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Treaty shopping in international investment law PDF

401 Pages·2017·2.663 MB·English
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i TREATY SHOPPING IN INTERNATIONAL INVESTMENT LAW ii INTERNATIONAL ECONOMIC LAW SERIES International Economic Law series, established by the late Professor John H Jackson, addresses a range of issues in international economic law, which includes international trade law, international investment law, and the global financial order. The series aims to encourage interest in the broad contours of international economic law, heightening awareness of its significance across the globe as well as its continuous interactions with other areas. The series edi- tors encourage quality submissions from a wide range of perspectives, includ- ing doctrinal, theoretical, empirical, and interdisciplinary viewpoints. Novel and cutting edge research is particularly welcome, as are contributions from both emerging and established scholars from around the world. Series Editors ANDREW D. MITCHELL Professor at Melbourne Law School, The University of Melbourne TANIA VOON Professor at Melbourne Law School, The University of Melbourne recent titles in the series Good Faith and International Economic Law Edited by Andrew D. Mitchel, M Sornarajah, and Tania Voon Development at the WTO Sonia E. Rolland The BRIC States and Outward Foreign Direct Investment David Collins iii Treaty Shopping in International Investment Law JORUN BAUMGARTNER 1 iv 1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Jorun Baumgartner 2016 The moral rights of the author have been asserted First Edition published in 2016 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2016950214 ISBN 978– 0– 19– 878711– 2 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. v To my dad, who has always encouraged me to discover new horizons May this book encourage Luca in a similar way later on vi vii Series Editors’ Preface This is the first book to be published in the Oxford University Press Series on International Economic Law since the passing of its first editor, the great Professor John H Jackson. Professor Jackson was a warm and generous friend and mentor with a keen intellect and unending energy, who is recognized as the founder of the field of international economic law. We pay our respects to his family and friends and wish to acknowledge the enormous contribution he made to this field over his lifetime. As we continue our role as editors of the series, we cannot but feel his absence and only hope to be able to honour his legacy in small ways. As relative newcomers to this role, our ambitions are modest. We hope to encourage interest in the broad contours of international economic law, heighten- ing awareness of its significance across the globe as well as its continuous inter- actions with other areas, such as public policy concerning public health and the environment, international dispute settlement and other aspects of public inter- national law, sustainable development, and other disciplines, including economics and political science. We encourage submissions to the series from senior scholars as well as newer voices, academics as well as practitioners, from doctrinal, theoretical and empirical perspectives, and from countries around the world. While several of the debates today concerning international economic law perpet- uate those of many decades, we believe that the current moment offers particularly exciting opportunities for thoughtful and rigorous scholarly contributions to have a meaningful impact on national and international law and policy. Developments in the World Trade Organization, new approaches to regional and plurilateral nego- tiations, and reform proposals in relation to investment treaty arbitration all offer room for a diversity of views that will benefit from engagement and collaboration. The current volume gets to the heart of a key legitimacy concern with international investment arbitration (and particularly investor–S tate dispute settlement): ‘treaty shopping’, which Baumgartner defines: to include all legal operations aimed at invoking or creating a qualifying nationality and/o r a qualifying investment, eg by structuring or restructuring an investment or by otherwise conferring an entitlement or property right to an investment, with a view to benefitting from a particular international investment agreement granting an investor direct standing[.] Treaty shopping in international investment law is surprisingly under-r esearched, with Baumgartner’s work providing the first comprehensive English language study of the area. In particular, she delves into the complex problem of distinguishing between legitimate and illegitimate forms of treaty shopping, carefully analysing the principle of ‘good faith’ as a possible touchstone, as well as articulating various approaches to treaty drafting that may help minimize abusive practices. Baumgartner’s examination concerns a perennial problem in international investment law, while being all the more relevant today given increasing public viii viii Series Editors’ Preface scrutiny of investment treaties and investor– State dispute settlement (ISDS), the continuing accumulation of such treaties and disputes, and the uncertainty sur- rounding the current law. As an example of the current significance of treaty shop- ping in international investment law, awards of two tribunals only made public since the finalization of this manuscript accepted jurisdictional objections on the basis of ‘abuse of process’ in connection with corporate restructuring related to pre- existing disputes. In a jurisdictional award released to the public on 16 May 2016, the tribunal in Philip Morris Asia Limited v Australia, discussed in this book, found that the restructuring was undertaken when the claimant’s dispute with Australia concerning standardized tobacco packaging was foreseeable, ‘for the principal, if not sole, purpose of gaining Treaty protection’. Similarly, in an award dispatched to the parties on 2 June 2016, the tribunal in Transglobal Green Energy LLC and Transglobal Green Panama SA v Panama upheld Panama’s jurisdictional objection ‘on the ground of abuse by Claimants of the investment treaty system by attempting to create artificial international jurisdiction over a pre-e xisting domestic dispute’. Such disputes are sure to continue. Baumgartner’s piercing analysis offers valu- able insights into the way in which they have been and are best handled, as well as suggestions for reducing uncertainty as to which side of the line particular con- duct falls. The implications of the book also go further, given its consideration of broader public international law questions, and the growing potential for cross- treaty disputes, not only in the context of international investment law, but also extending to international trade law. These kinds of complications are likely to increase in both frequency and intensity as countries continue their fervour for negotiating more and bigger agreements, including the ‘mega- regionals’ such as the Trans- Pacific Partnership, Transatlantic Trade and Investment Partnership, and Regional Comprehensive Economic Partnership. This book provides an in- depth exploration of the issues surrounding treaty shopping to help better equip arbi- trators, policy- makers, negotiators, and litigants in dealing with such issues at a crucial time. Andrew D. Mitchell and Tania Voon ix Acknowledgements This book is a slightly revised and updated version of the doctoral thesis I defended at the University of Lausanne (Switzerland) in June 2015 under the same title. To see it published at Oxford University Press is an immense reward both to me as well as the persons who have contributed to making this a successful project. I am indebted and sincerely grateful to many persons I have met along the way of this endeavour and who have contributed in one way or another, not least Professor Andreas Ziegler, my thesis supervisor, for the support and flexibilities granted dur- ing the period of writing, as well as Professor Marc Bungenberg, member of the PhD defence committee, for having always stood by with precious comments and advice. My gratitude extends to the other members of the PhD defence commit- tee, Professor Christina Binder, Professor Andrea Bonomi and Professor Tarcisio Gazzini, for their valuable comments and for making my thesis defence a pleasur- able and memorable experience. I am also very thankful to my friends and colleagues who, over the years, have provided emotional support, reviewed drafts or given comments on the manuscript, in particular Tristan Gianora, Dr. Jörn Griebel, Caterina Arias Hernandez, Felix Imhof, Dr. Wolfgang Alschner, Ömer Keskin, Azadi Öztürk and Elisabeth Türk. Many thanks are also due to the editorial team at Oxford University Press for their guidance, support and efficiency in bringing the book to press, to the Series Editors Professors Tania Voon and Andrew Mitchell for their kind support of the manuscript, as well as to the anonymous peer reviewers for their valuable comments. This book has been revised to include investment arbitral jurisprudence until May 2016 (redacted Philip Morris Asia v Australia award). The opinions expressed in this book were written in my capacity as research fellow and are not necessarily those of my current, or any future, employer. Finally, words are not enough to thank my family—my partner Pancho, our son Luca, my parents Viktor and Sylvia and my brother Peter—for the love, support and patience shown over these past years, without which this endeavour would not have been possible. Geneva, October 2016

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