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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The German Federal Supreme Court dismisses claim by bondholders against Greece, denying jurisdiction on grounds of state immunity

The German Federal Supreme Court (Bundesgerichtshof) recently held that creditors cannot bring claims against the Hellenic Republic before the German courts in the context of Greece's debt restructuring in 2012 , finding that Greece enjoys immunity from jurisdiction before the German courts (decision of 8 March 2016; docket number VI ZR 516/14).

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ICSID tribunal declines jurisdiction on basis of lack of evidence of necessary “control” under BIT and requires claimant to pay 80% of costs of the state

In the ICSID decision of Guardian Fiduciary Trust Ltd f/k/a Capital Conservator Savings & Loan Ltd v Former Yugoslav Republic of Macedonia (ICSID Case No. ARB/12/31) issued on 22 September 2015, the Tribunal declined jurisdiction on the basis that the Claimant failed to establish that it qualified as a national of the Netherlands for the purposes of the Netherlands – Macedonia BIT (the BIT).

The BIT provides a wide definition of "national" which extends to "legal persons….controlled, directly or indirectly…." by a national of a contracting party. The Claimant, Guardian Fiduciary Trust Limited (Guardian), a company incorporated in New Zealand, brought the claim under the BIT, arguing that it qualified as a national of the Netherlands as it was ultimately controlled by a Dutch foundation which had a registered office in the Netherlands. Having determined that the issue of control was ultimately a matter of evidence, and not something to be determined solely on the basis of an analysis of New Zealand law, the Tribunal concluded that the Claimant had failed to provide that necessary evidence. It further concluded that the limited evidence before it suggested that the Claimant was in fact indirectly controlled by another entity of a different jurisdiction.

In issuing the decision, the Tribunal considered it appropriate, in the circumstances, to award the State Respondent, the Former Yugoslav Republic of Macedonia (Macedonia), 80% of its costs.

This decision does not so much highlight the complexities of establishing control in a complex ownership structure, as it does the importance of properly establishing and evidencing the basis for a Claimant's assertion of a Tribunal's jurisdiction over the claim. Failure to do so may, as in this instance, leave a Claimant footing the bill for the State Respondent's costs.

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A sardine cannot swallow a whale: ICSID tribunal declines jurisdiction under the Egypt-UAE BIT

In an Award on Jurisdiction rendered earlier this year in National Gas S.A.E. v. Arab Republic of Egypt (ICSID Case No. ARB/11/7), an ICSID tribunal declined jurisdiction to hear a claim brought against Egypt under the Egypt-UAE BIT by an Egyptian corporate claimant whose immediate shareholders were two UAE shell companies but who was ultimately controlled by an Egyptian-Canadian dual national. The claimant had sought to argue that despite being an Egyptian company that it was entitled to take advantage of a limited exception in Article 25(2)(b) of the ICSID Convention which provides that in certain circumstances a national of an ICSID Contracting State can include a national of the State party to the dispute if there is an element of “foreign control“. However, these arguments were rejected by the tribunal, not least because the “control” of the claimant rested ultimately with an Egyptian national and not the two UAE shell companies.

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The Alien Tort Statute – when will a claim “touch and concern” the territory of the United States?

In Kiobel v Royal Dutch Petroleum Co, the US Supreme Court held that the presumption against extraterritorial application of US laws applies to claims under the Alien Tort Statute (ATS). The Supreme Court left open the possibility of ATS claims which “touch upon and concern” US territory, provided that they “do so with sufficient force to displace the presumption against extraterritorial application“. However, they provided limited guidance as to how that standard should be interpreted.

The circumstances in which the presumption against extraterritorial application will be displaced have recently been considered by courts in the Second, Fourth, Ninth and Eleventh Circuits in the cases of In re: South African Apartheid Litigation, Al Shimari v CACI Premier Technology Inc., Doe v Cisco Systems Inc., and Cardona v Chiquita Brands International Inc. Following these decisions, it appears that in order to establish jurisdiction under the ATS it will be necessary to show that some conduct which contributed to the alleged harm has taken place on US soil.

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Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin. This issue considers some significant decisions of the Indian courts, including two decisions on the arbitrability of fraud claims and a decision of the Supreme Court concerning the power of Indian courts to intervene in foreign-seated arbitrations.

The e-bulletin also reports on some interesting news stories on India-related arbitration claims, including the ongoing GMR-Maldives dispute and a decision on the termination of an arbitral tribunal’s mandate.

No jurisdiction over BIT claims if investor fails to state a prima facie case

In Achmea BV v The Slovak Republic (PCA Case No. 2013-12), the tribunal considered the respondent’s objection that it lacked jurisdiction on the ground that the claimant had failed to establish a prima facie cause of action under the Netherlands – Slovak Republic bilateral investment treaty (BIT).

A tribunal constituted under the BIT has dismissed claims brought by Achmea BV relating to possible future changes in the Slovak private health insurance market including the threatened expropriation of Achmea’s Slovak subsidiary. The tribunal determined that it had no jurisdiction to hear the case because Achmea had failed to make out a prima facie case that the Slovak Republic had breached the expropriation and fair and equitable treatment provisions of the BIT by indicating an intention to expropriate Achmea’s subsidiary.

The case is of interest for its discussion of the prima facie case requirement and also the tribunal’s ruling that it was impossible and impermissible, in circumstances where no expropriation had yet taken place, for the tribunal to attempt to assess the legality of the Slovak Republic’s hypothetical future conduct. (Achmea BV v The Slovak Republic (PCA Case No. 2013-12).

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No consent to ICSID jurisdiction found under Venezuelan Investment Law: distinction drawn between the intention of the drafters and the intentions of the State

In OPIC Karimun Corporation v Venezuela, an ICSID tribunal has held that Venezuela’s Investment Law’s reference to ICSID did not, without more, provide consent to ICSID jurisdiction. Due to the ambiguous wording of the law, the tribunal looked at the intention of Venezuela and was unable to conclude that it had intended to provide consent. This was despite evidence from one of the drafters of the law that he had intended the relevant provision of the law to constitute such consent. The Tribunal drew a distinction between the intention of the drafters, and the intention of the State.

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Egypt prevails on “fork-in-the-road” provision

In an unpublished ICSID decision last month (the Decision), reported in Global Arbitration Review and Investment Arbitration Reporter, the Arab Republic of Egypt (Egypt) successfully knocked out the majority of claims brought by California-based H&H Enterprises Investments (H&H) by way of jurisdictional arguments based on the “fork-in-the-road” provision contained in the US-Egypt bilateral investment treaty (the BIT).

Fork-in-the-road provisions in BITs generally limit an investor to choosing only one of a number of agreed dispute resolution procedures. For example, if an investor submits its dispute to the local courts, then a fork-in-the-road provision would prevent the investor from also pursuing other dispute resolution procedures under the BIT, such as international arbitration. In the absence of a fork-in-the-road provision, submission of a dispute to local courts will not preclude the investor from pursuing other dispute resolution options.

It is thought that this is only the second BIT claim to be denied jurisdiction on the basis of a fork-in-the-road provision. It serves as a reminder to investors with potential contractual and international law claims to consider carefully the provisions of the relevant BIT before beginning proceedings in any forum.

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ICJ orders provisional measures in proceedings between East Timor and Australia

The International Court of Justice (ICJ) has handed down its decision in respect of provisional measures sought by East Timor in a pending case before the Court. The principal claim relates to documents and data seized by the Australian Security Intelligence Organisation (ASIO) from the office of an Australian lawyer representing East Timor in an upcoming arbitration with Australia.¹

At least some of the materials seized relate to a pending arbitration between East Timor and Australia concerning allegations by East Timor that Australia engaged in spying during negotiations to sign the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS). In that arbitration, East Timor contends that Australian espionage invalidates CMATS, a $40 billion gas and oil treaty, as the treaty was not negotiated in good faith.

The Court has ordered that Australia:

  • ensure that the content of the seized material is not used to the disadvantage of East Timor before the principal claim is determined;
  • keep the seized materials and any copies thereof under seal; and
  • not interfere in any way in communications between East Timor and its legal advisors in relation to the CMATS arbitration.

However, the Court did not order that Australia deliver the seized materials into the custody of the ICJ or deliver to East Timor and the ICJ a list of the materials seized in the raid that have been disclosed to any person and a list of those to whom the materials had been disclosed, as requested in East Timor’s request for provisional measures.

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