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Branch News

CIArb London seminar - Investment arbitration: the past, present and future

22 May 2017 Branch News
By Amanda Lee, PRO, CIArb London Branch

The London Branch held a seminar entitled ‘Investment arbitration: the past, present and future’, generously hosted by White & Case LLP, on 17 May 2017.

 

Irvinder Bakshi (Chair, London Branch) introduced the event. John Tackaberry QC (39 Essex Chambers, London Branch Committee) chaired the expert panel, which comprised David Goldberg (White & Case LLP), Dr. Guido Carducci (Independent arbitrator and professor, MCF and HDR) and Alexander Uff (Shearman & Sterling).

  

Line-up of the CIArb London Branch Seminar Speakers 17 May 2017
[L to R: Dr. Guido Carducci, Alexander Uff, Irvinder Bakshi, John Tackaberry QC, David Goldberg) 

 

David Goldberg began by providing an overview of investment disputes involving states in the CIS region. Goldberg began by acknowledging the significant level of criticism levied at investment treaty claims, citing lack of transparency, cost, inconsistency of decisions and the “bitter fight between the ICSID regime and EU law” as key criticisms.

 

Goldberg offered four observations in respect of investment disputes in the CIS region:

 

  1. over the last few years the number of cases from the CIS region has significantly increased;
  2. previously the focus was on Ukraine but other states are increasingly involved;
  3. the amounts in dispute are going up;
  4. disputes now involve individuals from the CIS region, not just Western Europe.

Goldberg provided an overview of cases involving regions such as Ukraine, Moldova and the Kyrgyz Republic, highlighting that many arbitrations from this region are ICSID or ECT cases and a number involve applications for emergency measures.

 

Goldberg concluded by commenting briefly on Yukos, observing that Yukos will eventually provide answers to questions such as the provisional application of the ECT to Russia, in addition to acknowledging the role that it has played in forming arbitration policy in respect of issues such as the appropriate role of tribunal secretaries and the enforcement of arbitral awards set aside at the seat.

 

Addressing key issues relating from intra-EU BITs, with reference to EU case law and current proposals, Dr. Guido Carducci began by providing an overview of the applicable treaty regime, highlighting the huge increase in the number of investment treaties and treaties containing investment provisions (albeit without the aim of protecting investments). Carducci highlighted two key issues that relate to the EU position, firstly the question of who can sign a treaty?

 

The position, Carducci explained, is that the signature must come from the member state, not the EU. This was confirmed in an opinion issued by the European Court of Justice on May 16, 2017 at paragraph 292.

 

Secondly Carducci addressed the issue of compatibility between EU treaties and in particular, the effect of Article 351 of the Lisbon Treaty, considering whether the obligation to take all appropriate steps to eliminate incompatibilities between treaties was a ground for treaties not to be followed – there is, Carducci acknowledged, no automatic termination of a treaty in the circumstances. Carducci concluded by addressing two issuing arising from the prospect of investment courts: such courts depart significantly from the “root tradition” of party-appointed arbitrators; and in a “great shift”, an appellate tribunal may uphold, reverse or modify awards.

 

Alexander Uff concluded the seminar by providing his perspective on the past, present and future of proportionality in investment arbitration, noting that this issue provides an illustration of the different legal regimes at play in investment arbitration and how substantive arbitration law continues to evolve.

 

Uff observed that proportionality is not traditionally included in treaties but has formed part of the analysis undertaken by tribunals in respect of issues such as fair and equitable treatment.

 

Outlining the roots of proportionality in German law as a means of balancing the competing interests between states and private individuals, Uff noted that it has been described as a “principle” or a “doctrine” but was probably more accurately described as “a method of legal analysis”, requiring three consecutive analyses which consider issues such as necessity and disproportionate effect.

 

From its roots in the 1950s proportionality was adopted by the ECJ and ECHR and the first reference to it in an investment arbitration award appears to be in the 2003 Techmed v Mexico ICSID decision. Uff explained that cases concerning proportionality concern the exercise by the state of its regulatory powers and provided an overview of further cases, including Occidental and Ampal-American Israel Corp. et al v Arab Republic of Egypt.

 

Uff noted that Ampal represented the first time that a tribunal had applied a proportionality analysis in a purely contractual context, in that the state acted as a contractual party not in its regulatory capacity. Uff concluded by referring to the use of express language reaffirming the right of parties to regulate within their territories, the context in which a proportionality analysis is typically applied, in CETA.    

 

The speakers’ presentations were followed by a lively question and answer session, which addressed pressing issues such as the dispute resolution regime proposed by CETA and the lack of use of mediation in investment treaty disputes, after which Irvinder Bakshi thanked the speakers and host. The evening concluded with a reception for the speakers and attendees, generously hosted by White & Case LLP.    

 

Papers prepared by the speakers will be available on the London Branch’s website (www.londonarbitrators.org) in due course.