university of st. gallen · executive master of european and international business law of the...

Executive Master of European and

International Business Law of the University of St.Gallen M.B.L.-HSG

Investment Protection in the European Union and the case of the

European Union and the Latin American Bilateral Investment

Treaties and Treaties with Investment Provisions

From ad hoc Arbitration toward a Multilateral Investment Court

Author: Ruth Maria Salas Paniagua

Supervisor: Prof. Dr. Daniel Sarmiento

Zürich,19July2017

2

Dedication

To the memory of my father, who taught me that every aspiration needs self-effort and that

much could be done with so little.

3

Table of Content

Table of Content 3

List of Abbreviations 8

Sources 10

Introduction 24

Chapter I 26

Investor-State Settlement Disputes Mechanisms in Context: From Diplomatic Protection to ad

hoc Arbitration and more 26

A. Domestic Legal Systems 28

B. Diplomatic Dispute Settlements 30

C. Ad hoc Arbitration 31

D. Arbitration under Treaties 33

E. International Law on Investment Disputes Settlement 35

Chapter II 39

Investor State Disputes Settlement Mechanisms policies in the European Union and in the

Latin American States 39

A. European Union policy on Investor State Disputes Settlement Mechanisms 40

B. Latin American States policy on Investor State Disputes Settlement Mechanisms 43

Chapter III 50

Investor State Dispute Settlement Mechanisms Legal Framework in Treaties with Investment

Provisions and Bilateral Investment Treaties in force between the European Union and the


A. Treaties with Investment Provisions and Bilateral Investment Treaties pre shift of

competence from Member States to the European Union 50

4

1. Framework Agreement for Cooperation between the European Economic Community and

the Federative Republic of Brazil 51

2. Framework Agreement for Cooperation between the European Community and its

Member States and Paraguay and other Bilateral Investment Treaties negotiated with the

European Union Member States 52

3. Framework Agreement for Cooperation between the European Community and the

Eastern Republic of Uruguay and other Bilateral Investment Treaties negotiated with the


4. Inter-regional Framework Cooperation Agreement between the European Community and

its Member States and the MERCOSUR and its Member States and other Bilateral

Investment Treaties negotiated between the MERCOSUR State Members and the


5. Partnership Agreement between the Members of the African, Caribbean and Pacific

Group of States and the European Community and its Member States 56

6. Partnership, Political Coordination and Cooperation Economic Agreement between the

European Community and its Member States and Mexico and other Bilateral Investment

Treaties negotiated with the European Union Member States 57

7. Agreement establishing an Association between the European Community and the

Republic of Chile and other Bilateral Investment Treaties negotiated with European

Union Member States 59

8. Economic Partnership Agreement between the Caribbean Community and the European

Community and its Member States and other Bilateral Investment Treaties negotiated

with European Union Member States 61

B. Treaties with Investment Provisions and Bilateral Investment Treaties post shift of

competence from Member States to the European Union 63

1. Trade Agreement between the European Union and its Member States and Colombia,

Peru and Ecuador and other Bilateral Investment Treaties negotiated with the European

Union Member States 63

2. Association Agreement between the European Union and Central America States and

other Bilateral Investment Treaties negotiated with European Union Member States 66

C. Other Bilateral Investment Treaties entered into by European Union Member States and


5

Chapter IV 74

The need for a new approach: The European Multilateral Investment Court Proposal 74

A. Overview of the main areas of criticism of the Investor-State Arbitration system 75

1. Access to arbitration 76

2. Selection/Designation of Arbitrators 77

3. Costs 79

4. Remedies 80

5. Forum shopping 81

6. Consistency of Decisions 81

7. Transparency 82

B. Analysis of the Multilateral Investment Court Proposal 84

C. A Reality Check: Challenges to the legitimacy of a Multilateral Investment Court 89

Summary 96

Conclusions 98

Appendices 103

Appendix 1: BITs Paraguay – EU MS 104

Appendix 2: BITs Uruguay – EU MS 106

Appendix 3: BITs Argentina – EU MS 109

Appendix 4: BITs Mexico – EU MS 111

Appendix 5: BITs Chile – EU MS 114

Appendix 6: BITs Antigua and Barbuda – EU MS 117

Appendix 7: BITs Barbados – EU MS 118

Appendix 8: BITs Belize – EU MS 120

Appendix 9: BITs Dominica – EU MS 121

6

Appendix 10: BITs Grenada – EU MS 122

Appendix 11: BITs Guyana – EU MS 123

Appendix 12: BITs Haiti – EU MS 124

Appendix 13: BITs Jamaica – EU MS 125

Appendix 14: BITs Saint Lucia – EU MS 126

Appendix 15: BITs Saint Lucia – EU MS 127

Appendix 16: BITs Suriname – EU MS 128

Appendix 17: BITs Trinidad and Tobago – EU MS 129

Appendix 18: BITs Colombia – EU MS 130

Appendix 19: BITs Ecuador – EU MS 131

Appendix 20: BITs Peru – EU MS 133

Appendix 21: BITs Costa Rica – EU MS 136

Appendix 22: BITs El Salvador – EU MS 137

Appendix 23: BITs Guatemala – EU MS 139

Appendix 24: BITs Honduras – EU MS 141

Appendix 25: BITs Nicaragua – EU MS 142

Appendix 26: BITs Panama – EU MS 144

Appendix 27: BITs Bolivia – EU MS 146

Appendix 28: BITs Cuba – EU MS 147

Appendix 29: BITs Venezuela – EU MS 149

Appendix 30: BITs Dominican Republic – EU MS 151

6

Appendix A: ICSID – Cases against Argentina 151

Appendix B: ICSID – Cases against Ecuador 152

Appendix C: ICSID – Cases against Peru 153

Appendix D: ICSID – Cases against Venezuela 154

Resume 155

Statement 155

8

List of Abbreviations ABA American Bar Association

ALBA Bolivarian Alliance for the Peoples of our America

Art. Article

BITs Bilateral Investment Treaties

CAFTA - DR Central American and Dominican Republic Free Trade

Agreement

CARIFORUM Caribbean Community

CETA Comprehensive Economic and Trade Agreement between the

European Union and Canada

CFIA Cooperation and Facilitation Investment agreements

CJEU Court of Justice of the European Union

EU European Union

EC European Commission

EP European Parliament

FDI Foreign Direct Investment

FTA Free Trade Agreement

ICC International Chamber of Commerce

ICJ International Court of Justice

ISA Investor-State Arbitration

ICSID International Center for Settlement of Investment Disputes

ICSID Rules ICSID Arbitration Rules

ISDSM Investor-State Dispute Settlement Mechanisms

LAS Latin American States

MERCOSUR Southern Common Market

MIGA Convention Multilateral Investment Guaranty Agency Convention

NAFTA North American Free Trade Agreement

9

NGO Non Governmental Organization

New York Convention Convention on the Recognition and Enforcement of Foreign

Arbitral Awards of 1958

OCDE Organization for Economic Co-operation and Development

SSDS State-to-State Dispute Settlement

Washington Convention Washington Convention on the Settlement of Investment

Disputes between States and Nationals of Other States of 1965

TTIP Transatlantic Trade and Investment Partnership

TTIP Draft 2015 Transatlantic Trade and Investment Partnership Draft of the

European Commission of 15 September 2015

UNASUR Union of South American Nations

UNCTAD United Nations Conference on Trade and Development

UNCITRAL United Nation Commission on International Trade Law

UNCITRAL Rules UNCITRAL Arbitration Rules

US United States of America

WTO World Trade Organization

10

Sources

Articles

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¿Un Nuevo Foro de Solución de Controversias de Inversión Extranjera?, Tercera Conferencia

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Giardini, Gian Luca and Ayuso Ana, EU-Latin American and Caribbean Inter-regional

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Kuijper, Pieter Jan et al., European Parliament, Directorate General for External Policies of

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11

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12

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13

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14

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16

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17

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18

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19

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20

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21

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22

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2017] (Cited UNCTAD, Investor-State Dispute Settlement 2016).

UNCTAD, United Nations, Conference on Trade and Development, World Investment Report

2017: Investment and the Digital Economy, United Nations Publications, Geneva, 2017,

available at<http://unctad.org/en/PublicationsLibrary/wir2017_en.pdf>, [accessed on 01 July

2017] (Cited UNCTAD, World Investment Report 2017).

23

Web Pages/Web Sites

ICSID, World Bank, (2017), Search Cases Data Base, available at

<https://icsid.worldbank.org/en/Pages/cases/AdvancedSearch.aspx> [accessed on 01 June

2017].

European Commission, European Union, (2017), Investment, available at

http://ec.europa.eu/trade/policy/accessing-markets/investment/ [accessed on 01 June 2017].

European Commission, European Union, (2017) Trade, available at

<http://ec.europa.eu/trade/> [accessed on 01 June 2017].

UNCTAD, United Nations (2017), Investment Policy Hub, available at

<http://investmentpolicyhub.unctad.org> [accessed on 01 June 2017].

24

Introduction On the basis of long existing cultural, economic and cooperation relationships between

European States and Latin America, the European Union has deepened the association with

that region since the 60’s. In truth, the affiliation of these regions has extensively unfolded

over the past decades. Despite the most recent global financial crisis and the hindrance

experienced as a result in both regions, the joining of Ecuador to the Free Trade Agreement

concluded with Colombia and Peru in 2012, one of the most vocal States against foreign

direct investment and trade in the past few years, the recent proposal of the European

Commission to commence negotiations to modernize the Free Trade Agreements with

Mexico and Chile and the relaunching of negotiations tending to conclude an Association

Agreement with the MERCOSUR, last March in Buenos Aires, reflect the increasing

importance and growing potential of the Latin American region for the European Union.

Latin America is not averse to international investment rules. As of the early 90’s foreign

direct investment is widely seen as an engine of economic development, of diversification of

the productive base and of job creation. Even though, the expanding interest and aggressive

advance of global players in its more attractive economies, because of their large reserves of

resources or market size, the uneasiness due to significant political and economic shocks

experienced in some countries and the more active role impersonated by civil society, in

connection with sustainability challenges, have contributed significantly to show a growing

distrust in the region toward the current system of dispute resolution between investors and

States based primarily on ad hoc arbitration.

Coincidentally, the European Union, particularly as of the enlargement of its competencies in

terms of commercial policy with the Lisbon Treaty, has been consistently working to ensure

that its investors abroad enjoy a level playing field. One of the key pillars of this new

common approach is the commitment to revamping the widely used investor-State ad hoc

arbitration, due to an increasing criticism from political and civil society groups according to

which such mechanism does not respond any more to standards of transparency and

impartiality required when public interest are involved. The European Union’s proposal to

accomplish that goal is the creation of a Multilateral Investment Court, which, by adhering to

standards common to international courts, could offers a transformative change in resolving

25

international investment treaty disputes and have an immediate effect in reducing the

predominant role of investor-State ad hoc arbitration.

Could be the adjudicative body proposed by the European Union the answer to the growing

mistrust toward investor-State ad hoc arbitration in Latin America too? The objective of this

thesis is to analyze whether the shift currently promoted by the European Union could

effectively be adopted by Latin American States that are part of bilateral investments

agreements or other agreements with investment provisions with the European Union and its

State Members.

In the first Chapter of this paper, it is addressed the differences and potential interplays of

today coexisting mechanisms that foreign investors are endowed with when confronted with

potential disputes arising between them and their host State, along with the basic contextual

background that gave birth to each different investor-State dispute settlement mechanism,

how each one of them operates, as well as its advantages and disadvantages. Then, in the

second Chapter the focus is shifted to deduct and characterize the actual policies of both, the

European Union and the Latin American States, apropos such mechanisms. In Chapter III,

related to that effort, a comprehensive analysis of all bilateral investment treaties and other

multilateral treaties with investment provisions is carry through, in order to ascertain whether

there is coherence between the current policies exhibited and the regulatory framework in

force. This Chapter is complemented extensively by Appendixes showing into more detail the

most relevant aspects of each effective agreement reviewed. With this background, in

Chapter IV this research goes forward in developing a conceptual analysis on the apparent

deficiencies signaled to the investor-State ad hoc arbitration system, a detailed description of

the European Union alternative herein above mentioned to solve the shortcomings of such

mechanism and a final review and analysis of the arguments challenging the legitimacy of the

Multilateral Investment Court, as reflected in recent treaties concluded with third parties, as

well as official documents, press releases and positions papers emanating from the European

Union institutions.

26

Chapter I Investor-State Settlement Disputes Mechanisms in Context: From Diplomatic Protection to ad hoc Arbitration and more Foreign direct investment1 (FDI) disputes have been in the beginning mostly international

disputes between States based on diplomatic protection. This has changed significantly during

the last century. In fact, prior to the World War II foreign direct investments have not faced

many risks, except in States that were not under colonial ruling. Eventually, many States

became independent but continued to be under protectorate or certain form of dominance by

its former colonist, hence investors from former dominant States continued to have sufficient

protection. Once the power of former colonist started to dissipate, the early rules of

diplomatic protection were devised in the context of damages suffered by its citizens in the

now ex colonies States. Such disputes have been originally highly politicized and often the

exercise of diplomatic protection was only a pretext for an investor home State’s intervention

in the affairs of the host State or the precursor for the ultimate use of force 2. But it is also

true that within the courts of the host States a variety of barriers such as partiality of the

forum, immunity of the State or adoption of certain policies often left no meaningful means of

redress to a foreign investor3. Diplomatic protection have proved to be insufficient in

providing relief to foreign investors affected by the adoption of certain measures by host

States and usually require not only the intervention of the investor’s home State but also the

exhaustion of local remedies. In this context, what complicates matters in particular is the

relationship between private and public interests and the clash in investment disputes

resolutions between commercial, public, domestic and international laws.

1 “Foreign direct investment involves the transfer of tangible and intangible assets from one country to another for the purpose of their use in that country to generate wealth under the total or partial control of the owner of the assets”. Sornarajah, International Law on Foreign Investment, 8. 2 Historians are of the opinion that Latin American States were frequently victims of abuse of such diplomatic protection efforts exercised by governments of the foreign investors States of origin. Such alleged abuses were the political basis for the formulation of the “Drago Doctrine”, aimed at forbidden the use of force for the collection of the public debt of Latin American States, and the “Calvo Doctrine”, which basically denied that foreign investors were entitled to special rights and privileges and emphasized that disputes related to claims of such foreign investors against host States were to be settled exclusively under domestic laws and by domestic tribunals. Hamilton, Latin American Investment Protections, 2, Shihata, Depolitization of Investments Disputes, 1 to 3, Hindelang, Shifting Paradigms in International Investment Law, 291 and Sachet et al., Investor-State Dispute Settlement Mechanism, 89 and 90. 3 A famous case that exemplifies this situation is Mexico’s President Lázaro Cardenas nationalization of the country’s petroleum industry in 1938, which was then dominated by U.S. and U.K. corporations. Due to political pressure and security interests arising from World War II, Mexico and the oil companies reached a final settlement under which the companies received US$24 million, just a fraction of the book value of the expropriated facilities. Dugan, Investor-State Arbitration, 11.

27

It is this dilemma that gives birth to the modern system of bilateral investment treaties (BITs)

and other treaties with investment provisions (TIPs). Since the late 60’s, and in the case of

Latin America mostly as of the 90’s, States have increasingly consented to an international

regime in which foreign investors are granted, under certain conditions, the ability to initiate

and enforce claims against States in disputes arising from the State’s regulation of their assets.

Some academics characterize this system as a modern international investment law because it

grants foreign investors a private right to file claims against the host State in an international

forum4. As a matter of fact, the proliferation of BITs and TIPs has led to an explosion of

arbitration, which has become an important method for foreign investors to oppose State

regulations and seek compensation as a result of breaches of law. The wide geographic

coverage of BITs and TIPs and the corresponding availability of arbitration forums has taken

arbitration beyond a mere collection of dispute settlement procedures in different treaties and

established it as an international mechanism for adjudicative review, but given variations

under different treaties, this mechanism still appears to be complex, fragmented, and at times

incoherent5.

Simultaneously, the phenomenon of globalization has led to the formation of new complex

governing arrangements at domestic, regional and international levels. In fact, globalization

has reshaped the boundaries between domestic and international spheres and has changed the

way of understanding domestic and international politics and law. It has also fragmented the

model of sovereignty by creating multiple centers of governance to allow States to regulate

economic processes that are increasingly transnational. There is a multiplicity of levels and

types of governance: public and private, State and non-State, national and international

institutions. Due to this more complicated pattern of governing arrangements that is evolving,

especially given the growth of international and regional bodies equipped with a broad range

of regulatory powers, some scholars argue that we are now witnessing the emergence of a

new institutional configuration.

There is no doubt that the interplay of the phenomena previously referred is pushing in the

direction of creating a new alternative for the settlement of disputes arising from the

relationship between foreign investors and host States. Indeed, there are a significant number

4 Tanzi, Inversiones en América Latina, 37 and 38. 5 Van Harten, Investment Treaty Arbitration, 3 and 4.

28

of critics pointing out that the current mechanisms in place are insufficient and a new level of

governance, as it is the case of the European Union (EU), is willing to lead the crusade to

propose an alternative: the European Investment Court System.

In the interest of attempting to understand the intricacy of the scenario summarized above, it

is unavoidable, before analyzing the main topic of this thesis, to get acquainted with the

differences and potential interplays of today coexisting mechanisms that foreign investors are

endowed with when confronted with potential investor-State disputes arising as a result of

theirs investments in a host State.

A. Domestic Legal Systems

Historically speaking, States have taken various measures to attract and facilitate investment

on the basis that investments, both foreign and domestic, are important for sustained

economic growth. To facilitate and encourage such investments, the domestic legal systems

have evolved to protect investors’ rights and interests from improper treatment and undue

interference by the State, allowing foreign and domestic individuals and entities to challenge

the State’s conduct on constitutional, statutory and contract grounds. Nevertheless, as the

domestic legal framework has evolved to protect investors’ economic interests, it has also

evolved to reflect the fundamental importance of the State’s ability to regulate investors and

their activities for the safety, health, security, and social interests of other parties. Then the

resulting balance that has been attained in domestic law is reflected in an array of complex

and detailed substantive and procedural rules governing who can bring claims against the

State, under what circumstances, through what processes, for what types of harms and for

what remedies.

Despite the good reputation that a State could have in terms of access to and independence of

its domestic administrative and judicial systems, a reality check will easily confirm that

foreign investors usually face significant obstacles to obtain redress in a host State’s court

when their counterparty is the government of such State. Without regard to differences in

judicial systems, scholars agree that domestic legal courts, when confronted with foreign

investors claims, have been, and still continue to be to a certain extent, affected by: (i) local

bias: which is recognized in modern legal systems by the inclusion of legal provisions

attempting to reduce its effects by furnishing foreign parties with recourses and remedies

29

against local prejudice; (ii) State immunity: whose concept is the result of the old-age axiom

that “the king can do no wrong” or, in other words, that the law making authority should not

or could not be subordinated to its own power and ultimately enact that, in cases where the

host State is the cause of foreign investor’s damage, local courts may not authorize to provide

any remedy; (iii) inefficiency: particularly developing countries often lack responsive, robust

legal systems capable of effective and promptly adjudicating complex claims, but also, in

general terms, the complexity of modern legal systems and the interplay of its different levels

and subjects and of the damages and its subsequent claims, affects the promptness with which

these cases can be resolved in the context of foreign investment; and (iv) political influence:

there are a significant number of examples showing how States have used this mechanism in

the past in order to limit the options to foreign investors to obtain an equitable redress of their

investment and, although it is true that today the use of this mechanism is more subtle, it

continues to be practiced6.

Due to the deficiencies referred, foreign investors have also resorted to bring charges against

the host State in their own home State courts under the principle of in personam jurisdiction.

But, in this scenario they are usually encountered with: (i) an insufficient nexus of facts with

the investor home State to provide foundation for such jurisdiction; (ii) the host State retains,

with very few exceptions, immunity based on the classical international law principle

according to which States are granted immunity from the territorial jurisdictions of other

States; (iii) the home court will have to resort to the application of the “Acts of State

Doctrine”, which set forth that every sovereign State is bound to respect the independence of

every other sovereign State and the courts will not sit in judgment of another State’s acts done

within its own territory7 or (iv) just be subject to the application of the host State law as

prescribed by normal choice of law principles, since under more law systems the applicable

law is that of the State where the transaction and the dispute have taken place8.

6 Civil law systems emphasize the purpose of the State’s act and separate the forums for the adjudication of administrative law issues and civil disputes, which allows to certain extend found States liable for breach of contract. Dugan, Investor-State Arbitration, 15 to 19. 7 The Act of State doctrine was initially developed in the United States of America (herein after referred as to the US) in cases against officials or agents of foreign governments and applied as a corollary to the personal immunity of foreign sovereigns. This connection between the Act of State doctrine and sovereign immunity is evident from a 19th century American case, Underhill v. Hernandez, which established the doctrine. In this case, the Supreme Court held that a citizen of the US was not entitled to recover damages in a US court from a Venezuelan Military General who refused to issue a passport to him because the acts of the General were held to be acts of the Venezuelan government. US Court, Underhill vs. Hernandez, 168 U.S. 250, (1897). 8 Dugan, Investor-State Arbitration, 19 to 23.

30

In this scenario it is understandable that foreign investors and their host States have sought

alternatives to domestic legal systems to resolve investments disputes, such as those described

herein below.

B. Diplomatic Dispute Settlements

The origin of diplomatic protection can be traced back in history. In 1758 the Swiss jurist

Emmerich Vattel delineated the fundamental principle of diplomatic protection when he

wrote: “whoever ill- treats a citizen indirectly injures the State, which must protect that

citizen”9. During the latter part of the nineteenth century and the early part of the twentieth

century, this principle became a central feature of relations between developed States on the

one hand and developing States on the other. Unfortunately, due to the constraining approach

of developed States diplomatic protection succumbed to bad reputation among developing

States. There were a number of attempts in codifying the principles governing diplomatic

protection but the two developments that played a significant role and impacted its further

application were the onset of the Universal Declaration of Human Rights of 1948 and the

emergence of BITs and TIPs to facilities investments, as well as the subscription of the

Washington Convention on the Settlement of Investment Disputes between States and

Nationals of Other States of 1965 (the Washington Convention). These advancements, in the

opinion of many authors, make today diplomatic protection redundant.

Diplomatic protection by an investor’s home State is the classical mechanism available in

order to redress of damages caused by wrongdoing acts or omissions of a host State. There are

definite rules on the basis of which diplomatic intervention to protect the interests of a foreign

investor could be made. As a matter of fact, diplomatic dispute settlements require first the

exhaustion of local remedies of the host State, which is based on the premise that the home

State of the complaining foreign investor must grant the offending host State an opportunity

of doing justice in its own legitimate way and avoid, if possible, an international controversy.

Additionally, an act that harms the foreign investor should be unlawful in relation to

international law, as for instance denial of justice, unjustified delay in its administration, or

judgment against the law. Furthermore, another condition is the right conduct by the foreign

investor which means that he or she has not caused by his or her own behavior the alleged

9 Dougard, Articles on Diplomatic Protection, 1.

31

damage. A protection of this kind could mean consular action, negotiation, mediation, judicial

and arbitral proceedings, reprisals, retorsion, severance of diplomatic relations, economic

pressure and even, at its was more common in the nineteenth century and the early part of the

twentieth century, the final resort: the use of force. Today, diplomatic protection is defined

by authoritative sources as the “invocation by a State, through diplomatic action or other

means of peaceful settlement, of the responsibility of another State for an injury caused by an

internationally wrongful act of that State to a natural or legal person that is a national of the

former State with a view to the implementation of such responsibility”10. Then, this institution

is justified on the premise that “whereby any violation of the rights of a foreign national is

also a violation of the rights of his State of nationality”11 . This is a mechanism of a

discretionary nature and therefore its exercise usually leads to time-consuming proceedings

and subsequent bias on the valuation of the damages. Furthermore, it is important to keep in

mind that ultimately the dispute to be settled by diplomatic means could only be referred to

international adjudication with the consent of the host State.

The main critic to this mechanism is that investors are denied standing to initiate proceedings,

instead only the home State of an investor is able to spouse the claims and exercise diplomatic

protection. Therefore, this mechanism is becoming less fashionable.

In today’s world, where most States relay in BITs and TIPs to regulate the investment

relationships among them, as well as between its nationals and host States, diplomatic

protection appears to be the last resource for the protection of foreign investments and will be

implemented only when no treaty or other remedies are available.

C. Ad hoc Arbitration Investor-State ad hoc arbitration has started with the inclusion of international arbitration

clauses in the investor-State agreements. Ad hoc arbitration tribunals resolved most of the

disputes concerning mistreatment of foreign investors that originates in the early last century.

Before the emergence of the investment treaty system and its coextensive arbitration

mechanism, foreign investors had virtually devised by themselves for the protection of their

investments, entirely on the basis of contractual structures of protection that were negotiated

10 Kauffmann-Kohler, Reform of investor-State arbitration, 7. 11 Wang, Diplomatic Protection, 8.

32

with the host State at the time of the entry of their investments into its territory, when the

foreign investor’s bargaining power is at its greatest. Thus the principle has been to ensure

that the relationship with the host State was built on contractual techniques of protecting the

terms of the contracts and the assets. Since the domestic laws of host States, as previously

explained, presented a number of difficulties for a foreign investor to seek redress, this

alternative was complemented with a choice of law other than the law of the host State to

ensure that the contractual protection could operate in practice and, accordingly, required the

creation of an elaborate international law theory to support its application, being arbitration

the central feature of this system12. In spite of the increasing quantity of BITs and TIPs that

are enacted this mechanism continues to be relevant.

An ad hoc arbitration is basically the one which is not administered by an institution,

thereupon the parties will have to determine all aspects of the arbitration by themselves, for

example, the number of arbitrators, appointment of those arbitrators, the applicable law and

the procedure for conducting the arbitration. Provided the parties approach the arbitration in

good faith, ad hoc proceedings have the potential to be flexible, faster and even cheaper than

institutional proceedings. But, even in scenarios of cooperation the parties may also

misunderstand each other, particularly if they come from different cultures and jurisdictions,

and then this approach could require time, attention and expense with no guarantee that the

terms agreed will address all eventualities. Then, it is important to keep in mind that because

this type of arbitration operates without any particular framework and, in general, without

guidelines, thus it is challenged in terms of efficiency in awarding compensation, consistency

and coherency of decisions13.

Some authors are of the opinion that these arrangements are only favorable to foreign

investors with sufficient negotiating power and small or medium scale foreign investors are at

disadvantage. But it is also true that a host State already possesses a power that the foreign

investor lacks, ergo a direct right of action is a modest limitation on the former sovereignty

and is essential to creating a basis for effective and efficient foreign investment activities14.

12 Sornarajah, International Law on Foreign Investment, 276 and 277. 13 Dugan, Investor-State Arbitration, 35. 14 Brower, Trait or Boon, 480 to 482.

33

Notwithstanding the disadvantages afore mentioned, ad hoc arbitration continues to provide

foreign investors and host States with an alternative to deal with some of the limitation in

dispute settlements provided by diplomatic protection and customary international law. In

fact, the removal of a settlement of a potential dispute from the domain of domestic

adjudication and protection of foreign investors against unilateral changes in the governing

law are reasons enough to resort to this mechanism when no other more appropriate is

available.

D. Arbitration under Treaties The emergence of treaties to regulate foreign investments has been primarily a response to the

uncertainties and inadequacies of the customary international law of State responsibility for

injuries to foreign investors and their property. Discussions on the Washington Convention

has gave recognition to the right of a State to consent in a treaty to arbitrate future disputes

and also recognized that an investor could accept such consent by submitting a claim to

international treaty arbitration, thereby replacing investor-State arbitration under an investor-

State agreement with arbitration under a treaty. From there onwards, developed States started

to advocate for the creation of an international institution to settle disputes between host

States and foreign investors through arbitration.

This conjuncture gave birth to the International Center for Settlement of Investment Disputes

(ICSID). The significance of the ICSID in the evolution of Investor-State Dispute Settlement

Mechanisms (ISDSM) under treaties is paramount. Nevertheless, authors agree that the

negotiations to create this institution allowed developing States to keep critical safeguards in

order to retain some control in the resolution of disputes. As of the 90s, the perception that

being a party to the Washington Convention was a method to increase mutual confidence, as

well as foreign investments flows, the United States of America (US) change in policy, in

terms of forcing the signing of protection agreements instead of guarantee agreements, and

the need of developing States to reinforce their domestic environment legal systems to

prepare themselves for the reception of FDI forced the States to give up the safeguards

previously mentioned and starting to accept the highly protective dispute settlement

provisions included in the BITs and TIPs15.

15 Sachet, Investor-State Dispute Settlement Mechanism, 91 and 92.

34

Today, according to the United Nations Conference on Trade and Development’s (UNCTAD)

database the international investment agreements regime is composed of 2,960 BIT’s and 368

TIP’s that provides substantive guarantees to foreign investors in the form of international

obligations placed upon contracting States, whereby States have to respect certain standards

of investment protection vis-à-vis foreign investors and their investments and allow them to

enforce those substantive protections through investor-State arbitration (ISA). In summary,

the protection of the investment treaties has become a global phenomenon that limits the

conducts of governments towards foreign investors in the developed States as well as in the

developing States16.

In a nut-shell, the key differentiating aspect of the arbitration under treaties is that it

transplants the private adjudicative model from the commercial sphere into the realm of the

government, thereby giving privately-contracted arbitrators the authority to make what are in

essence governmental decisions and this is possible because it is incorporated in an

institutional forum and a procedural framework. More specifically, it is widely accepted that

the aspects that individualize arbitration under treaties are: (i) the authorization on individual

claims: in fact under BITs and TIPs States give a prospective or general consent to the

arbitration of future investment disputes brought by an indeterminate class of potential

claimants in relation to a wide range of disputes giving international arbitral tribunals

jurisdiction over disputes that could arise from such State’s exercise of its public authority;

(ii) the use of damages as a public law remedy: when making a claim under a BIT or a TIP a

foreign investor normally seeks damages for harm caused by a State’s alleged breach of the

treaty’s standards of investment protection, where an arbitration tribunal concludes that a

State violated the treaty it may award damages to the foreign investor by imposing a sanction,

which has a deterrent effect on the State, consequently investment treaties authorize

arbitration tribunals to award damages as a public law remedy17; (iii) the direct enforceability

of awards: by incorporating the enforcement structure of the Washington Convention and the

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the York

Convention), BITs and TIPs allow investors to seek enforcement of an investment arbitration

award against assets of the respondent State before the domestic courts of any State that is a 16 Tanzi, Inversiones en América Latina, 27. 17 Outside of investment arbitration, the Francovich doctrine is probably the most ambitious attempt to apply treaty-based state liability in the context of economic integration, this doctrine, articulated by the European Court of Justice (herein after referred as to the ECJ), established the principle that individuals are entitled to seek damages for an alleged violation of the EU law by a Member State. Van Harten, Investment Treaty Arbitration, 12.

35

party to these two treaties, then the coercive force of an investment arbitration award is

thereby supported by the authority of a large number of States to enforce awards within their

territory, based on treaties that authorize the enforcement of foreign arbitration awards; and

(iv) the facilitation of forum shopping by investors: because it includes a varying level of legal

protection for capital flows depending on whether a treaty is in place and on its terms18.

Regardless of the positive aspects signaled, arbitration under treaties also has being attracting

an increasing number of critics according to which the system is going through a legitimacy

crisis19. Gabrielle Kauffmann-Kohler, group those in two categories: (i) critics related to the

decision makers: arbitrators allegedly lack of sufficient guarantees of independence and

impartiality because they would have an interest in perpetuating the regime due to the fact

that they are remunerated for their services, decision makers act also, both, as arbitrators and

counsels in different proceedings, hence with the possibility of creating conflict of interests

and they have insufficient relationship to the States whose regulations they are called to

scrutinize; and (ii) critics related to the process: awards issued by arbitration tribunal are

inconsistent and even contradictory and there is no mechanism in place to remedy this

situation, monetary awards and costs would often be excessive, there are not in place

appropriate control mechanisms and the ISA regime would lack transparency and offer

insufficient possibilities for third parties to participate in proceedings.

E. International Law on Investment Disputes Settlement

The international law on investments disputes settlement is difficult to delineate because it

combines international law with arbitration, presumed mainly as the mechanism to settle

disputes between private parties in the context of international commercial transactions, even

on the assumption that arbitration also has been used to resolve controversies between States

in a more limited fashion. From a pure arbitration perspective, the logic behind is the one

provided by private law where the parties are autonomous and equal and the governance of

theirs affairs is made through agreements subscribed at their discretion. On the other hand,

from a State as a party perspective, the logic is nourished by the public law principles of

18 Kauffmann-Kohler, Reform of investor-State arbitration, 6. 19 Signals of this crisis can be seen in the increasing denunciation of the Washington Convention and BIT’s and TIP’s on the part of Latin American States, which can be recognized as a increasing reluctance to comply with the arbitration awards, or in the redefinition of substantive provisions and process contained in the treaties in a form that reflects the apprehension about the jurisprudential tendencies in investment arbitration. Tanzi, Inversiones en América Latina, 28 and 29.

36

sovereignty of the State and its responsibilities towards its citizens. Many authors are of the

opinion that, irrespective of the use of arbitration as a mechanism to settle investor-State

disputes, this is a branch of international public law that imposes certain restrictions to the

States’ behavior; therefore arbitration under this context contributes to the public objectives of

the international community. The critics of this position argument that it differs from the

international public law in relation to its function, because it grant foreign investors a private

right to redress for breaches of law on the part of States in an international forum with the

potential outcome of getting an arbitral award executable under the Washington or the New

York Conventions. This right, as has been explained previously, is based on a future and

general consent of the State to be subject to arbitration, as concerted in an investment

agreement with the foreign investor home State. But it also differs from the pure commercial

arbitration because ISA involves the scope and limits of the State’s regulatory power and its

purpose is to govern the procedure and not necessary to infuse substantive principles, rules

and concepts used in the international commercial arbitration for the diverse controversies

potentially arising between a foreign investor and a host State20.

From an historical perspective the several failed attempts to establish a multilateral

framework demonstrate that the focus have to be shifted from the endeavor to seek agreement

on substantive standards to develop procedures for the impartial settlement of disputes 21. This change of perspective has been the final incentive to create the ICSID as a forum for dispute settlement and this continues to be seen as the boldest innovative step in the modern history of international cooperation concerning the role and protection of foreign investment. Today, the international instruments widely recognized as the base of the international law on

investments are: the New York Convention, the Washington Convention and the Multilateral

Investment Guaranty Agency Convention (the MIGA Convention). The New York Convention seeks to provide common legislative standards for the recognition of arbitration agreements and court recognition and enforcement of foreign and non- domestic arbitral awards. Its principal aim is that foreign and non-domestic arbitral awards will not be discriminated against and it obliges parties to ensure such awards are recognized and generally capable of enforcement in their jurisdiction in the same way as domestic awards. When consenting to be bound by the Convention, a State may declare that it will apply the 20 Tanzi, Inversiones en América Latina, 34 to 50. 21 The Magna Charta for the Protection of Foreign Property Draft of 1957, the Abs-Shawcross Draft, the Swiss Draft, the Multilateral Treaty Drafts of the OCDE forum of the capital exporting countries of 1962 and 1967, the Convention on the Protection of Foreign Property Draft of 1962. Dolzer, Principles of International Investment Law, 6 and 7.

37

Convention (i) in respect to awards made only in the territory of another party and (ii) only to legal relationships that are considered “commercial” under its domestic law. The Washington Convention was the first multilateral treaty in which states authorized the

expansion of compulsory international arbitration to encompass regulatory disputes between

States and foreign investors. The ICSID created by the Washington Convention provides a

forum for conflict resolution in a framework, which is intended to balancing the interests and

requirements of all the parties involved, and attempts in particular to depoliticize the

settlement of investment disputes. It is, in Ibrahim Shihata’s words “an instrument of

international policy for the promotion of investments and of economic development”22. This

mechanism is self-contained, providing for internal control, which includes provisions on the

interpretation, revision and annulment of awards. In addition, the Washington Convention

extends the jurisdiction of the ICSID to any legal dispute arising directly out of an investment,

but without defining the term investment giving then a great level of flexibility to the

arbitrator when considering the claims filed by the potentially affected foreign investor,

because the scope of the definition is the one established by the specific agreement, statute or

treaty that authorize the arbitration and, in practice, those instruments include broad

definitions too. Also, the Washington Convention played an integral role in the emergence of

investment arbitration because it opened the way for States to use investment arbitration as a

mechanism to control the exercise of public authority by the State.

The MIGA Convention, which has created the Multilateral Investment Guaranty Agency, and

to which today 181 States are members, main purpose is to facilitate the issue of guaranties

for investments against non-commercial risks. It differentiates from earlier proposals because

it provides a broader forum for international policy cooperation among capital-importing

States, capital-exporting States and foreign investors and takes part in the promotion of

investment flows among developing States. It is designed to be an autonomous institution,

which operates on its own account and within its own responsibility while maintaining a

symbolic, but significant linkage with the World Bank. Both home and host States share the

political oversight and financial responsibility, with the latters eventually subscribing forty

percent of the capital but having one-half of the votes. The Convention contains a number of

safeguards which ensure the host States’ control over investment activities in their territories

22 Shihata, Depolitization of Investments Disputes, 4.

38

while requiring MIGA to work on the improvement of investment conditions and standards in

agreement with these governments.

It can be concluded that international investment law consists of general international law, of standards more specific to international economic law, and of distinct rules peculiar to the protection of investment. In addition, the law of the host State plays an important role. Depending upon the circumstances of an individual case, the interplay between relevant domestic rules of the host State and applicable rules of international law may become central to the analysis of a case. Furthermore, the rules governing contracts between a foreign investor and a host State draw on both private and public law. To a certain extent, the rules of domestic law are being confronted and superseded by rules of public international law, and in relevant international cases, the decision of arbitrators will turn on their understanding of domestic law, possibly accompanied by a process of review of domestic law under the international standards contained in treaties and in general international law23.

ISDSM vary in terms of access, procedure and consequences, as well as with respect of

enforcement of an award. Through these mechanisms, foreign investors may challenge its

host State’s measures on the grounds that they are incompatible with provisions previously

agreed. These measures typically accrue from the exercise of public authority of the host

State. In spite of all the shortfalls pointed out, arbitration continues to be an effective tool to

manage political risk, promote the international rule of law, render substantive commitments

in investment instruments more credible and contributes towards a depoliticisation of

investment disputes. BITs, TIPs and other multilateral investment protection treaties can be

viewed as the extension of a century-old idea within public international law: that everyone is

entitled to a minimum standard of treatment abroad at any given time.

With a clear understanding on the basic background that gave birth to each different ISDSM,

how each one of them operates, as well as its advantages and disadvantages, it is possible now

to embark in figuring out what is the current stance in terms of policies related to foreign

investors protection in the European Union and in the Latin American States.

23Dolzer, Principles of International Investment Law, 9.

39

Chapter II Investor State Disputes Settlement Mechanisms policies in the European Union and in the Latin American States There are many elements that link the EU and Latin America. Cultural, historical and

economic ties between both regions are compelling. The EU is the leading investor in the

region and its second largest trading partner, although, the Asia-Pacific region has become the

main trading counterparty for Brazil, Chile, Colombia and Peru. Meanwhile, Central America

and the Caribbean have increased their interdependence with the US. Since the interests of

the EU in this region are still extensive, and global trends and the economic advancement of

other regions could reshape the field in terms of investment and its consequent standards of

protection, any aspects connected to ISDSM tendencies are relevant in the context of the EU-

Latin America relationship. ISDSM have become enormously important for Latin American

States (LAS) eager to attract FDI. LAS have allowed investors to resort to alternative disputes

settlement mechanisms, other than the one offered by a particular State’s judicial domestic

system, base on investors claims that domestic system are no adequate for protecting them

against disruptive State’s changes of policy. Nonetheless, LAS forced to embrace some of

these mechanisms (i.e. ISA) have also started to experience unforeseen consequences for their

economies and citizens. As a result, today there is an increasing support to substitute or

improve ISA, the prevailing ISDSM included in most BITs and TIPs concluded by LAS with

third parties, and already are in place some attempts to transition to alternative ISDSM or to

force investor-State disputes to return to domestic legal forums. When not managed

adequately, this could harm the efforts of the EU to solidify its investment relationship with

this region. This conjuncture gives momentum to any well articulate initiative willing to shift

to a more comprehensive and balanced mechanism to solve investor-State disputes, but in

order to accomplish such task it is required recognizing trends, which is the main focus of this

section, that could assist afterwards in articulating solutions able also to respond to the

growing concerns on this topic in this region. In this chapter, we will review the current

policy stance of both the EU and the LAS on ISDSM. The final goal is to give an appropriate

overview of what is the current context to be taken into consideration to propel more

progressive changes related to ISDSM in the context of the EU-Latin America investment

relationship.

40

A. European Union policy on Investor State Disputes Settlement Mechanisms

According to August Reinisch, the first antecedent of an EU policy, acting as a bloc,

regarding ISDSM can be found in the Energy Chapter Treaty entered by in 1994. In this

agreement, the EU, as the contracting party representing all Member States (MS), accepted

ISA as the mechanism to settle investment disputes between the EU and third parties for the

first time24.

With the Lisbon Treaty25, the EU’s external trade powers were significantly enlarged and now

include FDI as part of the Common Commercial Policy26. The interpretation of the MS and

the European Commission (EC) on this shift of competence differed remarkably and there has

been a battle on the scope of the EU competence on this subject. The last word came from the

Court of Justice of the European Union (CJEU) through its decision on procedure 2/15 on the

negotiation of the Free Trade Agreement (FTA) with Singapore27. It seems that the EU will

continue to have to act jointly with its MS with respect to dispute settlement; mediation and

transparency mechanisms insofar as those provisions apply to the parts of an agreement for

which the EU enjoys shared external competence. In Reinisch’s opinion, this seemingly

academic question has important political implications because mixed agreements require

adherence of the 28 individual EU MS while agreements falling under the exclusive

competence of the EU are solely negotiated by the EC and require only majority approval of

the Council of Ministers and the European Parliament (EP)28.

In spite of the above-referred limitations, under this new constellation the EU institutions

continue to favor the inclusion of ISDSM in BITs and TIPs, being ISA the most extended

mechanism used until now. Although, as of 2013 European institutions, particularly the EP,

have started to voice some concerns with regards to the current arbitration standards included

in BITs and TIPs. At the same time, under the pressure of civil society the EU has also

24 Reinisch, The EU and ISDS, 2. 25 Treaty of Lisbon. 26 TFEU. 27 CJEU, Opinion 2/15 of 16 May 2017, ECLI:EU:C:2017:376. It is important to emphasize that already in December 2016 Advocate General Eleanor Sharpston throughout her opinion considered that to conclude the Free Trade Agreement with Singapore the EU and its MS should act jointly. Furthermore, in what is relevant to EU policy on ISDSM, she concluded that the EU enjoys exclusive external competence as regards of such draft agreement that covers “dispute settlement, mediation and transparency mechanisms in so far as those provisions apply to (and are therefore ancillary to) the parts of the agreement for which the EU enjoys exclusive external competence”. CJEU, Press Release 147/16. 28 Reinisch, The EU and ISDS, 3 and 4.

41

started to strengthen its position with respect to the role of domestic legal systems and

including in its negotiations alternative mechanisms in the form of mediation and transitional

provisions toward the creation of a permanent investment court system aiming to amend what

they consider deficiencies in the current ISA system. As of February 2017, the most advanced

outcome reflecting the EC’s position on ISDSM is contained in the Comprehensive Economic

and Trade Agreement (CETA) entered into by the EU and Canada29. Also the EU-Vietnam

FTA and the EC Draft Transatlantic Trade and Investment Partnership (TTIP) of September

2015 contain relevant elements showing the EU current policy on ISDSM. For as much as the

EC has chosen not to adopt BIT and TIP standard models, the actual EU policy on ISDSM

has to be inferred from the several policy papers, directives, treaties, concluded after the shift

of competence from MS to the EU, and current treaty negotiations. Also, due to the particular

structure of the political representation in the EU, this is reflected in several sources from the

EP, the Council and the EC. The EU policy on ISDSM can be approached from three different

angles: general issues, ISA and other ISDSM aspects.

In a more broad sense the EU has directed its MS to take the necessary measures to eliminate

incompatibilities with Union law contained in BITs concluded between them and third

States30. Since there is no limitation whatsoever on which subjects this directive must be

applied to, one can assume that potential incompatibilities regarding ISDSM are covered by

this requirement. Furthermore, agreements with the EU should afford foreign investors the

same high level of protection as provided by EU law and the general principles common to

the laws of the MS granted to investors from within the Union, but not a higher level of

protection31. Courts of the EU and its MS must be trusted to provide effective legal protection

based on the principles of democratic legitimacy, efficiency and cost-effective manner32. In

this sense, the EU neither requires nor prohibits investors to first litigate their claims in domestic forums but it seeks to prevent parallel proceedings by permitting access to ISA only when a final determination has been made or the investor claims have been effectively withdrawn from domestic forums33. Also, the EU aims to provide incentives for investors to pursue claims in domestic courts or to seek amicable solutions such as mediation and ensure

29 As a matter of fact, Commissioner Cecilia Malmström recently emphasized that this agreement is the most ambitious and progressive deal reached by the EU and constitutes a template for other agreements. EC, Speech on Transparent EU Trade. 30 EP Regulation No. 1219/2012. 31 EP Regulation No. 912/2014. 32 EP, Lange Report, 18. 33 Reinisch, The EU and ISDS, 19.

42

that investors cannot bring claims on the same matter at the same time before an arbitral

tribunal and domestic courts34. Furthermore, it has been emphasized that tribunals will be required to dismiss claims without legal merit or legally unfounded and the losing party should bear all costs of the proceedings because there have been concerns that protracted and frequent litigation could have an effect on the policy choices made by States35. The EU is willing to include provisions to guarantee that hearings regarding investor-State dispute settlements are open and that all documents are available to the public subject only to the

protection of confidential information and business secrets36 and intends to provide third

parties the possibility to file submissions regarding a matter within the scope of an investor-

State dispute process.

With respect to ISA, the EU aims to establish clear rules to ensure that arbitrators are independent and act ethically, including a binding code of conduct37. They must be impartial, with expertise in international law and international investment law. The EU also aims to set up a list of qualified individuals from which the chairperson for the tribunal is drawn, if the investor or the responding State cannot otherwise agree on38. Another aspect that is relevant is the intention to establish an appeal mechanism so as to allow for review of arbitral rulings because in most existing BITs and TIPs decisions by an arbitral tribunal are final. The EU has also highlighted its policy stand with respect to other ISDSM and in particular

about a permanent solution more aligned with the characterization of an international court.

As a matter of fact, it is of the opinion that a permanent solution for resolving disputes

between investors and States, which is subject to democratic principles and scrutiny, where

potential cases are treated in a transparent manner by publicly appointed, independent

professional judges in public hearings and which includes an appellate mechanism, where

consistency of judicial decisions is ensured and the jurisdiction of courts of the EU and of its

MS is respected, must be created39. Therefore, EU bilateral agreements will begin the

transformation of the old ISA into a public Investment Court System comparable to the

International Court of Justice (ICJ) and the World Trade Organization (WTO) Appellate

34 EC, Report on Consultation TTIP, 89. 35 Ibid., 108. 36 Ibid., 80. 37 Reinisch is of the opinion that, in substance, however, this code does not add much to the existing obligations under most arbitration rules demanding independence and impartiality of arbitrators. Reinisch, The EU and ISDS, 22. 38 EC, Report on Consultation TTIP, 101 and 102. 39 EP, Lange Report, 18.

43

Body40.Accordingly, the EU will engage with partners to build consensus for a fully edged,

permanent International Investment Court41. The EU is willing to include other dispute-

resolution mechanisms such as mediation or non-disputing party participation through amicus

curiae briefs.

Approaching the analysis of the EU current policy on ISDSM in the form previously

introduced allows us to appreciate more clearly that, in fact, the EU have started a transitional

process aiming at its ultimate goal of transforming the current prevailing ISA into a

permanent international court system.

B. Latin American States policy on Investor State Disputes Settlement

Mechanisms

Regardless of the alleged common roots and cultural heritage LAS have not found shared

grounds in terms of ISDSM policy yet. On the contrary, the socio-economic heterogeneity,

due to geographical and historical reasons, political and economical influences, as well as

former liaisons with ex colonists or other influential States has had more weight in terms of

defining their position, from time to time, on this subject. Furthermore, today in Latin

America a number of competing regional integration initiatives and organizations share the

landscape. This results not only in fragmentation, but also often in quite divergent policies

and ideological stances that make even regional coordination problematic. Some of these sub-

regional institutions compete for members, representation, resources and allegiance42. An

additional decisive reason that explains this fragmented position is that, in spite of never

having attracted the most FDI, Latin America has historically encountered the largest number

of ISA, even if lately the region has been ruled by a majority of democratically elected

40 EC, Trade for All, 22 and EC TTIP Draft 2015. 41 Ibid., 22. 42 Gardini, EU-Latin America Relations, 7. Today, the most relevant supra national Latin American organizations are the following: Organization of American States (OAS), Organization of Ibero-American States (by its Spanish acronym OIS), Community of Latin American and Caribbean States (by its Spanish acronym CELAC), Latin American and Caribbean Economic System (by its Spanish acronym SELA), Rio Pact, Latin American Integration Association (by its Spanish acronym ALADI), Pacific Alliance, Association of Caribbean States (ACS), Common Market of the South (by its Spanish acronym MERCOSUR), Central American Integration System (by its Spanish acronym SICA), Central American Parliament (by its Spanish acronym PARLACEN), Bolivarian Alliance for the Americas (by its Spanish acronym ALBA), Andean Community of Nations (by its Spanish acronym CAN), Central American-4 Border Agreement (by its Spanish acronym CA-4), Amazon Cooperation Treaty Organization (by its Spanish acronym ACTO), Union of South American Nations (by its Spanish acronym UNASUR), Caribbean Single Market and Economy (CARICOM or CSME), Petrocaribe and the Organization of Eastern Caribbean States (OECS).

44

governments and has well established institutions and laws43. Finally, one has to take into

consideration that today the States which have been the most active in the negotiation of BITs

and TIPs are also the ones whose economies are most open to trade and investments and its

prevailing mechanisms of protection (Argentina, Chile, Mexico, Panama, Peru and Uruguay),

while the States which reject these kinds of negotiations are also the ones which carry out

more protectionist policies and therefore are not willing to grant distinctive mechanisms of

protection to foreign investors (Bolivia, Ecuador, Nicaragua and Venezuela). In an

intermediate position are some of the MS of the Mercado Común del Sur (MERCOSUR) and

the majority of the Central American and Caribbean States, which while applying policies to

open up their economies, are also interested in preserving their Tariff Unions and protecting

their markets, which has been a decisive factor in their strategy for trade negotiations44.

Current LAS negotiations and conclusion of BITs and TIPs seem to be influenced by a

rethinking of investment standards in general, but also are showing a particular interest in

targeting the prevailing ISA, although there is not a general tendency or alignment in terms of

which other ISDSM are more favored. Given the above differences it would be impossible to

find common guidelines in terms of policy on ISDSM, or even try to differentiate groups of

countries that follow a specific policy.

Based on the above-referred factual framework, authors are of the opinion that today Latin

America policy on ISDSM is fragmented in the following tendencies:

1. The traditional attachment of LAS to solve investor-States disputes in domestic

jurisdictions have re appeared, particularly in BITs and TIPs negotiated among them. The

most significant case is the Bolivarian Alliance for the Peoples of our America (ALBA)

Peoples Trade Treaty of 29 April 2006, which allows foreign investors recourse only to

claim before domestic courts, as any other national investor. Also, the Andean

Community has adopted a similar approach by forcing investors from MS to abide by the

provisions of domestic jurisdictions. Furthermore, Bolivia and Ecuador have amended

their constitutions to ban international arbitration in the context of investor State disputes. 43 Some authors claim that this tendency is starting to change, that the number of arbitration cases involving Latin American countries have decreased in recent years and that a landmark arbitration judgment, as the one of the ICSID on Phillip Morris Int. vs. Uruguay, that ruled on favor of Uruguay acknowledging its continued efforts to protect its population from tobacco use and tobacco smoke from others (public interest), could change the negative perception of Latin American States that fueled the aversion to ISA in recent years. 44 Rodríguez Mendoza, FTAs in South America, 17.

45

2. Also, there is a number of States that have signed a broad range of BITs and TIPs as a

result of the liberalization of its markets and the promotion of FDI in the 90’s. These

include among others Argentina, Chile, Mexico, Panama, Peru and Uruguay. Those

agreements contain mostly traditional ISA clauses no less than the ones used elsewhere.

There is some variety especially in terms of the form of arbitration to be chosen, the way

to express consent and the applicable law and forums. Even though, with regard to this

last aspect, most of the agreements concluded by them allow the possibility to establish

arbitration under the ICSID and the United Nation Commission on International Trade

Law (UNCITRAL) Arbitration Rules (UNCITRAL Rules)45.

3. Most BITs and relevant TIPs concluded by LAS provide ISA subjected to the fulfillment

of prior amicable settlement requirements conditional to a time limit. Relevant

agreements that include such a provision are North American Free Trade Agreement

(NAFTA), Central American and Dominican Republic Free Trade Agreement (CAFTA-

DR), and the FTAs concluded between MS of MERCOSUR and CARICOM.

4. A number of LAS are requiring again the exhaustion of domestic remedies before to be

entitled to start an ISA. In the past, this requirement was abusively used to avoid the

potential case to be solved by arbitral tribunals, but case law have shown that arbitrators

have been flexible in interpreting the fulfillment of such requirements as pre requisite to

accept a case base on an alleged breach of obligations under a contract or investment

agreement, that have not necessarily complied with such pre requisite.

5. Many treaties provide that once the investor have chosen a particular dispute resolution

procedure that foreclosures the possibility of electing any other dispute resolution

mechanism otherwise available under the treaty. This type of clauses is traditionally

intended to force the investor to choose between domestic remedies or international

arbitration and is known as “the Fork in the Road Clause”.

6. Some LAS believe there is a bias in the current normative framework for ISA in favor of

private investors and unduly restrictions on the host State regulatory autonomy in

furtherance of other public interests. Authors put accent on the fact that, except for a short

45Tanzi, Inversiones en América Latina, 174, 204 and 205.

46

period of time in the 90’s, LAS has for a variety of reasons always been quite antagonistic

toward FDI in general and to a preferential protection of foreign investors in particular.

But within this group of States policies adopted differ substantially:

a) Brazil has always abstained from entering into international treaty obligations aimed

at the protection of foreign investors alleging incompatibility with its Constitution. In

fact, Brazil has declined to sign the ICSID Convention, which represent a clear stance

against ISA. Notwithstanding, as of 2014 Brazil has been the most active treaty

negotiator within the region, with six cooperation and facilitation investment

agreements (CFIA) signed in 2015. Brazil’s new model aims to remove internal legal

barriers while preserving space for public policies. This model is not focused on

dispute settlement; indeed Investor State Dispute Settlement (ISDS) is not possible on

the basis of the CFIAs. Disputes prevention requires the creation of specific

institutional mechanisms as “joint committees” and “focal points”, being the latters

equivalent to “Ombudsmen” figures. A focal point should prevent disputes and solve

possible disagreements in an amicable manner. Steps to be taken prior to State-State

dispute settlement proceedings, the only alternative of dispute settlement allowed by

these instruments, are consultations and negotiations and an examination by the joint

committee. CFIAs also included mechanisms for risk mitigation and dispute

prevention throughout substantive standards of investment protection46.

b) Ecuador perhaps is the State that better represents a second group of States (including

Bolivia and Venezuela, all of them already denounced the Washington Convention)

that rejects ISA as the prevailing ISDSM and aiming to install new sovereignty’s

policies and strategies. Ecuador not only adopted an increasingly critical stance on this

issue but also has employed a variety of measures in the domestic and international

realm that clearly signaled its intention to remove itself from the prevalent ISA

system. Furthermore, its new constitution entered into force in 2008 requires the State

to give priority to domestic investment over FDI and, subject to regional and sectorial

exceptions, prohibits Ecuador from entering into international agreements under which

it would have to cede sovereign jurisdiction to international arbitration venues in

46 Fach Gómez, International Investment Law and ISDS, 6 and 7, Singh, Rethinking Bilateral Investment Treaties, 141 to 154 and Tanzi, Inversiones en América Latina, 170.

47

contractual or commercial disputes between the State and individuals or private

corporations. But Ecuador also is actively participating in initiatives aspiring to

develop new supra national legal mechanisms to settle investor-States disputes (i.e. the

Energy Council of South America treaty draft, the discussions of the Union of South

American Nations (UNASUR) on the creation of a center for dispute settlements

under its auspices and the ALBA working group discussing the design of a regional

center for dispute settlement)47. More recently, Ecuador that in July 2009 suspended

its participation in the talks to reach the EU-Colombia, Peru and Ecuador FTA, in May

2013 signaled its willingness to resume the negotiation and join the agreement. Such

negotiations were concluded in July 2014 and this trade agreement is being

provisionally applied to Ecuador as of January 2017 too.

c) Since 2008 the MS of the UNASUR have been negotiating an agreement to create a

Centre for the Settlement of Investment Disputes. They have produced at least 3

drafts, the first in 2012 and a second in 2014; apparently there is an amended draft as

of February 2016. As provided by the rules of this regional organization, any

agreement must be reached by consensus, therefore any process intended to create

new institutions or regulations usually is time consuming. The current draft have not

being made public yet, but according to what is known about the draft of 2014, there

are three mechanism for resolving disputes: facilitation, mediation and arbitration. It

also includes the possibility to file an appeal, as well as to request clarifications and

revisions, when a new fact that could have been decisive for the award is discovered.

It also contemplates recourse for annulment, but Argentina, Paraguay, Uruguay and

Venezuela requested that the instance to resolve annulments must be permanent

instead of ad hoc, as it is in the case of the Washington Convention. This group of

States also summited for consideration of the other MS a proposal according to which

members of a permanent annulment tribunal must be independent, impartial and

recognized professionals in the field48.

7. There are already in place supranational bodies entitled to resolve or review disputes

arising in connection with investor-State disputes. An example of this sub category is the

47 Nowrot, International Investment Law and Ecuador, 6 to 8. 48 Fach Gómez, UNASUR Centre of Settlement.

48

Andean Tribunal of Justice of the UNASUR (herein after referred as to the UNASUR

Court). This regional community49 gives broad freedom to its MS in terms of how they

rule FDI, recognizing as sources of regulation the domestic normative, the communitarian

normative and the BITs and TIPs agreed by its members. Although, as long as the

disputed matter is related to Andean Community legislation, a concept that includes

foreign investors whether natural or juridical persons, must be submitted to the UNASUR

Court, either through an action for non-compliance or a preliminary interpretation. In this

sense, as confirmed by the jurisprudence of the UNASUR Court, ISA is considered a

national judge for the purposes of the obligation to directly request a preliminary ruling

from the supranational court in cases that refer to Andean Community legislation. The

UNASUR Court is therefore not only a forum for the settlement of FDI disputes but also,

from the point of view of the Andean Community, the obligatory forum where the dispute

is related to the interpretation or application of its regulations50. Unfortunately, this

instance is limited to hearing only those matters that involve community rules and does

not consider the direct determination of compensation, although it has the possibility of

requesting precautionary measures and has rules that guarantee transparency and allow the

intervention of third parties.

8. There is at least one American forum with jurisdiction to eventually solve cases involving

some specialized investor-State disputes. In fact, some authors are of the opinion that the

Inter American Court of Human Rights created in 1979 could settle disputes related to

FDI since it recognizes property as an individual human right and, therefore, it is entitle to

heard cases referred to the private property law. Nonetheless, the Court have been clear

and consistent in signaling that it is not the forum to protect business activity against

arbitrary acts of the States, even if it has resolved cases involving indigenous property

arguing that such kind of property is fully protected under the inter American human

rights system, because it has a function that goes beyond pure economic interests. In the

49 Its current members are Bolivia, Colombia, Ecuador and Peru and its current associated members are Argentina, Brazil, Paraguay, Uruguay and Chile. 50The UNASUR Court of Justice, in its ruling issued on 26 August 2011, in the process of non-compliance 03-AI-2010, included in the concept of national judge the system of arbitration. Likewise, this supranational court in its Interpretation 57-IP-2012 of 11 July 2012, concluded that: “The arbitrators or arbitration tribunals that are of only or last instance, are included within the concept of national judge contained in articles 33 of the Treaty of Creation of the Court of Justice of the Andean Community, and 122 and 123 of its Statute and, consequently, they are obliged to request a preliminary ruling from the Court of Justice of the Andean Community when they are aware of a process in which any of the rules that conform the Andean legal order must be applied or controverted, in accordance with the provisions Enshrined in Community legislation”. Anaya Vera, El Tribunal de Justicia de la Comunidad Andina, 4 to 6.

49

Court view, in principle, human rights must always prevail over rights related to

international business and the payment of adequate compensation is the solution to meet

investments commitments incompatible with human rights obligations. In my opinion,

since with the exception of the Dominican Republic, Trinidad and Tobago and Venezuela,

the rest of the Latin American States are subject to this court jurisdiction, it could be seen

as an specialized supra national instance in terms of potential claims involving and/or

affecting indigenous property rights, in which cases this court will have jurisdiction, once

the domestic remedies of the country in which a conflict has arisen have been exhausted.

Due the extensiveness of indigenous populations in Latin America, one can not discard

that conflicts involving property rights of these populations in connection with FDI will

be under this court jurisdiction.

Policies on ISDSM in EU and LAS are in different stages of evolution. In the case of the EU

the standardization resulting from its own integration process allows it to have a quite clear

and coherent vision when compare with the situation in LAS. The EU has a clear road map in

terms of how to transit from ISA, the current prevailing ISDSM included in its BITs and TIPs,

to a mechanism that could improve the deficiencies signaled by an increasing number of

experts with respect to the use of ISA. On the contrary, LAS are transiting different

approaches, in line with their current level of development and economic and political

predicaments. Despite this, it can be concluded that there is undoubtedly a growing concern in

both regions, mainly due to the increasing distrust towards the impartiality of arbitrators

responsible for solving disputes between investors and host States and clear trends that

suggest there is an opportunity to advance changes with respect to the way in which such

disputes have been resolved in the past.

The question that arises immediately after establishing the relevant aspects of the current

policy stance of both regions, with respect to investor-State disputes settlement, is to what

extent this is reflected in the regulatory framework in force between them. In the next chapter,

a systematic review of BITs and TIPs will be addressed in order to try to give an accurate

answer to this interrogation.

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Chapter III Investor State Dispute Settlement Mechanisms Legal Framework in Treaties with Investment Provisions and Bilateral Investment Treaties in force between the European Union and the Latin American States As previously indicated, the Lisbon Treaty enlarged the EU external trade powers. Therefore,

it will not be a surprise that treaties negotiated and entered into by the EU as a contracting

party itself, before such significant change, reflect a different balance of power between the

EU and its MS. In fact, most of such agreements could be described as “umbrella treaties”

that are oriented to settle principles for cooperation between the parties and the basis for

further BITs to be negotiated separately. Notwithstanding, these agreements also incorporate

references to investment that, together with trade, are portrayed as the vehicles to better

achieve such cooperation. The chronological review of all these instruments is intended to

demonstrate the evolution in terms of the kind of provisions on ISDSM that were consented

by the parties.

A. Treaties with Investment Provisions and Bilateral Investment Treaties pre

shift of competence from Member States to the European Union These agreements were mostly negotiated during the 90’s and the beginning of this century.

During that period LAS went through an extensive liberalization of their economies and

promotion of FDI in an attempt to encounter the negative effects of political and financial

crises that affected the region since the late 70s. It is important to keep in mind that the

dynamics between the EU authorities and its MS were different at that time because there was

not a Common Commercial Policy in place. Therefore, MS were basically free to negotiate

BITs with third parties, but at the same time the EU authorities were interested in negotiating

other international agreements that contained also investment provisions, in an attempt to

point out a coherent approach for its MS and to continue being a relevant partner group to

LAS as a regional grouping. In terms of FDI and related topics provisions included in such

treaties, in particular those referred to ISDSM, it could be assumed that it was necessary first

an agreement between the EU and its MS to further negotiate with third parties. This

51

particular circumstance may have affected the level of commitments that the EU was able to

make toward third parties.

1. Framework Agreement for Cooperation between the European Economic Community

and the Federative Republic of Brazil The treaty herein referred was signed by the contracting parties on 29 June 1992 and entered

into force as of 01 November 1995. In what is relevant to FDI it states that “the Contracting

Parties, taking into account their mutual interest and long and medium term economic

objectives, undertake to establish economic cooperation of the widest possible scope. The

aims of such cooperation shall be in particular: …(d) to encourage the flow of

investment…”51. Furthermore, in Article 8, it is included a compromise to encouraging steps

to facilitate access for small and medium size enterprises to sources of capital, to markets and

to appropriate technology, and also fostering joint venture activities directed especially

towards trade between the parties and aimed at third country markets. Also, in Article 9 it is

reiterated that the contracting parties agree, so far as their competences, rules and regulations

and policies permit, to encourage an increase in mutually beneficial investment, to examine

the possibility of setting up operations and mechanisms to improve the climate for such

investments in keeping with the guidelines of paragraph 38 of the Rome Declaration on

relations between the European Economic Community and its MS and the countries of the

Rio Group. The only reference to settlement mechanisms to solve disputes arising from the

treaty is found in Article 29, which incorporates the figure of a Joint Committee, which will

seek appropriate methods of forestalling problems, which might arise in areas covered by the

agreement. This agreement reflects the historical position of Brazil to avoid any compromise

to summit disputes arising between foreign investors and the Brazilian State to any foreign

jurisdiction and/or forum.

Brazil has negotiated BITs with the following EU MS: Belgian-Luxembourg Economic

Union, Denmark, Finland, France, Germany, Italy, the Netherlands, Portugal and the United

Kingdom. All of them where concluded between 1994 and 1999 and driven by liberal

presidents that were in office at that time, which coincides with the boom of economic

liberalization and seek of FDI that characterized this period in Latin America. None of those

agreements are in force basically because ratification in Parliament suffered from a significant

51 EC-Brazil Cooperation Agreement, Art. 3(d).

52

political opposition from the Labor Party, one of the main players in the Brazilian political

field at the time. From a pure legal approach one of the two main arguments that were raised

against ratification of those and other BITs negotiated during that period, which relates

directly with our subject of analysis, was that, according to who opposed them, these norms

contravene customary international law traditionally adopted by Brazil: the principle of

exhaustion of local remedies. Furthermore, it was strongly argued that direct access of foreign

investors to international arbitration would place them in equal footing with Brazilian

sovereignty, and this would be equivalent to protecting such investors to the detriment of

national interests. ISA was, then, not an option for Brazil, given the country’s trust on its

neutral and efficient judiciary and skepticism towards arbitration mechanisms generally

during that period52. Some authors point out that circumstances allowed Brazil to avoid the

enforcement of such agreements at the time. In fact, the significant internal demand, which

accounted as the most relevant driver of its economy, and the lack of interest in protecting

Brazilian investors abroad, due to the mostly inexistent pressure from the private sector,

explain why Brazil was able to avoid following the path of other LAS in terms of ISDSM.

2. Framework Agreement for Cooperation between the European Community and its

Member States and Paraguay and other Bilateral Investment Treaties negotiated with the European Union Member States

The Framework Agreement herein referred was signed by the contracting parties on 03

February 1992 and entered into force as of 01 November 1992. In what is relevant to FDI it

states: “the Contracting parties agree to promote, so far as theirs powers, rules and

regulations permit, an increase in mutually beneficial investment”53. Furthermore, it is

mentioned that the parties will improve the mutual investment climate through agreements for

the promotion and protection of such investments on the basis of the principles of non-

discrimination and reciprocity. As in the previous case, the only reference to a settlement of

disputes mechanism is the creation of a Joint Committee, which according to Article 21, shall

see the proper functioning of the agreement and examine all issues arising from its

application.

52 Morosini, The New Brazilian ACFIs, 9. 53 EC-Paraguay Cooperation Agreement, Art. 7(a).

53

Paraguay has entered into BITs with the following EU MS: Austria, Belgian-Luxembourg

Economic Union, Czech Republic, France, Germany, Hungary, Italy, the Netherlands,

Portugal, Romania, Spain and the United Kingdom. There is not an express link between

these BITs and the Framework Agreement of Cooperation previously referred, but, since the

last one was entered into in 1992, most of the BITs herein referred to were negotiated

afterwards, with the exception of the agreements with France and the United Kingdom, that

were negotiated in the 80’s. Most of these follow a similar structure and include mainly two

ISDSM options: amicable negotiations up to 3 or 6 months and ISA. Predominantly,

Paraguay agreed to be subject to arbitration under the ICSID Rules, but in some cases also

accepted arbitration under UNCITRAL rules. It is also remarkable that most of those BITs

include a “Fork in the Road Clause” which means that investors could eventually refer a

potential dispute to domestic courts. But in the case of the Belgian-Luxembourg Economic

Union, Hungary and Romania if investors opt for the domestic forum they will have the

alternative to bring the case before an arbitral tribunal if after 18 months no judgment or

agreement has been reached. The agreements with France and the United Kingdom do not

allow the use of domestic courts but remit to ISA as the only option to settle an investor-State

dispute. One could presume that the negotiation power of developed countries during the

80’s were stronger due to the significant external shocks and internal challenges LAS were

confronted with at the time. Finally, there is just one case that does not allow claims from

investments that were made before the signing of the BIT: the Netherlands. According to the

ICSID Data Base, there is an arbitration case registered against Paraguay by a EU MS, it was

filed in 2007 by a Dutch investor and is already concluded54. For a more detailed overview

see Appendix 1.

3. Framework Agreement for Cooperation between the European Community and the

Eastern Republic of Uruguay and other Bilateral Investment Treaties negotiated with the European Union Member States

This treaty, signed by on 04 November 1991 and enforced as of 01 January 1994, in what is

relevant to FDI and mechanisms to settle disputes has identical provisions as the ones

included in the agreement between the EU and Paraguay55 previously referred.

54 ICSID Case No. ARB/07/9. 55 EC-Uruguay Cooperation Agreement, Arts. 7(a) and (b) and 21, 2.

54

Uruguay has entered into BITs with the following EU MS: Belgian-Luxembourg Economic

Union, Czech Republic, Finland, France, Germany, Hungary, Italy, the Netherlands, Poland,

Portugal, Romania, Spain, Sweden and the United Kingdom. With the exception of the

agreement with Finland, which was entered into in 2004, the rest of them were negotiated and

signed in the late 80’s and the 90’s. These agreements follow a similar structure that the

described for the case of Paraguay. ISDSM included are amicable negotiations up to 6

months, except in the case of Poland that requires up to 12 months, and ISA under ICSID

Rules mainly and also under UNCITRAL Rules for 6 cases. The “Fork in the Road Clause”

is present in all of them but in the majority subject up to 18 months if investors have chosen

to bring a potential dispute to a domestic court. Afterwards, if no judgment has been issued

the investor is allowed to bring the case before an arbitral tribunal. As exceptions to the rule,

the agreements with the Belgian-Luxembourg Economic Union and France set forth that

investors are allowed to seek arbitration also if the domestic court judgment is not in line with

the respective BIT. It is interesting to highlight that even if the agreement with Finland was

concluded in the early years of this century, it has not particular differences when compared

with those concluded during the 90’s. For a more detailed overview see Appendix 2.

4. Inter-regional Framework Cooperation Agreement between the European Community

and its Member States and the MERCOSUR and its Member States and other Bilateral Investment Treaties negotiated between the MERCOSUR State Members and the European Union Member States

This treaty, signed by the contracting parties on 15 December 1995 and entered into force as

of 01 July 1999, indicates that the parties shall promote cooperation in business with the aim

of establishing a climate which favors economic development in their mutual interest and that

such cooperation should focus in particular on investment, among other56. Furthermore, in

Article 12, referred to the promotion of investment, such commitment is further developed by

stating that such cooperation shall encompass measures as promoting the development of a

legal environment which is conductive to investment between the parties, particularly through

the conclusion between interested European Community MS and MERCOSUR MS of

bilateral agreements for the promotion and protection of investment57 . The agreement

encompass the creation of a Cooperation Council entitled to discuss the important matters that

may arise, which is assisted in performing its duties by a Joint Cooperation Committee, but 56 EC-MERCOSUR Cooperation Agreement, Art. 11, 1(a). 57 Ibid., Art. 12, 2(b).

55

from the description of their duties cannot be inferred that such bodies have any power to deal

with investor-State disputes. The only provision that could be a potential reference to such

type of conflicts and the existence of an ISDSM within the framework of this agreement is

contained in Article 30, which refers to Consultation as the mechanism that the parties will

undertake on any issue referred to the agreement. The specific procedure to make possible

the consultation should be developed by the Cooperation Council and the responsible body

for conducting such proceedings is the Joint Cooperation Committee.

Today the MERCOSUR is integrated by Argentina, Brazil, Paraguay and Uruguay and it is

basically a custom union and a trading bloc. Even tough it is considered the most relevant

regional grouping in Latin America because as of 2012 Bolivia has started its accession

process and Chile, Colombia, Ecuador, Guiana, Peru and Suriname are associated members.

Then one can conclude that all South American States are linked to MERCOSUR either as

MS or Associate Member. It is interesting that none of the BITs entered into by the

MERCOSUR MS with EU MS have an explicit reference to the Framework Agreement.

Since the cases of Brazil, Paraguay and Uruguay BITs with EU MS have been already

discussed, the only additional analysis required with regard to the MERCOSUR is the case of

Argentina. It is remarkable that Argentina is the MERCOSUR MS that has the most extensive

network of BITs entered into with EU MS, which includes: Austria, Belgian-Luxembourg

Economic Union, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, Germany,

Hungary, Italy, the Netherlands, Poland, Portugal, Romania, Spain, Sweden and the United

Kingdom. All such agreements were negotiated and enforced during the 90’s and contain

provisions that allow amicable negotiations up to 6 months, except for the case of the

Belgian-Luxembourg Economic Union that does not allow it, and ISA as ISDSM. The typical

“Fork in the Road Clause” is present in all the agreements, even if a significant number of

them give investors the right to seek arbitration after 18 months of having initiated

proceedings before a domestic court if no judgment has been issued. There are two cases that

differ from the rest because they only cover potential claim as of it’s signing: France and

Netherlands. Also, it is important to highlight that in the BITs with the Belgian-Luxembourg

Economic Union, Germany, the Netherland and the United Kingdom it is necessary to

exhaust first domestic remedies, but if no judgment has been issued after 18 months investors

could request arbitration. Argentina is one of the few Latin American States that present a

56

significant number of arbitration cases initiated by EU MS, according to the information

registered in the ISID Data Base. To this date there are 28 cases, 8 of them are still pending

and investors from Spain, Italy, France and Germany figure as the most active. Additional

information specific to these cases can be consulted in Appendix A. For a more detailed

overview on BITs concluded by Argentina with EU MS see Appendix 3.

Perhaps the most visible feature that arises when analyzing the specific circumstances of each

MERCOSUR MS is that, notwithstanding that they are part of the same grouping and share

policies on customs and trade, there are enough room for each country to pursue its own

policy with regards to ISDSM. From the extreme of Brazil, that basically refrained from

enter into BITs with third parties and furthermore does not recognizes ISA as a mechanism to

settle investor-State disputes, to Argentina that has one of the most extended networks in

terms of BITs entered into with EU MS.

5. Partnership Agreement between the Members of the African, Caribbean and Pacific

Group of States and the European Community and its Member States

This treaty was signed by the contracting parties on 23 June 2000 and entered into force as of

01 April 2003, but it was terminated on 15 June 2010. Despite not being in force, it is relevant

to mention it because it included provisions to encourage and facilitate investment, as well as

to create and maintain a predictable and secure investment climate and ensure such

investments by creating guarantees and introducing generally accepted standards of

protection58. But it is also relevant because it contained provisions according to which the

parties committed themselves to conclude additional agreements to protect investments. In

connection with such commitment, in Chapter 5, Article 15, it was agreed that for the

negotiation of further bilateral agreements between the parties they will study the main

clauses of a model protection agreement with particular attention to international arbitration in

the event of disputes between investors and host States. Also, it was agreed that technical

cooperation should be used to develop, among others, arbitration mechanisms and judiciary

systems to enhance the protection of investments59. Finally, article 98 included arbitration as

the mechanism to solve disputes arising from the agreement, provided that a previous

submission to the Council of Ministers, created also by the treaty, was complied with and no

58 EC-COTONOU Partnership Agreement, Art. 75. 59 Ibid., Art. 77(3).

57

settlement with the auspice of such body was possible. This is the first agreement concluded

by the EU and its MS and in part a grouping of LAS, specifically the Caribbean States, that

has a clear mention on ISDSM and more specifically on ISA as the mechanism to be included

in further agreements between the parties to solve investor-State disputes.

6. Partnership, Political Coordination and Cooperation Economic Agreement between the

European Community and its Member States and Mexico and other Bilateral Investment Treaties negotiated with the European Union Member States

This treaty was signed by the contracting parties on December 1997 and entered into force as

of October 2001. As the ones previously mentioned, it has a general commitment to promote

investment as one of the mechanisms to increase economic cooperation between the parties.

Article 15 of the agreement is devoted to describe how the parties plan to promote investment.

It is expressly signaled that the parties shall create an attractive and stable environment for

reciprocal investment. Also, they will cooperate to develop a legal environment conductive to

investment between the parties, when necessary, by the subscription of specific treaties

between EU MS and Mexico, to promote and protect investment. In what can be considered

as a significant advance compared with previous treaties concluded by the EU with LAS, this

agreement provides in Article 50 that the Joint Council, a governing body similar to the ones

included in previous treaties with LAS, shall decide on the establishment of a specific trade or

trade related dispute settlement procedure compatible with the relevant WTO provisions in

this field. Although it is true that this provision is far from what is defined as ISDSM, at least

it can be considered as a significant advance in terms of willingness to include settlement

mechanisms in treaties with investment provisions between the EU and LAS. The Joint

Council introduced such settlement mechanisms only until March 2000 through provisions

that are much more detailed than the ones included in other comparable treaties negotiated by

the EU and its MS at that time (i.e. the Euro-Mediterranean Association Agreement, the EU-

South Africa Trade and Development Cooperation Agreement and the EU-Chile Association

Agreement)60. Not only does it provide a timetable for every procedure (consultation and

arbitration), but it also contains a separate set of Model Rules of the Procedure, as well as a

Code of Conduct giving specific guidelines on the qualifications, emphasizing impartiality as

one of the conditions to be met, of terms of reference and operational procedures for the

60 EC-Mexico Joint Council Decision No 2/2000 and Szepezi, Comparing EU FTA, 5.

58

arbitrators. Contrary to other agreements, this provides for two reports to be issued by the

Arbitration Panel. First, its findings need to be submitted to the parties in the form of an initial

report within 3 months and in any event by no later than 5 months. Upon receiving the initial

report, both parties have 15 days in which to submit their comments in writing, after which

another 15 days are scheduled for the preparation of the final report. The difference with other

agreements is that both parties can contribute input to the final decision. This agreement goes

beyond the final ruling in providing for situations in which one party regards the other party’s

implementation of its report as being unsatisfactory. Yet, disputes in a few trade and trade-

related areas are excluded from the arbitration procedure.

Mexico is perhaps one of the most interesting cases in Latin America when dealing with BITs

and particularly with ISA. It has signed BITs with the following EU MS: Austria, Belgian-

Luxembourg Economic Union, Czech Republic, Denmark, Finland, France, Germany,

Greece, Italy, the Netherlands, Portugal, Slovakia, Spain, Sweden and the United Kingdom.

There is no deliberated reference linking these agreements with the Partnership Agreement

previously referred to, but what calls undoubtedly the attention is that BITs signed with

Mexico has systematically included the most measures and details regarding ISDSM. The

first thing that should be addressed is that all these BITs were negotiated in the late 90’s or

early this century. In terms of structure, all BITs subscribed by Mexico with EU MS includes

as ISDSM negotiations up to 6 months upon written notification. Once that period has expired

without agreement between the parties, investors are allowed to request arbitration upon 60

days notification mostly both under ICSID and UNCITRAL Rules. In the case of the BIT

subscribed with the United Kingdom, investors have the option to submit claims to the

Permanent Court of Arbitration with seat in The Hague, or any other forum that the parties

may agree. Interestingly, there is an express statute of limitation as of between 3 and 4 years

from the moment the investor was aware of the existence of damages to request arbitration.

In most of the cases a “Fork in the Road Clause” is included, but there is also a reservation of

rights to seek arbitration as long as no judgment in first instance has been issued, excluding

those cases that are subject to administrative courts. Since any claim involving government

authorities and institutions are subject to that jurisdiction, one could assume that if an investor

decides to bring claims against the government in a domestic court basically will be obliged

to exhaust local remedies first. No punitive damages are allowed and the treaty only covers

those claims that arise as of it’s signing. In a number of cases provisional measures are

59

allowed, both, by domestic courts and arbitration panels’ enforcement. Consolidation of

claims is permitted expressly in all these BITs under certain rules. As long as the parties

agree, final rulings issued by the arbitration panels could be made accessible to the public,

which is one of the few cases of BITs negotiated by LAS that include a basic level of

transparency. Something that calls the attention when comparing these agreements with the

majority of the other negotiated by LAS with EU MS is the fact that it is explicitly requested

that arbitrators must have experience and be independent and impartial. In one case, the BIT

with the United Kingdom is it provided that arbitrators could appoint experts to assist them

with the evaluation of a case. In the ICSID Data Base there are 5 arbitration cases filed

against Mexico by EU MS, except for one, that was filed by a French investor, the remaining

were filed by Spanish investors and only the case brought by Telefonica S.A. (Spain) is

pending61. For a more detailed overview see Appendix 4.

7. Agreement establishing an Association between the European Community and the

Republic of Chile and other Bilateral Investment Treaties negotiated with European Union Member States

This treaty, signed by the contracting parties on 18 November 2002 and entered into force as

of 01 February 2003, includes in Article 16, as one of its general objectives, cooperation

aimed inter alia at creating new opportunities for trade and investment62. Also, in Article 21 it

is expressly agreed to develop a legal framework for the Parties that favor investment, by

conclusion, where appropriate, of bilateral agreements between the EU MS and Chile to

promote and protect investment. Article 49 of the agreement also states that in terms of

increasing cooperation priority will be given to activities aimed at promoting trade and

investment. Finally, according to Article 134 the parties committed to review the investment

legal framework with the objective of progressive libertisation of the investment conditions in

order to ensure that they are consistent with their commitments in international investment

agreements, in no later than 3 years as of the entry into force of the treaty. The most

significant change with respect to similar instruments entered into by the EU with LAS is

Tittle VII that refers to Dispute Settlement63. This section provides the rules to settle any

disputes arising between the parties and even if is not intended as a mechanism to settle

61 ICSID Case No. ARB(AF)/00/2, ICSID Case No. ARB(AF)/04/3, ICSID Case No. ARB(AF)/09/2, ICSID Case No. ARB(AF)/12/4, and ICSID Case No. ARB(AF)/13/2. 62 EC-Chile Association Agreement, Art. 16(c). 63 Ibid.

60

investors-State disputes directly, it envisage the possibility to advance consultations regarding

the interpretation and application of the agreement in order to avoid disputes and settle any

difference in mutual and satisfactory resolution. There is a body created by the treaty with

members representing both parties, the Association Committee, which, in a maximum of 30

days period, will review such consultations, take a decision and provide the parties with the

measures to correct the situation. Furthermore, Articles 184 to 189 describe the dispute

settlement procedure, which apply to any matter that may arise in connection with the

interpretation and implementation of this agreement. Interesting when compare to other

similar agreements is the fact that arbitrators are not selected in an ad hoc basis, instead there

is a fixed list of 15 potential arbitrators and a third of such group could not be European of

Chilean nationals, from this sub group the chair person of a panel tribunal should be

designated. This agreement allow third parties interested to submit so-called amicus-curiae

briefings, although the arbitrators are not obliged to address such contributions in their

decisions. Also, it is provided that the decisions must be made public, as well as the hearings,

in the last case if all parties agree. Finally, it is also included the possibility to request

temporary compensatory measures.

Chile has BITs signed and enforced with the following EU MS that were negotiated as of the

early to the late 90’s: Austria, the Belgian-Luxembourg Economic Union, Croatia, Czech

Republic, Denmark, Finland, France, Germany, Greece, Italy, Poland, Portugal, Romania,

Spain, Sweden and the United Kingdom. Different from the previous cases, these agreements

are explicitly linked to the Association Agreement herein supra mentioned. The first feature

that should be taken into consideration is that due to the relationship between both types of

agreements one has to be careful in determining whether in specific circumstances,

particularly in those when a more favored treatment could be granted to investors, one or the

other would prevail. In terms of ISDSM, most of the BITs allow the parties first to engage in

amicable negotiations up to 3 or 6 months. Afterwards, investors could choose between

bringing claims to domestic courts or arbitration under ICSID and UNCITRAL Rules.

Predominantly, the only claims covered by these agreements are those that will arise as of

their signing. All these BITs contain the typical “Fork in the Road Clause”, but some of them

reserve the right to seek arbitration once a certain period of time has elapsed, mostly between

18 and 36 months, without domestic courts issuing a judgment. Chile has only 2 arbitration

cases registered in the ICSID Data Base associated to EU MS; in both the claimant is a

61

Spanish investor, one was initiated in 1998 and the other in 2004 and both are already

concluded64. For a more detailed overview see Appendix 5.

8. Economic Partnership Agreement between the Caribbean Community and the European

Community and its Member States and other Bilateral Investment Treaties negotiated with European Union Member States

This treaty entered into force on 20 October 2008 and includes as counterparties to the EU

and its MS the Caribbean Community (CARIFORUM) MS, a regional organization grouping

the Caribbean States. This agreement also refers to investment as one of the key objectives to

be reached. Furthermore, Article 1 (b) expressly indicates that one of the objectives of the

agreement is “Promoting regional integration, economic cooperation and good governance

thus establishing and implementing an effective, predictable and transparent regulatory

framework for trade and investment between the Parties and in the CARIFORUM region”65.

With respect to dispute settlement mechanisms it includes Article 215, which allows the

parties to reach an amicable agreement at any time. In this scenario the parties should notify

the situation to the CARIFORUM-EC Trade and Development Committee and upon adoption

of the solution agreed the process will be terminated. Also, in Article 216 it is provided that

the Joint CARIFORUM-EC Council will create the Rules of Procedure to handle disputes

under the agreement. But what is compelling in this provision is that explicitly states that any

meeting of the Arbitration Panel as well as its rulings shall be open to the public, according to

Rules of Procedure, unless the arbitration panel decides otherwise on it own of by request of

the parties. Arbitration under this agreement is also subjected to customary rules of

interpretation of international public law and arbitrators are encouraged to reach a decision by

consensus first, otherwise they should decide by majority of votes. As is the case of the treaty

between the EU and Chile, there is a closed list of 15 arbitrators from which the parties should

select the arbitration panel and a third of such a list must be integrated by arbitrator that are no

nationals of the States that are parties to the agreement, the chair of the panel must be one of

those. A Code of Conduct for the Arbitrators is annexed to the treaty66. The treaty includes

provisions that give the parties tools to invoke exceptions when they consider that the

64 ICSIS Case No. ARB/98/2 and ICSIS Case No. ARB/04/7. 65 EC-CARIFORUM Economic Partnership Agreement, Art. 1(b). 66Ibid., Art. 221.

62

application of the treaty provisions could affect public interests and national security, which is

an exception when compare with previous treaties negotiated by the EU with LAS.

CARIFORUM MS are currently Antigua and Barbuda, Bahamas, Barbados, Belize,

Dominica, Grenada, Guyana, Haiti, Jamaica, Monserrat, St. Kitts and Nevis, St. Lucia, Saint

Vincent and the Grenadines, Suriname and Trinidad and Tobago. There are also other

Associate Members, all of them smaller Caribbean Islands. Part of the system comprises a

Court of Justice that has exclusive jurisdiction to interpret and apply the treaty that created the

Forum and also acts as Appellate Body or court of last resort in both civil and criminal

matters for those MS that have submitted to its jurisdiction. All BITs entered into by the

CARIFORUM MS with EU MS are expressly linked to the Economic Partnership Agreement

and were negotiated and signed in the late 90’s or early years of the current century. This

group of States does not present a significant network of BITs; even some of them have not

any at all, as it is the case of Monserrat and St. Lucia. One could argue that due to the limited

economies they represent, mostly associated to extractive and tourism industries, these

countries remain a secondary priority to most EU MS. Nevertheless, the data shows that

Germany and the United Kingdom are consistently the EU MS that have entered into BITs

with almost all CARIFORUM MS. Also, France and the Netherlands have subscribed

agreements with some of these States, but that could be accounted mostly to the ex colonist

ties to some of them. In terms of structure, most of these agreements include the alternative

to held amicable negotiations up to 3 months, as well as conciliation under the ICSID Rules.

This last feature is not present in the BITs previously described. Furthermore, the majority of

these agreements do not require investors to exhaust domestic remedies but allow them to

directly seek arbitration under ICSID and UNCITRAL Rules. One additional remark that

should be made is that those BITs subscribed by CARIFORUM MS with the Netherlands

include the possibility to settle the dispute by means of “ex aequo et bono” (equity and

conscience). In the contest of arbitration this refers to the power of arbitrators to dispense

with consideration of the law but consider solely what they acknowledge to be fair and

equitable in the case at hand. According to the ICSID Data Base, in terms of arbitration cases

filed against this group of States by EU MS, there is only one case filed against Guyana67 by a

British investor. For a more detailed overview see Appendixes 6 to 17 respectively.

67 ICSID Case No. ARB/01/9.

63

B. Treaties with Investment Provisions and Bilateral Investment Treaties post shift of competence from Member States to the European Union

These agreements were negotiated after the shift of competence in Commercial Policy from

the MS to the EU. But not necessarily show a more consistent approach in terms of policy

and subsequently in the type of provisions that where included in each case, as it will be

highlighted afterwards. Also, these agreements coexist with BITs that were entered into by

these LAS and EU MS under the previous allocation of competencies in the EU. This

circumstance call the attention in terms of determining if specific provisions were included to

norm the relationship between the general and later TIPs and the individual and earlier BITs.

1. Trade Agreement between the European Union and its Member States and Colombia,

Peru and Ecuador and other Bilateral Investment Treaties negotiated with the European Union Member States

This treaty was signed on 26 June 2012 and entered into force on 01 June 2013, except for

Ecuador for which entered into force just as of January 2017. The discussion of this

agreement started before the EU enlargement of trade powers under the Lisbon Treaty, but

interestingly it was concluded once this shift of competence took place. The agreement

includes as one of its main objectives the development of an environment conducive to an

increase in investment flows and, in particular, to the improvement of the conditions of

establishment between the parties, on the basis of the principle of non-discrimination68.

Although this agreement was negotiated in a similar period of time than the one concluded

with the Central American States, the features and emphasis in both treaties are evidently

different, since in the latter the emphasis is put on cooperation and there includes many

provisions addressing EU civil society stakeholder concerns, as transparency, the

consideration of imbalances or asymmetry among the parties to the agreement, the need to

protect the environment and cultural heritage of the parties and the like. Interestingly, when

compare to other similar agreements, it present differences in the provisions contained in

Article 115, according to which the agreement will not limit the rights and obligations of the

parties and its investors in any existing or future international agreement relating to

investment to which the MS of the EU and the other parties to the treaty are parties, but at the

same time “any dispute settlement mechanism established under any existing or future

international agreement relating to investment to which the European Union, a Member State 68EU-Colombia, Ecuador and Peru FTA, Art. 4(d).

64

of the European Union or a signatory Andean Country is a party shall not be applicable to

alleged breaches of this Chapter”. This is an explicit exclusion of any actual or future rules

on investment disputes settlements to solve disputes arising as a result of the implementation

of this agreement, which a contrario sensu shall be resolved base on the provisions contained

therein. It is also included a compromise to a progressive liberalization of investment, which

among others will include a review of the investment legal frameworks and environments

consistent with their commitments under international agreements. Issues arising in

connection with competition, as provided in the agreement, could be subject to Consultations

intended to reach an amicable solution according to Article 265, but it is not allowed to

invoke the Dispute Settlement mechanism provided therein and instead will be subject to the

applicable domestic competition laws. Tittle XII includes a set of detailed disputes settlement

mechanisms that emphasizes prevention, but also creates an extensive framework to solve

potential disputes arising from the application of this treaty. Among the options included are:

Good Office, Mediation and Conciliation, Mediation exclusively for non Tariff Measures

related issues, as previously mentioned, Mutually agreed Solutions, Consultations and

Arbitration. In the last case, as in other agreements negotiated in this century, a closed list of

25 arbitrators designated equitably by the parties is agreed. There are also rules of procedure

and a code of conduct for arbitrators, as well as consolidation rules and the possibility to

request temporary remedies. The parties are entitled to ask for clarification of the arbitration

rulings and decisions by the arbitrators, when possible, should be consensual, otherwise

adopted by a majority of the arbitration panel members69. The mechanisms describe herein

above are not per se direct ISDSM, as it is the case in all other TIPs herein described, but

nonetheless show the evolution in the acceptance of the inclusion of more alternative

mechanisms to solve disputes by LAS and more regulations applicable to arbitrators.

Colombia has BITs signed and enforced only with Spain and the United Kingdom. Both

agreements were negotiated recently when compared with other LAS, the one with Spain in

2005 and the other with the United Kingdom in 2010. In terms of structure, both agreements

are explicitly linked to the trade agreement previously referred and include as ISDSM the

typical amicable negotiations up to 6 months, but the agreement with the United Kingdom

also provides recourse to conciliation and mediation, which accounts for a remarkable

difference when compare with most other BITs negotiated by this State with other LAS. Both 69 EU-Colombia, Ecuador and Peru FTA, Arts. 302 to 313.

65

agreements portray a statute of limitation with respect to the claims that could be subject to

arbitration of 3 and 5 years respectively and cover only those claims arising as of the signing

of each BIT. This feature is also present in BITs negotiated by Mexico earlier, but is the only

additional case. In regards of the need to exhaust local remedies first, it is subject to such

measure when domestic administrative law requires it. Again here one can see an approach

more similar to the one adopted in BITs negotiated by Mexico. For a more detailed overview

see Appendix 18.

Ecuador, in spite of having denounced the ICSID Convention and terminated a number of

BITs, as a reaction against the increasing power or arbitral panels in settling investor-State

disputes, continues to maintain this type of agreements with the following EU MS: France,

Germany, Italy, the Netherlands, Spain, Sweden and the United Kingdom. Most of those

BITs were concluded in the late 90’s and the beginning of this century and, as in the case of

Colombia, are linked to the Trade Agreement herein referred to. These agreements are similar

to the prevailing model, which means they include amicable negotiations up to a certain

period of time (6 months mostly). Most of them allow investors to request arbitration, some

directly, other after exhausting local remedies, up to certain period of time, and also there are

cases including “Fork in the Road Clauses”. With the exception of the agreements with

France and Germany, the rest of them consider arbitration under both ICSID and UNCITRAL

Rules. That means investors that are nationals of those two States lost the possibility to

request ISA as a mechanism to settle investor-State disputes because there is no other arbitral

forum available according to the respective BIT. Thus, this could be interpreted, as in such

circumstances the only available remedies are the domestic ones or in its defect it will be

necessary to recourse to SSDS as provided both in the BITs and in the Free Trade Agreement.

There are 6 arbitration cases registered against Ecuador in the ICSID Data Base filed by

claimants from the United Kingdom and Spain between 2001 and 2009 and all are concluded.

Additional details on the cases can be consulted in Appendix B. For a more detailed overview

on the BITs herein referred to see Appendix 19.

In the case of Peru, BITs with the following EU MS are in place: Belgian-Luxembourg

Economic Union, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, the

Netherlands, Portugal, Romania, Spain, Sweden and the United Kingdom. With the exception

of the BIT negotiated with the Belgian-Luxembourg Economic Union; which was entered into

66

in 2005 the remaining agreements were negotiated and entered into in the mid 90’s and all of

them are linked to the Free Trade Agreement specifically. Most of them allow amicable

negotiation up to 3 months, but there are also some that requires conciliation, diplomatic

mediation or the application of the ISDSM included in specific agreements concluded

between the parties first. The agreement with Czech Republic only provides for SSDS, even if

it was negotiated at the same time that other which comprises both ISDSM and SSDS. As in

the case for Ecuador, the BITs subscribed by Peru are less standardized. Interestingly the one

agreed with the Netherlands has a sunset-clause preserving substantive protection standards

and the ISDSM agreed to investments made during the validity of such agreement up to 15

years as of its termination. Finally, it is important to remark that most of the agreements

include the “Fork in the Road Clause” and are subject to arbitration under ICSID and

UNCITRAL Rules. Peru has been involved in 7 arbitration cases according to the ICSID Data

Base, except for 2 cases the remaining are concluded. More details on these cases can be

verified in Appendix C. For a more detailed overview of the BITs herein described see

Appendix 20.

In trying to find a common base in regards of the BITs entered into by the Andean States that

are covered by a common Free Trade Agreement with the EU and its MS, the only

circumstance that stands out is that all were more flexible in terms of the provisions agreed

with their counter parties, even if in some cases, based on the dates of signing, negotiations

should have been in parallel.

2. Association Agreement between the European Union and Central America States and

other Bilateral Investment Treaties negotiated with European Union Member States This agreement, which was negotiated between 2007 and 2011 and signed on 29 of July 2012

is the first one concluded by the EU authorities with a LAS grouping after the shift of

competence in terms of trade powers from the MS to the EU. Among its objectives this

agreement includes “foster increased trade and investment among the Parties, taking into

account special and differential treatment in order to reduce structural asymmetries existing

between both regions�70. It is interesting that in this agreement, for the first time, provisions

giving access to civil society to dialogue with the treaty bodies of governance were included.

For this purpose the treaty creates a Joint Consultative Committee linked to the Association

70 EU-Central America Association Agreement, Art. 2(h).

67

Council, which is composed of representatives of both the EU Economic and Social

Committee and the Comité Consultivo del Sistema de Integración Centroamericana y el

Comité Consultivo de Integración Económica71. It is also requested that the parties will

periodically call these stakeholders to inform them about the implementation of the agreement

and to gather their suggestions in this respect. The references to FDI in this treaty are

significantly less obvious than in previous agreements, being cooperation the core objective

of the agreement. Nonetheless in Article 26 (g) it is included that parties “shall encourage

and facilitate private financing and direct foreign investment, in particular through funding of

the European Investment Bank in Central America in line with its own procedures and

financial criteria�. The trade pillar, which incorporates investment provisions, encompasses

an efficient and streamlined dispute settlement system; in accordance with principles such as

transparency and sequencing. The system, which may ultimately allow for the suspension of

trade benefits, is intended as a last resort if parties fail to resolve disagreements by other

means. Once a case has been led, it proceeds along a fixed set of procedures and time frames.

Should parties fail to reach an agreement through formal consultations according to Article

310 or a Mutually Satisfactory Solution according to Article 324, they can resort to Mediation

according to Article 332, which is excluded for certain matters (i.e. tariff measures), or

request the establishment of an Arbitration Panel, made up of independent legal experts72.

This panel will issue binding recommendations, which are to be made public, no later than

120 days after its establishment. In line with the transparency principle that applies to this

agreement, natural or legal persons with an interest in the subject matter residing or

established in the disputing Parties ‘territories are authorized to submit amicus curiae briefs

for the panel possible consideration in accordance with the rules of procedure. Comparable to

the previous treaty described above, arbitrators are encouraged to reach a decision by

consensus first, otherwise they should decide by majority of votes according to Article 323.

The list of arbitrators or panelists, as they are named in this agreement, is also closed and

composed by 30 individuals proposed by the Association Council, the EU and the Central

American Parties equitably, and at least 12 of them must be no nationals of the States that are

parties to the treaty. Again, there are not ISDSM included in this agreement, but it shows an

increasing willingness to accept alternative dispute settlement mechanisms that put more

emphasis in negotiation and amicable solutions. Furthermore, this is the only agreement 71 EU-Central America Association Agreement, Arts. 10 and 11. 72 Ibid., Arts. 311 to 318.

68

concluded by the EU and a grouping of LAS that incorporates provisions addressing the

increasing concern of lack of transparency and giving potential stakeholders at least a channel

to officially voice any concern regarding the application of the treaty. The Central American

countries that are part to the previous described agreement are: Costa Rica, El Salvador,

Guatemala, Honduras, Nicaragua, and Panama. The BITs in place between these countries

and EU MS are explicitly linked to this agreement.

Costa Rica has BITs signed and enforced with Czech Republic, France, Germany, the

Netherland and Spain. Those were entered into in the late 90’s except for the case of France,

which was signed in 1984 but enforced only until 1999. These agreements include amicable

negotiations up to 6 months as ISDSM as well as ISA, mostly under ICSID Rules, but in

some cases also under UNCITRAL Rules. With the exception of the BIT with Spain, these

cover any claims arising as a result of FDI. Also, in all cases it is included the “Fork in the

Road Clause”, except in the case of the BIT with France that requires the exhaustion of local

remedies first, but reserves the right to arbitration. Also, in the case of the agreement with

France, it is included the International Chamber of Commerce (ICC) as one of the possible

arbitral forums. It is interesting to highlight that even if Costa Rica subscribed the

Washington Convention in 1981 it was only ratified and enforced by its Parliament until

1993. Perhaps this explains why in the BIT negotiated with France in the early 80’s one of the

forums agreed was the ICC. There are 3 arbitration cases against Costa Rica registered in the

ICSID Data Base related to EU MS, 2 requested by German claimants in 2008 and 2009 and

one by a Spaniard in 2012 and all are already concluded73. For a more detailed overview see

Appendix 21.

El Salvador has BITs with the Belgian-Luxembourg Economic Union, Czech Republic,

Finland, France, Germany, the Netherlands, Spain and the United Kingdom and most of them

were negotiated and signed in the late 90’s, except in the case of France which was concluded

in 1978 and enforced in 1992. As in the case of Costa Rica, most of them include amicable

negotiations up to 3 or 6 months and ISA. With the exception of the BITs with Finland,

Germany and Spain, which cover only claims arising as of the signing of the respective

agreement, the rest of them cover claims related to any FDI. Interestingly, in the BIT agreed

with the Netherlands, El Salvador accepted to exhaust domestic remedies first, while for the

73 ICSID Case No. ARB/08/1, ICSID Case No ARB/09/20 and ICSID Case No. ARB/12/4.

69

Netherlands applies a “Fork in the Road Clause”. In both agreements with France and

Germany ISA is a direct option while in the other cases there is a “Fork in the Road Clause”

included. As well as in the case of agreements negotiated by the Netherlands with the

Caribbean States, the “aequo et bono” settlement is allowed. According to the ICSID Data

Base, there are 2 arbitration cases filed by EU MS against El Salvador, one by a Spanish

investor and the other by an Italian, the former one was filed in 2003 and the latter in 2013

and both are concluded74. For a more detailed overview see Appendix 22.

Guatemala has BITs with the Belgian-Luxembourg Economic Union, Czech Republic,

Finland, France, Germany, Italy, the Netherlands, Spain and Sweden. All of them, except the

one negotiated with France, which was signed in 1998, were concluded in the first years of

this century. In all cases amicable negotiations up to 3 or 6 months are permitted. In the case

of the agreement with Italy, if there are provisions agreed in specific agreements among the

parties those should be observed. Furthermore, for all cases general coverage of claims was

accepted, which means any claims connected to FDI, even made before the signing of the

respective BIT, could invoke the ISDSM agreed. With the exception of the BIT with France

that only allows recourse under the ICSID Rules, the other agreements also provide the option

to invoke the UNCITRAL Rules. Germany, the Netherlands and Sweden investors have only

recourse to arbitration, in the other cases there is a “Fork in the Road Clause”. In the case of

the BIT with the Belgian-Luxembourg Economic Union exceptionally a “Fork in the Road

Clause” is expressly included with respect to arbitration, since exhaustion of local remedies is

not required. Only one case is been filed against this State by EU MS, according to the ICSID

Data Base. The claimant was a Spanish investor; it was filed in 2009 and is already


Honduras has concluded BITs with France, Germany, the Netherlands, Spain and the United

Kingdom mostly during the second half of the 90’s. There are not significant differences in

these agreements with respect to the majority of the BITs negotiated by the other Central

American States. The only case that stands out is the agreement signed with Germany, which

provides for the use of conciliation under the ICSID Rules as long as both parties have signed

such Convention. There are 3 arbitration cases registered in the ICSID Data Base against

74 ICSID Case No. ARB/03/26 and ICSID Case No. ARB/13/18. 75 ICSID Case No. ARB/09/05.

70

Honduras, 2 filed by Italian investors and one by a Spaniard one and all of them are


Nicaragua maintains BITs with the following EU MS: Czech Republic, Denmark, France,

Germany, Italy, the Netherlands, Spain and the United Kingdom. No agreement present a

specific depart from the standard models already discussed. Perhaps the only additional

remark that is important to make is the fact that due to political reasons this is one of the LAS

that has strongly criticized the use of ISA as ISDSM and supported the denunciation of the

Washington Convention made by several South American States, even though it continues to

be bounded to such international arbitration forum. For more details see Appendix 25.

Panama has BITs concluded and entered into with Czech Republic, Finland, France,

Germany, Italy, the Netherlands, Spain, Sweden and the United Kingdom. Interestingly is the

fact that there is not a prevalent period of time in which such agreements where concluded

like in most other cases. On the contrary, just to give an example the agreement with France

was signed in 1982 while the agreements with Finland and Italy were concluded in 2009. In

spite of the timeframe differences in terms of subscriptions, most of them are quite similar. It

is provided room for amicable negotiations up to certain period of time (mostly 6 months)

first, as well as arbitration under ICSID or UNCITRAL Rules. Most of them include the

“Fork in the Road Clause” or direct access to ISA and the scope of claims that could be

brought to the ISDSM provided is general. Panama, according to the ICSID Data Base, has 2

arbitration cases filed by Dutch investors and both are pending77. For a more detailed

overview see Appendix 26.

In summary, Central American States are not particularly out of the scope in terms of the

provisions that are reflected in most BITs entered into with EU MS by the majority of the

LAS. With the exception of BITs negotiated with France earlier, the rest of them where

concluded in the last half of the 90’s or the first years of this century. Some of them reflect a

systematic policy in terms of which type of provisions were agreed upon depending on the

counter party, as is the case of the agreements negotiated with Germany and the Netherlands.

Also, most of the BITs concluded with this group of States seems to be more flexible in terms

of access to ISA when compare with the BITs concluded by the South American States. 76ICSID Case No. ARB/99/08, ICSID Case No. ARB/07/32,and ICSID Case No. ARB/09/4.77 ICSID Case No. ARB/15/14 and ICSID Case No. ARB/17/12.

71

C. Other Bilateral Investment Treaties entered into by European Union Member States and Latin American States

There are some LAS that are not bounded to any regional or bloc agreement with the EU and

its MS. Those are Bolivia, Cuba, Dominican Republic and Venezuela. However, all of them

have concluded BITs with EU MS; therefore it is necessary to examine these cases in order to

have a complete overview of all international agreements in place with investment and

ISDSM provisions between both regions.

In the case of Bolivia, it maintains enforced BITs with Italy, Romania and the United

Kingdom and terminated those entered into with Austria, the Belgian-Luxembourg Economic

Union, Denmark, France, Germany, the Netherlands, Spain and Sweden. These are similar to

the ones described, with amicable negotiations and ISA as ISDSM, “Fork in the Road Clause”

or not exhaustion of local remedies first. Only one arbitration case is registered against

Bolivia in the ICSID Data Base, the claimant was a Dutch company and is already


Perhaps Cuba is the most interesting case of this group. Despite the economical and

commercial sanctions that it has endured, Cuba maintains BITs with Austria, France,

Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Romania, Slovakia, Spain and

the United Kingdom that were negotiated and enforced during the 90’s. In most cases it is

included the alternative of amicable negotiations up to 6 months, the scope of claims allowed

vary between treaty only and general, in some of them there is a “Fork in the Road Clause”

but in general no exhaustion of local remedies is required, except in the case of the BIT with

Austria that required it up to first instance judgment. The only significant difference noted is

that in addition to the ICSID and UNCITRAL Rules, these agreements provide an additional

forum: the ICC in most cases. For a more detailed overview see Appendix 28.

Venezuela continues to have BITs in force, at least from a formal perspective, with the

Belgian-Luxembourg Economic Union, Czech Republic, Denmark, France, Germany, Italy,

Portugal, Spain, Sweden and the United Kingdom. Except in the case of the BIT with France,

which was entered to in 2001, the rest where concluded in the late 90’s. Most of them allow

bringing claims against the State only related to FDI that took place after the signing of the

78 ICSID Case No. ARB/07/28.

72

respective agreement. Also, all of them include the ICSID as one of the forums. Since

Venezuela denounced the Washington Convention in January 2012 the only remaining

possibility is arbitration under UNCITRAL Rules. As in the case mentioned for Ecuador,

which also denounced this Convention, the BIT with France only provides the ICSID

arbitration option. Therefore, French investors only could reach out to the domestic courts or

the SSDS mechanisms provided in the agreement. Also, the “Fork in the Road Clause” is

predominant, although in the agreement with Italy it is provided the exhaustion of local

remedies up to 18 months and as long as no judgment have been issued. As expected, due to

the nationalization process of certain sectors implemented by the regime controlling the

Venezuelan government as of 1999, this is one of the Latin American States that are subjected

to a significant number of arbitration cases. To this date cases have been brought to the ICSID

Forum by EU MS investors and only 8 are concluded. Additional details on these cases could

be consulted in Appendix D. For a more detailed overview n the BITs herein described see

Annex 29.

The Dominican Republic has a special status of cooperation with CARIFORUM, but does not

have the status of member; therefore its review is made separately from the TIP and BITs

entered into by CARIFORUM and its MS. It has entered into BITs with the following EU

MS: Finland, France, Italy, the Netherlands and Spain. As in most previous cases, ISDSM

included in those are amicable negotiations up to 6 months and ISA. With the exception of

the agreement negotiated with Spain that provide for treaty claims and arbitration under

UNCITRAL rules only, the coverage of potential claims in the rest of the cases is general and

the forums specifically provided for are ICSID and arbitration under UNCITRAL Rules.

With the exception of the BIT with France, the remaining agreements contain the “Fork in the

Road Clause”. For a more detailed overview see Annex 30.

Bolivia and Venezuela, in terms of diplomatic and international relationships, continue to be

perceived as outcasts but have decided to preserve some of the BITs concluded with EU MS.

Even though, one should assume that under the current conditions it is likely that they could

withdraw of their obligations under these BITs at any moment, as it have being the case with

respect to other international agreements they used to be part of. Cuba is in a category by its

own, but due to the opening of its market in recent years one could expect some cooperation

73

in dealing with ISDSM. The Dominican Republic is in a similar situation than the Central

American and Caribbean States.

The specific regulatory framework on ISDSM that exists between the EU and its MS and the

LAS reflects a divergence with respect to the EU current policy, and also some level of

divergence with respect to a few LAS’s specific policies. There is no significant evolution in

terms of incorporating measures to counter balance the power exercised by the international

arbitration system that have grown hand in hand with the intensification of trade and FDI. The

historical suspicion that LAS have always showed with respect to the regulation of their

external relationships with developed States will undoubtedly continues to represent a

challenge in terms of negotiating any adjustment to the existing prevailing framework.

However, as exhibit in the instruments herein reviewed, this does not means that in the face of

a balanced proposal intended to reduce the excesses or fill in the deficiencies presented by the

current prevailing system, LAS will not be willing to give it an opportunity.

Although we have been pointing out in the previous chapters some of the drawbacks of the

actual prevailing dispute settlement mechanism between investors and States, it is now

necessary in the next chapter to conduct a detailed review of such deficiencies, as well as the

alternative EU proposal, to determine whether the latter could redress the former and

consequently could have some level of acceptance by the LAS eventually faced by an

encouragement from the EU to shift in that direction.

74

Chapter IV The need for a new approach: The European Multilateral Investment Court Proposal Without pretending to embark in a detailed analysis on the political reasons that propelled the

most recent EU change of policy in terms of ISDSM, as reflected in the TIPs concluded with

Canada and Vietnam, the draft of the TTIP of September 2014 and several position papers

emanating from EU institutions, in this chapter it is relevant to keep in mind the context in

which this has happened. Interestingly, the fervor against the use of ISA as the prevalent

ISDSM did not gained the same level of intensity in all EU MS. On the contrary, this in one

of the many examples where one could appreciate the divergent positions adopted by EU MS

on relevant policy issues. Most authors agree that the key actors in this debate have been Non

Governmental Organizations (NGOs) and politicians from Germany, the Netherlands, France

and Austria, in disagreement with the now on hold TTIP negotiations between the EU and the

US following the change of the latter’s Administration. This has been seen as a surprise,

particularly in the case of Germany where the Federal Council expressly rejected the

inclusion of a specific ISA mechanism in the TTIP, since those MS have extensively

concluded BITs including such mechanism. The main arguments of these groups were that the

current ISA system lacks of fairness and impartially and that combined in this specific case

with the US economic, commercial and political power could help to force EU standards and

ultimately affect European consumers and empower foreign companies to prevent legitimate

EU regulations via ISA79. This argument is not new at all, in fact is a reformulated version of

the messages used by the anti-globalization movement that surged in the 90’s in connection

with the trade policies promoted by the WTO and the anti-NAFTA debate brought by the US

and the Canadian public in connection with the ISA mechanism included in that agreement.

As we know, the pressure exerted by these groups led the EC to a suspension of negotiations

of the TTIP and public consultations, including the controversial ISA subject, in 2014 and

2016. Additionally, EU Commissar Malmström has repeatedly termed the system “old-

fashioned” and “far from perfect” raising questions about fairness and impartiality in

balancing investors and States interests and insisting that the system is in a clear need of an

79 Reinisch, The EU and ISDS, 8 and EFILA, Paper regarding the ICS, 10 and 11.

75

overhaul, citing a need to evaluate whether ad hoc arbitration is out of touch with the current

public policy landscape, particularly given the “high-profile” uses of ISA in cases that have

implications for social and environmental issues80. Not to mention that the recent CJEU

decision in the case 2/15, already mentioned in Chapter II, could be seen as an empowering

tool for these groups at the local level since now there is no doubt that the EU institutions will

have to negotiate certain provisions, including those regarding ISDSM, together with MS.

ISA has been characterized, by its opponents as a special right for large transnational

companies to circumvent domestic courts. Ultimately, this discussion has forced the EU

institutions to re consider their position and adopt a different approach.

Having in mind the scenario above described, this section is devoted to a more conceptual

analysis on the apparent deficiencies signaled to the ISA as the primary ISDSM used today to

solve dispute arising between foreign investors and host States, as well as a more detailed

description of the alternative EU proposal to solve such shortcomings: the Multilateral

Investment Court. Afterwards, a review and analysis of the arguments challenging the

legitimacy of such proposal will be undertaken.

A. Overview of the main areas of criticism of the Investor-State Arbitration

system During the past few years there has been an increasing discussion on whether the prevalent

ISA allows an adequate balance of the private and public interests involved in investor-State

disputes81. There are supporters and detractors to the current status quo on this subject, while

also an increasing number of authors are proposing some progressive measures to improve

and keep what is in place arguing that other known ISDSM, as diplomatic negotiations,

SSDS, or domestic forums, will not guaranty a much better balance and showing some

concerns in terms of the legitimacy of the new proposal led by the EU, having as a

background a very fragmented regulatory system. The main areas of concern are discussed

below.

80 Investment, EU's Malmström Court Pitch.81 According to Miller and Hicks it is important to keep in mind that based on their empirical review of available records on disputes under existing BITs over 90% of BITs have operated without a single investor claim of a treaty breach, increase in disputes in the last 10 years are proportional to the increase of outward foreign capital stock, most disputes related to sectors characterized by high levels of State intervention and about a third of the cases are settled in advance of a ruling. Miller, Investor-State Dispute Settlement, 6.

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1. Access to arbitration Access to ISA is traditionally studied in terms of limitations. Authors agree that the main

potential limitations regarding ISA are related to subject (ratione materiai), time (ratione

temporis) claimant (ratione personae) and forum. With respect to the first limitation, most

agreements contain broad descriptions as “disputes” or “any disputes”, but a few also require

that the violation of the treaty must have resulted in damages (i.e. all BITs entered into by

Mexico with EU MS) and some limit the scope of the disputes to those obligations created

specifically by the treaty. The ratione temporis is usually reflected by two approaches:

cooling-off periods and statutes of limitation. Today, the vast majority of investment treaties

require that the claimant respect a preliminary period before filing an arbitration request. In

most cases this cooling-off period is included as a non-confrontational dispute mechanism

(i.e. amicable negotiations up to certain period of time), but also there are cases that provide

for specific periods. In the other hand, statutes of limitation, while present in some investment

agreements, represented only 7%, according to an Organization for Economic Co-operation

and Development’s (OECD) Study published in 2010. This modality of provision was first

introduced in the NAFTA. Furthermore, nor the Washington Convention and the subsequent

ICSID Rules neither the UNICITRAL Rules refers to statutes of limitation in connection with

the possibility to request arbitration as provided in most BITs. In terms of ratione personae

there is a plethora of related issues that occupy authors, as for instance the rules to determine

whether a foreign individual investor or a company registered in the host State but controlled

to certain extend by such foreign individual are entitled to request arbitration. Even though, in

what is relevant for our analysis, in the majority of BITs the investor is the only party entitled

to initiate arbitration. Finally, with respect to “forum” access, today most investment

agreements refers to arbitration at least under ICSID or UNCITRAL Rules and give investors

unilateral choice in terms of forum, among the provided multiple alternatives, and the less

require both parties agreement82.

Critics of the current ISA system often point out, in connection with “access”, as the main

imbalances the following: (i) the system is a one-way process of public law claims in which

only one class of parties (investors) triggers use of the system by bringing claims, and only

the other class (States) is liable to pay awards for violating the treaty, thus the ability to bring

82 Pohl, Dispute Settlement Provisions, 14 to 23.

77

claims is non-reciprocal83; (ii) the majority of treaties that include ISA do not include statutes

of limitation to request arbitration, as it happens in domestic judicial systems regarding any

type of claims; and (iii) national investors do not enjoy similar alternatives to bring claims

against the State and, on the contrary, they would have to bring their claims to the

corresponding domestic courts, as provided by the applicable domestic legal system.

According to Hindelang an alternative to reduce the disadvantageous perception in the first

case could be to grant States the same right to arbitration access84. With respect to the second

argument, it seems that BITs negotiated during the first years of this century have more

consistently included statutes of limitation (i.e. the BITs negotiated by Colombia) and

eventually current BIT’s could be amendment to include them. The final argument is a more

complex condition that has to be addressed by each State by creating internal conditions for

its national investors that are fair when compared to those granted to foreign investors.

2. Selection/Designation of Arbitrators

One of the key elements of ISA is that both disputing parties, the claimant-investor and the

host State, play an important role in the selection of the arbitral tribunal, which give them a

considerable control over the process. Given that investor complaints relate to the conduct of

sovereign States, taking these disputes out of the domestic sphere of the State concerned

provides aggrieved investors with an important guarantee that their claims will be adjudicated

in an independent and impartial manner. Most BITs and TIPs that contain rules on ISA refer

to the arbitration rules of the ICSID or the UNCITRAL, which provide three ad-hoc

arbitrators, two party-appointed; the third appointed in consensus or, in lieu thereof, by a third

person or institution. Today these rules also include Codes of Conduct intended to guaranty

that arbitrators will comply with basic rules in terms of qualification, transparency, disclosure

and impartiality, as well as mechanisms to challenge the appointment of individuals that do

not comply with such requirements. In addition, most ISA clauses included in BITs relies

alternatively on party appointed arbitrators in a very similar fashion as the one above

described, in some cases only assigning the role of third designating party, in case of

disagreement, to a reputable and impartial institution.

83 Singh, Rethinking Bilateral Investment Treaties, 47. 84 Kuijper, ISDS in the EU, 103.

78

Most objections related to this aspect of ISA focus on (i) the ample power granted to

arbitrators due that substantive treaty standards are formulated in vague and overly broad

terms, resulting in the grant of excessive discretion to arbitrators called to interpret and apply

those standards85; (ii) the fact that some practitioners act both as counsel and arbitrator in

different proceedings, with the possibility of ensuing conflicts of interest or so-called issue

conflicts86; and (iii) the perceived lack of minimal requirements to which arbitrators should be

bound87. Also, it is frequently mentioned that (iv) impartiality could be compromised due to

the fact that such individuals are designated by the parties and therefore could tend to favor

them88 and as compared to tenured judges holding public office, arbitrators would have an

insufficient relationship to the States whose regulations they are called to scrutinize89.

As counter arguments some authors advert that code of conducts and closed lists of potential

arbitrators to be selected could solve most of such concerns, that reputable arbitration rules in

force already provide such codes and those included in the most recent generation of treaties

do not portray different features than the existing in those codes of conducts. Furthermore, it

is argued that the crucial factor for appointment is not the possible or real bias in favor of a

party’s position, but is rather the reputation for impartial and independent judgment that earns

appointments. A reputation, in other words, is too fragile to risk by biased decision-making

and therefore works as a control that ensures the arbitrators’ independence and impartiality90.

85 Kauffmann-Kohler, Reform of investor-State arbitration, 10 and 11. 86 Thomas Buergenthal, a judge at the International Court of Justice, has criticized the dual arbitrator- counsel role. He considers that the dual role raises questions of due process and should be eliminated in order to ensure that an arbitrator will not be tempted, consciously or unconsciously, to seek to obtain a result in an arbitral decision that might advance the interests of a client in a case he or she is handling as counsel. Pohl, Dispute Settlement Provisions, 49 and 50. 87 According to Singh, the industry is made up of cross-connected players who affiliate around prominent centers of arbitration such as the International Chamber of Commerce in Paris, usually name each other for appointments and may exclude those who are not accepted within the industry’s networks. Singh, Rethinking Bilateral Investment Treaties, 48. 88 Because they are remunerated for their services, arbitrators would have a vested interest in perpetuating the regime. As investment arbitrations may only be initiated by investors

arbitrators would depend on these for future appointments and,

ultimately, for work. Arbitrators would in consequence be inclined to cater to the investors’ interests. Kauffmann-Kohler, Reform of investor-State arbitration, 12. However, according to Rosert, by the end of 2012, claimants prevailed in 32% of the concluded arbitration cases, while 41% were rendered in favour of the State and 26% were settled. Roset, The Stakes are High, 3. 89 To elaborate, security of tenure is one of the core safeguards of adjudicative independence in public law. By removing it, as investment treaties do, States have returned to a model of adjudicative decision-making that is directly dependent on the discretion of executive officials in powerful governments and, remarkably, in international business organizations and the arbitration industry. Singh, Rethinking Bilateral Investment Treaties, 47. In addition, it is necessary to take into consideration that, for example, the ICSID arbitration community is dominated by a handful of highly prominent and influential individuals. Arbitrators tend to be Europeans or Americans and a small minority of individuals receives most of the appointments. Indeed, Ginsburg (2003) argues that professional barriers to entry -notably the requirements of legal experience- keep the arbitration community very closed. Strezhnev, Detecting Bias in International Investment Arbitration, 8 and 9. 90 Brower, Trait or Boon, 492.

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3. Costs

Originally, the ISA was designed to ensure a neutral forum that would offer investors a fair,

cheap and flexible process for settling investment disputes. However, the high costs of

arbitrations can be a concern for both States and investors. Some authors are of the opinion

that monetary awards issued by arbitral tribunals, but also legal fees and related costs incurred

by parties in investment proceedings, would often be excessive. According to the Report on

Investor-State Dispute Settlement issued by the UNCTAD in 2016, not including interest,

legal and arbitration costs, “on average, successful claimants were awarded about 40% of the

amounts they claimed. In cases decided in favor of the investor, the average amount claimed

was $1.4 billion and the median $100 million. The average amount awarded was $545 million

and the median $20 million”91. As a consequence, they argue, States would be constrained to

spend significant amounts of money to defend legitimate public policies. From the State

perspective, even if a government ends up winning the case, the tribunal may refrain from

ordering claimant investors to pay the respondent’s costs, leaving the average US$8 million

spent on lawyers and arbitrators as a significant burden on public finances92. It is important to

take into consideration that, according to the OECD Research on this subject, 82% of the

costs are related to legal counsels and experts, 16% correspond to the arbitrator’s fees and 2%

to institutional costs93. An additional aspect related to costs is the lack of guidance in terms of

allocation in most BITs and the fact that the cost allocation rules from the ICSID and

UNCITRAL, the most prominent arbitration institutions, differs. While under UNCITRAL

Rules the unsuccessful party affords all costs, the ICSID Rules give a limited discretion in

allocating cost to the arbitral tribunal.

Miller y Hicks claim that according to their research States win the majority of arbitration

cases and in cases won by investors usually arbitrators grant just a fraction of the amounts

claimed94. But also recognize that arbitration costs could be significantly high and those totals

cost are difficult to predict because the arbitration system has not established clear rules of

allocation costs.

91 UNCTAD, Investor-State Dispute Settlement 2016, 5. 92 Singh, Rethinking Bilateral Investment Treaties, 24 and IISD, The Stakes are High, 8. 93 The OECD (2012) suggested that high costs might be due to the “increased role of large law firms that mobilise teams of lawyers using expensive litigation techniques borrowed from corporate litigation practices”. Roset, The Stakes are High, 9. 94 Two empirical reviews conducted on the subject showed that the average damages award granted by arbitrator was three and two cents respectively for every dollar of the amount originally claimed. Miller, Investor-State Dispute Settlement, 10.

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4. Remedies Very few BITs specify what arbitral tribunals might award. According to an OECD Study of

2010 provisions on the possible content of awards appeared only in treaties negotiated as of

1988 but still remain rare95. Neither the ICSID nor the UNCITRAL Rules include provision

on remedies. The few agreements that include such kind of provisions often list the following

contents: declaratory awards, compensation, interests, order of specific performance such

restitution in kind or a restitution of property and allocation of costs and fees. In some cases,

it is also expressly included prohibitions to award monetary or punitive damages or

compensation that excess guidelines provided in the treaty.

One of the most controversial aspects signaled by ISA opponents in connection with remedies

is the lack of guidelines on terms of payment of interests since this component may be as

significant as the principal claim itself. Some BITs stipulate payment of appropriate interest

or interest at fair and equitable rate but it is largely at the arbitration tribunal discretion to

grant such component of the award. An additional argument used by detractors of ISA is the

ample margin of discretion arbitrators would be entitled to when awarding remedies in the

absent of precise and clear rules. According to the OECD Report on Investor State Dispute

Settlement of 2012, arbitration tribunals have frequently awarded damages as compensation

by reference to the rules of State responsibility under general international law. As noted by

Irmgard Marboe, however, the rules on State responsibility were developed in inter-State

relationships, thus between sovereign States on the basis of equality under international law.

A different kind of relationship exists between a State and a foreign investor, a private law

subject. Marboe suggests it is worth considering whether all aspects of the rules on State

responsibility are appropriate to address the wrongful conduct of States in this particular

relationship96.

Thus, as in the previous case, the introduction of more specific rules on the subject, an

attainable goal taking into consideration that more recent BITs include such level of details

with respect to remedies, could greatly benefit both investors and host States.

95 For example, in the BITs reviewed in Chapter II such provision appears only in the agreement concluded by Mexico and Colombia. 96 Pohl, Dispute Settlement Provisions, 26.

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5. Forum shopping

Forum shopping in the context of ISA refers to the possibility by the disputing parties to have

the dispute resolved by what they believe is the most favorable forum for their interests,

whereas domestic legal systems generally limit access to forums. In practice, most BITs and

TIPs offer investors several forum options, including the alternative to seek recourse under

domestic courts. The argument against ISA related to forum shopping is basically the

perceived unfairness when comparing with the options granted to national investors. While

such forum shopping clauses are desirable for some States wishing to attract more FDI,

recently expressed concerns about ensuring a level playing field between domestic and

foreign investors may require additional or different policy rationales97.

Today many investment agreements, while tend to lack of an adequate level of detail on this

subject, contain restrictions in the form of the so-called “Fork in the Road” clauses or formal

surrender of rights to other possible forums, in order for the investor to be able to initiate

proceedings in one of the forums offered, but authors in general agree that setting more

precise rules for procedures in treaties limits the so-called forum shopping.

6. Consistency of Decisions One of the main goals of any adjudicatory body in theory should be to provide the parties

subjected to its jurisdiction security and predictability. From a practical point of view, this is

usually achieved by resolving the same or similar legal or factual questions in the same or

similar way in successive cases. However, in the context of ISA the multiplication of BITs

and TIPs with different provisions on the subject has raised the risk of multiple and

conflicting awards, as the same dispute can lead to awards under different treaty regimes, as

well as under different contracts.

Those who critic the prevalent ISA system point out that a reasonable degree of consistency is

also important to the legitimacy and perceived fairness of a dispute resolution system. If

similar cases are not resolved in similar ways, public confidence in the system is weakened.

Legitimacy can be undermined, in particular, by suspicions that inconsistencies may not be

random as between parties, States and contexts98.

97 Pohl, Dispute Settlement Provisions, 53. 98 Ibid., 58.

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On the other hand, ISA system’s supporters advert that consistency is a question of degree

and therefore, it is necessary to consider the cost versus the desirable degree of consistency to

be attained. Additionally, they point out that inconsistency in decision making in ISA is, first

and foremost, the result of the current state of international investment law, atomized into

over 3,000 investment instruments and dozens of arbitration rules. It is true that arbitral

awards are rendered on the basis of similarly worded instruments, but those are legally

speaking hardly comparable. Therefore, it appears to be more appropriate to speak of

fragmentation instead of inconsistency of ISA decisions99. Not to mention, it is supposed that

an adjudicatory body primary task is to decide the dispute presented to it in accordance with

the governing rules by using the means of interpretation prescribed for. Ultimately, in their

opinion, referring to arbitrarily chosen previous decisions rendered on treaties different to the

one under consideration does not spare an arbitration tribunal from interpreting a treaty in

accordance with the primary means of interpretation. Furthermore, they are of the opinion

that any kind of precedent system applied to ISA would be a deviation of the interpretation

rules that ultimately will shift the power from investors and States to a third party.

There are already in place several tools to promote consistency in connection with ISA. One

is the publication of decisions, which have increased exponentially in the last few years, due

to the role played by arbitration institutions that compile and publish such information. The

most recent BITs and TIPs also include clauses prescribing publication subject to certain rules

(i.e. confidentiality). Furthermore, there is open debate in several fronts with regards to the

creation of permanent review bodies, despite arguments on potential undesirable effects and

some limited review bodies in place. Although an appellate mechanism would clearly

prolong proceedings and lead to higher litigation costs, it is often asserted that such a

mechanism would foster the uniformity and predictability of the outcomes of investment.

7. Transparency

In the context of ISA, this aspect refers to the extent to which the public may be alerted to,

gain information about and perhaps participate in proceedings organize to adjudicate an

investor claim100 . Current arbitration rules included in most BITs provide for limited

transparency. In fact, under the existing rules, hearings are treated as entirely private matters

99Kuijper, ISDS in the EU, 43.100 Coe, Transparency in the Resolution of Investor-State Disputes, 1339.

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and publication of the resulting award depends on the decision of one or both parties. The

argument to support this, borrowed from the traditional commercial arbitration, is that

confidentiality serves to expedite arbitrations, as well as to protect the confidentiality of

information and reputation. With the exception of the ICSID, whose Secretariat register all

cases brought to this forum, there is not publication of filed cases in any other arbitration

forum. There is no general binding rule for the publication of awards and they remain

generally confidential unless the parties to the dispute agree to disclose them101. Since the

principle of public hearings in judicial proceedings is embodied in national laws, the approach

of investment arbitration on issues of public interest has engendered pressure from the public

and interest groups to allow them access not only to the final arbitral award, but also to

proceedings similar to those, which they would have, in national adjudication102.

Those who support ISA are quick to argue that the ICSID, perhaps the most relevant

arbitration institution today, has been not only improving its own practice to records cases,

publishing awards and giving access to third parties to arbitration related information, but also

encouraging other participants to increase the level of transparency associated to ISA. Today

all ICSID cases are publicly registered with basic information about the parties and claims. A

large majority of ICSID awards and annulment committee decisions are available on the

ICSID homepage as well as on other publicly accessible Internet sites103. As well, it is

mentioned that the most recent generation of BITs and TIPs (i.e. NAFTA, CAFTA, etc.)

already allow non-disputing parties to make oral and written submissions to arbitral tribunals

on issues of interpretation. But the most significant effort in this line is without any doubt the

recent adoption of the Mauritius Convention on 10 December 2014, which will be entering

into force next 18 October 2017. This instrument provides that parties to investment treaties

concluded before 01 April 2014 could express their consent to apply the UNCITRAL Rules

on Transparency in Treaty-based ISA. Such rules basically require for making publicly

available information on investor-State arbitration arising under BITs and TIPs when the

parties to the relevant agreement agree to their application.

As in the case of consistency, transparency is a matter of degree. Participants should take into

consideration its own interests as well as those of their stakeholders in order to determine the 101 OCDE (2005), Transparency and Third Part Participation, 4. 102 Ibid. and Kauffmann-Kohler, Reform of investor-State Arbitration, 14. 103Reinisch, The EU and ISDS, 21.

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level of transparency that is adequate to respond to public interest concerns and the reasonable

confidentiality to protect legitimate private interests.

B. Analysis of the Multilateral Investment Court Proposal The Investment Court introduced by the EU will be, in theory, an standing body of jurists,

which would be complemented by an appellate instance, hearing appeals on error of law, but

also able to review factual findings for manifest error of fact in connection with investor-

States disputes. This initiative is a break through that set aside in the most radical fashion the

ISA system and according to EU authorities it “should provide investors and governments

with one coherent set of rules, including an effective dispute settlement and enforcement

mechanism, which is legitimate and accepted by citizens, business and policy-makers”104.

The EU principal arguments to justify this approach are the following: (i) the way in which

investment disputes are currently adjudicated has become subject to increasing criticism; (ii)

dispute resolution mechanisms for investment disputes have been based on mechanisms

stemming from the field of commercial arbitration, while the vast majority of investor-State

dispute claims are about the correct interpretation and application of international agreements

under public international law that regulate obligations of governments towards a multitude of

foreign investors; (iii) allowing the disputing parties to individually choose their adjudicators

in a particular case create doubts about the objectivity and the systemic impacts of the current

approach to ISA, (iv) current remuneration of adjudicators by the disputing parties raises

concerns about the risk that financial incentives may have an impact on the decision making

processes; (v) the ad hoc nature of the current system of different ISA tribunals brings

problematic systemic implications because is producing conflicting rulings in identical o very

similar treaty provisions which is problematic when long-term treaty obligations of States are

at stake; (vi) existing international instruments in the field of investment arbitration only

provide for very limited grounds of “appeal” of arbitral awards and this means that such

decisions can be legally wrong but cannot be corrected; and (vii) complementing the

investment dispute resolution system with the checks and balances known from other judicial

systems in the field of public or international law would improve the legal quality of

104 EC, WEF 2017, 1, EFILA, Paper regarding the ICS, 3, Titi, The EU Proposal for an IIC, 4 and Kauffmann-Kohler, Reform of investor-State arbitration, 34.

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decisions105. EU authorities are of the opinion that, despite the increasing efforts to improve

the current investment regulation framework in force by one-on-one re negotiations or by

means of not binding recommendations emanating from arbitration institutions, the more

effective form to make a quantum leap would be through a multilateral agreement providing

for resolution of investment disputes in a way that the concerns, as above summarized, are

taking care of.

But what the proposal actually consists of. The following is an attempt to summarize the

main aspects that distinguish such proposition, based on the literature and negotiated or

concluded legal instruments that contain in whole or in part aspects of this initiative.

The first aspect that comes into consideration is the inclusion of alternative dispute settlement

mechanisms in the form of consultation106; within a period as of the submission of the request,

but also subjected to statutes of limitation up to 2 or 3 years in all agreements as of the

moment the potential claimant was aware of the breach of an obligation by the counter party;

and mediation107, in the TTIP Draft and the EU-Vietnam FTA according to the rules as agreed

by the parties in their respective Annexes 1, while in the CETA according to the rules agreed

by the parties at that time or, if available, under the rules of the Committee on Services and

Investments created by the treaty, if the parties agree.

Then, the EU proposal is centered on the establishment of a tribunal of first instance108 and an

appellate tribunal109. The first instance tribunal is composed of permanent members elected

by a join committee110. The number of members under the TTIP Draft and both the EU-

Vietnam FTA and the CETA could be adjusted111. A third of the members will be nationals

of the EU MS, other third of nationals from the respective counter party State and the

105 EC, WEF 2017, 2 and 3 and EFILA, Paper regarding the ICS, 8 and 9. 106 TTIP Draft Sep. 2015, Section 3, Sub Section 2, Art. 4; Vietnam FTA, Section 3, Sub Section 2, Articles 4 and 6 and CETA, Chapter 8, Section F, Article 8.19. 107 TTIP Draft Sep. 2015, Section 3, Sub Section 2, Art. 3; Vietnam FTA, Section 3, Sub Section 2, Article 5 and Annex 1; CETA, Chapter 8, Section F, Article 8.20. 108 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(1); CETA, Chapter 8, Section F, Art. 8.23. 109 TTIP Draft Sep. 2015, Section 3, Sub Section 4, Art. 10; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 13; CETA, Chapter 8, Section F, Art. 8.28. 110 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(2); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(2); CETA, Chapter 8, Section F, Art. 8.27.2. 111 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(3); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(3); CETA, Chapter 8, Section F, Art. 8.27.3.

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remaining nationals from a third party State112 and they will be appointed for fixed terms

renewable up to one additional term113. Cases will be heard in divisions of three members

chaired by a third State national114 appointed by the President of the court and will be

assigned in a rotating, random basis115, but in the TTIP Draft herein mentioned and in the

CETA it is also provided the alternative for the claimant to request a single member to heard

the case116. Members will be paid a monthly retainer fee117 covered by both parties to the

agreement118, in the case of the EU-Vietnam FTA the distribution of such costs will take into

consideration the level of development of the parties, while in the other agreements it is

provided an equal sharing. Interestingly is that in order to determine such fees in the TTIP

Draft it was proposed to use as a referent the retainer fee for the WTO Appellate Body’s

members, while in the other two instruments it will be used the guidelines as provided in the

ICSID Rules. Even though, it is provided in all cases that in the future such form of

remuneration could be converted in a permanent salary119. The claimants will be allowed to

submit claims under the ICSID Rules, the ICSID Additional Facility Rules, the UNCITRAL

Arbitration Rules or any other rules agreed by the disputing parties120 and members of the

tribunals will have to render awards within 18 months, in the case of the TTIP Draft and the

EU-Vietnam FTA, and 24 months, in the case of the CETA, as of the date of submission of

the claim121. Extensions will be only permitted if the deadline cannot be respected and in such

cases an explanation of the impossibility must be given to the parties. With respect to the

Permanent Appeal Tribunal, it is provided that it will have jurisdiction over awards issued by

112 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(2); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(2); CETA, Chapter 8, Section F, Art. 8.27.2. 113 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(5); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(5); CETA, Chapter 8, Section F, Art. 8.27.5. 114 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(6); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(6); CETA, Chapter 8, Section F, Art. 8.27.6. 115 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(7); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(7); CETA, Chapter 8, Section F, Art. 8.27.7. 116 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(9); CETA, Chapter 8, Section F, Art. 8.23.5. 117 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(12); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(14); CETA, Chapter 8, Section F, Art. 8.27.12. 118 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(13); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12(15); CETA, Chapter 8, Section F, Art. 8.27.13. 119 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 9(15); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 7(2); CETA, Chapter 8, Section F, Art. 8.23.2. 120 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 6; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 7(2); CETA, Chapter 8, Section F, Art. 8.23.2. 121 TTIP Draft Sep. 2015, Section 3, Sub Section 5, Art. 28(5); EU-Vietnam FTA, Section 3, Sub-Section 5, Art. 27(6); CETA, Chapter 8, Section F, Art. 8.39.7.

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the first instance tribunal122. In the case of the TTIP Draft and the EU-Vietnam FTA it is

provided a fix number of 6 members, 2 members from the States of the respective parties to

the agreement each and 2 members from third party States, while in the CETA the parties will

decide the number of members and, in all cases, the respective join committees will appoint

such individuals as well for fixed terms renewable for one additional term only. Appeals will

also be heard by division of 3 members and base on the provisions contained in Article 52 of

the Washington Convention or for errors in the application or interpretation of applicable law,

as well as for manifest errors in the establishment of the facts, including the establishment of

relevant domestic law123. The Permanent Appeal Tribunal is entitled to uphold, modify or

reverse an award and refers back an award for adjustment124.

In connection with transparency related issues, these instruments include the following

provisions: (i) the tribunals will be subject to transparency requirements based on the

UNCITRAL Rules125, but in addition pleadings to make public any information regarding the

disputes available will be subject to confidentiality or protected information rules126; (ii) in

the CETA is it provided expressly that hearings should be open to the public127, while in the

TTIP Draft is allowed to intervening parties attend hearings; and but the intervention of third

parties is limited to supporting in whole or in part the award sought by one of the disputing

parties128.

On the subject of eligibility of members to the tribunals herein above referred, it is requested

that individuals appointed to, both the tribunals and the appellation tribunals, shall possess the

qualifications required in their respective States for appointment to judicial office, or be

jurists of recognized competence. They shall have demonstrated expertise in public

international law and it is desirable that they have expertise in resolution of disputes arising

122 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 10; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 13(1); CETA, Chapter 8, Section F, Art. 8.28.1. 123 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 10(8); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 28(1); CETA, Chapter 8, Section F, Art. 8.28.2. 124 TTIP Draft Sep. 2015, Section 3, Sub Section 5, Art. 30; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 29; CETA, Chapter 8, Section F, Art. 8.28.7(b). 125 TTIP Draft Sep. 2015, Section 3, Sub Section 5, Art. 18; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 20 and Annex II; CETA, Chapter 8, Section F, Art. 8.36. 126 TTIP Draft Sep. 2015, Section 3, Sub Section 5, Art. 18(4); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 20(4); CETA, Chapter 8, Section F, Art. 8.38. 127 CETA, Chapter 8, Section F, Art. 8.36.5. 128 TTIP Draft Sep. 2015, Section 3, Sub Section 5, Art. 23.

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under international investment or international trade agreements129. Moreover, they will be

bound to strict conflict of interest rules and Code of Conducts for both levels130. Their

appointments could be challenged in case of conflicts of interests and they could, as well, be

removed from their seats if do not comply with their duties. Furthermore members of these

tribunals must discontinue any counsel work upon appointment.

Other relevant topic addressed is that in the TTIP Draft and the EU-Vietnam FTA both

tribunals, of first instance and appeal, are allowed to create their own working procedures131,

while in the CETA the first instance tribunal will have the same privilege but in the case of

the appeal tribunal it is provided that the Join Committee created by the treaty is the body

entitled to set its administrative and organizational rules132. In addition, it is provided that the

tribunals could order interim measures133 and in the EU-Vietnam FTA and the CETA there is

also included clear guidelines on how the tribunals should grant awards134. For enforcement

purposes, awards shall be deemed to be arbitral award within the meaning of the New York

and the Washington Conventions135. These agreements consider the possibility of evolve into

the future Multilateral Investment Court, which from a practical point of view means that

such institution will have jurisdiction to replace these bilateral bodies136.

As one could easily infer, from the previous run-through, the EU Investment Court is a “work

in progress”. Many of its features have been taken from other well-known international court

systems, but at the same time it preserves many elements that are distinctive of the ISA as we

known it today. Furthermore, the proposal is complemented by reference to certain

substantive and procedural guidelines of well-established ISA rules, as are the ICSID the

UNCITRAL Rules. As conceived in the instruments reviewed, it also requires the assistance

129 TTIP Draft Sep. 2015, Section 3, Sub Section 4, Art. 9; EU-Vietnam FTA, Section 3, Sub-Section 4, Article 12(4); CETA, Chapter 8, Section F, Art. 8.27.4. 130 TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 11; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 14 and Annex II; CETA, Chapter 8, Section F, Art. 8.44.2. 131 TTIP Draft Sep. 2015, Section 3, Sub Section 4, Art. 9(10) and Art. 10(10); EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 12 (10) and Art. 13(10). 132 CETA, Chapter 8, Section F, Art. 8.27.10 and 8.27.7.133TTIP Draft Sep. 2015, Section 3, Sub Section 5, Art. 19; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 21; CETA, Chapter 8, Section F, Article 8.34.134EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 31; CETA, Chapter 8, Section F, Art. 8.39.135TTIP Draft Sep. 2015, Section 3, Sub Section 3, Art. 7; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 31(3); CETA, Chapter 8, Section F, Art. 8.41.5.136TTIP Draft Sep. 2015, Section 3, Sub Section 4, Art. 12; EU-Vietnam FTA, Section 3, Sub-Section 4, Art. 15; CETA, Chapter 8, Section F, Art. 8.29.

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of administrative bodies created by reputable arbitration institutions to be able to operate (i.e.

the ICSID Secretariat).

But these hybrid adjudicative bodies have been only created within the framework of bilateral

relationships yet. Thus the question that thereupon arises is whether a multilateral agreement

to shift from ISA to a Multilateral Investment Court, as the EU has expressly made known

would be its goal, could be reachable. This is a question that should be undoubtedly answered

having in mind whether the EU or any other grouping of States and or regional groups of

States have the required legitimacy to advance such agreement and enroll a significant

number of participants, given the fragmented regulatory framework in place for FDI.

Additionally, it is necessary to acknowledge that a permanent Investment Court portraying

features more in sync with existing international tribunals also could be challenged in several

aspects.

C. A Reality Check: Challenges to the legitimacy of a Multilateral Investment

Court

The merit of the EU permanent Adjudicative Body solution entitled to solve disputes arising

from the relationship between foreign investors and States agreed with Vietnam and Canada,

and considered as an standard feature for current and further negotiations by the EU

authorities, is that to some extent is managing to respond to many of the concerns expressed

by EU institutions and the European civil society regarding the perceived lack of transparency

and the potential abuses in the use of ISA. But authors familiar with the subject also have

raised some concerns and pointed out opportunities for improvement.

There are two parallel lines of evaluation when analyzing the EU Investment Court proposal

and both would have a significant influence in terms of the likelihood of creating a legitimate

Multilateral Investment Court: one is the political context required to make it happens and the

other is the regulatory context required to make it operative and over all the must-choice

alternative in terms of ISDSM.

About the political context, so far the EU attempts to put in place adjudicative bodies

encompassing characteristics more aligned with those of an international court have been

bilateral agreements. In such scenario it seems more feasible to arrive to an agreement that

works for both parties involved, in terms of balancing public and private interests, since it is

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expected that the parties are the source of or represent such interests and will be able to find a

balanced understanding to assign the weight those will have in terms of how will be addressed

in their mutual agreement. Even tough, as reflected in the review herein conducted even

among these few cases there are variations. Then, one has to be realistic and recognize that

until now multilateral adjudicative bodies operating are the result of extended negotiation

processes on very concrete and widely recognized and standardized affairs (i.e. human rights).

Investment relationships are very unique and dependable of external circumstances and that

will undoubtedly impact any agreement on how to deal with potential disputes arising as a

result of such interactions. Thus from this perspective relevant questions should be answered

in order to better define the road to shift from the ISA system to any other alternative. Which

public and private interests would be taken into consideration to design the Multilateral

Investment Court and who would define them and how?, Who and how will controls a

Multilateral Investment Court in absent of a multilateral government? Fragmentation due to

the more than 3,000 BITs and TIPs in place make virtually impossible to create a single

mechanism to solve disputes that could be adapted to every single case.

In connection with the regulatory context there are concerns regarding the appointment of

members to and the integration of the tribunals, conflicts of interest and rules for removal of

appointed members, requirements for supporting staff, lack procedures or insufficient

standardization and about the nature of these adjudicative bodies in connection with the

enforcement of awards. These topics will be further elaborated herein as follows.

With respect to the members of the tribunals, there is not a clear difference with respect to the

qualifications required to them in order to be considered for appointment at the first instance

level or at the appeal level. Since one of he most relevant critics to ISA is the lack of

qualified appeal adjudicative bodies able to review awards, it would have been expected that

such a consideration would be included, especially since there are already antecedents of such

requirements in other courts with international jurisdiction137. Furthermore, it have being

signaled that the appointment of members mechanism provided so far could tend to bring to

the tribunals individuals that are biased toward the interests of the States, since now members

will be designated by committees integrated by States representatives to such bodies138. This

137 ABA, Report on the Investment Court System, 22 and 23 and EFILA, Paper regarding the ICS, 15 to 17. 138 The ABA, in the report hereafter referred, call attention to a comment made by former ICJ President Stephen Schwebel who said “I do not believe that it is the intention of the EU to entrench such bias, but if it is to be presumed that an arbitrator

91

form of designation neither provides space for any type of input from other stakeholders,

which could be interpreted as a lack of transparency. Since this is one of the core critics to

ISA, it would be advisable to address such concerns by introducing measures to select

members through some kind of stakeholder consultations or validations processes. Under the

current EU Investment Tribunal proposal this power is transferred to the States and more

particular to the representatives of the government in office at a time. Investors are usually a

significant force that will not easily renounce to such granted concession. The American Bar

Association (ABA) is of the opinion that an alternative like the one allowed by the Appellate

Body of the WTO, where the disputing parties at least can select members from a list of

potential candidates, would be a more potable alternative to bring support to the EU

proposal139.

The ABA Report also addresses the lack of reference to diversity rules in the style of the

International Criminal Court. Even if the focus of the latter is quite different, this group is of

the opinion that this is an opportunity to introduce such kind of remarks in the areas of DFI

and ISDSM, since reality is that lack of diversity representation in all possible meanings is

becoming a relevant topic and will continue to be a pertinent trend in the future. In particular,

it is mentioned that the eventual lack of a balanced representation of regional minorities, as it

could be the case of developing States, in a Multilateral Investment Court scenario could

become an obstacle to effectively enroll a significant number of participants into the new

system. In their opinion, a Multilateral Investment Court proposal that does not address the

problem posed by an eventual integration taking into consideration this aspect will withdraw

legitimacy to any attempt to create it. In line with this argument Gabrielle Kaufmann-Kohler

adds that in an scenario of a multilateral courts it will be important to provide for an election

procedure acceptable to the greatest number of States while preserving the workability of the

court. 140.

appointed by an investor is biased in favour of the investor – a presumption that the record of investor-state arbitration does not sustain – is there reason to presume that judges appointed only by states will not be biased in favour of states? ABA, Report on the Investment Court System, 24, EFILA, Paper regarding the proposed ICS, 15 and Titi, The EU Proposal for an IIC, 8. 139 ABA, Report on the Investment Court System, 29 to 3, EFILA, Paper regarding the ICS, 14 and 15 and Refinish, The EU and ISDS, 25. 140 ABA, Report on the Investment Court System, 28 and 29 and Kauffmann-Kohler, Reform of investor-State arbitration, 61 to 66.

92

The topics of impartiality and non bias of the individuals in charge of adjudicating awards in

investor-States disputes is at the center of the discussion about ISA. Surprisingly, the EU is

not taking the opportunity to introduce more precise rules in terms of how the deal with

conflicts of interest. One particular situation, highlighted by the ABA in its Report about the

proposal for the TTIP, is that none of the instruments reviewed undertake how to deal with

situations where the members of the tribunals have a professional relationship with one party

in interest of the outcome of a specific dispute not being party itself to the actual dispute. The

other issue is that, even if the instruments reviewed include reasonable provisions with respect

to ethics, conflict of interest and specific code of conducts, none state expressly a prohibition

for a member of these tribunals to engage as arbitrator in an ad hoc ISA dispute. It is true that

one could infer from the general provisions on ethics included therein that such a situation

would be incompatible with the role, but the fact is that the context for the consideration of

bias regarding members of the Investment Court must be considered in its entirety and not

solely regarding the Investment Court141. Other area of concern related to this topic is the

lack of details with regards to the remuneration of the members of the tribunals. It is true that

barring the investor from the possibility of influencing the outcome of a requested award, by

being directly connected to the tribunal members in terms of the payment of fees, is a

significant advance to reduce conflicts of interest, but it is also true that the same situation

could happens if governments are now the ones paying the fees. It seems that the EU is

tackling the issue of potential conflict of interests only by shifting the power to designate

members to a tribunal entirely to the States, almost like assuming that perhaps not conflicts of

interest will arise in such circumstances.

There is a significant differences between all instruments reviewed regarding the rules for

removal of members of the tribunals. In the TTIP Draft, after the request of the affected

disputing party the president of the tribunal would decides. The EU-Vietnam FTA follows

the same path but, in addition introduce the option for the president of the tribunal or the

parties acting jointly to request a removal of a member to the Joint Committee created by the

treaty. In the CETA also there are included two different possibilities, but with an additional

element: the disputing party affected could invite the President of the International Court of

Justice to decide on the issue, or the president of the tribunal as well as, by join initiative, the

parties could request the Joint Committee created by the treaty such a removal. Undoubtedly, 141ABA, Report on the Investment Court System, 28 and 29.

93

the model followed by the CETA is the more appropriate to provide the adequate level of

independence in such a critical matter. Still, critics to the EU proposal are of the opinion that

assigning this task in certain cases to a body integrated by representatives of the States parties

to the agreement –the Joint Committees- is not aligned with the arguments raised by the EU

against the use of ISA and the lack of independence that it portrays142.

An additional topic signaled is that the only mention to qualifications, obligations and ethics

related to supporting staff made in the instruments is a burden upon the members of the

tribunals to ensure that their staff will comply with certain provisions applicable to

themselves. It seems that this issue would have to be developed further in order to introduce

obligations, control mechanisms and procedures to remove supporting staff that may be

conflicted in certain cases. One additional question that arises in connection with this is how

would be handled potential conflicts of interests with respect to the supporting role assigned

to the ICSID Secretariat.

The scarcity of standard procedural rules on how these adjudicative bodies should operate at

both levels is an area of great concern. Having in mind that one of the stronger arguments of

the EU against the use of ISA is the absent of predictability due to the fragmentary nature of

such mechanism it should have weighed enough so that it would has been included more

standardization is aspects like this. There is a deficiency in terms of defining the rules to

determine which are the applicable laws and no specific mention is made in any of the

instruments reviewed to the relationship of the agreement with neither international law nor

international law principles and this circumstance removes validity to the proposal because it

reduces predictability in decisions143. Nor is discussed the subject of the place or venue in

which those tribunals will operates, which could considerably affect aspects as enforceability

of the awards and operability of the tribunals. The timing to grant an award -between 18 and

24 months- seems prima facie short when compare with the level of complexity that some

cases could have, but, on the other hand, the extensions permitted upon the tribunal reasoning

are not limited in any form and there are not consequences for extended unreasonable

delays144. So far the Investment Court transitional attempts in place have no governing law,

are binding to address conflicts of law according to the Vienna Convention on the Law of 142 ABA, Report on the Investment Court System, 47. 143EFILA, Paper regarding the ICS, 18 to 20. 144 Titi, The EU Proposal for an IIC, 15.

94

Treaties of 1969 but taking into consideration the international laws valid between the parties

-instead of the international law as a whole, as it should be-, when having to take into

consideration domestic law should follow the local prevailing interpretation and does not have

any power to impose sanctions upon someone engaged in a violation of the rules or a court

order related to a claim. With respect to the possibility for third parties to intervene, other of

the key arguments of the EU against ISA, the rules included are poor. As a matter of fact

there are no protections to ensure that intervention is done in the public interest and not for

unfairly affecting on the parties to the investment dispute. There are no anti-abuse obligations

imposed on interveners, nor are any disclosure requirements on interveners to prevent

interveners who are funded by a disputing party. The relationship between these tribunals and

other bodies created by BITs and TIPs have not been addressed yet. Most investments

agreements include other ISDSM, then one has to question how the framework created by the

potential Multilateral Investment Court would related to such alternatives (i.e. State to State

arbitration). These would be serious weaknesses in the fairness and independence of a

Multilateral Investment Court.

As one could appreciate the hybrid nature of the adjudicative bodies referred to as tribunals in

the treaties and the TTIP Draft reviewed, but described as courts in the EU policy documents,

present a number of challenges as they are conceived now, but one in particular stands out:

the characterization or nature of the Investment Court145. It is not unimaginable, as mentioned

by Michael Goldhaber already, a case where the winner of an award while trying to enforce it

before a domestic court could be confronted with the argument that such adjudication is not

an arbitral award146. Catherine Titi and August Reinisch approach this aspect more deeply

pointing out that, even if the treaties include provisions equalizing the decisions of these

bodies to arbitral awards for enforcement purposes and therefore should be recognized and

enforced under the rules provided for by the New York and the Washington Conventions,

from a legal feasibility point of view it seems that the EU is attempting to extend the

obligation of recognizing and enforce an award emanating from these tribunals upon the

entirety of the parties to the multilateral instruments mentioned by means of a bilateral

agreement. These authors are of the opinion that while it is clear that the award should be

recognized and enforced by the domestic systems of the parties to the bilateral agreement, it is

145Reinisch, The EU and ISDS, 25.146ABA, Report on the Investment Court System, 98.

95

highly probable that the subterfuge to cover the enforcement of awards under the New York

and the Washington Conventions will be challenged147.

It seems that the actual EU proposal to create a Multilateral Investment Court is in a very

early stage of evolution. Revamping the actual ISA system by incorporating into it certain

features more traditional to judicial systems would certainly have the ability to amend some

of the problems identified by its critics. However, it seems that its introduction, at least in

terms of what have already been agreed by the EU with Vietnam and Canada, also entails

important inconsistencies that require to be promptly addressed and mend before considering

an implementation of such a system at a multilateral level, otherwise this would undoubtedly

lead to grounded criticism and opposition. This, together with the fragmented nature of the

legal framework regulating FDI and its mechanism of protection at global level today,

presents a huge challenge in order to reach a regulatory framework for dispute settlement that

is satisfactory and accommodates the multiple particularities of each relationship.

147 Titi, The EU Proposal for an IIC, 32 to 34, Kauffmann-Kohler, Reform of investor-State arbitration, 34 to 40 and 54 to 56 and Reinisch, The EU and ISDS, 27.

96

Summary

Policymaking related to investor-State dispute settlement is getting more complex, more

divergent and more uncertain. In a global context of low economic growth, greater

governmental intervention, reduction of investment outflows, sustainability challenges,

populism and growing nationalism, it is not surprising that relevant actors are competing

actively in the re definition of any aspects that may affect their actual and future interests.

Although global investment flows lost growth momentum in 2016, decreasing by 2 per cent

according to the most recent report on the subject published by the UNCTAD last June, the

rate of investor-State arbitration cases continues unabated. Altogether, according to the same

report, 62 new cases were initiated in 2016, bringing the total number of known cases to 767.

Consequently, it is not a surprise that the European Union is actively promoting what is

framed as a rules-based investment dispute-settlement regime that is more credible and aims

at impartiality and transparency, to reduce uncertainty and improve the stability of its

investment relations. The question that emerges immediately is whether such a proposal is

viable in the current context. An answer to that question, in connection with the actual

relationship between the European Union and Latin America is the main goal of this thesis.

This paper shows the relevant findings on the likelihood that the shift from investor-State ad

hoc arbitration to a permanent Multilateral Investment Court, as currently endorsed by the

European Union, could be an opportunity to Latin American States, in the context of the

increasing global apprehension shown toward the use of investor-State arbitration.

To achieve the objective herein above mentioned, first it became necessary to review the

differences and potential interplays of today coexisting mechanisms that foreign investors are

endowed with when confronted with potential disputes arising between them and their host

State. Along with a clear understanding on the basic contextual background that gave birth to

each different investor-State dispute settlement mechanism, how each one of them operates,

as well as its advantages and disadvantages, it became necessary, to reach an understanding in

respect to the actual policies of both, the European Union and the Latin American States,

apropos such mechanisms. Related to that effort afterwards, it was paramount to ascertain to

which extend policies are reflected in the actual legal framework in force between the parties.

A detailed review of all bilateral investment treaties and treaties with investment provisions

between the European Union and its Member States and the Latin American States and

97

groups of States was conducted in Chapter III, which is complemented extensively by

Appendixes showing into more detail the most relevant aspects of each effective agreement,

with respect to disputes settlement mechanisms in general terms. Once these fundamental

steps were achieved, this research was able to go forward in developing a conceptual analysis

on the apparent deficiencies signaled to the investor-State arbitration system, as the dominant

mechanism to settle dispute arising between foreign investors and host States. Then, a

detailed description of the European Union proposal to solve the shortcomings of such

mechanism was undertaken. This effort was consummated with a final review and analysis of

the arguments challenging the legitimacy of the Multilateral Investment Court, as reflected in

recent treaties concluded with third parties, as well as official documents, press releases and

positions papers emanating from the European Union institutions.

The interests of the European Union in Latin America continue to be significant. Until 2015

the greatest outflows of investment received by Latin American States continue to proceed

from Europe. Inasmuch as global trends and the economic advancement of other regions’

interests in Latin America could reshape the field in terms of investment relevance and its

consequent standards of protection in place, it is of the utmost relevance for the European

Union to continue performing a preponderant role in shaping any aspects in connection with

investor-State dispute settlement mechanisms in that region.

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Conclusions

The Multilateral Investment Court concept endorsed and promoted by the European Union as

an alternative to investor-State arbitration could be an option for Latin American States,

historically hostile toward accepting investor-State dispute settlement mechanisms, to settle

controversies outside their legal domestic systems; as long as the actual proposal would be

effective, in terms of answering to the doubts arising from an increasing skepticism showed

by the region with respect to the prevailing investor-State arbitration mechanism, and is

flexible enough to accommodate progressively to the different levels of policy evolution

existing in that region.

Investor-State arbitration, when comparing with domestic legal systems of the host States and

State-to-State diplomatic negotiations, together with the international legal framework on

investment disputes settlement, continues to be the most effective medium to manage political

risk, promoting the international rule of law, rendering substantive commitments in

investment instruments more credible and contributing towards a depoliticization of

investment disputes. This mechanism, albeit increasing criticism, continues to be the most

effective guarantee that every foreign investor is entitled to a minimum standard of treatment

abroad at any given time.

The European Union has a coherent vision on how to transit from the prevailing investor-

State arbitration system to a Multilateral Investment Court. The first steps have been taken by

directing its member to eliminate incompatibilities between the Union law and bilateral

investment treaties concluded with third parties and preventing parallel proceedings by permitting access to arbitration only when a final determination has been made or the investor claims have been effectively withdrawn from domestic legal courts. In the last few years it has also made consistent efforts to include in its negotiations of new treaties with investment provisions clear rules to ensure that arbitrators are independent and act ethically, including binding codes of conduct. Also, it has introduced the use of lists of qualified individuals from which the members of an arbitral tribunal are drawn, in an attempt to reduce the likelihood of conflicts of interests. Recently, as reflected in the treaties conclude with Vietnam and Canada,

the European Union has highlighted its policy stance with respect to a permanent solution

more aligned with the characterization of an international court, where potential cases are

treated in a transparent manner by publicly appointed, professional judges in public hearings

99

and which includes an appellate mechanism, where consistency of decisions should be

ensured. In what seems to be a first stage, bilateral investment treaties will begin to be

transformed by including, instead of investor-State arbitration, adjudicative bodies that exhibit

some features more proper of a public court system.Accordingly, the European Union will

engage with its partners to build consensus for a fully edged, permanent International

Investment Court.

Latin American States policies on investor-State dispute settlement mechanisms reveal

different levels of evolution and in some cases even retrocession, intensified by an increasing

number of competing regional integration initiatives and organizations. This results not only

in fragmentation, but also in divergent policies and ideological stances that make even

regional coordination problematic. Current negotiations and conclusion of treaties seem to be

influenced by a rethinking of investment standards in general, but also are showing a

particular interest in targeting the prevailing investor-State arbitration, although there is not a

general tendency or alignment in terms of which other alternatives are more favored. Given

the scenario above described, it would be impossible to find common guidelines in terms of

policy on this subject in that region.

The regulatory framework on investor-State dispute settlement mechanisms that exists

between the European Union and its Member States and the Latin American States reflects

significant discrepancies with respect to the current policy of the former, and also, to some

extent, with respect to Latin American States’ policies. Except for some recent provisions

standing out the relevance of transparency and impartiality by giving more access to the

public, in connection with negotiations and future developments of treaties with investment

provisions, there is no significant evolution in terms of incorporating specific measures to

counter balance the power exercised by the international arbitration system that have grown

hand in hand with the intensification of trade and foreign direct investment. In general terms,

most bilateral investment treaties reviewed are short and concise, with State-to State disputes

settlement and investor-State arbitration applying to all aspects of the agreement, choice of

arbitration forum left to the discretion of the claimants, and generally with no provision made

for appeals. There are no specific requirements, except in a couple con cases, Mexico and

Colombia, for those in charge of dealing with disputes submitted to arbitration beyond the

regulatory frameworks of the specific forums agreed. Those Latin American States with

100

greater political and economic weight managed to include in its agreements more limitations

in terms of access to arbitration by foreign investors or avoided the subscription of such

agreements. Other treaties with investment provisions, on the other hand, reflect a slightly

faster evolution in terms the recognition of other aspects, beyond pure typical investment

related provisions. Particularly, in those negotiated by the European Union after the

enlargement of it’s external trade power there is greater openness in terms of transparency and

civil society participation, as well as control over the qualifications and behavior that should

be shown by those who are called to settle disputes through arbitration. The historical

suspicion that Latin American States have always showed with respect to the regulation of

their external relationships with developed States will undoubtedly continues to represent a

challenge in terms of negotiating any adjustment to the existing prevailing framework.

However, this does not means that in the face of a balanced proposal intended to reduce the

perceived excesses presented by the current prevailing investor-State arbitration, they will not

be willing to be part in a progressive development of an alternative system.

The most relevant concerns with respect to investor-State arbitration concentrate first in an

ostensible deficit of balance between the private and public interests involved. The system is

a one-way process of claims in which only one party is allowed to bring claims and only the

other is subjected to the payment of awards. There are not clear statutes of limitation to

request arbitration based on a State breach of its obligations neither the same opportunities for

domestic investor to circumvent local legal system and frequently the high cost involved in

such processes represent an entry barrier to small and medium size investors, as well as a

significant burden to some States finances. A second line of questioning relates to the absent

of measures to ensure impartiality of the system. Due that the disputing parties play an

important role in the selection of the arbitrators, this give them considerable control over the

process. But also this translates in an ample power granted to arbitrators because substantive

treaty standards are formulated in vague and overly broad terms and there are not clear rules

in terms of what remedies must be awarded. Also, it is frequently mentioned that arbitrators

could be compromised due to the fact that such individuals are designated by the parties and

therefore could tend to favor them. A third area of apprehension is the insufficiency of a

reasonable degree of consistency, due to the fragmentary nature of arbitration and the absence

of a comprehensive appeal mechanism to challenge awards. Finally, there is an increasing

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animadversion due to the apparent insufficient transparency because current arbitration rules

provide for very limited access to information.

The Investment Court proposal introduced by the European Union, in theory, will be an

standing body of members, which would be complemented by an appellate instance, hearing

appeals on error of law, but also able to review factual findings for manifest error of fact in

connection with investor-States disputes. Nevertheless, as currently introduced in the

agreements and other documents herein reviewed, it resembles more a hybrid version of an

adjudicative body, portraying features of both, the arbitration system and an international

court. While it is true that a shift in terms of the power to appoint members, from investors

and States to only the States, would happens, no scrutiny or validation from stakeholders or

impartial bodies is considered. Such measure could have represented a significant advance in

terms of providing legitimacy and impartiality to the selection procedure. Besides, since this

in an opportunity to differentiate the proposed adjudicative body from traditional arbitration

panels, and address the critics against arbitration, it is surprising the depthless approach

regarding conflicts of interest. Although the actions of members are subject to codes of

conduct, such are not more detailed than those already included in arbitration rules of well-

known arbitration institutions, neither it is addressed the subject in connection with the

potential supporting staff. The removal of appointed members is left, in part, to the presidents

of the tribunals or the representatives of the governments in the join committees created by

the treaties, which also could affect the credibility of the alternative system. In general, the

actual alternative would require a significant improvement in terms of guidelines on

procedures, as a matter of fact with one exception, in the case of the Appeal Tribunal

contemplated in the CETA, the tribunals are entitled to define its own procedures. In addition,

the adjudicative bodies created by the FTA with Vietnam and the CETA with Canada do not

have its own operative structure neither a designated place of venue yet and, on the contrary,

it is expected that those would be supported by well-known arbitration institutions.

Beyond the practical aspects above enumerated, there are two substantive legal aspects that

would require additional analysis from experts related to this hybrid adjudicative body

proposal. The first one is about the applicable law to the settlement of controversies. In the

instruments already concluded, it seems that the members would have to apply the

international law “valid between the parties” instead of the “international law”, which limits

102

the scope of what actually will be applicable. Also, when having to take into consideration

“domestic law” they would have to constrain to the “prevailing domestic interpretation”,

which limit the contribution that they could provide. Second, due to the hybrid nature of the

actual adjudicative bodies created it could not be ruled out that there will be questions about

whether a decision made by one of those is really an arbitral awards and as such covered by

the enforceability granted by the Washigton and the New York Conventions. The FTA with

Vietnam and the CETA include provisions according to which such decisiones are assimilated

to arbitral awards, in terms on international enforceability. Notwithstanding, a question to be

responded is whether a bilateral agreement could extend such understanding upon a

multilateral agreement without the participation of the other parties to the latter.

As a premise, a proposal such as the one being advanced by the European Union seems more

in line with what Latin American States have historically favored. As a matter of fact, the

shift to a mechanism with an increasing command of State governments, instead of investors,

in defining the rules of the game, and particularly having more control in the selection of the

individuals appointed to settle such disputes, would be more aligned with the policy stance

and interests of most major players of this region on this subject. But the current proposal is

in a very preliminar stage of development and as it is now would be likely challenged as wells

as faced with a complex reality. Notwithstanding the good intentions supporting this overture,

investment relationships are very unique and dependable of external circumstances and that

will undoubtedly impact any agreement on how to deal with potential disputes arising as a

result of such interactions. Thus from this perspective relevant questions should be answered

first in order to better define the road to shift from one system to any other alternative.

Fragmentation due to the more than 3,000 BITs and TIPs in place which make virtually

impossible to create a single mechanism to solve disputes that could be adapted to every

single case. And last but not least, any alternative to investor-State arbitration would need to

effectively demonstrate a quantum leap in terms of clarity, transparency and impartiality to

succeed, being the paucity of those features the main argument against investor-State

arbitration as it is known today.

103

Appendices

103

Appendix 1: BITs Paraguay – EU MS

Paraguay/ Relevant Provisions

Austria BLEU (Belgium &

Luxemburg) Czech Republic France Germany Hungary

Year Sig/Year Enf 1993/2000 1992/2004 1998/2000 1978/1980 1993/1998 1993/1995 Relationship with other TIPs

None None None None None None

SSDS Yes, amicable negotiations up to 6 months and ad hoc

arbitration

Yes, diplomatic negotiations, Commission designated by both parties

and ad hoc arbitration

Yes, consultations and diplomatic negotiations up

to 6 months and ad hoc arbitration

Yes, diplomatic negotiations up to 6 months


Yes, negotiations and ad hoc arbitration

Yes, negotiations up to 6 months and ad hoc

arbitration

Other ISDSM

Amicable negotiations up to 3 months and

conciliations under ICSID rules

Amicable negotiations and diplomatic conciliation up

to 6 months

Amicable consultations up to 6 months

Specific agreement if more favorable


Amicable negotiations up to 6 months

ISDS arbitration Yes Yes Yes Yes Yes Yes Scope of claims General General General General General General

Forums Domestic courts and ICSID Domestic courts, ICSID

and ad hoc tribunal under UNCITRAL rules

Domestic courts, ICSID and ad hoc tribunal under

UNCITRAL rules ICSID Domestic courts and ICSID Domestic courts and ICSID

Local remedies first Fork in the road clause Yes, but up to 18 months

and reserves right to arbitration

Fork in the road clause No Fork in the road clause Yes, but up to 18 months

and 1st. instance and reserves right to arbitration

Applicable law BIT and princ. of int. law

BIT, law of the contracting party and princ. of int. law

but awards according to national law

BIT, domestic law if not in conflict with other regulations, spec.

agreements and princ. of int. law, but awards

according to domestic law

Not indicated Not indicated Not indicated

Consolidation of claims No No No No No No Provisional measures No No No No No No Amicus curiae submissions by third parties

No No No No No No

Transparency in hearings No No No No No No Transparency in documents

No No No No No No

Regulations on arbitrators

In SSDS president must be national of third party State






Review of rulings No No No No No No

104

Paraguay/ Relevant Provisions

Italy Netherlands Portugal Romania Spain United Kingdom



SSDS Yes, diplomatic

negotiations up to 6 months and ad hoc arbitration

Yes, diplomatic negotiations and ad hoc

arbitration

Yes, consultations and diplomatic negotiations up

to 6 months






arbitration

Other ISDSM

Specific agreements and amicable negotiations upon written notification up to 6

months

Amicable consultation up to 3 months, amicable negotiation during

arbitration allowed and ex aequo et bono settlement


Consultations up to 6 months

Amicable negotiations upon written notification up to 6

months

Conciliation under ICSID rules

ISDS arbitration Yes Yes Yes Yes Yes Yes

Scope of claims General General, but only claims after enforcement of BIT General General General General

Forums Domestic courts, ICSID


Domestic courts and ICSID Domestic courts, ICSID



UNCITRAL rules

Domestic courts, ICSID, ICC and ad hoc tribunal under UNCITRAL rules

ICSID

Local remedies first Fork in the road clause Fork in the road clause Fork in the road clause

Fork in the road clause, but domestic courts up to 18

months, not judgment and agreement of both parties to

arbitration

Fork in the road clause No

Applicable law Not indicated

BIT, domestic law, spec. agreements and princ. of

int. law, but awards according to domestic law

Not indicated, but awards according to domestic law


int. law


int. law Not indicated


No No No No No No


No No No No No No




In SSDS president must be national of third party State with diplomatic relations to

both parties





Source: Investment Policy Hub, UNCTAD, United Nations, accessed 01 July 2017, < http://investmentpolicyhub.unctad.org/IIA/IiasByCountry#iiaInnerMenu>

105

Appendix 2: BITs Uruguay – EU MS

Uruguay/ Relevant Provisions

BLEU (Belgium & Luxemburg)

Czech Republic Finland France Germany Hungary


None None None None None

SSDS

Yes, diplomatic negotiations, Commission designated by both parties


Yes, consultations and negotiations up to 6 months


Yes, diplomatic negotiation up to 6 months and ad hoc

arbitration




arbitration


arbitration

Other ISDSM Amicable negotiations upon written notification up to 6

months

Negotiations up to 6 months


months

Amicable negotiations up to 6 months and spec.

agreements



ISDS arbitration Yes Yes Yes Yes Yes, but case by case consent required

Yes, but case by case consent required

Scope of claims General General General General General General




UNCITRAL rules


UNCITRAL rules


UNCITRAL rules Domestic courts and ICSID Domestic courts and ICSID

Local remedies first Yes, but up to 18 months or

judgment not in line with BIT

Fork in the road clause Fork in the road clause

Yes, but reserves right to arbitration and requires

quitclaim in domestic court and judgment in line with

BIT

Yes, but up to 18 months Yes, but up to 18 months

Applicable law Law of the claiming party, BIT, spec. agreements and

princ. of int. law

BIT, law of the claiming party, spec. agreements

and princ. of int. law

BIT, princ. of int. law and law of the both parties if not in contradiction with

BIT

BIT, spec. agreements, princ. of int. law and law of

the claiming party BIT Not indicated


No No No No No No


No No No No No No









106

Uruguay/

Relevant Provisions Italy Netherlands Poland Portugal Romania Spain






arbitration

Yes, diplomatic negotiations up to 12 months and ad hoc

arbitration


arbitration




arbitration

Other ISDSM Amicable negotiations up to 6 months and conciliation

under ICSID rules

Amicable negotiations up to 6 months and conciliation

under ICSID rules


under ICSID rules



under ICSID rules


months

ISDS arbitration Yes, if judgment is against princ. of int. law and BIT

Yes, if judgment is against princ. of int. law and BIT

Yes, if judgment is against princ. of int. law and BIT Yes Yes Yes, if judgment is against

princ. of int. law and BIT

Scope of claims General

General, but upon termination it covers

investments made before up to 15 years

General Treaty claims only Treaty claims only General

Forums Domestic courts and ICSID Domestic courts and ICSID Domestic courts and ICSID Domestic courts, ICSID


Domestic courts and ICSID Domestic courts, ICSID


Local remedies first Yes, but up to 18 months and if not final judgment

Yes, but up to 18 months and if not final judgment

Yes, but up to 18 months and if not final judgment Fork in the road clause Yes, but up to 18 months

and if not final judgment Yes, but up to 18 months and if not final judgment

Applicable law Not indicated BIT, princ. of int. law,

domestic law of the claiming party

No indicated BIT, domestic law of the

claiming party and princ. of int. law

Not indicated

BIT, spec. agreements domestic law of the



No No No No No No


No No No No No No








Review of rulings No No No No No

107

Uruguay/

Relevant Provisions Sweden United Kingdom

Year Sig/Year Enf 1997/1999 1991/1997 Relationship with other TIPs

None None




arbitration

Other ISDSM Amicable negotiations up

to 6 months

Negotiations upon written notification up to 3 months

and conciliation under ICSID rules

ISDS arbitration Yes Yes, if judgment is against princ. of int. law and BIT

Scope of claims General General

Forums

Domestic courts, ICSID, ad hoc tribunal under

UNCITRAL rules and other agreed bt. parties


UNCITRAL rules


and if not final judgment in 1st. instance

Applicable law BIT, domestic law of the


BIT, princ. of int. law and domestic law of the

claiming party Consolidation of claims No No Provisional measures No No Amicus curiae submissions by third parties

No No

Transparency in hearings No No Transparency in documents

No No




Review of rulings No No


108

Appendix 3: BITs Argentina – EU MS

Argentina/ Relevant Provisions


Luxemburg) Bulgaria Croatia Czech Republic Denmark





Yes, diplomatic negotiations, Commission








Yes, amicable consultations up to 3 months and ad hoc

arbitration

Other ISDSM Amicable negotiations up to

6 months No Amicable negotiations up to 6 months




ISDS arbitration

Yes, but up to 18 months, if controversy continues after

domestic judgment or mutual agreement

Yes Yes Yes Yes Yes

Scope of claims General General Treaty claims only General General General




UNCITRAL rules


UNCITRAL rules


UNCITRAL rules


UNCITRAL rules


UNCITRAL rules Local remedies first Yes, but up to 18 months Yes, but up to 18 months Fork in the road clause Fork in the road clause Fork in the road clause Fork in the road clause

Applicable law

Domestic law of contracting party, BIT,

spec. agreements and princ. of int. law



BIT, domestic law of contracting party, spec.

agreements and princ. of int. law

Principles of international law






No No No No No No


No No No No No No


No In SSDS president must be national of third party State






109


Finland France Germany Hungary Italy Netherlands



SSDS Yes, negotiations up to 6

months and ad hoc arbitration



Yes, amicable negotiations and ad hoc arbitration





Yes, diplomatic negotiations, amicable

negotiations and ad hoc arbitration


to 6 months Amicable negotiations up to

6 months Amicable negotiations Amicable consultations Amicable consultations and

diplomatic negotiations after arbitration

Amicable consultation up to 3 months, voluntary

conciliation and mediation

ISDS arbitration Yes Yes Yes, if exhausted local

remedies up to 18 months or mutual agreement

Yes Yes Yes, if exhausted local

remedies up to 18 months or controversy remains

Scope of claims Treaty claims only General, but no claims bf. BIT enforcement

General, but requires case by case consent General Treaty claims only General, but no claims bf.

BIT enforcement




UNCITRAL rules


UNCITRAL rules


UNCITRAL rules


UNCITRAL rules


UNCITRAL rules Local remedies first Fork in the road clause Fork in the road clause Yes, but up to 18 months Fork in the road clause Yes, but up to 18 months Yes, but up to 18 months

Applicable law



BIT, spec. agreements, domestic law of contracting party and princ. of int. law








No No No No No No


No No No No No No









110


Poland Portugal Romania Spain Sweden United Kingdom



SSDS Yes, negotiations and ad

hoc arbitration








arbitration


arbitration



6 months Amicable negotiations up to


6 months No Amicable consultations

ISDS arbitration Yes Yes Yes Yes Yes Yes, if exhausted local

remedies up to 18 months or controversy remains

Scope of claims Treaty claims only Treaty claims only Treaty claims only General General Treaty claims only,




UNCITRAL rules


UNCITRAL rules


UNCITRAL rules


UNCITRAL rules

ICSID and ad hoc tribunal under UNCITRAL rules

Local remedies first Fork in the road clause Fork in the road clause Fork in the road clause Yes, but up to 18 months Fork in the road clause Yes, but up to 18 months

Applicable law

BIT, domestic law of contracting party spec.

agreements and principles of int. law





BIT, spec. agreements, domestic law of contracting party, and principles of int.

law

BIT, domestic law of contracting party and principles of int. law

BIT, spec. agreements, domestic law of contracting party, and principles of int.

law Consolidation of claims No No No No No No Provisional measures No No No No No No Amicus curiae submissions by third parties

No No No No No No


No No No No No No










111

Appendix 4: BITs Mexico – EU MS

Mexico/ Relevant Provisions


Luxemburg) Czech Republic Denmark Finland France

Year Sig/Year Enf 1998/2001 1998/2003 2002/2004 2000/2000 1999/2000 1998/2000 Relationship with other TIPs None None None None None None

SSDS

Yes, negotiation and conciliation upon written

notification up to 4 months and ad hoc arbitration





Yes, consultation and negotiation upon written


Yes, diplomatic negotiation upon written notification up




Other ISDSM Negotiations upon written notification up to 6 months






ISDS arbitration Yes, but notification 60

days in advance and up to 4 years as of knowledge

Yes, but notification 60 days in advance and up to 3

years as of knowledge







Yes, but notification 60 days in advance, as of 6

months and up to 4 years as of knowledge

Scope of claims General, but no punitive

damages and security reasons limitations

General, but no punitive damages and security

reasons limitations

Treaty claims only, but no punitive damages and

security reasons limitations

General, but no punitive damages

General, but no punitive damages and security

reasons limitations

General, but no punitive damages

Forums Domestic courts, ICSID, ICC and ad hoc tribunal under UNCITRAL rules



UNCITRAL rules


UNCITRAL rules


UNCITRAL rules

Domestic courts, ICSID, ICC, ad hoc tribunal under UNCITRAL rules and other

esp. agreement

Local remedies first

Fork in the road clause, but reserves rights to arbitration

bef. final judgment in 1st. instance, exc. if in

administrative court




Fork in the road clause








Applicable law BIT and princ. of int. law BIT and princ. of int. law BIT, princ. of int. law and interpretation agreed by

parties BIT and princ. of int. law BIT and princ. of int. law BIT, esp. agreements and

princ. of int. law

Consolidation of claims Yes Yes, by domestic court Yes Yes Yes No Provisional measures No No No Yes, by domestic court No No Amicus curiae submissions by 3er parties

No No No No No No

Transparency in hearings No No No No No No Transparency in documents Yes, award if agreed Yes, award if agreed Yes, award if agreed Yes, award if agreed Yes, award if agreed Yes, award if agreed


Yes, experience, independent & impartial

and in SSDS president must be national of third party

State



State



State




State


Review of rulings No No Yes No No No

112


Germany Greece Italy Netherland Portugal Slovakia

Year Sig/Year Enf 1998/2001 2000/2002 1999/2002 1998/1999 1999/2000 2007/2009 Relationship with other TIPs None None None None None None

SSDS

Yes, consultation, negotiation upon written






Yes, consultations an diplomatic negotiations, ex aequo et bono settlement






Other ISDSM Negotiations and

consultations upon written notification up to 6 months

Negotiations and consultations upon written notification up to 6 months





ISDS arbitration Yes, but notification 60

days in advance and up to 4 years as of knowledge

Yes, but notification 90 days in advance as of 6






Yes, but notification 90 days in advance as of 6


Yes, but notification 6 months in advance and up to 3 years as of knowledge

Scope of claims Treaty claims only, but no

punitive damages and security reasons limitation

Treaty claims only, but no punitive damages

Treaty claims only, but no punitive damages and

security reasons limitation

General, no punitive damages and security

reasons limitation







UNCITRAL rules


UNCITRAL rules


UNCITRAL rules and other agreed

Local remedies first Yes, but reserves rights to

arbitration bef. final judgment in 1st. instance

Fork in the road clause, but no arbitration if domestic

court chosen




Fork in the road clause, but NE reserves rights to arb. bef. final judgment in 1st.

instance, exc. if in administrative court

Fork in the road clause Fork in the road clause

Applicable law BIT and princ. of int. law BIT, princ. of int. law and interpretation agreed by

parties BIT and princ. of int. law

BIT, princ. of int. law and interpretation agreed by

parties


parties


parties Consolidation of claims Yes Yes Yes Yes Yes Yes

Provisional measures No Yes, by domestic court No No Yes, by domestic court Yes, by domestic court or arbitral tribunal

Amicus curiae submissions by 3er parties

No No No No No No

Transparency in hearings No No No No No No Transparency in documents No Yes, award if agreed Yes, award if agreed Yes, award if agreed Yes, award if agreed Yes, award if agreed

Regulations on arbitrators Yes, experience and in

SSDS president must be national of third party State

Yes, experience and in SSDS president must be

national of third party State







Review of rulings No Yes No Yes No Yes

113


Spain Sweden United Kingdom

Year Sig/Year Enf 2006/2008 2000/2001 2006/2007 Relationship with other TIPs None None None

SSDS

Yes, amicable negotiation upon written

notification up to 6 months and ad hoc

arbitration

Yes, negotiation upon written notification up to 6


Yes, consultation and negotiation up to 4 months


Other ISDSM Amicable negotiations

upon written notification up to 6 months

Consultation and negotiation upon written

notification up to 6 months

Consultation and negotiation up to 6 months

ISDS arbitration

Yes, but notification 6 months in advance and

up to 3 years as of knowledge





Scope of claims Treaty claims only Treaty claims only, but no punitive damages


Forums

Domestic courts, ICSID, ad hoc tribunal under UNCITRAL rules and

other agreed

ICSID, ICC and ad hoc tribunal under UNCITRAL

rules

ICSID, PCA and other agreed

Local remedies first Fork in the road clause No No

Applicable law BIT, princ. of int. law

and interpretation agreed by parties

BIT and princ. of int. law BIT, princ. of int. law and interpretation agreed by

parties Consolidation of claims Yes Yes Yes Provisional measures Yes, by domestic court Yes, by domestic court Yes by arbitral tribunal Amicus curiae submissions by 3er parties

No No No

Transparency in hearings No No No Transparency in documents Yes, award Yes, award if agreed Yes, award


Yes, experience and in SSDS president must be national of third party

State




Review of rulings No No No

Other No No Yes, appointment of experts by arbitral tribunal


114

Appendix 5: BITs Chile – EU MS

Chile/ Relevant Provisions


Luxemburg) Croatia Czech Republic Denmark Finland


Chile-EC Assoc. Agreement







arbitration

Yes, diplomatic negotiations, Commission


Yes, amicable negotiations up to 6 months and ad hoc

arbitration


arbitration






to 3 months

Negotiation and diplomatic conciliation upon written

notification up to 6 months





ISA Yes Yes Yes Yes Yes Yes

Scope of claims Treaty claims only General General Treaty claims only General General, but no to claims bf. BIT enforcement

Forums Domestic courts, ICSID, and ad hoc tribunal under


Domestic courts, ICSID, and ad hoc tribunal under



Fork in the road clause, but reserves right to arbitration

if no judgment up to 36 months


if no judgment up to 18 months

Fork in the road clause Fork in the road clause Fork in the road clause Fork in the road clause

Applicable law Not indicated, but awards

executed accord. to domestic law



BIT and princ. of int. law, but awards executed

accord. to domestic law

BIT and and princ. of int. law Not indicated

BIT, domestic law of contracting party and princ.

of int. law


No No No No No No


No No No No No No



with dipl. relationship to parties







115


France Germany Greece Italy Poland Portugal
















arbitration








3 months Amicable consultation up to

6 months

ISA Yes Yes, and if domestic judgment is against BIT Yes Yes Yes Yes

Scope of claims General, but no to claims

bf. BIT enforcement Treaty claims only Treaty claims only Treaty claims only Treaty claims only Treaty claims only

Forums Domestic courts and ICSID Domestic courts and ICSID Domestic courts, ICSID, and ad hoc tribunal under

UNCITRAL rules


UNCITRAL rules


UNCITRAL rules Domestic courts and ICSID

Local remedies first Fork in the road clause

Fork in the road clause, but reserves right to arbitration if no domestic judgment up

to 18 months

Fork in the road clause Fork in the road clause Fork in the road clause Fork in the road clause

Applicable law Not indicated Not indicated BIT and princ. of int. law



Not indicated BIT, princ. of int. law,

domestic law of contracting party and espc. agreements


No No No No No No


No No No No No No











116


Romania Spain Sweden United Kingdom

Year Sig/Year Enf 1995/1997 1991/1994 1993/1995 1996/1997 Relationship with other TIPs






arbitration






arbitration

Other ISDSM Negotiations up to 3

months Amicable negotiations up

to 6 months Amicable negotiations up

to 6 months Amicable consultations up

to 3 months ISA Yes Yes Yes Yes

Scope of claims

General, but once BIT is terminated investments are

protected only up to 15 years

General General, but no to claims bf. BIT enforcement General

Forums Domestic courts and ICSID Domestic courts, ICSID, and ad hoc tribunal under


Local remedies first Fork in the road clause Fork in the road clause Fork in the road clause, but

parties could adopt other agreements


Applicable law

BIT and princ. of int. law, but awards executed

accord. to domestic law of contracting party

BIT, spec. agreements and princ. of int. law Not indicated Not indicated

Consolidation of claims No No No No Provisional measures No No No No Amicus curiae submissions by third parties

No No No No

Transparency in hearings No No No No Transparency in documents

No No No No






Review of rulings No No No No


117

Appendix 6: BITs Antigua and Barbuda – EU MS

Antigua and Barbuda/ Relevant Provision

Germany United Kingdom


CARIFORUM-EC EPA (2008)


SSDS Yes, diplomatic negotiations and ad hoc

arbitration


arbitration Other ISDSM Amicable negotiations

upon written notification up to 3 months and

conciliation under ICSID rules

Amicable negotiations upon written notification up

to 3 months and conciliation under ICSID

rules ISA Yes Yes, upon written request Scope of claims General General Forums ICSID and ad hoc

arbitration under UNCITRAL rules

ICC, ICSID and ad hoc arbitration under

UNCITRAL rules Local remedies first No No Applicable law Not indicated, but award

must be executed according to domestic law of contracting party

Not indicated

Consolidation of claims No No Provisional measures No No Amicus curiae submissions by third parties

No No


No No






118

Appendix 7: BITs Barbados – EU MS

Barbados/ Relevant Provision

Germany Italy United Kingdom

Year Sig/Year Enf 1994/2002 1995/1997 1993/1993 Relationship with other TIPs




SSDS Yes, amicable negotiations


Yes, diplomatic negotiations upon written notification and ad hoc

arbitration


arbitration

Other ISDSM




rules



rules ISA Yes Yes Yes, upon written request Scope of claims General General General Forums

ICSID ICSID and ad hoc arbitration under


Local remedies first No No No Applicable law Not indicated Not indicated Not indicated Consolidation of claims No No No Provisional measures No No No Amicus curiae submissions by third parties

No No No

Transparency in hearings No No No Transparency in documents

No No No







119

Appendix 8: BITs Belize – EU MS

Belize/ Relevant Provision

Netherlands United Kingdom




SSDS Yes, diplomatic negotiations, ad hoc

arbitration, amicable and ex eaquo et bono settlements


arbitration

Other ISDSM Conciliation under ICSID rules


to 3 months ISA Yes Yes, upon written request Scope of claims General Treaty claims only Forums

ICSID ICSID, ICSID and ad hoc


Local remedies first No Yes, up to 3 months Applicable law Not indicated Not indicated Consolidation of claims No No Provisional measures No No Amicus curiae submissions by third parties

No No


No No






120

Appendix 9: BITs Dominica – EU MS

Dominica/ Relevant Provision






arbitration


arbitration Other ISDSM

No



rules ISA No Yes, upon written request Scope of claims General General Forums

ICSID ICC, ICSID and ad hoc


Local remedies first No No Applicable law Not indicated Not indicated Consolidation of claims No No Provisional measures No No Amicus curiae submissions by third parties

No No


No No






121

Appendix 10: BITs Grenada – EU MS

Grenada/ Relevant Provision

United Kingdom

Year Sig/Year Enf 1988/1988 Relationship with other TIPs






ISA Yes, upon written request Scope of claims General Forums ICC, ICSID and ad hoc


Local remedies first No Applicable law Not indicated Consolidation of claims No Provisional measures No Amicus curiae submissions by third parties

No

Transparency in hearings No Transparency in documents

No



Review of rulings No


122

Appendix 11: BITs Guyana – EU MS

Guyana/ Relevant Provision





SSDS Yes, amicable negotiations and ad hoc arbitration


arbitration Other ISDSM




rules ISA Yes Yes, upon written request Scope of claims General General Forums ICSID Domestic courts and ICSID Local remedies first No Yes, up to 3 months Applicable law Not indicated Not indicated Consolidation of claims No No Provisional measures No No Amicus curiae submissions by third parties

No No


No No






123

Appendix 12: BITs Haiti – EU MS

Haiti/ Relevant Provision

France Germany United Kingdom






arbitration


arbitration


arbitration Other ISDSM Amicable negotiations up

to 6 months No Amicable negotiations


ISA Yes No Yes Scope of claims General General General Forums ICC Not indicated ICC and ad hoc arbitration

under UNCITRAL rules Local remedies first No No Fork in the road clause Applicable law BIT Not indicated No indicated Consolidation of claims No No No Provisional measures No According to general rules

of int. law No

Amicus curiae submissions by third parties

No No No


No No No







124

Appendix 13: BITs Jamaica – EU MS

Jamaica/ Relevant Provision

France Germany Italy Netherlands Spain United Kingdom









arbitration


arbitration


arbitration

Yes, diplomatic negotiations, ad hoc

arbitration, amicable and ex eaquo et bono sett.




arbitration


to 6 months

Amicable negotiations and conciliation under ICSID

rules






to 6 months Amicable negotiations

ISA Yes Yes Yes Yes upon written request Scope of claims General General General General Treaty claims only General Forums

ICSID and domestic courts Domestic courts and ICSID ICSID and ad hoc arbitration under


Domestic courts, ICSID and ad hoc arbitration

under UNCITRAL rules Domestic courts and ICSID


Yes, but up to 18 months in case of nationalizations or

expropriations Yes, but up to 18 months Fork in the road clause Yes, if no agreement is

reached

Applicable law Spec. agreements and BIT Not indicated Not indicated Not indicated

BIT, spec. agreements and princ. of int. law, domestic law of the contracting party

Not indicated


No No No No No No


No No No No No No




In ISA arbitrators must be nationals from third party

State with diplomatic relationship to both parties


State






125

Appendix 14: BITs Saint Lucia – EU MS

Saint Lucia/ Relevant Provision






arbitration






to 3 months

ISA Yes Yes, upon written request Scope of claims General General Forums

ICSID ICC, ICSID and ad hoc


Local remedies first No No Applicable law Not indicated, but award

must be executed according to domestic law of contracting party

Not indicated


No No


No No






126

Appendix 15: BITs Saint Lucia – EU MS

Saint Vincent and the Grenadines/

Relevant Provision Germany




arbitration Other ISDSM No ISA No Scope of claims Treaty claims only Forums No indicated Local remedies first No Applicable law Not indicated Consolidation of claims No Provisional measures No Amicus curiae submissions by third parties

No


No





127

Appendix 16: BITs Suriname – EU MS

Suriname/ Relevant Provision

Netherlands



SSDS Yes, diplomatic negotiations, ad hoc

arbitration, amicable and ex eaquo et bono settlements

Other ISDSM No ISA Yes Scope of claims General Forums ICSID Local remedies first No Applicable law Not indicated Consolidation of claims No Provisional measures No Amicus curiae submissions by third parties

No


No





128

Appendix 17: BITs Trinidad and Tobago – EU MS

Trinidad and Tobago / Relevant Provision

France Germany Spain United Kingdom

Year Sig/Year Enf 1993/1996 2006/2010 1999/2004 1993/1993 Relationship with other TIPs






arbitration


arbitration




arbitration Other ISDSM Amicable negotiations up

to 6 months, but not for spec. agreements

Amicable negotiations up to 6 months, but not for

spec. agreements


to 6 months


to 6 months ISA Yes, but not for spec.

agreements No Yes Yes, upon written request

Scope of claims General Treaty claims only General General Forums ICC, ICSID and ad hoc


ICSID, ICC and ad hoc arbitration under

UNCITRAL rules

ICSID and ad hoc arbitration under

UNCITRAL rules

ICC, ICSID and ad hoc arbitration under

UNCITRAL rules Local remedies first Fork in the road clause No Fork in the road clause No Applicable law

BIT and spec. agreements Not indicated BIT, spec. agreements and princ. of int. law, domestic law of the contracting party

Not indicated

Consolidation of claims No No No No Provisional measures No No No No Amicus curiae submissions by third parties

No No No No

Transparency in hearings No No No No Transparency in documents

No No No No






Review of rulings No No No No


129

Appendix 18: BITs Colombia – EU MS

Colombia/ Relevant Provisions

Spain United Kingdom


CO-EC-PE and EU Agreement CO-EC-PE and EU Agreement



Yes, direct negotiations up to 6 months and ad hoc arbitration


to 6 months and consultations


months, mediation and conciliation

ISA Yes, upon written

notification 90 days in advance

Yes

Scope of claims Treaty claims only, up to 3

years as of knowledge Treaty claims only, up to 5



UNCITRAL rules

Domestic courts, ICSID, ICC and ad hoc tribunal under

UNCITRAL rules or domestic rules

Local remedies first Yes, when required by ad.

domestic law Yes, when required by ad.

domestic law up to 6 months

Applicable law BIT, domestic law of

contracting party and princ. of int. law

Not indicated


No No


No No








130

Appendix 19: BITs Ecuador – EU MS

Ecuador/ Relevant Provisions

France Germany Italy Netherlands Spain Sweden


CO-EC-PE and EU Trade Agreement 2012






SSDS Yes, amicable negotiations

up to 1 year and ad hoc arbitration


ad hoc arbitration



Yes, consultations, amicable negotiations, ex aequo et bono settlement



arbitration

Yes, consultations, diplomatic negotiations up


Other ISDSM Conciliation under ICSID

rules


to 6 months

Spec. agreement procedure and negotiations upon

written notification up to 6 months and



to 6 months



ISA Yes, but parties could

resume amicable negotiations at any time

Yes and also if award is against BIT Yes Yes Yes Yes

Scope of claims General, but up to 15 years

as of termination of BIT Treaty claims only General General General General

Forums Domestic courts and ICSID Domestic courts and ICSID Domestic courts, ICSID, and ad hoc tribunal under

UNCITRAL rules


UNCITRAL rules


UNCITRAL rules


UNCITRAL rules

Local remedies first Yes, but up to 6 months Yes, but up to 18 months

and reserves right to arbitration

Fork in the road clause Fork in the road clause Fork in the road clause No

Applicable law Not indicated Not indicated Not indicated

Applicable law, but awards executed according to

domestic law of contracting party

BIT, spec. agreements and princ. of int. law Not indicated


No No No No No No


No No No No No No

Regulations on arbitrators In SSDS president must be national of third party State







131

Ecuador/ Relevant Provisions

United Kingdom



SSDS Yes, negotiations and ad

hoc arbitration


months and conciliation under ICSID rules

ISA Yes Scope of claims General


UNCITRAL rules Local remedies first Yes, but up to 6 months Applicable law Not indicated Consolidation of claims No Provisional measures No Amicus curiae submissions by third parties

No


No





132

Appendix 20: BITs Peru – EU MS

Peru/ Relevant Provisions


Czech Republic Denmark Finland France Germany









negotiations, Commission and ad hoc arbitration



Yes, negotiation up to 3 months and ad hoc

arbitration

Yes, negotiation up to 6 months and ad hoc

arbitration




arbitration

Other ISDSM

Amicable negotiations upon written notification, expert adv. and dipl. conciliation

up to 6 months

No Negotiations up to 3 months

Negotiations up to 6 months and conciliations

under ICSID rules

Amicable negotiations up to 6 months and spec.

agreements

Negotiations up to 6 months

ISDS arbitration

Yes, but express consent and renounce to domestic

forums required and up to 3 years as of knowledge

No Yes Yes Yes, but express consent from both parties required Yes

Scope of claims General, but not to claims

before BIT General General Treaty claims only General General



Not indicated ICSID and ad hoc tribunal under UNCITRAL rules ICSID ICSID


UNCITRAL rules

Local remedies first Fork in the road clause No No No No Yes, but up to 18 months and no final judgment

Applicable law

BIT, law of the claimant party and princ. of int. law

but awards according to domest. law

Not indicated BIT, spec. agreements and princ. of int. law Not indicated Not indicated BIT, domestic law and

spec. agreement

Consolidation of claims Yes No No No No No Provisional measures No No No No No No Amicus curiae submissions by third parties

No No No No No No


No No No No No No









133

Peru/ Relevant Provisions

Italy Netherlands Portugal Romania Spain Sweden











arbitration


arbitration




arbitration



Other ISDSM

Specific agreements and amicable negotiations upon written notification up to 6

months

Amicable consultation up to 3 months, amicable negotiation during

arbitration allowed and ex aequo et bono settlement


Amicable consultations and negotiations up to 6 months


months


under ICSID rules

ISDS arbitration Yes, but no if spec.

agreement Yes Yes Yes Yes Yes

Scope of claims General General, but for investment bf. BIT only up to 15 years

General, but no for claims bf. BIT enforcement General General General



ICSID Domestic courts, ICSID



UNCITRAL rules


Domestic law and ICSID

Local remedies first Fork in the road clause Fork in the road clause Fork in the road clause Fork in the road clause Fork in the road clause Yes, but up to 3 months, not final judgment and

reserves right to arbitration

Applicable law Not indicated No indicated BIT and princ. of int. law BIT, domestic law, spec. agreements and princ. of

int. law

BIT, spec. agreements domestic law and princ. of



No No No No No No


No No No No No No




In SSDS president must be national of third party State with diplomatic relations to

both parties





134

Peru/

Relevant Provisions United Kingdom






months and conciliation under ICSID rules

ISDS arbitration Yes Scope of claims General Forums Domestic courts and ICSID Local remedies first Yes, but up to 3 months Applicable law Not indicated Consolidation of claims No Provisional measures No Amicus curiae submissions by third parties

No


No





135

Appendix 21: BITs Costa Rica – EU MS

Costa Rica/ Relevant Provisions

Czech Republic France Germany Netherlands Spain

Year Sig/Year Enf 1998/2001 1984/1999 1994/1998 1999/2001 1997/1999 Relationship with other TIPs

CA-EU Association Agreement





SSDS Yes, consultations and


Yes, diplomatic negotiations, and ad hoc

arbitration



arbitration





Amicable negotiation up to 6 months




to 6 months ISA Yes Yes Yes Yes Yes

Scope of claims General General General General, but no claims bf. BIT enforcement Treaty claims only


UNCITRAL rules ICSID ICSID


UNCITRAL rules

Domestic courts and ICSID, and ad hoc tribunal

under UNCITRAL rules



upon withdrawal before final domestic judgment

Yes, but reserves right to arbitration Fork in the road clause

Fork in the road clause, but CRC reserves right to

arbitration upon withdrawal before final domestic

judgment and NLD direct arbitration


Applicable law BIT, princ. of int. law,

domestic law of contracting party and princ. of int. law

Not indicated BIT, spec. agreements,

domestic law of contracting party and princ. of int. law

Not indicated BIT, spec. agreements and princ. of int. law

Consolidation of claims No No No No No Provisional measures No No No No No Amicus curiae submissions by third parties

No No No No No

Transparency in hearings No No No No No Transparency in documents

No No No No No









136

Appendix 22: BITs El Salvador – EU MS

El Salvador/ Relevant Provisions


Czech Republic Finland France Germany Netherlands











ad hoc arbitration



Yes, diplomatic negotiations, and ad hoc

arbitration



Yes, consultations and amicable negotiations up to 6 months, ex aequo et bono

settlement and ad hoc arbitration

Other ISDSM

Amicable negotiations upon written notification by diplomatic channels up to 6

months

Amicable negotiations Amicable negotiations up to 3 months


Consultations and amicable negotiations up to 6 months



Scope of claims General General Treaty claims only General Treaty claims only General, but only claims after BIT enforcement

Forums Domestic courts and ICSID Domestic courts, ICSID, and ad hoc tribunal under

UNCITRAL rules


UNCITRAL rules

ICSID and ICC or other agreement bt. parties ICSID


UNCITRAL rules

Local remedies first Fork in the road clause Fork in the road clause, but claim withdrawal bef. final judgment in domestic court

Fork in the road clause, but claim withdrawal bef. final judgment in domestic court

No No For SV yes, but for NL Fork in the road clause

Applicable law

Domestic law of the contracting party, BIT,

spec. agreements and int. princ. of law

Not indicated Not indicated Spec. agreements Not indicated

Not indicated, but award executed accord. to



No No No No No No


No No No No No No








137

El Salvador/ Relevant Provisions






negotiations up to 6 months Yes, diplomatic




Negotiations up to 3 months and conciliation

under ICSID rules ISA Yes Scope of claims Treaty claims only General




Applicable law BIT, other agreements bt. parties and princ. of int.

law Not indicated


No No


No No






138

Appendix 23: BITs Guatemala – EU MS

Guatemala/ Relevant Provisions


Czech Republic Finland France Germany Italy











ad hoc arbitration









Other ISDSM Consultation upon written

notification and negotiation up to 6 months




Consultations and amicable negotiations up to 6 months

Spec. agreements and negotiations up to 6 months

ISA Yes Yes Yes Yes Yes Yes Scope of claims General General General General General General

Forums ICSID, and ad hoc tribunal under UNCITRAL rules,

ICC and CCS


UNCITRAL rules



Other forum agreed and ICSIS if both parties are

part of

Domestic courts, ICSID, and ad hoc tribunal under UNCITRAL rules/Paris or

Stockholm

Local remedies first No, but fork in the road

clause for arbitration Fork in the road clause Yes, but reserves right to

arbitration upon withdrawal before final judgment


upon withdrawal before final judgment

No Fork in the road clause

Applicable law


other agreements bt. parties and princ. of int. law

Not indicated

Not indicated, but award executed accord. to

domestic aw of contracting party

BIT and princ. of int. law Not indicated Spec. agreements


No No No No No No


No No No No No No

Regulations on arbitrators No In SSDS president must be

national of third party State In SSDS president must be national of third party State





139

Guatemala/ Relevant Provisions

Netherlands Spain Sweden





SSDS

Yes, diplomatic negotiations up to 6

months, ex aequo et bono settlement and ad hoc

arbitration

Yes, diplomatic negotiations up to 6 months Yes, negotiations up to 6


Other ISDSM Consultations and amicable

negotiations


to 6 months

Negotiation up to 6 months and conciliation under

ICSID rules ISA Yes Yes Scope of claims General General General

Forums ICSID and ad hoc tribunal under UNCITRAL rules


UNCITRAL rules


Local remedies first No Fork in the road clause No Applicable law Not indicated BIT and princ. of int. law Not indicated Consolidation of claims No No No Provisional measures No No No Amicus curiae submissions by third parties

No No No


No No No







140

Appendix 24: BITs Honduras – EU MS

Honduras/ Relevant Provisions

France Germany Netherlands Spain United Kingdom










Yes, consultations and diplomatic negotiations up to 6 months, ex aequo et

bono settlement and ad hoc arbitration



arbitration


to 6 months


conciliation under ICSID if both parties are part of


Amicable negotiations upon written notification

up to 6 months


up to 3 months and ad hoc arbitration

ISA Yes Yes Yes Yes

Scope of claims General General General, but no claims bf. BIT enforcement General Treaty claims only



ICSID Domestic courts, ICSID



UNCITRAL rules


rules Local remedies first Fork in the road clause No Fork in the road clause Fork in the road clause No

Applicable law

Domestic law of the contracting party, BIT,

spec. agreement and princ. of int. law

Not indicated Not indicated BIT, spec. agreement and princ. of int. law Not indicated


No No No No No

Transparency in hearings No No No No No Transparency in documents

No No No No No








141

Appendix 25: BITs Nicaragua – EU MS

Nicaragua/ Relevant Provisions

Czech Republic Denmark France Germany Italy Netherlands









negotiations up to 6 months ad hoc arbitration






Yes, consultation and negotiations up to 6 months


Yes, diplomatic negotiations, ex aequo et

bono settlement and ad hoc arbitration


months Negotiation up to 6 months Negotiations up to 6 months

Amicable negotiations up to 6 months and other

agreement

Consultations and negotiations up to 6 months

Diplomatic exchanges, consultations and



Scope of claims General General General General, but no claims before BIT General General, but not previous

govern. actions


UNCITRAL rules Domestic courts and ICSID ICSID and ad hoc tribunal

under UNCITRAL rules Domestic courts and ICSID


UNCITRAL rules ICSID

Local remedies first Fork in the road clause Fork in the road clause No No Fork in the road clause No

Applicable law Not indicated BIT, other agreements bt. parties and princ. of int.

law Not indicated Not indicated Not indicated Not indicated


No No No No No No


No No No No No No




In SSDS president must be national of third party State No In SSDS president must be

national of third party State Review of rulings No No No No No No

142

Nicaragua/ Relevant Provisions






months Yes, diplomatic




Negotiation and conciliation under ICSID

rules ISA Yes Scope of claims Treaty claims only General


Domestic courts and ICSID


Applicable law BIT, domestic law, other agreements and princ. of



No No


No No






143

Appendix 26: BITs Panama – EU MS

Panama/ Relevant Provisions

Czech Republic Finland France Germany Italy Netherlands



SSDS Yes, consultations and

negotiations up to 6 months ad hoc arbitration



Yes, bilateral Commission, diplomatic negotiations up





Yes, consultation, diplomatic negotiations, ex aequo et bono settlement


Other ISDSM Negotiations Amicable negotiations


Other agreements and amicable negotiations up to

6 months


6 months


6 months


ISA Yes Yes Yes Yes Yes Yes Scope of claims General General General General General General


UNCITRAL rules


UNCITRAL rules and other agreed

Ad hoc tribunal under UNCITRAL rules ICSID




Fork in the road clause, but reserves right to arbitration before sentence of domestic

court

Fork in the road clause bt. forums No No Fork in the road clause Fork in the road clause

Applicable law Not indicated

BIT, and princ. of int. law, but execution of arbitral

awards according to national law

Not indicated Not indicated Not indicated Not indicated


No No No No No No


No No No No No No








144

Panama/ Relevant Provisions



None None None


negotiations up to 6 months Yes, negotiations up to 6



arbitration



Amicable negotiation up to 6 months

Negotiation upon written notification up to 6 months

and other agreements

ISA Yes, upon written

notification Yes Yes

Scope of claims Treaty claims only General Treaty claims only




Ad hoc tribunal under UNCITRAL rules


Applicable law BIT, domestic law, other agreements bt. parties and

princ. of int. law Not indicated Not indicated

Consolidation of claims No No No Provisional measures No No No Amicus curiae submissions by third parties

No No No


No No No







145

Appendix 27: BITs Bolivia – EU MS

Bolivia/ Relevant Provisions

Italy Romania United Kingdom


None None None



Yes, direct negotiations and ad hoc arbitration




to 6 months Amicable consultations and

diplomatic negotiations


to 6 months ISDS arbitration Yes Yes Yes Scope of claims Treaty claims only General Treaty claims only




UNCITRAL rules


rules Local remedies first Fork in the road clause Fork in the road clause No Applicable law General international law Not indicated Not indicated Consolidation of claims No No No Provisional measures No No No Amicus curiae submissions by third parties

No No No


No No No







146

Appendix 28: BITs Cuba – EU MS

Cuba/ Relevant Provisions

Austria France Germany Greece Hungary Italy

Year Sig/Year Enf 2000/2001 1997/1999 1996/1998 1996/1997 1999/2003 1993/1995 Relationship with other

TIPs None None None None None None

SSDS

Yes, amicable negotiations, consultation, mediation or conciliation up to 60 days





arbitration



Yes, consultations negotiations up to 6 months




to 60 days Amicable negotiations up

to 6 months Amicable negotiation up to

6 months Amicable negotiations up to 6 months, consultations



ISA Yes Yes Yes Yes Yes

Scope of claims Treaty claims only up to 5

years as of knowledge General General Treaty claims only General but requires case by case consent Treaty claims only


and ICC Ad hoc tribunal under

UNCITRAL rules

Ad hoc tribunal, if no agreement on arbitrators president of ICC decides

Domestic courts, ICC and ad hoc tribunal under

UNCITRAL rules

ICC and ad hoc tribunal under UNCITRAL rules

Domestic courts, ICC and ad hoc tribunal under

UNCITRAL rules Local remedies first Yes, up to first judgment No No No No Fork in the road clause

Applicable law BIT and princ. of int. law Not indicated Not indicated BIT, spec. agreements and princ. of int. law Not indicated Not indicated

Consolidation of claims No No No No No No Provisional measures No No No No No No


No No No No No No

Transparency in hearings No No No No No No Transparency in

documents No No No No No No

Regulations on arbitrators No In SSDS president must be national of third party State






147

Cuba/ Relevant Provisions

Netherlands Portugal Romania Slovakia Spain United Kingdom

Year 1999/2001 1998/1999 1996/1997 1997/1997 1994/1995 1995/1995 Relationship with other

TIPs None None None None None

SSDS


months, ad hoc arbitration with amicable negotiations

and ex aequo et bono settlements




arbitration

Yes, consultations or negotiations up to 6 months



arbitration


arbitration


to 6 months Amicable negotiations up

to 6 months Amicable negotiations and conciliation up to 6 months

Negotiations up to 6 months and other

agreements bt. parties

Amicable negotiations upon written notifications

up to 6 months


to 3 months ISA Yes Yes Yes Yes Yes

Scope of claims General, but no claims bf.

BIT enforcement General General Treaty claims only Treaty claims only



Domestic courts and ad hoc tribunal under UNCITRAL

rules

ICC and Ad hoc tribunal under UNCITRAL rules

ICC and ad hoc tribunal under UNCITRAL rules

ICC and Ad hoc tribunal under UNCITRAL rules

Local remedies first No Fork in the road clause Fork in the road clause Fork in the road clause No

Applicable law

Not indicated, but awards execution accord. to


Not indicated Not indicated No indicated

BIT, spec. agreements, princ. of int. law and


Not indicated

Consolidation of claims No No No No No No Provisional measures No No No No No No


No No No No No No

Transparency in hearings No No No No No No Transparency in

documents No No No No No No











148

Appendix 29: BITs Venezuela – EU MS

Venezuela/ Relevant Provisions


Czech Republic Denmark France Germany Italy Portugal

Year Sig/Year Enf 1998/2004 1995/2006 1994/1996 2001/2004 1996/1998 1990/1993 1994/1995 Relationship with other TIPs

None None None None None None None

SSDS


months, Commission and ad hoc arbitration

Yes, consultations and negotiations up to 6 months and ad hoc

arbitration


arbitration


arbitration


Yes, diplomatic negotiations and

Commissions up to 6 months and ad hoc

arbitration


arbitration

Other ISDSM

Negotiations and conciliation upon

written notification up to 6 months

Negotiations up to 6 months and other

agreement bt. parties


arbitration


Negotiations up to 6 months Amicable negotiations Amicable negotiations

up to 6 months

ISDS arbitration Yes Yes Yes Yes Yes Yes Yes

Scope of claims General, but not previous claims Treaty claims only Treaty claims only Treaty claims only Treaty claims only Treaty claims only General

Forums

Domestic courts, ICSID and ad hoc

tribunal under UNCITRAL rules

ICSID and ad hoc tribunal under

UNCITRAL rules


UNCITRAL rules

Domestic courts and ICSID


UNCITRAL rules





Local remedies first Fork in the road clause No No Fork in the road clause No Yes, but up to 18

months and if not final judgment


Applicable law

Law of the claiming party, BIT, spec.


Not indicated BIT, spec. agreements and princ. of int. law Not indicated

BIT, other agreements, domestic law of the claiming party and princ. of int. law

Law of the claiming party, BIT, spec.


BIT, princ. of int. law, law of the claiming

party and spec. agreements

Consolidation of claims No No No No No No No Provisional measures No No No No No No No Amicus curiae submissions by third parties

No No No No No No No

Transparency in hearings


Transparency in documents



In SSDS president must be national of

third party State

In SSDS president must be national of third

party State


party State


party State


party State


party State


party State with dipl. relations to both parties

in SSDS Review of rulings No No No No No No

149

Venezuela/ Relevant Provisions



None None None



Yes, diplomatic negotiations up to 60 days



arbitration



Amicable negotiations and conciliation under ICSID

rules


ISDS arbitration Yes Yes Yes Scope of claims Treaty claims only Treaty claims only General






Applicable law BIT, spec. agreements and

princ. of int. law Not indicated Not indicated

Consolidation of claims No No No Provisional measures No No No Amicus curiae submissions by third parties

No No No


No No No







150

Appendix 30: BITs Dominican Republic – EU MS

Dominican Republic/ Relevant Provisions

Finland France Italy Netherlands Spain


CARIFORUM-EC EPA (2008) CARIFORUM-EC EPA (2008)

CARIFORUM-EC EPA (2008) CARIFORUM-EC EPA (2008) CARIFORUM-EC EPA

(2008)

SSDS Yes, diplomatic negotiations up


Yes, diplomatic negotiations, and ad

hoc arbitration




arbitration with amicable or ex aequo et bono settlements


arbitration

Other ISDSM Amicable negotiations up to 6

months Amicable negotiation

up to 6 months

Consultations and negotiations up to 6 months,

procedure of invest. agreement

Amicable negotiations and consultations up to 4 months


up to 6 months

ISA Yes Yes Yes Yes Yes Scope of claims General General General General Treaty claims only

Forums Domestic courts, ICSID, and ad hoc tribunal under UNCITRAL

rules

ICSID, and ad hoc tribunal under

UNCITRAL rules


UNCITRAL rules

Domestic courts, ICC, ICSID, and ad hoc tribunal under

UNCITRAL rules

Ad hoc tribunal under UNCITRAL rules

Local remedies first Fork in the road clause No Fork in the road clause Fork in the road clause Fork in the road clause

Applicable law

BIT and and princ. of int. law, arbitral awards should be

enforced according to domestic law of contracting party

BIT, spec. agreements and and princ. of int.

law Not indicated Not indicated

BIT, other agreements bt. parties and princ. of

int. law


No No No No No

Transparency in hearings

No No No No No

Transparency in documents

No No No No No



In SSDS president must be national of

third party State




In SSDS president must be national of third party

State



Appendix A: ICSID – Cases against Argentina

151

Case No. Date Registered Claimant(s) Claimant Nationality Status ARB/97/3 19.02.1997 Compañía de Aguas del Aconquija S.A. and Vivendi Universal

S.A. France Concluded

ARB/02/8 17.07.2002 Siemens A.G. Germany Concluded ARB/03/7 23.04.2003 Camuzzi International S.A. Luxembourg Concluded ARB/03/2 05.05.2003 Camuzzi International S.A. Luxembourg Pending ARB/03/10 29.05.2003 Gas Natural SDG, S.A. Spain Pending ARB/03/18 17.07.2003 Aguas Cordobesas S.A., Suez, and Sociedad General de Aguas de

Barcelona S.A. Spain and France Concluded

ARB/03/19 17.07.2003 Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A

France Concluded

ARB/03/17 17.07.2003 Suez, Sociedad General de Aguas de Barcelona S.A. and Interagua Servicios Integrales de Agua S.A.

Spain and France Pending

ARB/03/20 21.07.2003 Telefónica S.A Spain Concluded ARB/03/23 12.08.2003 EDF International S.A., SAUR International S.A. and León

Participaciones Argentinas S.A. France and Luxembourg Concluded

ARB/03/22 12.08.2003 Electricidad Argentina S.A. and EDF International S.A. France Concluded ARB/04/4 27.01.2004 SAUR International France Concluded ARB/04/1 22.01.2004 Total S.A. Spain Concluded ARB/04/18 26.08.2004 France Telecom S.A. France Concluded ARB/04/18 26.08.2004 France Telecom S.A. France Concluded ARB/05/1 14.01.2005 Daimler Financial Services AG Germany Concluded ARB/04/14 07.09.2005 Wintershall Aktiengesellschaft Germany Concluded ARB/07/8 27.03.2007 Giovanni Alemanni and others Italy Concluded ARB/07/17 25.07.2007 Impregilo S.p.A. Italy Concluded ARB/07/17 25.07.2007 Impregilo S.p.A. Italy Concluded ARB/07/26 01.10.2007 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao

Biskaia Ur Partzuergoa Spain Concluded

ARB/07/31 18.12.2007 HOCHTIEF Aktiengesellschaft Germany Pending ARB/08/14 15.10.2008 Impregilo S.p.A. Italy Concluded ARB/09/1 30.01.2009 Teinver S.A., Transportes de Cercanías S.A. and Autobuses

Urbanos del Sur S.A. Spain Pending

ARB/12/38 11.07.2013 Repsol, S.A. and Repsol Butano, S.A. Spain Concluded ARB/14/32 18.12.2014 Casinos Austria International GmbH and Casinos Austria

Aktiengesellschaft Austria Pending

ARB/15/39 17.09.2015 Salini Impregilo S.p.A. Italy Pending ARB/15/48 17.12.2015 Abertis Infraestructuras, S.A. Spain Pending

Source: Cases Data Base, ICSID, World Bank, accessed 01 July 2017, < https://icsid.worldbank.org/en/Pages/cases/AdvancedSearch.aspx>





























152

Appendix B: ICSID – Cases against Ecuador

Case No. Date Registered Claimant(s) Claimant Nationality Status ARB/01/10 05.10.2001 Repsol YPS Ecuador S.A. Spain Concluded ARB/05/12 29.07.2005 Machala Power Cia. Ltd. And Noble Energy Inc. United Kingdom Concluded ARB/06/17 31.10.2006 Euro Control S.A. y Tecnicas Reunidas S.A. Spain Concluded ARB/08/5 02.06.2008 Burlington Resources Andean Ltd., Burlington Resources

Ecuador Ltd., Burlington Resources Oriente Ltd. and Burlington Resources Inc.

United Kingdom Concluded

ARB/08/10 08.08.2008 CRS Resources, LDC, Murphy Ecuador Oil Co. Ltd., Overseas Petroleum and Investment Corp., Repsol YPF Ecuador S.A.

United Kingdom and Spain Concluded

ARB/09/23 30.12.2009 ADC Management Ltd., AG Concessions Inc., Aecon Investment Corp., Black Coral Investments Inc., Corporación Quiport S.A., Icaros Development Corporation S.A. and Quiport Holdings S.A.

United Kingdom Concluded


153

Appendix C: ICSID – Cases against Peru

Case No. Date Registered Claimant(s) Claimant Nationality Status ARB/98/6 28.10.1998 Compagnie Miniere Internacionale Or S.A. France Concluded ARB/03/28 03.06.2003 Duke Energia Internacional Peru Investment No. 1 Ltd. United Kingdom Concluded ARB/10/17 20.07.2010 Renee Rose Levy de Levi France Concluded ARB/11/17 24.06.2011 Renée Rose Levy and Gremcitel S.A.

France Concluded

ARB/11/21 22.07.2011 DP World Callao S.R.L., P&O Dover (Holding) Limited, and The Peninsular and Oriental Steam Navigation Company

United Kingdom Pending

ARB/12/5 15.02.2012 Isolux Corsán Concesiones S.A.

Concluded

ARB/17/9 05.04.2017 Lidercón, S.L.

Spain Pending


154

Appendix D: ICSID – Cases against Venezuela

Case No. Date Registered Claimant(s) Claimant Nationality Status

ARB/96/3 27.11.1996 Fedax N.V The Netherlands Concluded ARB/05/4 06.04.2005 I&I Beheer B.V. The Netherlands Concluded ARB/06/4 14.03.2006 Vestey Group Ltd United Kingdom Pending ARB/07/4 06.02.2007 Eni Dación B.V. The Netherlands Concluded ARB/07/27 10.10.2007 Venezuela Holdings B.V. and others The Netherlands Concluded

ARB/07/30 23.07.2008 ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V. and ConocoPhillips Gulf of Paria B.V. The Netherlands Pending

ARB/08/15 30.10.2008 CEMEX Caracas Investments B.V. and CEMEX Caracas II Investments B.V. The Netherlands Concluded

ARB/09/3 10.04.2009 Holcim Limited, Holderfin B.V. and Caricement B.V. The Netherlands Pending ARB/10/9 12.04.2010 Universal Compression International Holdings, S.L.U. Spain Pending ARB/11/1 05.01.2011 Highbury International AVV and Ramstein Trading Inc. The Netherlands Pending ARB/11/5 23.02.2011 Longreef Investments A.V.V. The Netherlands Pending

ARB/11/10 20.04.2011

The Williams Companies, International Holdings B.V., WilPro Energy Services (El Furrial) Limited and WilPro Energy Services (Pigap II) Limited

The Netherlands and the United Kingdom Concluded

ARB/1125 30.03.2012 OI European Group B.V. The Netherlands Pending

ARB/11/26 30.09.2011 Tenaris S.A. and Talta - Trading e Marketing Sociedade Unipessoal Lda. Portugal and Luxembourg Pending

ARB/11/30 21.11.2011 Hortensia Margarita Shortt United Kingdom Concluded ARB/12/13 15.06.2012 Saint-Gobain Performance Plastics Europe France Pending ARB/12/18 25.07.2012 Valle Verde Sociedad Financiera S.L. Spain Pending ARB/12/19 01.08.2012 Ternium S.A. and Consorcio Siderurgia Amazonia S.L. Spain and Luxembourg Concluded ARB/12/22 15.08.2012 Venoklim Holding B.V. The Netherlands Pending

ARB/12/23 21.08.2012 Tenaris S.A. and Talta - Trading e Marketing Sociedade Unipessoal Lda. Portugal and Luxembourg Pending

ARB/13/11 06.06.2013 Valores Mundiales, S.L. and Consorcio Andino S.L. Spain Pending ARB(AF)/14/1 10.04.2014 Anglo American PLC United Kingdom Pending

ARB/14/10 19.05.2015 Highbury International AVV, Compañía Minera de Bajo Caroní AVV, and Ramstein Trading Inc. The Netherlands Pending

ARB (AF)/16/1 05.05.2016 Luis García Armas Spain Pending ARB/1623 25.07.2016 Agroinsumos Ibero-Americanos, S.L. and others Spain Pending

Source: Cases Data Base, ICSID, World Bank, accessed 01 July 2017, < https://icsid.worldbank.org/en/Pages/cases/AdvancedSearch.aspx

155

Resume

Name of the author: Ruth Maria Salas Paniagua

Born on: Alajuela, Costa Rica

Studies on: Law and International Trade

Degrees:

09/2002 – 07/2004 CINPE, National University of Costa Rica, San José, Costa

Rica: M.Sc. in International Trade 02/1996 – 12/1996 Law School, University of Costa Rica, San José, Costa Rica:

Post graduate Studies in Commercial and Corporate Law 02/1988 – 02/1995 Law School, University of Costa Rica, San José, Costa Rica:

Graduate (LLM) in Law Studies.

Field of business activity: International Business Law

Course/Year: 2016/2017 Executive Master of European and International

Business Law M.B.L. – HSG at the University of St. Gallen.

Statement I hereby declare

- that I have written this paper without any help from others and without the use of documents

and aids other than those stated above,

- that I have mentioned all the sources used and that I have cited them correctly according to

established academic citation rules,

- that I am aware that my work can be electronically checked for plagiarism and that I hereby

grant the University of St.Gallen copyright in accordance with the Examination Regulations

in so far as this is required for administrative action.

Location, Date: Zürich, 18 July 2017

Signature:

university of st. gallen · executive master of european and international business law of the...

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