005, p. 2030; Nassar, 1997, pp. 202 et seq.

[45] See therefore also the casuistic interpretation below, under III.B.3.b.bb.

[46] Klöckner Industrie-Anlagen GmbH and others v. United Republic of Cameroon and Société Camerounaise des Engrais, ICSID Case No. ARB/81/2, Annulment Decision, 3 May 1985, 2 ICSID Reports 95 (1994), p. 122.

[47] Elombi expresses the need for such a compromise in Elombi, G., “ICSID Awards and the Denial of Host State Laws”, 11 (3) Journal of International Arbitration 61 (1994), pp. 61-68 (hereinafter “Elombi, 1994”), p. 66.

[48] Cf. e.g. Gaillard/Banifatemi, 2003, p. 381; Schreuer, 2005, p. 2030.

[49] Cf. Schreuer, 2005, p. 2030.

[50] Cf. reference in Gaillard/Banifatemi, 2003, p. 382 and footnote 24.

[51] Cf. Essien, V., Book Review of Broches, A., Selected Essays: World Bank, ICSID and other subjects of public and private international law, 19 Fordham International Law Journal 818 (December 1995), pp. 818-831, p. 825.

Excerpt out of 59 pages

Details

Title
The role of international law in Article 42(1) of the Washington Convention on the Settlement of Investment Disputes
Course
ICSID Convention
Grade
19
Author
Year
2011
Pages
59
Catalog Number
V335548
ISBN (eBook)
9783656986560
ISBN (Book)
9783656986577
File size
806 KB
Language
English
Tags
ICSID, International Law, Article 42(1) ICSID Convention, Role of international law
Quote paper
Lydia Beil (Author), 2011, The role of international law in Article 42(1) of the Washington Convention on the Settlement of Investment Disputes, Munich, GRIN Verlag, https://www.grin.com/document/335548

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