Foreign direct investment is playing a determinative role in today's world and particularly in generating economic growth and social development in less developed areas of the world. Arguably, apart from reliable substantive law, and investment-insurance, an effective dispute settlement mechanism is the third major factor of promoting foreign direct investments.[1] Finding an impartial and efficient forum to deal with investment disputes bears essential importance with regard to foreign investment. After the II World War, it was clear that there was no such a forum; this was the gap that the Convention on the Settlement of Investment Disputes between States and the Nationals of Other States of 18th March 1965[2] was to fill in.[3]
Thanks to its assumed impartiality, professionalism and flexibility, arbitration seemed to be the most acceptable form of dispute resolution for the founders of the ICSID Convention.[4] Generally respecting the parties' freedom in many respects, arbitration allows the participants to decide about the rules of procedure, the persons of arbitrators, and the applicable substantive law, as well.[5] Furthermore, an effective arbitration has to provide a rule even for such cases where there is no agreement between the parties, for example, as to applicable substantive law.
As it could be expected, along the drafting of the Convention a basic controversy between capital-exporting and capital-importing countries determined the negotiations on applicable law.[6] The former industrialised countries wanted to rely as much as possible on the protection of international law in order to pull out the investor-host State dispute from the jurisdiction of domestic laws. On the other hand, the latter developing countries preferred their domestic laws to international norms, towards which they had a great deal of suspicion. Hence, the founders had to find such a formula as to applicable substantive law that would overarch this basic tension and could provide a definite guide for future arbitrators on what the applicable law should be. What they finally came up with is the text now incorporated in Art 42 of the Convention, which reads as follows:
"Article 42
(1) 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.
(2) The Tribunal may not bring in a finding of non liquet on the ground of silence or obscurity of the law.
(3) The provisions of paragraphs (1) and (2) shall not prejudice the power of the Tribunal to decide a dispute ex aequo et bono if the parties so agree."
As it can be seen, the first sentence of Art 42(1) provides the greatest freedom in choosing applicable law to the parties. It is entirely up to them to determine what law should apply to their relationship. The Convention provides a supplementary rule in the second sentence of Art 42(1), designating as applicable law the domestic law of the host-state and such rules of international law as may be applicable. This clause only comes into play when the parties have not agreed on applicable law. Hence, the first sentence of Art 42(1) of the article with section (3), which allows the parties to enable the tribunal to decide ex aequo et bono, provide great flexibility to the parties, whereas the second sentence of section (1) and the prohibition of non-liquet in section (2) ensure certainty: in case of lack of parties' choice, the tribunal is provided with a rule on what the applicable law is.[7]
The ban on finding a non-liquet in section (2) is coupled with the rule that the tribunal has to decide on every question that have been submitted to it,[8] and reveals the underlying view of the drafters that the applicable law provided by Art 42(1) is sufficiently complete to decide on every aspects of possible disputes.[9]
The issue of applicable law is a grave matter; this is aptly demonstrated by ICSID cases, for instance, by the Klöckner v. Cameroon Case, in which the ad hoc Committee ruled that by not applying the applicable law the tribunal had manifestly exceeded its power, which mandated the annulment of its award.[10] The first section of Art 42, and especially its second sentence, has been the subject of much debate
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over the last decades since it leaves many questions unanswered with regard to applicable law.
This paper addresses only one important aspect of Art 42(1) that is to determine how international law plays a role in adjudicating disputes in ICSID arbitration, in what cases international law is directly or indirectly applicable and how international and domestic law interact with each other. Through analysing relevant arbitral awards of the last four decades, and corresponding scholarly opinions, the dissertation tries to identify the individual functions of international law and its inter-relationship with domestic law under both the first and second sentence of Art 42(1).
The first sentence of Art 42(1) conforms to the regular rule of international arbitration: the parties enjoy a great freedom in ascertaining the applicable substantive law to their relationship. Other major international arbitration mechanisms also provide the same rule.[11] The choice can be either explicit or implicit according to the practice of the tribunals,[12] and can be made even in the course of the arbitration. The parties may choose, basically, any rules of any law, for example, the law of the host state,[13] the law of the state of the investor, the law of any other third state,[14] and international law to their relationship. Since the first sentence reads as "such rules of law", a dépeçage is possible, i.e. the parties enjoy full freedom in choosing from the rules of several legal systems including international law; they may combine these rules or can exclude some of them.
International law can be chosen directly by the parties stating in the contract that "international law" or "the general principles of law will apply" to the relation between them. This results in the so-called "internationalisation" of the contract. By designating international law as applicable law to their contracts, the parties can be considered as making an attempt to bridge the traditional gap between the state versus investor relationship governed by the contract and the host-state versus investor's state relationship being on the plane of international law.[15]
Nevertheless, relying exclusively on international law can mean that some technical aspects of the dispute (e.g. standards, professional features) will not be covered by any law, due to the lack of corresponding international rules. Hence, this exclusive choice of international law is not advisable.
Another possibility is that the contract will designate both the law of the host-state and international law as applicable laws. This will create a situation similar to that of the second sentence of Art 42(1) (host state law combined with international law). In Kaiser Bauxit v. Jamaica the mining agreement concluded by the parties contained that
"the Arbitration Tribunal shall apply the law of Jamaica and such rules of international law as may be applicable."[16]
Indirectly, parties can choose international law by designating a particular national law, which incorporates the rules of international law. It is important to distinguish between the different rules of international law in this regard since the constitutional solution of a particular state usually varies depending on which rule of international law is in question (customary law, a general principle or a treaty).[17] Nevertheless, it is not advisable to rely exclusively on international law incorporated into domestic law since the status of such international law rule then follows that of the domestic law and changes together with it.
Another possibility is that the conflict of laws rules of the chosen domestic law point to an international rule, or to another national law, which in turn refer to international law. National conflict rules may point to international treaties, most likely, to investment agreements and other international treaties embodying international private law rules.[18]
When parties have chosen international law as the exclusive substantive applicable law, there is no doubt that the tribunal has to use international rules to the dispute. Moreover, if the parties have not limited the scope of international law in this regard, the tribunal will have to look into the whole array of international law. No such a case has come to ICSID arbitration yet.
If the parties have chosen both international and domestic law as applicable law, then the tribunal will face a situation similar to the one under the second sentence of Art 42(1). Here, we only refer to the
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AGIP v. Congo case, where the investment contract conferred onto international law a supplementary role in relation to domestic law. In the tribunal's view, this warranted that "at the very least...recourse to principles of international law can be made to fill lacuna in Congolese law, or to make any necessary additions to it."[19] Although this contention is rightly stated, further conclusions of the arbitrators cast some doubts (see II.1.3.4.). (As to the notion of lacuna, see point II.2.3)
Apparently, this kind of application of international law rather means using such domestic rules that completely conform to the respective rules of international law. Sometimes only the preamble of domestic act reveals that the basis of the legislation was an international treaty or other international rule. In two ICSID cases (Adriano Gardella v. Côte d'Ivoire[20] and LETCO v. Liberia[21]), the arbitrators applied domestic rules but were cautious to state that the applied rules conformed to international norms.
In AGIP v. Congo the application of international law took place in relation to a so-called "stabilisation clause". A possible effective way of alleviating the risks posed by choosing the host state's law as applicable law is an agreement between the investor and the host state with the understanding that the body of law of the time of their entering into the contract will apply to their relationship. Such a stabilisation clause freezes the status of the applicable domestic law. The relation of this kind of provision with international law is worth examining.
In AGIP v. Congo, the agreement between the investor and the host state contained such a stabilisation clause. Art 4 of the Agreement stipulated that the government of the Congo will not apply certain ordinances and decrees as well as "other ordinances or subsequent decrees the object of which is to change the private joint-stock company character" of the affiliate.[22] Furthermore, 11Art of the agreement provided that if later changes transpire in the company law of the Congo, the Government will insure that those changes will not affect the structure and composition of the company. However, by Ordinance No. 6/75 the government nationalised the company.
Applying the provision on applicable law agreed by the parties, the tribunal stated that first it had to examine the case under Congolese law, and then it should "ask itself whether the question must also be viewed with respect to international law."[23]
Further on, the tribunal pointed out that the stabilisation clause prevented any party to the agreement to unilaterally modify the status of the company. This could not be allowed since such a unilateral right would be "a purely protestative condition" and as such would be void under the applicable domestic law.[24] The illegality of the nationalisation under Congolese law thus was established on the basis of the stabilisation clause.
According to the sequence laid down by the tribunal in relation to applicable law -examination first under national law, then determining whether under international law further analysis is needed, see above - at this point the tribunal could have stopped since the claim seemed to be upheld already under domestic law. Still, the tribunal was eager to state that it had to proceed with an analysis under international law, as well. Curiously, the major argument for this was that the nationalising ordinance itself was a piece of Congolese law, and thus the question arose: "why it cannot thereby be considered as providing a juridical basis for the measures taken pursuant to it?"[25] Therefore, the tribunal itself was not sure about the question whether which is the real legal basis for eliminating the effect of the nationalisation decree, which defies an earlier stabilisation clause, Congolese Law or international law? In other words, the tribunal was not sure whether the ordinance as a piece of domestic law could override the stabilisation clause.
In the instant case, the additional reference to international law as applicable law in the contract provided solution for the tribunal to the question. AGIP contended that the phrase "supplemented" implied the subordination of Congolese law to international law. The tribunal chose not to take a position on the precedence of international law over domestic law, but stated that "at the very least...recourse to principles of international law can be made to fill a lacuna in Congolese law, or to make any necessary additions to it."[26] Noting that by entering freely into a contract the government of the Congo exercised its sovereign power,[27] the tribunal emphasised that the applicability of the stabilisation clause did not flow from the sovereignty of the contracting state but from the "common will of the parties expressed at the level of international juridical order".[28]
Basically, through this statement, the tribunal established a status and protection of the stabilisation clause under international law.
The applicability of international law appeared only in relation to the stabilisation clause, that was the point where international law completed Congolese law, and since the whole nationalisation was found illegal, thus the examination of other allegations (discriminatory nature of measures) under international law was not necessary.
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A major - and more compelling - problem under the first sentence of Art 42(1) is whether international law could have a role even in such cases where it has not been chosen by the parties as applicable law. Is it justifiable to recourse to international law in these cases, and which international rules may have a role here? A straightforward case of such function is when an international investment treaty directly regulates the subject matter, independently from the parties choice. Nevertheless, there seem to be serious arguments in favour of further cases of such an application.
When there is an "umbrella agreement" between the host-state and the investor's state that agreement - being a piece of international law-making - can also be considered as the source of application of international law. Such treaties are usually bilateral or multilateral investment treaties, in which the cooperating states will lay down the condition by which they treat foreign investments originating in one another's country. An investment agreement between two or more states containing an arbitration clause may authorise the parties to the investment dispute (the investor and the host state) to invoke the treaty itself as applicable substantive law. The usual way is to specify in the treaties that investment disputes, which may be submitted to an arbitral mechanism (e.g. to ICSID), shall include "...an alleged breach of any right conferred or created by this Treaty with respect to an investment."[29] In this way, these treaties directly regulate the subject matter of the investment dispute. They may be considered as a prevailing lex specialis as opposed to any other regulation (domestic or international) with regard to the relationship between the Host State and the investor of the other contracting state.
Hence, these inter-state investment treaties between states may render future investment disputes under the effect of the substantive law stipulated in the investment agreements themselves.
Conversely, the contract between the investor and the host-state can provide that it will be governed by the provisions of the underlying investment agreement, and recourse can only be made to the host state's law if the investment agreement is silent or incomplete on a particular issue.
The fact whether which rules of international law will become applicable through the vehicle of an investment treaty depends on the delimitation incorporated in the treaty itself. The agreement may refer only to its own provisions or can open up the scope of applicable law by allowing recourse to international law in general. The arbitrators can avail themselves of international law in accordance with this delimitation.
One could argue that the lack of reference to international law in the first sentence of Art 42(1) means that - apart from the function of investment treaties -the application of such rules is excluded. Some think that if international law was allowed to be applied in this case that would lead to uncertainty, therefore, it is not warranted since it leads to clear diversion from the parties' will.[30] Broches explains that this position could be right if the first sentence spoke of national systems of law. But this is not the case. The rules chosen by the parties can be both national and international norms, therefore a specific reference to the rules of international law would have been out of place.[31] When the parties have chosen, for example, the national law of the host state and then the host state changes its law to the detriment of the investor, Broches sees it appropriate for the aggrieved party to be able to invoke fundamental precepts of international law. Such basic rules could be the prohibition of discriminatory or arbitrary actions or the requirement of good faith.[32]
A compelling argument in favour of the application of international law is that it is "inherent in the very status" of a "tribunal set up to dispose of issues under international investment contracts and in deliberate substitution for alternative modes of international protection."[33] True, it would be extraordinary if an international tribunal should totally exclude the application of international law. This would lead to such an extreme position, which could justify any situation created by the host state if that situation was valid under domestic law. Since the legislative sovereignty of a state is quasi unlimited, this would mean that even a manifest denial of justice, discriminatory or arbitrary measure of the host state or actions taken in bad faith should be upheld by the tribunal.[34] It can be also pointed out that the goals of the Convention aim at a predictable environment for investments and the exclusion of international law would prejudice this objective.[35]
Nevertheless, a stronger policy argument can be highlighted. States establishing an international tribunal under Art 27(1) of the Convention waive their rights to provide diplomatic protection in relation to disputes submitted to ICSID.[36] Why should the investors be worse-off in the arbitration procedure than in the case of diplomatic protection whereby the
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state of the investor can invoke fundamental norms of international law?[37] Furthermore, Art 54(1) of the Convention requires a general recognition of the awards of the tribunal, and shall enforce its pecuniary obligations. This requirement could hardly be enforced if awards ignoring minimal international standards were the subjects of enforcement.[38]
The most challenging problem is what we should mean by international law in this respect? According to the above stated arguments (see point II.3.1.), only very basic rules with a nature of guarantee can be taken into account so as to ensure a fundamentally just outcome of the procedure.
In the first place, peremptory rules of international law[39] have to be mentioned. These rules embody erga omnes obligations, which should be respected by all international actors,[40] and no state shall recognise as lawful a situation created by the serious breach of peremptory rules.[41] There has been an ongoing dispute regarding the content of this international jus cogens, which should be worked out in state practice and in the jurisprudence of international tribunals.[42] However, it can be asserted with reasonable certainty that such rules as the prohibitions of slavery, piracy, genocide, aggression, or torture are by all means included.[43] Hence, ICSID as an international tribunal could not uphold any remedy relating to an investment that involves slave-work. Nevertheless, it is less likely that such an extreme violation of international values would occur in investment disputes. It is important to note that no rule pertaining to international investment has been designated so far as a peremptory rule.
More relevant emerging tenets relating to foreign investments can be found in international customary law and among general principles of international law. Such notions are: prohibition of discriminatory or arbitrary measures, principles of pacta sunt servanda and that of good faith. Broches was also of the point of view that apart from treaty law, only such rules of international law might come into play under Art 42 as those of good faith and pacta sunt servanda.[44]
In sum, it can be asserted that not all customary rules or general principles of international law relating to foreign investment can have a role under the first sentence of Art 42(1), only those of a basic controlling and guaranteeing character. These latter rules - together with peremptory norms - can be considered as the elements of some kind of an international public policy,[45] the criteria, minimum standards of which have to prevail in any international arbitration, thus under ICSID arbitration, as well. The applicability of the whole array of international customary law and general principles would make the first sentence of Art 42(1) completely redundant, which clearly could not have been the intention of the drafters.
For example, it seems to be an emerging principle - also asserted by an ICSID award - that in case of injury to the investor, the solution of in integrum restitutio has been discarded, and the only available remedy is that of full compensation taking into account both damnum emergens and lucrum cessans.[46] Nevertheless, if a domestic law is to be applied under the first sentence of Art 42(1) and that law provides the rule of in integrum restitutio, one could reasonably ask: why not to use it? Awarding full monetary compensation may well be a wise notion in general, but does not have a nature of basic guarantee. If the particular circumstances of the case can convince the tribunal that there will be no obstacle as to enforcement, it can decide under the applicable domestic law to render in integrum restitutio for the claimant. By doing so, the tribunal will not prejudice the fundamental procedural and substantive guarantees of the arbitration. Hence, this rule - though belonging to the emerging principles of international investment law - should not play a corrective, controlling role of public policy under the first sentence of Art 42(1).
It may easily happen that the rules chosen by the parties do not provide a satisfactory solution to the relevant legal issue. This may even happen when the parties have chosen the whole domestic law of a particular country. Art 42(2) requires the tribunal to render an award in any case, but the question arises: on what basis should the arbitrators do that? In may be submitted that the problem of lacuna confers onto international a further role.
As Reisman stipulates it, a lacuna exists when a state allows or encourages certain activities, but plainly does not regulate those acts or their consequences, and does not provide any supplemental mechanism as to applicable law, either.[47] The question in that arbitrators have to pose themselves such a case is whether the chosen law addresses the respective issue at all. This notion should be perceived broadly. It is not necessarily a lacuna if no remedy or a different remedy than that provided by international law is offered by the domestic law, since this can be a decision of the national regulator not to regulate or to regulate in a different manner.[48] A genuine "socio-legal gap"
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is to be found by the arbitrators to assert a lacuna, and in closing that gap they have to use the whole legal framework provided by the chosen law with its statutes, judicial precedents, general principles and very own analytical mechanism.[49]
Only after having used the whole scope of the legal framework of the chosen law and having found no applicable rules can the arbitrators turn to other rules, namely to those of international law. For each legal system provides a mechanism for filling up possible gaps. The Swiss Civil Code, for example, provides that in case of lacuna the judge should act as he thinks the legislator would do.[50] Hence, if the Swiss law is the chosen law, it would be hard to invoke international law to fill lacunae.
Exactly for this reason, for failing to apply the gap-filling mechanism of the national law, have been the arbitrators of SPP v. Egypt[51] heavily criticised.
Though the award did not identify Egyptian law as applicable law, it stated that even if it was the case an agreement could not entirely exclude the application of international law. Where a lacuna exists in the domestic law, there is an absence of choice as to the relevant applicable law, therefore, the second sentence of Art 42(1) has to come into play.[52] The case concerned the alleged invalidity of certain acts of Egyptian officials under Egyptian law. The tribunal found that there was no remedy for the aggrieved party under Egyptian law if an official's act was declared to be void. However, a denial of remedy can not be the final answer, therefore, the tribunal was bound to apply the rules of international law by the virtue of Art 42.[53] In brief, the tribunal found that since there was no remedy provided by the domestic (Egyptian) law a lacuna existed, which meant the absence of choice of the parties. In turn, under the second sentence of Art 42(2) the rules of international law had to be invoked.
In the light of the above stated considerations, the appropriateness of this reasoning does not lack any doubts. Firstly, the arbitrators defined the lack of remedy as a lacuna and did not consider that it may have been a deliberate regulatory decision of the legislator not to provide such a remedy. Secondly, having found a perceived lacuna, they did not apply the general principles or other instruments of the gap-filling mechanism of the Egyptian law, instead, they declared an absence of choice of law and turned to the second sentence of Art 42(1).
That lacunae may exist even in the most sophisticated legal system is beyond dispute. Nevertheless, a better course of gap-filling could be suggested as follows.
If the parties have chosen a particular national law, the gap-filling mechanism of that national law should be used in the first place (including possible general principles or customary law of that law or the national judge's discretionary power). Only when the arbitrators have done so and only if the lacuna still existed should the tribunal state that in the absence of chosen applicable law the second sentence of Art 42(1) has to be applied (host state's law and international law), which means, basically, turning to the principles of international law.
If the chosen law was originally international law or international law coupled with host state's law, the arbitrators should already apply the principles of international law together with the national gap-filling mechanism under the first sentence of Art 42(1). In this case, the matter should be solved under the first sentence of Art 42(1) and no recourse is needed to the second sentence, which would anyway lead to the same result.
Considering its functions described above, the following roles of international law can be asserted under the first sentence of Art 42(1):
A) International law chosen by the parties directly or indirectly:
a) An investment contract may point to international law. The type of applicable international rule: determined by the contract. (cf. point II.1.2.1.).
b) International law can be incorporated in the chosen domestic law. The type of applicable international rule: international treaty, customary international law, general principles of international law (cf. point II.1.2.2.).
c) The conflict of laws rules of the chosen national law may point to international law or to another national domestic law the conflict of laws of which may point to international law. The type of applicable international rule: international treaty provisions (cf. point II.1.2.3.).
B) International law without its being chosen:
a) An international investment treaty can directly regulate the subject matter of the dispute. The type of applicable international rule: international treaty or the scope of rules identified by the treaty (cf. point II.2.1.).
b) The public policy function of international law can have a corrective role when the rules provided by the domestic law would lead to a violation of fundamental values. The type of applicable international
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rule: international public policy rules (peremptory rules of international law, principles of good faith and pacta sunt servanda). (cf. point II.2.2.3.).
c) International law can have a supplemental role where there is a lacuna in the applicable domestic law. The type of applicable international rule: customary international law, general principles of international law (cf. point II.2.3.3.). ■
NOTES
[1] Philippe Kahn, The Law Applicable to Foreign Investments: The Contribution of the World Bank Convention on the Settlement of Investment Disputes, 44 Indiana Law Journal 1 (1968), p. 3.
[2] Hereinafter called as ICSID Convention or Convention, which came into force on the 14[th] October 1966. The text of the Convention is available in International Legal Materials 4/1965, p. 534., as well as on the ICSID web-site,
http://www.worldbank.org/icsid/basicdoc/basicdoc.htm
[3] The overall relevance of the Convention is relative. It is a unique and new forum, but in the last four decades only 83 cases have been concluded by ICSID tribunals, and presently 78 cases are pending.
[4] Kahn, op. cit., p. 4.
[5] Lowenfeld, Andreas, International Litigation and Arbitration, American Casebook Series, St. Paul, Minnesota, 2002, pp. 331-332.
[6] Developed countries have rightly feared dark scenarios like confiscation, undue limitation on profit-transfer, discriminatory treatment, or excessive taxation. On the other hand, newly born developing countries have also had justifiable fears of situations in which powerful multinational enterprises could abuse their position and totally exploit their investment without having regard to the economic, social, and environmental needs of the host country. Only referring to the history of foreign direct investment in India, one can point to extreme cases of causing damage or of abuse of power by multinationals. See Arjun Bhardwaj, Delwar Hossain, Globalization and Multinational Corporations in South Asia: Towards Building a Partnership for Sustainable Development, Regional Centre for Strategic Studies, RCSS Policy Studies 20, Sri Lanka, the text is available on the next web-site: http://www.rcss.org/policy_studies/ps_20.pdf, date of accession 25/07/2004 date of accession 25/07/2004.
[7] Schreuer, Cristopher, The ICSID Convention: A Commentary, Cambridge University Press, (2001), p. 553
[8] Art. 48(3) of the Convention
[9] Screuer, op. cit., p. 632
[10] The ad hoc Committee found that "in its reasoning, limited to postulating and not demonstrating the existence of a principle or exploring the rules by which it can only take concrete form, the Tribunal has not applied "the law of the Contracting State". It did...act outside the framework provided by Article 42(1)...the Tribunal thus "manifestly exceeded its powers" within the meaning of Article 52(1)(b) of the Washington Convention", Klöckner v. Cameroon, Decision on Annulment , 3 May 1985, para.79., 2 ICSID Reports, p.125.
[11] The first such a legal document was the European Convention on International Commercial Arbitration, signed in Geneva, April 21, 1961. Art 7 of that Convention reads:
"1. The parties shall be free to determine, by agreement, the law to be applied by the arbitrators to the substance of the dispute. Failing any indication by the parties as to the applicable law, the arbitrators shall apply the proper law under the rule of conflict that the arbitrators deem applicable. In both cases the arbitrators shall take into account the terms of the contract and trade usage." 484, U.N.T.S. 364, p. 374. See, furthermore, Art 33(1) of the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), 1976, U.N.Doc. A/3/17 (1976), Art 33(1) reads: "Article 33
The arbitral tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable."; and Art. 17(1) of the International Chamber of Commerce (ICC) Rules of Arbitration. Art 17(1) reads: "Article 17 Applicable Rules of Law 1.The parties shall be free to agree upon the rules of law to be applied by the Arbitral Tribunal to the merits of the dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate.", the text is available on the web-site of the ICC:
http://www.iccwbo.org/court/english/arbitration/rules.asp#article_17, date of accession: 12/07/ 2004.
[12] See, AAPL v. Sri Lanka, Award, 27 June 1990, para. 20-21, 30 ILM (1991) p. 581. But see also Samuel K.B. Asante's dissenting opinion in the case, " ... a response by one party to the interpretation of particular provisions of the Treaty suggested by the other does not necessarily imply that the parties agree that the Treaty constitutes the primary source of legal obligation...", Ibid., p. 631.
[13] See, for example, the Mobil v. New Zealand case where the law of New Zealand was chosen: "7.6 An Arbitral Tribunal shall apply the law of New Zealand", Attorney General, v. Mobil Oil NZ Ltd., New Zealand, High Court, 1 July 1987, 118 International Law Reports, Cambridge University Press, p. 625
[14] See, for example, SPP v. Egypt, where the laws of England were stipulated by the parties in a loan agreement. Award, 20 May 1992, SPP v. Egypt, para. 75., 3 ICSID Reports, p. 206
[15] Lauterpacht, Elihu, The World Bank Convention on the Settlement of International Investment Disputes, in: Recueil d'etudes de droit international en hommage à Paul Guggenheim (1968), p. 653.
[16] Kaiser Bauxit v. Jamaica, Arbitral Tribunal Decision on Jurisdiction and Competence, 6 July 1975, 1 ICSID Reports 296 (1993), p. 301.
[17] Two basic legal theories have had effects on the constitutional arrangements of countries, namely monism and dualism. On how these theories have influenced individual countries' solutions see Shaw, Malcolm N., International Law, Cambridge University Press, 2003, p.129, and pp.151-155.
[18] Such an international treaty is, for example, the EC Convention on the Law Applicable to Contractual Obligations (Rome 1980).
[19] Award, 30 November 1979, para. 82., AGIP v. Congo, 1 ICSID Reports, p. 306 (1993) p. 323
[20] Award, 29 August, 1977, Adriano Gardella v. Côte d'Ivoire, 1 ICSID Reports (1993), p. 287., Schreuer, op. cit., p. 585.
[21] Award, LETCO v. Liberia, 31 March 1986, 2 ICSID Reports, pp. 358-59.
[22] Award, 30 November 1979, AGIP v. Congo, 1 ICSID Reports p. 306 (1993), para. 69, p. 321.
[23] Ibid, para. 71., p. 322.
[24] Ibid., paras. 78-79., p. 323.
[25] Ibid., para. 80., p. 323.
[26] Ibid., para. 83., p. 324.
[27] Ibid, para. 82., p. 323.
[28] Ibid., para. 85., p. 324.
[29] Art VI(1) USA-Turkey Bilateral Investment Treaty, available at the next web-site: http://ankara.usembassy.gov/IRC/treaty/1985BIT.HTM, date of accession: 13/07/2004
[30] Toope, Stephen, J., Mixed International Arbitration, Grotius Publications Limited, Cambridge, 1990, p. 239.
[31] Broches, Aaron, The Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965, Explanatory Notes and Survey of its Application, 18 Yearbook of Commercial Arbitration 627 (1993), p. 668.
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[32] Ibid, p. 669.
[33] Lauterpacht, op. cit., p. 658.
[34] Schreuer, op. cit., p. 588.
[35] As the Report of the Executive Directors states it, the goal of the Convention is "to facilitate the settlement of disputes between States and foreign investors ... [which is] a major step towards promoting an atmosphere of mutual confidence ....thus stimulating a larger flow of private international capital into those countries which wish to attract it.", para. 9., Report of the Executive Directors, the text is available on the ICSID web-site, http://www.worldbank.org/icsid/basicdoc/partB-section03.htm, date of accession 9/07/2004.
[36] Art. 27(1) reads: "Article 27 (1) No Contracting State shall give diplomatic protection, or bring an international claim, in respect of a dispute which one of its nationals and another Contracting State shall have consented to submit or shall have submitted to arbitration under this Convention, unless such other Contracting State shall have failed to abide by and comply with the award rendered in such dispute." See also Feuerle, P. International Arbitration and Choice of Law under Article 42 of the Convention on the Settlement of Investment Disputes, 4 Yale Studies in World Public Order 89 (1977), pp. 111-113.
[37] Craig, The Final Chapter in the Pyramids Case: Discounting an ICSID Award for Annulment Risk, 8 ICSID Rev.-Foreign Investment Law Journal 264 (1993), footnote 26, p. 275., and Lauterpacht, op. cit., p. 658.
[38] Schreuer, op. cit., p. 590. These considerations have been also reflected in the decision of the ad hoc Committee in the Amco v. Indonesia case, see Decision on the Application for Annulment, Amco v. Indonesia, 16 May 1986, para. 21., 1 ICSID Reports, p. 514., cf. point III.3.1.1.
[39] Art 53 of the Vienna Convention on the Law of the Treaties identifies peremptory rules of international law. Art 53 reads: "Article 53 Treaties conflicting with a peremptory norm of general international law (jus cogens) A treaty is void if, at the time of its conclusion, it conflicts with a peremptory norm of general international law. For the purposes of the present Convention, a peremptory norm of general international law is a norm accepted and recognized by the international community of States as a whole as a norm from which no derogation is permitted and which can be modified only by a subsequent norm of general international law having the same character."
[40] Case concerning Barcelona Traction, Light and Power Company Limited (Belgium v. Spain), International Court of Justice Reports, 1971, pp. 3., 32., 46.
[41] Art 41(2) of the text of the Draft Articles on Responsibility of States for Internationally Wrongful Acts of the International Law Commission, the text is available on the UNweb-site, http://www.un.org/law/ilc/texts/State_responsibility/responsibilityfra.htm, date of accession: 11/07/2004.
[42] Commentary of the International Law Commission on the Convention on the Law of Treaties, United Nations Conference on the Law of Treaties, Official Records, Documents of the Conference, 67-68, UN Doc.A/CONF.39/11. Add.2 (1971), quoted by Reisman, Michael W., The Regime for Lacunae in the ICSID Choice of Law Provision and the Question of its Threshold, in Liber Amicorum Ibrahim.F.I Shihata, International Finance and Development Law, Kluwer Law International, The Hague-London-Boston-New York, p. 600.
[43] Ibid.
[44]Documents Concerning the Origin and Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, ICSID Publication (hereinafter: History of the Convention) Vol. II., p. 985., quoted by Schreuer, op. cit., p.612.
[45] P. Lalive, Ordre public transnational (ou réellement international) et arbitrage international, 1986 Revue de l'Arbitrage 329, quoted by Delaume, the Proper Law of State Contracts and Lex Mercatoria: A Reappraisal, op. cit., p. 95.
[46] "It is more than doubtful that ... in integrum restitutio could be ordered against a sovereign State." Award, 21 November 1984, Amco v. Indonesia, 24 ILM 1022, (1985), para. 202 (ii)
[47] Reisman, op. cit., p. 597.
[48] Ibid., pp. 594-595.
[49] Ibid., p. 595.
[50] Art 1(2) of the Swiss Code Civil, Art 1(2) reads in German: "Kann dem Gesetz keine Vorschrift entnommen werden, so soll das Gericht nach Gewohnheitsrecht und, wo auch ein solches fehlt, nach der Regel entscheiden, die es als Gesetzgeber aufstellen würde." The text is available on the next web-site: http://www.admin.ch/ch/d/sr/210/a1.html, date of accession: 8/07/2004. In English: "When no legal provision is applicable, the judge shall decide according to customary law and, in default of a custom, according to rules which he would lay down as if he had himself to act as a legislator.", Shihata/Parra, op. cit., footnote 56, p. 196.
[51] Award, 20 May 1992, SPP v. Egypt, 3 ICSID Reports, p. 189.
[52] Ibid., para. 80., p. 207.
[53] Ibid., paras. 83-84.
Lábjegyzetek:
[1] The Author is a junior lecturer.
Visszaugrás
