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The opportunity to commence an arbitration without observing a waiting clause is not a distinct right; it concerns the exercise of an existing right to arbitrate and thus is within the scope of an MFN clause
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Most-Favoured-Nation Treatment (MFN) > Application to dispute settlement clauses
- International Investment Treaties (IITs) > Protection of Investors under IITs > Dispute Settlement Clauses > Waiting Clauses / Duty to Attempt Settlement Before Arbitration > Character of Waiting Clauses
The observance of a waiting clause is a requirement of a claim's admissibility, not a tribunal's jurisdiction
- International Investment Treaties (IITs) > Protection of Investors under IITs > Dispute Settlement Clauses > Waiting Clauses / Duty to Attempt Settlement Before Arbitration > Character of Waiting Clauses
- Investment Treaty Arbitration > Admissibility > Further Problems
The invocation of a waiting clause constitutes a treatment within the territory of the host state
An MFN clause does not purport to give investors further rights in addition to those given under the IIT
A tribunal has to differentiate between questions of jurisdiction and admissibility
The parties to a dispute cannot alter the jurisdiction of an IIT tribunal; the tribunal may still have competence to hear and decide the case, but it would act as an ad hoc tribunal
An MFN clause does not permit an investor to selectively pick provisions from several IITs; the investor has to rely on the whole scheme of one IIT, e.g. a dispute settlement clause
In case investors of a different nationality are granted a choice between litigation and arbitration, a foreign investor without that choice is treated less favourable
Jurisdictional clauses in contracts providing for domestic court proceedings between the host state and a domestic company are of no relevance for the jurisdiction of a treaty-based tribunal in an arbitration commenced by the foreign shareholder of the domestic company
Minority shareholdings can constitute investments
The risk of double recovery is not relevant when determining a tribunal's jurisdiction
IITs must be interpreted using the rules of interpretation laid down in the VCLT
- International Investment Treaties (IITs) > International Law Rules Applicable to IITs > Law of Treaties > Rules of Interpretation > Interpretation Rules of the Vienna Convention on the Law of Treaties (VCLT) as Reflecting Customary International Law
- Vienna Convention on the Law of Treaties > Article 31 - General rule of interpretation > Further Problems > Articles 31 et seq. Reflect Customary International Law
A state's consent to arbitration is expressed in the IIT
If a dispute settlement clause requires a claim's submission to national courts on a party's request only, the submission is not mandatory without such a request
A party may take the position that the parties are still "in dispute" despite a domestic court's decision
While different tribunals should seek to act consistently with one another, there is no doctrine of precedent
If an IIT provides that "the management [...] of an investment" falls within the scope of an MFN clause, the clause applies to dispute settlement provisions
A duty to attempt settlement before domestic courts and an obligation to exhaust local remedies may have different effects
- International Investment Treaties (IITs) > Protection of Investors under IITs > Dispute Settlement Clauses > Waiting Clauses / Duty to Attempt Settlement Before Arbitration > Character of Waiting Clauses
- International Investment Treaties (IITs) > Protection of Investors under IITs > Dispute Settlement Clauses > Exhaustion of Local Remedies Clauses
- ICSID Convention > Jurisdiction of the Centre (Articles 25-27) > Article 26
Not every activity falls within the scope of an MFN clause
A tribunal has a duty to determine its jurisdiction sua sponte
If a dispute settlement clause requires a claim's submission to national courts only on a party's request, it may be argued that such a submission is nevertheless mandatory before commencing the arbitration
International Law Rules Applicable to IITs
Relationship of IITs to Other Sources of International Law
System of Precedents
While different tribunals should seek to act consistently with one another, there is no doctrine of precedent
Law of Treaties
Rules of Interpretation
Interpretation Rules of the Vienna Convention on the Law of Treaties (VCLT) as Reflecting Customary International Law
IITs must be interpreted using the rules of interpretation laid down in the VCLT
Protection of Investors under IITs
Applicability of IITs
Ratione Materiae – Definition of Investment
The Concept of "Investment"
Shares
Minority shareholdings can constitute investments
Expropriation and Standards of Protection
Most-Favoured-Nation Treatment (MFN)
General Remarks
The invocation of a waiting clause constitutes a treatment within the territory of the host state
An MFN clause does not purport to give investors further rights in addition to those given under the IIT
An MFN clause does not permit an investor to selectively pick provisions from several IITs; the investor has to rely on the whole scheme of one IIT, e.g. a dispute settlement clause
In case investors of a different nationality are granted a choice between litigation and arbitration, a foreign investor without that choice is treated less favourable
Not every activity falls within the scope of an MFN clause
Application to dispute settlement clauses
The opportunity to commence an arbitration without observing a waiting clause is not a distinct right; it concerns the exercise of an existing right to arbitrate and thus is within the scope of an MFN clause
If an IIT provides that "the management [...] of an investment" falls within the scope of an MFN clause, the clause applies to dispute settlement provisions
Dispute Settlement Clauses
Waiting Clauses / Duty to Attempt Settlement Before Arbitration
Character of Waiting Clauses
The opportunity to commence an arbitration without observing a waiting clause is not a distinct right; it concerns the exercise of an existing right to arbitrate and thus is within the scope of an MFN clause
The observance of a waiting clause is a requirement of a claim's admissibility, not a tribunal's jurisdiction
If a dispute settlement clause requires a claim's submission to national courts on a party's request only, the submission is not mandatory without such a request
A party may take the position that the parties are still "in dispute" despite a domestic court's decision
A duty to attempt settlement before domestic courts and an obligation to exhaust local remedies may have different effects
If a dispute settlement clause requires a claim's submission to national courts only on a party's request, it may be argued that such a submission is nevertheless mandatory before commencing the arbitration
Exhaustion of Local Remedies Clauses
A duty to attempt settlement before domestic courts and an obligation to exhaust local remedies may have different effects
Waiver of Rights Under an IIT
Jurisdictional clauses in contracts providing for domestic court proceedings between the host state and a domestic company are of no relevance for the jurisdiction of a treaty-based tribunal in an arbitration commenced by the foreign shareholder of the domestic company
Distinction Between Jurisdiction and Admissibility
A tribunal has to differentiate between questions of jurisdiction and admissibility
Jurisdiction
Consent by the Parties
The parties to a dispute cannot alter the jurisdiction of an IIT tribunal; the tribunal may still have competence to hear and decide the case, but it would act as an ad hoc tribunal
A state's consent to arbitration is expressed in the IIT
The Tribunal's Rights and Duties
A tribunal has a duty to determine its jurisdiction sua sponte
Further Problems
The risk of double recovery is not relevant when determining a tribunal's jurisdiction
Admissibility
Further Problems
The observance of a waiting clause is a requirement of a claim's admissibility, not a tribunal's jurisdiction
Article 31 - General rule of interpretation
Further Problems
Articles 31 et seq. Reflect Customary International Law
IITs must be interpreted using the rules of interpretation laid down in the VCLT
Jurisdiction of the Centre (Articles 25-27)
Article 26
A duty to attempt settlement before domestic courts and an obligation to exhaust local remedies may have different effects