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Even if an IIT contains an explicit choice of law clause deeming the IIT and international law applicable, the investor and the host state can agree that domestic law should govern the substantive merits with the IIT being treated as part of domestic law
General remarks on fair and equitable treatment
Expropriation can result from a series of acts or omissions that in sum result in a deprivation (so-called creeping expropriation)
Omissions can constitute an expropriation
The state's intention and the purpose of the measure are relevant, but not decisive when determining whether an expropriation occurred
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Expropriation > General Requirements of an Expropriatory Act > Further Problems
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Expropriation > Indirect Expropriation / Regulations > Determining Whether a Regulation Constitutes an Indirect Expropriation
If there is no obligation to negotiate an amicable settlement, the host state's refusal to enter into such negotiations does not constitute a violation of the FET standard
Although a tribunal does not have jurisdiction over measures of general state policy, it has jurisdiction to examine specific measures of that policy if they have a direct bearing on the investment
If consent to arbitration is based on an IIT and the IIT only refers to disputes concerning the host state's obligations in its dispute settlement clause, there is no consent to arbitrate counterclaims
- Investment Treaty Arbitration > Counterclaims
- ICSID Convention > Arbitration (Articles 36-55) > Article 46
- ICSID Arbitration Rules > Rule 40
There is no principle of extensive or restrictive interpretation of jurisdictional provisions in treaties
A state's consent to arbitration is expressed in the IIT
In accordance with Article 46 ICSID Convention and Rule 40 ICSID Arbitration Rules, a tribunal's jurisdiction over counterclaims depends on whether the parties consented to such jurisdiction
- Investment Treaty Arbitration > Counterclaims
- ICSID Convention > Arbitration (Articles 36-55) > Article 46
- ICSID Arbitration Rules > Rule 40
The respondent has the burden of establishing a tribunal's jurisdiction concerning a counterclaim
The obligation of full protection and security may constitute an obligation of legal protection of the investment
The full protection and security standard is not a strict liability standard
Undue delay to rule on a dispute may amount to a denial of justice
There is no abstract definition of what is fair and equitable; whether treatment was fair and equitable depends on the facts of the particular case
An erroneous judgement alone does not constitute a violation of the FET standard
If both parties agree that an investment existed, a tribunal may decide on the basis of this consent
A preservation of rights clause might be applicable to multilateral instruments such as the ECHR; it is not necessary, however, to examine the ECHR in this regard, as the level of protection by an IIT is higher and more specific than the ECHR
- International Investment Treaties (IITs) > International Law Rules Applicable to IITs > Relationship of IITs to Other Sources of International Law > Relationship of an IIT to Other Treaties > General Remarks
- International Investment Treaties (IITs) > Protection of Investors under IITs > Preservation of Rights Clauses
A violation of the non-impairment standard requires that the measure has no reasonable relationship to rational policy or there is no rational justification of differential treatment
Expropriations can be direct or indirect
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Expropriation > Indirect Expropriation / Regulations > Further Problems
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Expropriation > Direct Expropriation
The legitimate expectations of the investor can be a relevant factor within the standard of fair and equitable treatment
Determining the effect of a measure is the key question on assessing whether an indirect expropriation occurred
It is not relevant whether a measure is directed against the investor or the investment, as long as there is a violation of an IIT obligation harming the investment
- ICSID Convention > Jurisdiction of the Centre (Articles 25-27) > Article 25 > Jurisdiction Ratione Materiae > Arising Directly out of an Investment
- International Investment Treaties (IITs) > Protection of Investors under IITs > Applicability of IITs > State Conduct as a ‘Measure’ Violating the Treaty
The absence of a consent regarding jurisdiction over counterclaims cannot be overcome by an umbrella clause
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Umbrella Clause > General Remarks
- Investment Treaty Arbitration > Counterclaims
- ICSID Convention > Arbitration (Articles 36-55) > Article 46
- ICSID Arbitration Rules > Rule 40
International Law Rules Applicable to IITs
Relationship of IITs to Other Sources of International Law
Relationship of an IIT to Other Treaties
General Remarks
A preservation of rights clause might be applicable to multilateral instruments such as the ECHR; it is not necessary, however, to examine the ECHR in this regard, as the level of protection by an IIT is higher and more specific than the ECHR
Protection of Investors under IITs
Applicability of IITs
State Conduct as a ‘Measure’ Violating the Treaty
It is not relevant whether a measure is directed against the investor or the investment, as long as there is a violation of an IIT obligation harming the investment
Expropriation and Standards of Protection
Expropriation
General Requirements of an Expropriatory Act
Degree of Interference
Omissions can constitute an expropriation
Further Problems
Expropriation can result from a series of acts or omissions that in sum result in a deprivation (so-called creeping expropriation)
The state's intention and the purpose of the measure are relevant, but not decisive when determining whether an expropriation occurred
Direct Expropriation
Expropriations can be direct or indirect
Indirect Expropriation / Regulations
Determining Whether a Regulation Constitutes an Indirect Expropriation
The state's intention and the purpose of the measure are relevant, but not decisive when determining whether an expropriation occurred
Determining the effect of a measure is the key question on assessing whether an indirect expropriation occurred
Further Problems
Expropriations can be direct or indirect
Fair and Equitable Treatment
Character and Scope
General remarks on fair and equitable treatment
There is no abstract definition of what is fair and equitable; whether treatment was fair and equitable depends on the facts of the particular case
Case Groups
Denial of Justice
Undue delay to rule on a dispute may amount to a denial of justice
An erroneous judgement alone does not constitute a violation of the FET standard
Legitimate Expectations
The legitimate expectations of the investor can be a relevant factor within the standard of fair and equitable treatment
Further Cases
If there is no obligation to negotiate an amicable settlement, the host state's refusal to enter into such negotiations does not constitute a violation of the FET standard
Arbitrary and Discriminatory Measures
A violation of the non-impairment standard requires that the measure has no reasonable relationship to rational policy or there is no rational justification of differential treatment
Full Protection and Security
Character and Scope
The obligation of full protection and security may constitute an obligation of legal protection of the investment
The full protection and security standard is not a strict liability standard
Umbrella Clause
General Remarks
The absence of a consent regarding jurisdiction over counterclaims cannot be overcome by an umbrella clause
Preservation of Rights Clauses
A preservation of rights clause might be applicable to multilateral instruments such as the ECHR; it is not necessary, however, to examine the ECHR in this regard, as the level of protection by an IIT is higher and more specific than the ECHR
Applicable Law / Choice of Law Clauses
Even if an IIT contains an explicit choice of law clause deeming the IIT and international law applicable, the investor and the host state can agree that domestic law should govern the substantive merits with the IIT being treated as part of domestic law
Jurisdiction
Consent by the Parties
A state's consent to arbitration is expressed in the IIT
Interpreting Provisions Concerning Jurisdiction
There is no principle of extensive or restrictive interpretation of jurisdictional provisions in treaties
Counterclaims
If consent to arbitration is based on an IIT and the IIT only refers to disputes concerning the host state's obligations in its dispute settlement clause, there is no consent to arbitrate counterclaims
In accordance with Article 46 ICSID Convention and Rule 40 ICSID Arbitration Rules, a tribunal's jurisdiction over counterclaims depends on whether the parties consented to such jurisdiction
The respondent has the burden of establishing a tribunal's jurisdiction concerning a counterclaim
The absence of a consent regarding jurisdiction over counterclaims cannot be overcome by an umbrella clause
Jurisdiction of the Centre (Articles 25-27)
Article 25
Ex Officio Examination of Jurisdiction
If both parties agree that an investment existed, a tribunal may decide on the basis of this consent
Jurisdiction Ratione Materiae
Arising Directly out of an Investment
Although a tribunal does not have jurisdiction over measures of general state policy, it has jurisdiction to examine specific measures of that policy if they have a direct bearing on the investment
It is not relevant whether a measure is directed against the investor or the investment, as long as there is a violation of an IIT obligation harming the investment
Arbitration (Articles 36-55)
Article 46
If consent to arbitration is based on an IIT and the IIT only refers to disputes concerning the host state's obligations in its dispute settlement clause, there is no consent to arbitrate counterclaims
In accordance with Article 46 ICSID Convention and Rule 40 ICSID Arbitration Rules, a tribunal's jurisdiction over counterclaims depends on whether the parties consented to such jurisdiction
The absence of a consent regarding jurisdiction over counterclaims cannot be overcome by an umbrella clause
Rule 40
If consent to arbitration is based on an IIT and the IIT only refers to disputes concerning the host state's obligations in its dispute settlement clause, there is no consent to arbitrate counterclaims
In accordance with Article 46 ICSID Convention and Rule 40 ICSID Arbitration Rules, a tribunal's jurisdiction over counterclaims depends on whether the parties consented to such jurisdiction
The absence of a consent regarding jurisdiction over counterclaims cannot be overcome by an umbrella clause