INVESTMENT TREATY ARBITRATION

Current Practices, Challenges and Future Paths

duensingkippen.com

Olaf Duensing, FCIArbDUENSING KIPPEN, LTD

DUENSING KIPPEN is an international law firm specializing real estate, tax, business transaction, and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in 45 other countries

1) Bilateral agreements between two countries (BITs). Thailand is currently a party to at least 34 such

agreements;

DIFFERENT FORMS OF INVESTMENT TREATIES( IT)

2) Multilateral investment agreements between more than two countries (MITs), an example of which is the 2009 ASEAN Comprehensive Investment Agreement (ACIA), to which Thailand is also party; and

DIFFERENT FORMS OF IT

3) Free-trade agreement (FTA), which although not dealing only with investment protection issues, commonly include such provisions. The 2009 ASEAN-Australia-New Zealand Free-Trade Treaty (AANZFTT) to which Thailand is also a party is a good example of an FTA.

DIFFERENT FORMS OF IT

The Investors (under the German-Thai BIT) can be:Natural persons Legal entities, including companies, corporations, business associations and other organizations, with or without legal personality, which are constituted or otherwise duly organized under the law of that contracting party and have their seat in the territory of that contracting state.

Eligibility

The INVESTMENT (Thai German BIT) can be:Every kind of asset, including-Movable and immovable property-Shares/interest in company-Claims to money or performance with economic value-Intellectual property rights-Business concessions

Eligibility

1)  “Fair and equitable treatment” in accordance with international minimum standards (which has generally been equated with the investor’s legitimate expectations to be treated transparently, predictably, consistently, and justly by the host State);

Substantive Rights

2)  “Full protection and security” (which imposes positive obligations on the host State to protect investments);

Substantive Rights

3)  No “Arbitrary or discriminatory treatment” (which imposes a duty on the host State not to disregard internationally accepted standards of due process of law);

Substantive Rights

4)  No direct or indirect “Expropriation” of the investor’s property by the host State without “prompt, adequate, and effective compensation”;

Substantive Rights

5)  “National treatment” and “Most favored nation treatment” (which are sometimes treated separately and which require the host State to treat the investor no worse than it treats its own nationals or investor parties from third States); and

Substantive Rights

6)  The observance of specific contractual undertakings by the host State with the investor ( “Umbrella clauses”) which require the host State to honor its undertakings with investors regarding their investment.

Substantive Rights

If contract does not state otherwise:

Submission of the dispute to the courts of the host State

ENFORCEMENT

ENFORCEMENT

ASEAN Comprehensive Investment Agreement provides:

1 )“ICSID” - International Center for the Settlement of Investment Disputes.

“ICSID-Convention” signed by Thailand, but not ratified

2) “institutional arbitration”;

Such as International Chamber of Commerce; Regional Centre for Arbitration in Kuala Lumpur ; or the Thai Arbitration Institute

ENFORCEMENT

3) “ad hoc arbitration under the UNCITRAL Rules”.

ENFORCEMENT

Example of an Investment Treaty Arbitration against Thailand:

“Walter Bau AG v Thailand” re Don Muang Tollway

THAILAND

Section 15 Thai Arbitration Act (2002)“In any contract made between a government agency and a private enterprise, regardless of whether it is an administrative contract or not, the parties may agree to settle any dispute by arbitration. Such arbitration agreement shall bind the parties.”

THAILAND

BUT:

28 July 2009 Cabinet resolution: “all contract of the public sector (…) should not contain an arbitration clause”

THAILAND

14 July 2015, a new Cabinet resolution:

Cabinet approval only required for:1.Public Private Partnership Agreements2.Concession Agreements3.Contract under R.D. 2005Includes any project exceeding THB 1 billion

THAILAND

Questions?

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or email me at: olaf@duensingkippen.com