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A "losses due to war" clause cannot be interpreted as precluding the wrongfulness of a host state's breach of another standard of protection
The host state has to prove that the requirements of a rule precluding wrongfulness were met
Even well-intended but ill-conceived policies can be considered a contribution by the host state to the situation of necessity within the meaning of Article 25 (2) (b) ILC Articles on State Responsibility
If an IIT requires the host state to accord fair and equitable treatment to investments and prohibits arbitrary or discriminatory measures in two sentences of the same paragraph, the prohibition of arbitrary and discriminatory measures is just a specification of the FET standard
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Arbitrary and Discriminatory Measures
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Relationship of Standards of Protection Within a Single IIT
If the tribunal found that respondent did not accord fair and equitable treatment to an investment, it does not need to examine whether there has also been a breach of the full protection and security standard
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Full Protection and Security > Further Problems
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Relationship of Standards of Protection Within a Single IIT
"Essential interest" within Article 25 ILC Articles on State Responsibility also encompasses a state's social, economic and environmental stability
The interests of the investor are not relevant when examining the requirements of Article 25 (1) (b) ILC Articles on State Responsibility
According to the principle derived from the Chorzów Factory case, reparation should eliminate the consequences of the illegal act and re-establish the situation which would have existed if that act had not been committed
A tribunal may award compound interest
If interest is awarded for several measures, which cumulatively amounted to unfair treatment, the starting-point for the respondent's duty to pay interest is the date where the breaches had culminated
The fact that it was a political goal of the respondent to transfer public services back to public entities does not necessarily erase the existence of a public purpose as required by the standard of expropriation
Even if an IIT does not explicitly require proceedings in domestic courts for a certain amount of time, domestic proceedings may still be a condition for submitting the dispute to international arbitration
- 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
MFN clauses can apply to dispute settlement provisions, at least if the MFN clause extends to "all matters regulated by the IIT"
If a clear case law exists, a tribunal should make determinations on the basis of this case law
If shares are protected by an IIT, a shareholder can claim a breach of the IIT even if the state's measures were directed at the company and not him or her personally
An exclusive choice of forum clause in a contract cannot bar a tribunal from examining treaty based claims
Distinction between violation of a contract and a treaty
The concept of "legitimate expectations" within the FET standard and the existence of contractual rights are two different issues; a measure can, however, at the same time constitute a breach of the contract and of the FET standard
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Fair and Equitable Treatment > Case Groups > Legitimate Expectations
- International Investment Treaties (IITs) > Contract and Treaty Claims > Impact of Contract Claims on IIT Claims
Definition of an expropriatory act
The legitimate expectations of the investor can be a relevant factor within the standard of fair and equitable treatment
The termination of a concession does not necessarily amount to an expropriation
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Expropriation > General Requirements of an Expropriatory Act > Degree of Interference
- International Investment Treaties (IITs) > Contract and Treaty Claims > Impact of Contract Claims on IIT Claims
The FET standard requires at least respect for the international minimum standard of international customary law
International Law Rules Applicable to IITs
Relationship of IITs to Other Sources of International Law
System of Precedents
If a clear case law exists, a tribunal should make determinations on the basis of this case law
Law of State Responsibility
Circumstances Precluding Wrongfulness
The host state has to prove that the requirements of a rule precluding wrongfulness were met
Even well-intended but ill-conceived policies can be considered a contribution by the host state to the situation of necessity within the meaning of Article 25 (2) (b) ILC Articles on State Responsibility
"Essential interest" within Article 25 ILC Articles on State Responsibility also encompasses a state's social, economic and environmental stability
The interests of the investor are not relevant when examining the requirements of Article 25 (1) (b) ILC Articles on State Responsibility
Protection of Investors under IITs
Applicability of IITs
Ratione Materiae – Definition of Investment
The Concept of "Investment"
Shares
If shares are protected by an IIT, a shareholder can claim a breach of the IIT even if the state's measures were directed at the company and not him or her personally
Expropriation and Standards of Protection
Expropriation
General Requirements of an Expropriatory Act
Degree of Interference
Definition of an expropriatory act
The termination of a concession does not necessarily amount to an expropriation
Legality of an Expropriation
The fact that it was a political goal of the respondent to transfer public services back to public entities does not necessarily erase the existence of a public purpose as required by the standard of expropriation
Fair and Equitable Treatment
Relationship to Public International Law
The FET standard requires at least respect for the international minimum standard of international customary law
Case Groups
Legitimate Expectations
The concept of "legitimate expectations" within the FET standard and the existence of contractual rights are two different issues; a measure can, however, at the same time constitute a breach of the contract and of the FET standard
The legitimate expectations of the investor can be a relevant factor within the standard of fair and equitable treatment
Arbitrary and Discriminatory Measures
If an IIT requires the host state to accord fair and equitable treatment to investments and prohibits arbitrary or discriminatory measures in two sentences of the same paragraph, the prohibition of arbitrary and discriminatory measures is just a specification of the FET standard
Full Protection and Security
Further Problems
If the tribunal found that respondent did not accord fair and equitable treatment to an investment, it does not need to examine whether there has also been a breach of the full protection and security standard
Compensation for Losses in Times of War, National Emergencies etc. Including Necessity Considerations
A "losses due to war" clause cannot be interpreted as precluding the wrongfulness of a host state's breach of another standard of protection
Most-Favoured-Nation Treatment (MFN)
Application to dispute settlement clauses
MFN clauses can apply to dispute settlement provisions, at least if the MFN clause extends to "all matters regulated by the IIT"
Relationship of Standards of Protection Within a Single IIT
If an IIT requires the host state to accord fair and equitable treatment to investments and prohibits arbitrary or discriminatory measures in two sentences of the same paragraph, the prohibition of arbitrary and discriminatory measures is just a specification of the FET standard
If the tribunal found that respondent did not accord fair and equitable treatment to an investment, it does not need to examine whether there has also been a breach of the full protection and security standard
Dispute Settlement Clauses
Waiting Clauses / Duty to Attempt Settlement Before Arbitration
Character of Waiting Clauses
Even if an IIT does not explicitly require proceedings in domestic courts for a certain amount of time, domestic proceedings may still be a condition for submitting the dispute to international arbitration
Exhaustion of Local Remedies Clauses
Even if an IIT does not explicitly require proceedings in domestic courts for a certain amount of time, domestic proceedings may still be a condition for submitting the dispute to international arbitration
Waiver of Rights Under an IIT
An exclusive choice of forum clause in a contract cannot bar a tribunal from examining treaty based claims
Contract and Treaty Claims
Distinction of Contract and Treaty Claims
Distinction between violation of a contract and a treaty
Impact of Contract Claims on IIT Claims
The concept of "legitimate expectations" within the FET standard and the existence of contractual rights are two different issues; a measure can, however, at the same time constitute a breach of the contract and of the FET standard
The termination of a concession does not necessarily amount to an expropriation
Damages and Interest
Forms of Damages
According to the principle derived from the Chorzów Factory case, reparation should eliminate the consequences of the illegal act and re-establish the situation which would have existed if that act had not been committed
Interest
Interest Absent Explicit Rules
A tribunal may award compound interest
Date From Which Interest Should be Granted
If interest is awarded for several measures, which cumulatively amounted to unfair treatment, the starting-point for the respondent's duty to pay interest is the date where the breaches had culminated