What is the EAS?
EAS refers to the East Asia Summit, an annual pan-Asian forum.
EAS participants include all 10 ASEAN members plus China, Japan, South Korea, India, Australia and New Zealand. At the October 2010 EAS, Russia and the United States were both formally invited to participate as full members, and each country will be participating at the head of state level in 2011.
What is Investment Treaty Arbitration?
An unprecedented method of arbitration, whereby a private person (foreign investor) can directly initiate arbitration against a State. Of course there are jurisdictional prerequisites that a foreign investor must qualify to be successful, namely nationality, having a qualified investment, etc.
What is a BIT or FIPA?
A BIT is a Bilateral Investment Treaty, a FIPA is a Foreign Investment Promotion & Protection Agreement.
A BIT & FIPA are virtually identical kinds of international legal instruments. The common terminalogy for such is BIT, Canada chooses to call their BITs FIPAs.
BITs have become the most signaificant feature of investment arbitration providing foriegn investors the means with which to directly initiate arbitration against the relevant state.
Some beleive that BITs have accomplished, to some extent, what states could not do multilaterally after the Organization for Economic Co-Operation and Development (OECD) failed to pass the Multilateral Agreement on Investment (MAI).
What is the ICSID Convention?
The widely adopted ICSID Convention (also known as the Washington Convention) provides a procedural and institutional framework for investment arbitrations. It creates a self-standing system detached from national courts and facilitating enforcment in member States. ICSDI jurisdiction is restricted by its scope and the separate need for consent, and thus investment arbitration are often also brought under other rules, such as the UNCITRAL Rules.
What is the Applicable Law?
Investment arbitration permits parties to choose the law applicable to their dispute. If the parties fail to do som the default rule under the ICSDI Convention provides for both, domestic law of the host state and international law to be applied, although their exact relationship has not always been settled. In a BIT arbitration the applicable law is the BIT itself, supplemented by general rules of international law.
What is Bifurcation?
In the name of efficiency, BIT Tribunals often bifurcate proceedings into separate phases for (i) jurisdiction & admissability; and (ii) merits.
What are Interim Measures?
Investment Tribunals are often requested to order interim measures and have a power to do so under the ICSID system as well as the UNCITRAL Rules. Interim measures may vary greatly, but typically include anti-suit injunctions, maintenance of the status qou, preservation of evidence and security for costs. The most commonly used criteria for evaluating whether to grant interim measures are prima facie jurisdiction, prescence of right to be preserved, urgency and necessity.
What is Confidentiality & Amici Curiae?
Some commentators believe that confidentiality is often inappropriate in investment arbitrations which engage questions of public policy. The ICSDI system strives to promote transparency, imposing a duty of confidentiality only on the Tribunal. Parties may nevertheless agree on confidentiality,, or the Tribunal may make a confidentiality order with ints broad procedural powers. Written amicus curiae submissions have recently become more common in investment arbitration and Tribunals have often accepted them.
What are the Sources of State Consent in Investment Arbitration?
There are 3 different sources of State consent in investment arbitration:
- Contract (State A enters into a Contract with Person B to arbitrate any investment disputes that may arise between the parties);
- Investment Treaty (e.g. Bilateral Investment Treaty, Foreign Investment Promotion & Protection Agreements, Energy Charter Treaty, North American Free Trade Agreement Chapter 11, etc.)
- National Law of State (State A passes a national law that says that State A consents to arbitrate any dispute concerning X with foreign investors)
Once a State consents to investment arbitration, that State cannot unilaterally withdraw its consent.
A State generally cannot rely on its own internal law to argue that consent was not properly afforded.
A constituent subdivision or agency of a State can also consent to ICSID arbitration subject to certain conditions.
What is Ratione Temporis?
To simplify, ratione temporis is what hapened when and to whom.
Whether the investment was made before or after the conclusion of the treaty may be relevant depending on its language. More importantly, the time when the acts that the subject of the dispute may be relevant to the determination of jurisdiction where there have been carried out prior to the entry into force of the treaty. The same can be said of the time when the dispute arises.
What is Ratione Personae?
The concept of nationality of a legal entity is much more complex than the nationality of an individual. Various unsettled issues remain regarding the former, the most salient of which is whether or not ultimate control of a corporation should be taken into account in the absence of a specific provision in a treaty. The varying decisions on this point create much uncertainty as to the access to treaty protection. However, the following guiding principles may be drawn from the analysis above. First, the criteria governing jurisdiction differ depending on whether a natural person or a legal entity is concerned. Second, an individual with dual-nationality at the critical date will be precluded from relying on a BIT where one of the nationalities is that of the host State, if he is pursuing arbitration under ICSID. Third, where a BIT grants jurisdiction on the basis solely on the place of incorporation, Tribunals are likely to interpret such provisions narrowly, without investigating further e.g. the source of funds for the investment or whetherthe corproation is a mere shell. Fourth, where an investment agreement contains a provision that a locally incorporated company, subject to foreign control, can be considered a foreign investor, Tribunals will look at de facto control, not only the extent of the shareholding and Tribunals will generally not seek to establish which entity has ultimate control in a situation involving a chain of companies i.e. they will generally not pierce the corporate veil of the de facto controllinmg company. Fifth, generally, a company claiming treaty protection should have the same nationality at the date of injury and at the date of the claim; an objection on the basis of a change in nationality after such time is likely to fail.
What is Ratione Materiae?
The definition of "investment" remains one of the most controversial issues in investment law and arbitration. The ICSID Convention offers no definition even if successive Tribunals have tried to give it some content. Many BITs do on the other hand contain a definition of "investment" that is often very broad and general. Different approaches have been adopted by ICSID Tribunals in order to determine whether the transaction they have before them is an "investment" in relation to which they would have jurisdiction. Some Tribunals have adopted the Salini Test and its so-called objective criteria and have applied them with varying degrees of strictness. Others preferred to give priority to the consent of the parties as expressed in the relevant investment agreement. Tribunals have followed the broad wording contained in investment treaties.
What is a Cooling Off Period?
A cooling off period is a BIT provisions that imposes a time for the disputing parties to negotiate, before arbitration can be initiated.
What is the Fork in the Road?
A Fork-in-the-road clause forces a claimant to choose between domestic and international proceedings.
What are Parallel Proceedings?
Parallel proceedings give rise to several concerns, such as res judicata (binding effect of a decision on the parties) and consolidation and related techniques.
What is Denial of Benefits?
Denial of Benefits clauses enable a respondent State to refrain from extending the benefits of an investment treaty to a "mailbox company" that has no business activities in its State of incorporation and is owned or controlled by nationals of other States. However, they have not been successfully applied in practice so far.
What is a Counterclaim?
Both the ICSID Convention and the UNCITRAL Rules make it theoretically possible for States to include counterclaims into investor-State arbitral proceedings, though the specific wording of the BIT will be very important for the purpose of analysing whether there is consent for the counterclaim to be introduced.
Can a Contract be a Source of Jurisdiction to Initiate Investment Arbitration?
Yes. While the vast majority of modern investment arbitrations arise from alleged breaches by a host State of the substantive protections guarenteed by bilateral or multilateral investment treaties, the provisions of a contract between an investor and a host State can also be the source of substantive protections. The ability of a host State will depend on whether an investment Tribunal has jurisdiction to hear such claims, for example through an arbitration clause in the contract itself.
What is Expropriation?
Customary international law and investment treaties recognise the sovereign right of a host State to expropriate the property of foreign investors, however they limit host States' power to do so. In order to be legal, an expropriation (1) must have a public purpose, (2) must not be discriminatory or arbitrary, (3) must be conducted in accordance with due process and (4) must be accompanied by adequate compensation. Expropriation may be either direct or indirect. Direct expropriation occurs where the host State formally takes title of the expropriated asset, while indirect expropriation accurs where there is a substantial and permanent or prolonged interference with the investment which deprives the investor of all or most of its benefits.
What is Fair and Equitable Treatment (FET)?
A majority of successful investment claims are based on a breach of the FET standard. Broadly defined, the FET standard requires States to maintain stable and predictable regulatory framework consitent with reasonable investor expectations. However, the FET is a highly flexible standard which may not neccessarily be the same in all the treaties in which it appears. Key aspects of the FET standard developed in arbitral jurisprudence are the protection of legitimate expectations of investors, the requirements of transparency and stability, the duty not to deny justice, and the freedom from coercion and harassment.
What is Full Protection and Security (FPS)?
The content of the FPS standard has two main facets. The first is the traditional understanding of the standard as a protection from physcial violence against the assets and individuals connected with an investment. Such violence may be caused by the host State itself or by third parties, although a host State only has an obligation of due diligence, not a strict obligation, to prevent violence by third parties. The second facet goes beyond the scope of physical protection to include legal security. However, this facet is not conssitently accepted by the arbitral jurisprudence, in particular because, according to some Tribunals, it would overlap with the FET standard.
What is a Most Favoured Nation (MFN) Clause?
An MFN Clausein a BIT grants investors from the beneficiary State treatment by the host State which is no less favourable than that which it accords to investors from third States. Therefore, any benfit granted by a host State to investors from a third State will automatically be extended to investors of States with which the host State has cncluded a BIT with an MFN clause. It is well established in the arbitral jurisprudence that MFN clauses can be used by investors to invoke more favourable substantive protections contained in other BITs concluded by the host State. The use of MFN clauses to invoke more favourable dispute settlement provisions in third treaties has however proved to be more controversial, and the arbitral jurisprudence on this question is inconsistent.
What is an Umbrella Clause?
An umbrella clause obliges a host State to observe obligation or commitments it has undertaken towards investments. Thus, such obligations are "elevated" to the international sphere, and their breach becomes a breach of the BIT. The wording of umbrella clauses however varies significantly, and different Tribunals have taken different views on their effect. It is however now generally accepted in the arbitral jurisprudence that umbrella clauses elevate contractual obligation undertaken by the host State towards an investor would constitute a treaty breach.
What is the Defence of Abuse of Rights?
The defence of abuse of rights has been invoked in several investment arbitrations in two forms. the first, abuse of the quality of "investor", has been argued by host States in cases in which an investor organises or reorganises its business in order to avail itself of the protection of a BIT. Tribunals have notably accepted the defence where the sole purpose of a transaction was to gain access to investment arbitration under a particular BIT. The second, abuse of arbitral process, has been raised, albeit unsuccessfully, by host State in cases of multiplication of proceedings or where there is reason to believe that the investor only commenced arbitration to force the State to take certain measures.
What is the Defence of Necessity?
The defence of necessity is a circumstance precluding wrongfulness under customary international law. It can be invoked in exceptional cases in which a State is forced to breach an international obligation in order to protect an essential interest. In order to successfully invoke the defence of necessity, however, several conditions must be met. In particular, an act of necessity must be guided by the intention of the host State to (1) safeguard an essntial interst against (2) grave and imminent peril, and (3) the State must not have any other options available. Moreover, the neccessity defence should be rejected if reliance on it is excluded by the international obligation breached; or the State contributed to the creation of the state of necessity.
What is the Defence of International public Policy?
The defence of international public policy has been invoked by respondent States in investment arbitrations. Transnational public policy consists of supranational principles, universal standards and accepted norms of conduct which are to be applied in all fora. In order to form part of transnational public policy, a certain rule needs to be accepted by the international public policies of most countries. As a result, very few rules, standards or principles are recognised as forming part of transnational public policy. Rules which are usually mentioned as part of transnational public policy include the prohibitions of slavery, racial discrimination, and rug trafficking, as well as corruption. The prohibition of corruption has been the most frequent application of transnational public policy in investment arbitration.
What is Attribution?
One of the essential conditions for the responsiblity of a State towards an investor is that the acts or omissions in question are attributable to the State under international law. The basic rule of attribution under customary international law is that a State is responsible for the conduct of its organs. The definition of a State organ is very broad and includes persons or entities at any level of hierarchy exercising whatever function, be it legislative, executive or judicial. The conduct of private persons or entities will not normally be attributable to the State. However, a State may also be responsible for the acts ro omissions of entities or individuals which are not State organs in certain circumstances, namely where such entities or individuals are exercising elements of governmental authority or acting under the direction and control of State.
What Kinds of Remedies are Available in Investment Arbitration?
The three principal categories of remedies that are available in investment arbitration are: restitution, compensation, and satisfaction. The three forms of reparation may be ordered singly, or in combination with each other. Restitution is the primary remedy under the law of State responsbility for an internationally wrongful act committed by a State, but is rarely requested in investment treaty arbitrations. Compensation is the most commonly sought and awarded remedy in international practice. Compensation or damages will be awarded by an arbitral Tribunal where they correspond to the financially assessable damage suffered by the injured party. Satisfaction, which is not a common remedy in investment treaty arbitration, is a remedy for injuries which are not financially assessable. It can take a number of forms, such as declaratory or injunctive relief.
What is an Annulment?
Annulment does not modify the award but removes it. Annulment is possible only upon the request of a party. Only awards or parts of awards are subject to annulment. Awards are not subject to substantive review and an allegation of a mere error of fact or of law will be of no avail. The legal framework in respect of annulment proceedings varies greatly in function of whether an international investment arbitration is conducted under the ICSID Convention or not:
- Under the ICSID Convention, a request for annulment is generally subject to a time liimit of 120 days. Corruption has special time limits. Annulment is possible only on the basis of a limited number of serious grounds: improper constitution of the Tribunal; Manifest excess of powers; Corruption of Arbitrator; Serious departure from a fundamental rule of procedure; and Failure to state reasons.
- Non-ICSID investment treaty awards will be treated in the same way as an award issued in the context of an international commercial arbitration. Domestic arbitration law will provide the grounds on which annulment can be sought and the procedure, which is conducted before the competent domestic courts of the seat of arbitration. Domestic arbitration laws vary greatly in the way they deal with challenges of arbitral awards. However, the grounds for annulment of an award provided for in domestic arbitration laws are often based on those set out in the UNCITRAL Model Lw: Non-existent or invalid arbitration agreement; Denial of opportunity to present case; Failure of the Tribunal to comply with procedures agreed by the parties or prescribed by the law of the arbitral seat; Composition of arbitral Tribunal; Excess of powers; Arbitrator's lack of indepdence or impartiality; Non-Arbitrability of parties's claims; Public Policy; Fraud.
What is State Immunity?
Enforcement, both of ICSID (to some extent) and non-ICSID awards, has its limit in State immunity. An award against a host State need not be enforced if this would be in violation of the rules on State immunity as applied in the enforcing State, although a State that successfully relies on its law concerning State immunity from execution will still be in breach of its obligation under the ICSID Convention. The most important criterion for State immunity from execution is the nature of the assets that are to be the object of enforcement. Execution is permitted against commercial property belonging to the State, but not against property serving official or governmental purposes. There are also particular types of immunities granted certain types of property and not to the State as such. These include diplomatic property, military property, central bank property and cultural heritage. A waiver of immunity can be agreed upon by the parties but certain forms of waiver of immunity may be unenforceable even if agreed upon by the parties.
What is Recognition & Enforcement?
ICSID awards are final and binding. All State parties to the ICSID Convention are under an obligation to recognize and enforce ICSID awards. Awards are not subject to any review outside the ICSID Convention's system including domestic courts or the International Court of Justice. Recognition is the official confirmation that the award is authentic. Unlike the obligation to recognize an an award, the obligation to enforce is limited to the pecuniary obligations imposed by the award. The procedure for recognition and enforcement is governed by Article 54(2) and (3) of the ICSID Convention. Specific difficulties arise when the prevailing investor attempts to enforce the ICSID award against a constituent subdivision or agency of the State.
Non-ICSID investment treaty awards, including UNCITRAL awards rely on the same legal framework as international commercial arbitration awards for their recognition and enforcement. Almost all domestic legal frameworks on recognition and enforcement of arbitral awards are governed by the New York Convention. The grounds on which recognition and enforcement of an award can be refused are provided for in Article V(1) of the New York Convention: (a) the invalidity of the arbitration agreement; (b) violation of due process; (c) the arbitrator over stepping their authority; (d) irregularity in the composition of the arbitral Tribunal or the arbitral procedure; (e) award not binding or set aside and Article V(2): (a) the non-arbitrability of the subject matter of the award; and (b) the violation of public policy.
What is OCAC?
OCAC refers to The Organization of Central Asian Cooperation (also known as the Central Asian Cooperation Organization, CACO).
OCAC was an international organization, composed of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Russia. Georgia, Turkey and Ukraine had observer status.
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan formed OCAC in 1991 as the Central Asian Commonwealth (CAC). CAC continued in 1994 as the Central Asian Economic Union (CAEU), in which Tajikistan and Turkmenistan did not participate. In 1998, CAC became the Central Asian Economic Cooperation (CAEC), which marked the return of Tajikistan.
On 28 February 2002, it was renamed OCAC. Russia joined on 28 May 2004. On 7 September 2005, at the St. Petersburg Summit of the Central Asian Cooperation Organization, it was agreed to merge CACO into EurAsEC.
What is CAEU?
CAEU refers to the Council of Arab Economic Unity was established by Egypt, Iraq, Jordan, Kuwait, Libya, Mauritania, Palestine, Somalia, Sudan, Tunisia, Syria, United Arab Emirates and Yemen on 3 June 1957. CAEU became effective 30 May 1964, with the ultimate goal of achieving complete economic unity among its member states.
CAEU is headquartered in Cairo (Egypt).
For more CARU information: caeu.org.eg
What is GAFTA?
GAFTA refers to the Greater Arab Free Trade Area, a pan-Arab free trade area formed in 1997.
GAFTA was founded by 14 countries (Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, and the United Arab Emirates).
The establishment of GAFTA followed the adoption of the Agreement to Facilitate and Develop Trade Among Arab Countries (1981) by the Arab League's Economic and Social Council (ESC) and the approval by 17 Arab League member-states at a summit in Amman (Jordan), of the Greater Arab Free Trade Area Agreement (1997). In 2009, Algeria joined GAFTA as the eighteenth member-state. GAFTA is supervised and run by the ESC.
What is the Pacific Islands Forum?
The Pacific Islands Forum is an inter-governmental organization that aims to enhance cooperation between the independent countries of the Pacific Ocean. It was founded in 1971 as the South Pacific Forum
. In 2000, the name was changed; Pacific Islands Forum
is more inclusive of the Forum's Oceania-spanning membership of both north and south Pacific island countries and Australia. It is an official observer at the United Nations.
The Pacific Islands Forum is located in Suva, Fiji.
For more Pacific Islands Forum information: www.forumsec.org
What is the Melanesian Spearhead Group?
The Melanesian Spearhead Group (MSG) is an intergovernmental organization, composed of the four Melanesian states of Fiji, Papua New Guinea, Solomon Islands and Vanuatu as well as the FLNKS of New Caledonia. It was founded as a political gathering in 1983. On 23 March 2007, members signed the Agreement Establishing the Melanesian Spearhead Group, formalizing the group under international law.
The MSG Secretariat is located in Port Villa, Vanuatu.