From Bilateral Arbitral Tribunals and Investment Courts to a Multilateral Investment Court: Options Regarding the Institutionalization of Investor-State Dispute Settlement

213 Pages·2018·3.69 MB·English

by  Marc Bungenberg

European Yearbook
of International
Economic Law
Marc Bungenberg
August Reinisch
Special Issue:
From Bilateral Arbitral
Tribunals and Investment
Courts to a Multilateral
Investment Court
Options Regarding the Institutionalization
of Investor-State Dispute Settlement
123
European Yearbook of International
Economic Law
SeriesEditors
MarcBungenberg,Saarbrücken,Germany
MarkusKrajewski,Erlangen,Germany
ChristianTams,Glasgow,UnitedKingdom
JörgPhilippTerhechte,Lüneburg,Germany
AndreasR.Ziegler,Lausanne,Switzerland
AdvisoryEditors
ArminVonBogdandy,Heidelberg,Germany
ThomasCottier,Bern,Switzerland
StefanGriller,Salzburg,Austria
ArminHatje,Hamburg,Germany
ChristophHerrmann,Passau,Germany
MeinhardHilf,Hamburg,Germany
JohnH.Jackson{
WilliamE.Kovacic,Washington,USA
GabrielleMarceau,Geneva,Switzerland
Ernst-UlrichPetersmann,Firenze,Italy
HélèneRuizFabri,Luxembourg
BrunoSimma,München,Germany
RudolfStreinz,München,Germany
Moreinformationaboutthisseriesathttp://www.springer.com/series/8165
(cid:129)
Marc Bungenberg August Reinisch
From Bilateral Arbitral
Tribunals and Investment
Courts to a Multilateral
Investment Court
Options Regarding the Institutionalization
of Investor-State Dispute Settlement
MarcBungenberg AugustReinisch
FacultyofLaw UniversityofVienna
SaarlandUniversity Wien,Austria
Saarbrücken,Germany
ISSN2364-8392 ISSN2364-8406 (electronic)
EuropeanYearbookofInternationalEconomicLaw
SpecialIssue
ISBN978-3-030-01188-8 ISBN978-3-030-01189-5 (eBook)
https://doi.org/10.1007/978-3-030-01189-5
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Preface
On 20 March 2018, theCounciloftheEU gavethe EUCommission amandateto
negotiatethecreationofanewmultilateralcourtforinvestmentdisputes.Alreadyin
2017, the United Nations Commission on International Trade Law (UNCITRAL)
decided to discuss a reform of investment arbitration,including thepossibleestab-
lishment of a Multilateral Investment Court (MIC). This new development is
intended to provide a response to the strong criticism of international investment
law,ingeneral,andofadhocarbitrationbetweeninvestorsandstates,inparticular,
whichhasbeenexpressedinrecentyears.
Comprehensivestudiesonhowsuchadisputeresolutionsystemcouldbeputinto
action, however, do not exist so far. This “feasibility study” was launched in the
courseof2017andisintendedtocontributetoabroaderdiscussionontheoptionsof
establishing a new international special court for investment protection. Although
basedonthedebateaboutareformofinvestmentarbitration,itdoesnotdiscussthe
advantages and disadvantages of replacing the current system of investor-state
arbitration. Rather, it presents options for a potential institutionalised form of
investor-statedisputesettlementandforthedesignofanMIC.
The “cornerstones” of such a new permanent court are its strict rule of law
orientation,whichincludesthehighestdemandsonthejudicialappointmentproce-
dure as well as on the personal integrity, independence, and qualification of the
judges.Second,thecostsshouldbesignificantlylowercomparedtothestatusquo.
Third, transparency considerations and aspects of consistency of case law should
receiveparticularattention.Fourth,decisionsofanMICwouldhavetobeeffectively
enforceable.
This study was originally written in German with the support of Dr. Anja
Trautmann,LL.M.;Mag.CélineBraumann,LL.M.;andMag.SaraMansourFallah.
WearethankfulforthegoodcooperationwithSpringerandtheEuropeanYearbook
ofInternationalEconomicLawforacceptingthispublicationasaSpecialIssue.
Saarbrücken,Germany MarcBungenberg
Wien,Austria AugustReinisch
August2018
v
Contents
1 ExecutiveSummary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 PreliminaryConsiderationsRegardingtheEstablishment
oftheMIC/MIAM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 OrganisationalStructure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 ProcedureoftheMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 ApplicableLawoftheMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 LegalRemediesandEnforcementofMICDecisions. . . . . . . . . . . 6
1.6 EstablishmentofaStandaloneMultilateralInvestmentAppellate
Mechanism(MIAM). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3 TargetsfortheReorganisationoftheInvestmentProtection
Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 PositiveEffectsofaNewApproach. . . . . . . . . . . . . . . . . . . . . . . 15
3.1.1 ConsistencyofDecisions. . . . . . . . . . . . . . . . . . . . . . . . . 16
3.1.2 GreaterLegitimacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1.3 IndependenceandNeutralityofJudges. . . . . . . . . . . . . . . 17
3.1.4 LackofaControlMechanism. . . . . . . . . . . . . . . . . .. . . . 18
3.1.5 CostEfficiency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1.6 AccessforSMEs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.7 Transparency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.8 TimeEfficiency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 AdvantagesoftheTwo-TieredMICOption. . . . . . . . . . . . . . . . . 20
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
vii
viii Contents
4 DesignandImplementationofaTwo-TieredMIC. . . . . . . . . . . . . . 25
4.1 InstitutionalandProceduralDesign. . . . . . . . . . . . . . . . . . . . . . . 26
4.1.1 MembersofanMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.2 PlenaryBody. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.2.1 AppointmentofJudgesThroughthePlenary
Body. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.1.2.2 AdoptionofSpecificSecondaryRules. . . . . . . . 36
4.1.2.3 RequirementofMajorityforDecisionMaking. . . 37
4.1.2.4 TransparencyinProceedingsofthePlenary
Body. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1.2.5 SeatofthePlenaryBodyandFrequency
ofMeetings. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1.3 JudgesattheMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1.3.1 Full-orPart-TimeJudges. . . . . . . . . . . . . . . . . 39
4.1.3.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.1.3.3 Independence. . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.1.3.4 Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1.3.5 Availability. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.1.3.6 Remuneration. . . . . . . . . . . . . . . . . . . . . . . . . 45
4.1.3.7 OathofOffice. . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1.3.8 Immunity. . . . . . .. . . . . . . . . . . . . . . . . . . . . . 47
4.1.3.9 ParallelEngagements. . . . . . . . . . . . . . . . . . . . 47
4.1.3.10 Appointment/ElectionbytheParties
totheAgreement. . . . . . . . . . . . . . . . . . . . . . . 49
4.1.3.11 DurationofAppointmentandRotating
Reappointment. . . . . . . . . . . . . . . . . . . . . . . . . 49
4.1.3.12 DecisionsonInstancesofBiasbyJudges. . . . . . 50
4.1.3.13 TerminationoftheAppointment. . . . . . . . . . . . 51
4.1.3.14 RemovalfromOffice. . . . . . . . . . . . . . . . . . . . 51
4.1.4 PresidentoftheCourtandVicePresidentoftheCourt. . . . 52
4.1.5 PlenaryDecisions,ChambersandSingleJudges. . . . . . . . 52
4.1.6 AppellateMechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.1.7 Secretariat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.1.8 AdvisoryCentre. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.2 TheAppealsProcedureBeforetheTwo-TieredMIC. . . . . . . . . . . 57
4.2.1 JurisdictionoftheMIC. . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2.1.1 MembershipoftheRespondentState
andoftheHomeStateoftheInvestor
intheMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2.1.2 (Written)ConsenttotheJurisdiction
oftheMIC. . . . . . . .. . . . . . . . . . . . . . . . . . .. 60
4.2.1.3 JurisdictionRationePersonae. . . . . . . . . . . . . . 62
4.2.1.4 JurisdictionRationeMateriae. . . . . . . . . . . . . . 63
4.2.1.5 JurisdictionRationeTemporis. . . . . . . . . . . . . . 64
4.2.1.6 AvoidanceofAbuseofProcessandNegative
AdmissibilityRequirements. . . . . . . . . . . . . . . 64
Contents ix
4.2.2 RelationshipoftheMICtoOtherCourtsandArbitral
Tribunals. . . .. . . .. . . . .. . . .. . . . .. . . . .. . . .. . . . .. 69
4.2.3 TheRelationshipwithDomesticCourts. . . . . . . . . . . . . . . 71
4.2.4 TheRelationshipwithInter-State(Arbitration)Dispute
Settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.2.5 GeneralProcedurebeforetheMIC. . . . . . . . . . . . . . . . . . 73
4.2.5.1 CompulsoryConsultations?. . . . . . . . . . . . . . . 74
4.2.5.2 FirstInstanceProcedure. . . . . . . . . . . . . . . . . . 76
4.2.5.3 SecondInstanceProcedure/Appeal. . . . . . . . . . 95
4.2.6 ConsolidationofPendingProceduresattheMIC. . . . . . . . 102
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
5 ApplicableLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
5.1 ApplicableSubstantiveLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
5.1.1 EULawasApplicableSubstantiveLaw?. . . . . . . . . . . . . 113
5.1.2 UniformInterpretationofStandardsofProtection. . . . . . . 115
5.1.2.1 PermanencyoftheTreatyInterpreters
attheMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.1.2.2 HarmonisingInterpretationMandate. . . . . . . . . 118
5.1.3 EnsuringaNeutralandObjectiveInterpretation
ofStandardsofProtection. . . . . . . . . . . . . . . . . . . . . . . . 119
5.1.3.1 ClarificationandLimitationofInvestment
ProtectionStandardsinInvestment
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 119
5.1.3.2 LimitingtheMandateforInterpretation. . . . . . . 122
5.1.3.3 AuthenticInterpretationbytheParties. . . . . . . . 123
5.1.3.4 CompositionoftheMIC:Impartial
andIndependentJudges. . . . . . . . . . . . . . . . . . 124
5.2 ApplicableProceduralLawandProceduralPrinciples. . . . . . . . . . 126
5.2.1 Transparency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
5.2.2 Efficiency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
5.2.3 PracticeofJudicialInvestigationandLimitation
oftheSubjectMatteroftheDispute. . . . . . . . . . . . . . . . . 134
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
6 ThePronouncementofDecisionsandItsConsequences. . . . . . . . . . 141
6.1 LegalEffectsofDecisionsofInternationalDisputeSettlement
Bodies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
6.2 EffectsofDecisionsofInvestmentArbitralTribunals. . . . . . . . . . 143
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
7 RecognitionandEnforcementofDecisions. . . . . . . . . . . . . . . . . . . . 147
7.1 DecisionsoftheMICasArbitralAwardsWithintheMeaning
oftheICSIDConvention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
7.2 DecisionsoftheMICasArbitralAwardsWithintheMeaning
oftheNewYorkConvention. . . . . . . . . . . . . . . . . . . . . . . .. . . . 153
x Contents
7.2.1 VoluntarySubmissionbytheParties. . . . . . . . . . . . . . . . . 154
7.2.2 FinalandBindingDisputeResolution. . . . . . . . . . . . . . . . 156
7.2.3 Non-StateDecision-Makers. . . . . . . . . . . . . . . . . . . . . . . 157
7.2.4 ArbitratorSelectionbytheParties. . . . . . . . . . . . . . . . . . . 158
7.2.5 Foreign,Non-DomesticandAnationalAwards. . . . . . . . . 158
7.2.6 LitigationBetweenNaturalorLegalPersons. . . . . . . . . . . 161
7.2.7 MICasa“PermanentArbitralBody”UnderArticleI
Para.2NYC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
7.2.8 Reservationon“CommercialMatters”UnderArticleI
Para.3NYC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
7.3 RecognitionandEnforcementofDecisionsoftheMIC. . . . . . . . . 163
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
8 PossibilitiesfortheEstablishmentofanMICandaPossible
ConnectiontoExistingInstitutionsandSystemConformity. . . . . . . 167
8.1 PracticalImplementationoftheEstablishmentofanMIC. . . . . . 167
8.2 StructuringtheMICasanInternationalOrganisation. . . . . . . .. . 169
8.3 ConnectiontoExistingInstitutions. . . . . . . . . . . . . . . . . . . . . . . 171
8.4 EntryIntoForceoftheMICStatuteOnlywithaMinimum
NumberofMembers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
8.5 EstablishmentofMICJurisdictionbyExplicitModification
ofExistingandFutureIIAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
8.5.1 ConclusionofNewIIAsandFTAswithInvestment
Chapters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
8.5.2 RenegotiationandReformofExistingEUEconomic
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
8.5.3 Inclusionof“IIANetworks”oftheMemberStates
intheEstablishmentofMICJurisdiction. . . . . . . . . . . . . 176
8.6 TheMICStatuteasOpt-InConventionfortheModification
ofExistingIIAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
8.6.1 TheStandardCase:ConsensusontheEstablishment
ofMICJurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
8.6.2 ExceptionalCases:JurisdictionoftheMICEven
iftheHomeStateoftheInvestorIsNotanMIC
Member?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
8.6.3 JurisdictionoftheMICinCaseofMultilateralIIAs. . . . . 181
8.6.4 SummaryoftheEstablishmentofMICJurisdiction. . . . . 181
8.7 TransitionalProvisionsandSystemConformityoftheMIC. . . . . 182
8.8 WorkingLanguageandLanguageofProceedingsattheMIC. . . 183
8.9 CostDistributionintheNewSystem. . . . . . . . . . . . . . . . . . . . . 184
8.10 OverviewoftheNecessaryAgreementsandSecondary
Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186