14 May, 2018

Dawood Rawat v Mauritius: Dual-national claim dismissed based on treaty context interpretation

 

On 6 April 2018, a Tribunal constituted under the UNCITRAL Arbitration Rules rendered an Award on Jurisdiction in the case Dawood Rawat v. The Republic of Mauritius (PCA Case 2016-20).  Following a thorough analysis of the interpretation of the 1973 Investment Protection Treaty between the Republic of France and Mauritius (the “France-Mauritius BIT” or the “Treaty”), the Tribunal denied protection of the relevant investment protection treaty to a dual national – a French-Mauritian businessman – despite the treaty was silent on its application to dual nationals.  This approach was contrary to prior investment treaty decisions, such as Serafín García Armas and other v Venezuela, in which tribunals have rejected jurisdictional objections brought by respondent states where relevant the bilateral investment treaty (“BIT”) was silent on the exclusion of dual nationals.

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Filed under Arbitration Proceedings, Investment Arbitration, ISDS, Jurisdiction, MFN

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11 May, 2018

Upheaval and uncertainty in mineral regulation in parts of Africa: resurgence of resource nationalism highlights the importance of investment treaty protections

The last few months have seen significant changes to mining regulations in various African states, giving rise to a concern that a regional trend of resource nationalism may be (re-)emerging. In this context it is important for companies associated with the mining sector to be aware of the protection international investment treaties may provide against the impact of resource nationalism on their assets, and how to maximise that protection before risks materialise.  This bulletin briefly considers some of the last few months’ developments, before discussing how companies can use investment treaties to protect themselves against the risks they pose.

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Filed under Africa, Investment Arbitration, ISDS, Mining, Oil & Gas, Public International Law, State Contracts, Stabilization Clauses and Disputes, Structuring Investments

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8 May, 2018

State immunity: English court considers service of proceedings on a State in times of political unrest, and questions relating to enforcement of a foreign judgment against a State

In the recent decision of Certain Underwriters At Lloyds London v Syrian Arab Republic & Ors [2018] EWHC 385 (Comms) the English Commercial Court (the Court) considered the difficulties which may be encountered in trying to serve on a State. The Court also considered whether a state had submitted to the jurisdiction of a foreign court for the purposes of recognition and enforcement of the foreign judgment under the Civil Jurisdiction and Judgments Act 1982 (the CJJA).

This decision demonstrates the Court’s willingness to take a pragmatic approach when dealing with service of documents on a foreign State in situations where service through standard diplomatic channels may be difficult or inappropriate in the prevailing political climate. The decision also provides useful guidance regarding the requirements to be satisfied should a party wish to enforce a foreign judgment against a State in the English courts.

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Filed under Advice on State Contracts and Disputes, Enforcement, Privileges and immunities, Sovereign Immunity/State Immunity, State Immunity

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3 May, 2018

EU – Japan EPA presented to the European Council, ratification begins

On 18 April 2018 the European Commission (the “Commission“) presented the finalised text of the EU-Japan Economic Partnership Agreement (“EPA“) to the European Council and thereby took the first step in the EPA’s ratification process at the EU level.  Getting to this point took significant time and effort: the first of 18 rounds of negotiations began in early 2013, dozens of meetings were held within the EU itself, and the consolidated text was not finalised until (almost five years later in) December 2017.  While the time required to negotiate the text of the EPA is consistent with that taken by another recent EU agreement (the EU-Canada Comprehensive Economic and Trade Agreement (“CETA“) took a little over 5 years), both parties to the EPA appear keen to kick the ratification process into high gear.  If the parties’ plans come to fruition, the EPA will enter into force by 29 March 2019 and potentially will do so even before the formal conclusion of CETA, the text of which was finalised years earlier than that of the EPA.

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Filed under Asia, Economic partnership agreement, EU, Europe, Japan, Treaty negotiation, interpretation and impact

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19 April, 2018

Update on the future of ISDS: the discussions within UNCITRAL Working Group III – no apparent consensus to date

After a number of years of public debate in a variety of fora, the discussion of the future development of investor-state dispute settlement (ISDS) has recently moved to the United Nations Commission on International Trade Law (UNCITRAL). UNCITRAL Working Group III (WGIII) has been given a broad mandate to identify concerns regarding ISDS, consider whether reform is desirable and, if so, develop relevant solutions to be recommended to UNCITRAL.

WGIII started its work in the 34th session which took place from 27 November to 1 December 2017. As discussed further below, a number of key points were discussed, including: (i) the duration and costs involved in the procedure; (ii) the allocation of costs; and (iii) transparency. There was also some preliminary consideration of possible developments or changes in relation to the treatment of these issues. The Report of the 34th session indicates that some states advocate a fact-based analysis of ISDS but others note the need to address wider public perceptions of ISDS, as these can raise concerns over the legitimacy of the system.

Bringing the debate about the future of ISDS under the auspices of UNCITRAL, involving high level government representatives from across the world, and also in view of the transparent nature of WGIII’s process, raises the stakes, and perhaps also the prospects, of a more systemic reform. However, whilst the forum has the potential to generate a multilateral plan for ISDS, it is hard to discern any broad consensus at this stage either on the nature of the perceived problems associated with the current system of ad hoc arbitration, or on how those problems may be resolved. This is apparent from the Report and also from the audio recordings (helpfully summarised by IA Reporter, here). The 35th session will take place on April 23 to April 27 2018, following which further clarity on these issues may emerge.

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Filed under Investment Arbitration, ISDS, ISDS Reform, Treaty negotiation, interpretation and impact

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18 April, 2018

EU Council publishes Negotiating Directives for Convention establishing a Multilateral Investment Court: no real surprises but a couple of gaps

On 20 March, 2018 the Council of the European Union published negotiating directives dated 1 March 2018 authorizing the European Commission to negotiate a convention establishing a multilateral court for the settlement of investment disputes between investors and states. Whilst the detailed characteristics of the proposed multilateral investment court (the MIC) will be developed during the course of the negotiations, the Negotiating Directives give considerable indication of the EU’s intentions as to the MIC’s features.

The Negotiating Directives have their origin in the Commission’s Recommendation for a Council Decision authorising the opening of negotiations for a Convention establishing a multilateral investment court, published in September 2017.  This included a recommendation that negotiating directives be drawn up and made public immediately after their adoption.  The Commission has since commented that “the EU’s new policy on investment is fundamentally based on transparency” and that publication of the Negotiating Directives allows the EU “to continue to work with like-minded partners around the globe” towards creating a MIC, “knowing that EU citizens are fully informed of [its] negotiating instructions”.

Whilst the EU introduced its intention to move towards a multilateral system in a Concept Paper in 2015 (see our blog post here), the Commission’s Recommendation itself came shortly after UNCITRAL indicated in its 50th Session in July 2017 that UNCITRAL Working Group III would consider possible reform of investor-state dispute settlement.  This work began in the Working Group’s 34th session in November 2017, with its next session due to take place on 23 to 27 April 2018.  It will therefore be seen as no coincidence that the EU has chosen to publish these negotiating directives at this stage, and they will set the framework for the participation of the EU and its Member States, as further considered below.  The EU has also submitted a paper to the Working Group in advance of its next session highlighting its concerns over the current system of ISDS.

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Filed under EU, Europe, Investment Arbitration, ISDS, ISDS Reform, Treaty negotiation, interpretation and impact

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13 April, 2018

ICJ determines first ever compensation claim for environmental harm

On 2 February 2018, the International Court of Justice (the “ICJ” or the “Court”) delivered judgment in the case concerning Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v Nicaragua), determining the amount of compensation due to Costa Rica for environmental harm caused by Nicaragua’s activities in the northern part of Isla Portillos. This judgment, along with the related judgment delivered the same day in the joined cases concerning Maritime Delimitation in the Caribbean Sea and the Pacific Ocean and Land Boundary in the Northern Part of Isla Portillos (Costa Rica v Nicaragua) aims to bring to a conclusion the boundary dispute between the two neighbouring states stretching back to the 1850s.

The judgment is particularly noteworthy as it is the first time the Court has determined a damages claim for environmental harm. While the award fell short of the amount claimed by Costa Rica, both states have hailed the judgment as an important step in the normalisation of the relations between the two states.

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Filed under Americas, Arbitration Proceedings, Award, Environment, ICJ, Latin America, State to state claims

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19 March, 2018

State-to-State Dispute Settlement under the EU’s latest draft of the Withdrawal Agreement: CJEU jurisdiction remains

On 15 March 2018 the European Commission published a revised version of the draft Withdrawal Agreement between the EU and the UK previously published on 28 February 2018 following consultation with the Member States and the European Parliament. The revised document has been transmitted to the UK for negotiation. A comparison between the two drafts is available on our Brexit notes blog here.

In terms of State-to-State dispute settlement, little has changed since our blog post on 2 March 2018.

As was seen in the previous draft, under Part Six, Title III (“Dispute Settlement”), the Withdrawal Agreement proposes that a Joint Committee (co-chaired by representatives from each of the UK and the EU) be established to resolve disputes regarding the interpretation or application of the Withdrawal Agreement. In the event that the dispute cannot be resolved, then the Joint Committee itself, or either one of the UK or the EU, can refer the dispute to the CJEU under Article 162 (para. 1). The ruling from the CJEU is binding, and non-compliance with that ruling may result in the CJEU issuing a “lump sum or penalty payment”.

However, there is a slight change in when the rights of the EU or the UK arise to suspend rights and obligations in the event of such a dispute. Article 162 (para. 2) now states that, in the event that the dispute is not referred to the CJEU under paragraph 1 of that provision, then the EU or the UK may suspend aspects of the Withdrawal Agreement (other than those related to citizens’ rights) or any agreement between them “proportionate” to the gravity of the breach. In a further addition, paragraph 2 now states the EU or the UK, as the case may be, shall inform the other Party of its intention to suspend and allow the other Party, within 20 days, to remedy the situation. Any suspension shall take effect no earlier than 20 days after its notification to the other Party.

In view of the sensitivities over CJEU jurisdiction discussed in our earlier blog post, it will be interesting to see how the UK responds.

For further information, please contact Andrew Cannon, Partner, Vanessa Naish, Professional Support Consultant, Hannah Ambrose, Professional Support Consultant or your usual Herbert Smith Freehills contact.

Andrew Cannon
Andrew Cannon
Partner
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+33 15 357 6552
Vanessa Naish
Vanessa Naish
Professional Support Consultant
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+44 20 7466 2112
Hannah Ambrose
Hannah Ambrose
Professional Support Consultant
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+44 20 7466 7585

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Filed under Brexit, EU, EU Law, Europe, State to state claims, UK

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7 March, 2018

Security for costs granted by English Court in investment treaty award challenge in which claimants are receiving third-party funding

In its recent judgment in Progas Energy Limited and ors v Pakistan [2018], the English High Court (the Court) granted Pakistan’s request for security for their costs in defending a challenge to an investment treaty award. The Court declined Pakistan’s application for security for its unpaid costs in the arbitration awarded to them by the tribunal. The case is of particular interest because the Court considered the relevance to the applications of the fact that the Claimants were funded by a third-party funder.

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Filed under Arbitration Proceedings, Investment Arbitration, ISDS, Pakistan

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2 March, 2018

State-to-State dispute settlement under the EU’s draft Withdrawal Agreement: CJEU jurisdiction not arbitration

We have known for some time now that the UK and EU have very different views regarding the state-to-state dispute resolution mechanism to be contained in the Withdrawal Agreement between the EU and the UK. The EU has never made any secret of its intention for the CJEU to adjudicate on disputes between the UK and the EU over the interpretation of, and compliance with, the Withdrawal Agreement. Yesterday the EU released a draft Withdrawal Agreement for the UK’s consideration which contains a state-to-state dispute resolution provision which is consistent with that approach. This post provides an initial reaction to this draft provision.

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Filed under Brexit, EU, Europe, Public International Law, State to state claims

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