OUP Investment Claims Webinar Series Is the Vienna Convention on the Law of Treaties Dead in BIT...

OUP Investment Claims Webinar Series

Is the Vienna Convention on the Law of Treaties Dead in BIT Arbitration?

Moderator: Ian LairdSpeakers: Andrea Bjorklund, Todd Weiler, Frédéric G. Sourgens and Borzu Sabahi

20 October 2014, 4pm (GMT), 11am (EST)

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OUP Investment Claims Webinar Series, Ian A. Laird, 20 October 2014


Ian A. Laird• Partner, Crowell & Moring LLP, Washington, DC• Editor-in-Chief and Co-founder of OUP’s InvestmentClaims.com• Adjunct Professor – Georgetown University Law Center, and

Columbia Law School• Co-Director, International Investment Law Center, International Law

Institute, Washington, DC

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www.investmentclaims.com

OUP Investment Claims Webinar Series, A. Laird, 20 October 2014

• A module of Oxford Reports on International Law (ORIL)• Founded in 2008• Investment Claims (IC) is an acclaimed service for both practitioners and

academic users. Regular updates mean that subscribers have access to a fully integrated suite of current and high quality content including:

• Arbitration awards and decisions with peer-reviewed case reports and analysis• Bilateral investment treaty sets• Multilateral treaties• Investment treaty overviews from expert correspondents• Key monographs• Journal and yearbook articles• Arbitral rules• National legislation• English translations of key portions of non-English decisions

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‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean -- neither more nor less.’

‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’

‘The question is,’ said Humpty Dumpty, ‘which is to be master -- that's all.’

Lewis Carroll, Through the Looking Glass (1872).

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Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331.

Article 31 - General rule of interpretation1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

A Nascent Common LawThe Process of Decision making in International Investment Arbitration

Freddy SourgensOctober 20, 2014

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Problem 1: VCLT Formally Inapplicable

A Nascent Common Law; Sourgens, 20 October 2014

• Between States• No Corporates Allowed• Sovereign Equality & Objective Meaning Textualism

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Problem 2: Investors Are Third Parties


• Arbitration Without Privity• Contract Law And Suicide Pacts• VCLT And Allocative Mechanisms• Need Reasonable Middle Ground

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Formal Answer: IIAs Are Unilateral Acts


• Formal Dimension – Elevation of Investor• Practical Implications – Vesting• Mobil: No Restrictive Interpretation

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Functional Answer: Reliance Redivivus


• Go Beyond Text• Objective & Subjective State Context• Objective & Subjective Investor Context• Weigh Reciprocal Reliance Interests


Operational Coda: Common Law Rising

• Persuasive Precedent• Facts Over Text

– Interested in more?

Frederic Gilles Sourgens, A Nascent Common Law

(Brill/ Nijhoff: 2015)

The Place for Historical Analysis

in Investment Treaty Interpretation

Todd Weiler, SJDBarrister & SolicitorPhD Candidate, Western University Department of History, Canada

20 October 2014

The Place for Historical Analysis in the Interpretation of Investment Treaties, Todd Weiler, 20 October 2014

How to Interpret Investment Treaties

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Should [must] the VCLT serve as “Applicable Law”?

• Investment treaties form part of the corpus of public international law (whether any explicitly say so or not).

• Too many investment treaty tribunals have said, on too many occasions, that VCLT Articles 31 & 32 should be applied for one to seriously expect future tribunals to choose a different path.

• On the other hand, the VCLT approach is supposed to reflect the customary international law rules of interpretation. Since these rules have been applied in an incredibly uneven way, there may still be room for Freddy’s reclamation project!


Where Does Historical Analysis Fit?

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How to Placate Your Inner Positivist…

VCLT Article 31:

1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and

purpose

…

3. There shall be taken into account, together with the context:

…

(c) any relevant rules of international law applicable in the relations between the parties.

• Believe it or not, this provision was actually intended to cover the interpretative principle of contemporaneity.

• Before construing any provision, one must consider the specific, historical, context within which the treaty was concluded.

The Raging Bugbear of Indeterminacy

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A Necessary, but Regrettable, Element of Interpretation?

• Textual indeterminacy always provides an open door to ideological freelancing on the part of well-meaning arbitrators

•Ideology is best identified as using statist — liberal axis

• Ideological freelancing converts ostensible fidelity to the treaty text into fidelity to any given arbitrator’s ideological predilections.

• In other words, the devil really can hide in the details (where “details” means:

•Interpretative discretion caused by indeterminacy.


The Methodological Antidote

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Putting the First Principles of Public International Law to Work

• Introducing the Ying & Yang of Orthodox Public International Law:• Sovereign Equality• Good Faith

• And international investment law’s grundnorm:• When expressed positively: Equality• When expressed negatively: Non-discrimination

• Add a dash of the correct interpretative method, historical analysis, and you’re good to go!



A Curative for the Worst Kind of Inconsistency

Neutrality in Application

• Historical context involves time and place. Here are some possible examples:

• For Western countries:•Older BITs more likely to have a liberal than statist context.

• For former Soviet and Eastern Bloc countries:•Older BITs more likely to have a statist than liberal context.

• For the US and Canada:•More recent treaties were concluded in a more statist context.

• To apply the methodology correctly, one needs the right evidence.

The Vienna Convention and Investment Arbitration

Borzu SabahiOctober 20, 2014

Dr. Borzu Sabahi practices international arbitration in the law firm of Curtis Mallet-Prevost Colt & Mosle LLP. He is also: an Adjunct Professor at Georgetown and Columbia Law Schools, Co-Director of the International Investment Law Center of the ILI, and Editor of Oxford’s Investment Claims. Email: [email protected]

Disclaimer: views expressed are only those of Mr. Sabahi and cannot be attributed to Curtis Mallet or its clients.

mailto:[email protected]

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The VCLT: A Flexible Tool

VCLT and Investment Arbitration Borzu Sabahi October 20, 2014

• Flexibility– VCLT Articles 31 & 32 have it all: textualism (ordinary

meaning), purpose (objective and purpose), context, intentions, travaux preparatoire, and of course good faith

– VCLT is used in all international law disciplines• Growth of international courts? Fragmentation? • Role of interpreters? • Precedent?

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VCLT State-to-State Paradigm


• Using VCLT in practice? – Systematic approach?– When to move from ordinary meaning to secondary

sources, e.g., travaux?– Ambiguity? Any threshold?– Role of intentions of drafters? VCLT Art. 31(4)

• VCLT’s State-to-State paradigm– Who’s intentions?

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VCLT - Examples of Possible Shortcomings


(1) Joint Statements regarding meaning of treaty provisions? – VCLT 31(2): agreement or instrument in connection with

conclusion of a treaty ? – In a pending case? E.g., the 2001 FTC Notes of

Interpretation – Did VCLT drafters contemplate this? – Solution: caution. See Sir Franklin Berman’s Dissenting

Opinion in Industria Nacional de Alimentos, S.A. et al v. Peru, ICSID Case No. ARB/03/4, Annulment Proceedings, September 5, 2007

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VCLT -- Examples … (cont.)


(2) What about unilateral statements to shed light on the meaning of BITs?

(3) What about the positions taken by States in investment disputes? subsequent practice?

(4) What about a decision by Competent Authorities under NAFTA Art. 2103(6) that a measure is not an expropriation?

Conclusion• VCLT despite the deficiencies remains a great tool• Some effort however must be made to find out how VCLT would or

should apply in investor State arbitration

Treaty as Contract?

What difference does the VCLT Make?

Andrea K. Bjorklund, McGill University Faculty of Law20 October 2014

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Applicable Law in Investment Arbitration

Treaty as Contract?, Andrea K. Bjorklund, 20 October 2014

• “A Tribunal established under this Section shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law.” (NAFTA Article 1131(1))

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• The Vienna Convention on the Law of Treaties is the applicable law for the interpretation of the treaty itself– Conventional Law– Customary International Law

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• The claimant has an arbitral contract with the respondent– Does the VCLT apply to that contract as well?

• Yes, insofar as the terms of that contract are dictated by the language of the treaty

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The Vienna Convention in Practice


Aims of treaty interpretation

• To ascertain the intention of the parties?• To ascertain the meaning of the text?• To ascertain the object and purpose of a treaty and then to

interpret it in that light?• All of the above?

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The Vienna Convention in Practice


• The stated general rule of interpretation can be summarized as follows: the text must always be taken as the starting point. As such, no doctrine of restrictive or extensive interpretation of the text of the treaty should prevail. Interpretation of the text should be based on an “ex ante neutral approach”.

Laurence Boisson de Chazournes (dissenting), Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20 (3 July 2013) (internal citations omitted)

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Treaty as Contract


• “In answering this question [who, court or arbitrator, bears primary responsibility for interpreting and applying Article 8’s local court litigation provision], we shall initially treat the document before us as if it were an ordinary contract between private parties. Were that so, we conclude, the matter would be for the arbitrators. We then ask whether the fact that the document in question is a treaty makes a critical difference. We conclude that it does not.”

U.S. Supreme Court

BG Group Plc. v. Republic of Argentina

572 US ____ (2014)

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Treaty as Contract

Presentation name Presenter Name and Date

• “The Court begins by deciding a different case, “initially treat[ing] the document before us as if it were an ordinary contract between private parties.” Ante, at 6. The “document before us,” of course, is nothing of the sort. It is instead a treaty between two sovereign nations: the United Kingdom and Argentina. No investor is a party to the agreement.”

• “The law of international arbitration and domestic contract law lead to the same conclusion”

BG Group Plc. v. Argentina, C.J. Roberts, dissenting

572 US ____ (2014)

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Treaty as Contract


• “for our goal here – when faced with an agreement’s inevitable silence – is to find the appropriate default rule with respect to the probable ex ante understanding of contracting parties.” (discussing meaning of the local-litigation requirement in the Argentina-UK BIT)

Alan S. Rau, “Crossing the Threshold: Arbitral Jurisdiction After BG Group” (Melanges en l’honneur de Pierre Mayer (forthcoming 2015))

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Questions

?

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Next Webinar

Many thanks for joining us.

Please join us in the New Year for our next webinar examining corruption in investor-state

arbitration

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