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  • Title: Tribunal nixes effort by Turkey to obtain moral damages for intangible losses - Investment Arbitration Reporter (IAReporter)
    Descriptive info: You are here:.. Tribunal nixes effort by Turkey to obtain moral damages for intangible losses.. publication date:.. Aug 18, 2009.. Previous.. |.. Next..  .. By Luke Eric Peterson.. As noted in an.. accompanying news article.. , the Republic of Turkey sought monetary compensation from a Polish company, Europe Cement, which was alleged to have initiated arbitration in bad faith and for an improper purpose.. When pressed by arbitrators to clarify this demand, Turkey pointed to the 2008 award* in the Desert Line Properties (DLP) v.. Yemen arbitration, and another 1984 arbitral award** where claimants were awarded moral damages for reputational and physical/psychological harms.. On Turkey s view, arbitrators could, and should, award Turkey compensation for intangible losses to its reputation and international standing.. For their part, arbitrators agreed that conduct involving fraud or abuse of process deserves condemnation.. However, the difficult question was whether the claimant s actions warranted an award of damages.. Before having to analyze its own jurisdiction to render such an award, the tribunal expressed the view that exceptional circumstances such as physical duress were not present in the Europe Cement case, and that moral damages were not justified for this reason.. Rather, the tribunal expressed the view that any potential reputational damage will be remedied by the reasoning and conclusions set out in this Award, including an award of costs.. Earlier Ukrainian case had seen similar claim.. The Europe Cement case is the first instance to come to light where a state has claimed against an investor for moral damages in an investment treaty context.. However, in at least one other treaty-based arbitration,.. can recall that a state has attempted to claim for harm to its reputation (albeit without expressly casting the claim in moral damages terms).. In a relatively under-publicized arbitration under the Energy Charter Treaty (ECT), Amto v.. Ukraine, the Republic of Ukraine had sought damages for harm to its reputation, alleging that the investor s claims (which were ultimately rejected by arbitrators) were tantamount to libel.. ***.. In a departure from the approach later seen in the Europe Cement case, Ukraine framed this demand for compensation as a counter-claim under the ECT.. (Ukraine also noted that counter-claims are expressly permitted under the Stockholm Chamber of Commerce arbitration rules - the rules applicable to the Amto arbitration).. For their part, the arbitrators entertained the notion that a counter-claim by a state while not explicitly countenanced in the ECT could be considered in investment treaty arbitrations.. However, they held that the viability of such a claim would hinge upon the dispute resolution provisions of the treaty, the nature of the counterclaim, and the relationship  ...   proceeding, Turkey had pressed the tribunal to order the claimant to post some form of security in case Turkey should prevail in the arbitration and a costs order be entered in its favour.. On Turkey s view, there was a concern that Europe Cement would be stripped of assets by its owners and that any eventual costs order could not be enforced successfully against the remaining shell.. By contrast, the claimant had countered that posting of security for costs would be inappropriate in the case.. For their part, arbitrators postponed a decision on security for costs until the conclusion of the case.. In the August 13, 2009 award, arbitrators ruled that costs including the full 3.. 9 Million US spent by Turkey on legal costs - should be borne by the claimant.. In reaching this conclusion, the arbitrators noted that a costs award would go some way towards compensating the Respondent for having to defend a claim that had no jurisdictional basis and discourage others from pursuing unmeritorious claims.. In the absence of any security having been posted at an earlier stage of the proceeding by Europe Cement, Turkey will need to request that Europe Cement make good on this amount and pursue litigation, if necessary.. For a fuller report on the general reluctance of tribunals to order claimants to post security for costs in other investment treaty arbitrations against governments, click.. here.. * Desert Line Projects LLC v.. Republic of Yemen (ICSID Case No.. ARB/05/7), Award of February 6, 2008.. Unusually, of the three arbitrators in the DLP v.. Yemen case, two are active in the string of cases against Turkey, and may be put in a position where they need to discuss and debate the DLP v.. Yemen ruling on moral damages, and its relevance to the Turkey disputes.. Jan Paulsson serves as counsel to Turkey in the Europe Cement, Cementownia and Libananco cases, while Pierre Tercier is the President of the arbitral tribunal hearing the Cementownia claim at ICSID.. ** S.. R.. L.. Benvenuti Bonfant v.. People s Republic of Congo (ICSID Case No.. ARB/77/2) Award of Aug 8, 1980.. *** For our report on the Amto arbitration see items 5 6 in the October 9, 2008 edition of.. :.. http://www.. iareporter.. com/Archive/IAR-10-09-08.. pdf.. A copy of the award is available here:.. http://ita.. law.. uvic.. ca/documents/AmtoAward.. Investment Arbitration Reporter is a specialized news publication tracking developments in the area of international investment law and policy.. The publication does not offer legal or financial advice or recommendations of any kind.. To offer news-tips or comments, email the Editor, Luke Eric Peterson, at:.. editor@iareporter.. com.. Back to top..

    Original link path: /articles/20091007_1
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  • Title: UK electricity corp, National Grid, wins arbitration; Argentina's necessity defence rejected, but some consolation for Gov't - Investment Arbitration Reporter (IAReporter)
    Descriptive info: UK electricity corp, National Grid, wins arbitration; Argentina's necessity defence rejected, but some consolation for Gov't.. Dec 17, 2008.. By Luke Eric Peterson.. An.. IAReporter.. investigation finds that a UK electricity company, National Grid, has been awarded more than $53.. 5 Million (US) for losses arising out the Argentine financial crisis.. An arbitral tribunal operating under the UNCITRAL procedural rules ruled on November 3, 2008, in a still-unpublished award that Argentina denied fair and equitable treatment and protection and constant security to National Grid as mandated by the UK-Argentina bilateral investment treaty.. National Grid acquired a large stake in the Argentine electricity transmission sector in the early 1990s, but claimed that its investments were destroyed by a series of emergency measures taken by Argentina during the financial crisis that wracked the country a decade later.. **.. The three-person arbitration tribunal, consisting of Andres Rigo Sureda (Chair), Prof.. Alejandro Garro (Argentina's nominee), and Mr.. Judd L.. Kessler (claimant.. s nominee) ultimately rejected an argument by Argentina that these emergency measures were a necessary legal response to its financial crisis.. At the same time, the tribunal acknowledged the gravity of the crisis, and the fact that foreign investors may not be fully insulated from crises such as the ones the Argentina underwent in December 2001 and the months that followed.. Indeed, in a striking development, the tribunal ruled that the breach by Argentina of the treaty's fair and equitable treatment standard did not begin in January 2002, when the key emergency measures were enacted by Argentina, but rather in June 2002 when the Argentine Government imposed a requirement that certain legal remedies available to utility companies be waived as part of contract re-negotiation talks.. The practical import of the tribunal's approach was that Argentina was not liable to pay compensation to National Grid for losses sustained during the first six months when the financial crisis was at its peak.. In this respect, the National Grid award diverges from other financial crisis cases to date.. In several cases, arbitrators have held the Republic liable for treaty breaches commencing on or before January 2002, and rejected any recourse by Argentina to a defence of necessity under international law.. Meanwhile, in two other arbitrations, LG E v.. Argentina and Continental Casualty v.. Argentina, arbitrators have held Argentina to have breached BIT protections, but ruled that the Government was entitled to a necessity defence which absolved the country from having to pay compensation for those treaty breaches which fell in certain specific time periods (i.. e.. periods when the crisis was at its height).. The recent National Grid ruling charts a third course, by holding that the treaty itself was not breached when the crisis was at its very apogee.. *** However,  ...   contributed to the situation of necessity which it later sought to raise as a defence.. Rather, the tribunal pointed to various internal economic factors which contributed to the onset of the Argentine crisis, including the country's fiscal, debt and labor policies.. In reaching this conclusion, the tribunal noted that earlier tribunals (CMS and Enron) had reached a similar view of Argentina's contribution to its economic crisis.. Although the tribunal in the LG E case did not follow the CMS and Enron line of reasoning, the National Grid tribunal suggested that this was because the LG E tribunal had placed the onus on the claimant (LG E) to show that Argentina had contributed to the state of necessity.. For their part, the arbitrators in the National Grid case took the view that the onus lay with Argentina to prove that it had not contributed to the crisis.. In the tribunal's view, Argentina failed this test thus obviating any further inquiry into the other tests that must be met in order for a state to invoke successfully a necessity defence.. On the question of damages, the tribunal determined that it could use a discounted-cash flow analysis a method which it deemed appropriate where an investment was a going concern with a track record which could be used as a benchmark for assessing its future profitability.. However, the tribunal also took note of the value of certain share-sale transactions undertaken by National Grid, as these also provided some benchmark for the value of National Grid's Argentine investments.. As an UNCITRAL-based arbitration, the award can be challenged on certain limited grounds in the courts at the formal place of arbitration (Washington, D.. C.. ).. The case has already seen several challenges filed against arbitrators hearing the case.. Argentina sought (unsuccessfully) to challenge both Dr.. Andres Rigo Sureda and Mr.. Judd Kessler on different grounds at different times.. A fuller description of the tribunal's recent findings on the merits in National Grid v.. Argentina is contained in.. this separate article.. * In the Matter of an UNCITRAL arbitration between National Grid PLC v.. Argentine Republic, Award of November 3, 2008, unpublished.. ** These measures included the decoupling of a 1-to-1 peg between the Argentine Peso and the US Dollar, and the elimination of policies which had insulated utility tariffs from devaluation of the Peso by permitting tariffs to be calculated in inflation-adjusted US Dollars.. *** Argentina has prevailed outright in two financial crisis cases, one profiled later in this issue and a second brought by Chilean firm Metalpar.. See: A first unconditional ICSID win for Argentina, as Chilean investors fail to make out claims arising from financial crisis ,.. , Vol.. 1, No.. 3, June 18, 2008, available on-line at:.. com/Archive/IAR-06-18-08..

    Original link path: /articles/20090929_13
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  • Title: In an unusual outcome, Tanzania held to have violated treaty protections, but no damages flow to UK water company - Investment Arbitration Reporter (IAReporter)
    Descriptive info: In an unusual outcome, Tanzania held to have violated treaty protections, but no damages flow to UK water company.. Jul 28, 2008.. An arbitral tribunal at the International Centre for Settlement of Investment Disputes (ICSID) has held the Republic of Tanzania in breach of several provisions of the UK-Tanzania bilateral investment treaty in relation to Tanzania s treatment of the UK-based water-services firm Biwater-Gauff (Tanzania) Ltd.. (BGT).. *.. Notwithstanding a finding of multiple treaty breaches, the tribunal rejected in its entirety a bid by BGT for upwards of $20 Million (US) in compensation, citing the dire state of the firm s water project by the time that the Tanzanian Government took a series of abusive and unnecessary actions which deviated from the treaty protections owed.. From a purely financial perspective, these actions by Tanzania - that included the seizure of BGT assets and the deportation of local executives - merely served to accelerate (in a fashion contrary to the treaty) a process of winding up an investment which was teetering on the brink of collapse.. Background to the dispute and the fate of the project.. The investment by BGT in Tanzania was facilitated by several multilateral funders, including the World Bank, which provided $140 Million (US) in funding for Tanzania to upgrade and improve the delivery of water and sewage services in and around the capital of Dar es Salaam.. As part of this funding, Tanzania was obliged to appoint a private operator to manage and operate the system.. Following a bid process, BGT was selected to run the process, and a local entity, City Water, was incorporated in Tanzania for purposes of managing the system and entering into contracts with the Tanzanian side.. Given the dilapidated and inadequate state of the public water system, the investment called for various capital improvements and repairs, as well as the provision of meters to improve the measurement of consumption by individual households.. From the outset, BGT saw no prospect for profitability over the first seven years of the 10 year project.. For City Water to stay afloat in the short term it would rely upon equity investments by the project investors as well as a loan facility provided by a state entity.. Over the longer term, it was expected that improvements in customer billing and payments would mean that the tariffs charged for water-use would support City Water s operations.. Ultimately, the investment would not make it to its seventh year, much less its tenth year.. The arbitral tribunal, in summarizing the facts of the case, observed that both sides experienced difficulties in performing their contractual obligations.. While the tribunal conceded that City Water did make certain improvements, it determined that the local entity has made a poorly structure bid, failed to meet its subsequent obligations (including installation of crucial new billing software), and found itself in financial difficulty at a very early stage.. As a consequence of its failings, City Water was collecting far  ...   12, 2005 meeting of DAWASA s Board a formal decision was taken to put in motion steps to terminate this contract, and to call in a performance bond which City Water had posted at a local financial institution.. City Water dug in its heels and called for arbitration under the contract, according to the UNCITRAL rules of procedure.. That contract arbitration ultimately resulted in a December 2007 award against City Water for some $7 Million (US) for breach of its contractual obligations.. However, it remains to be seen whether DAWASA will be able to collect on the award given the parlous financial state of City Water, which is currently subject to liquidation proceedings in the Tanzanian courts.. In a recent statement Biwater says that Tanzania squandered millions of dollars in persisting with the contract arbitration: Since City Water is, for all practical purposes, defunct, has no functioning board and no assets, the action was completely pointless.. Meanwhile, long-time Biwater critic, and UK campaigning group, The World Development Movement, has called, in a recent press statement, on Biwater and its shareholders to honour the debts of City Water in relation to the unfavourable contract arbitration ruling.. Following DAWASA s move to terminate contract, Government breaches treaty.. While the process of winding up the City Water project was set in motion by DAWASA in May of 2005, a series of actions by Tanzanian Government officials over the subsequent 3 week period were ultimately deemed by the ICSID arbitration tribunal to be excessive and abusive , and in breach of the UK-Tanzania investment treaty.. Among the actions which were held to have breached Tanzania s treaty obligations were a series of public announcements by a Government Minister to the effect that the Government was terminating the City Water contract; a unilateral withdrawal of a tax exemption earlier granted to City Water; and the occupation of City Water s facilities and the unceremonious deportation of key company executives.. These (and other) substantive treaty breaches as well as the tribunal s reasons for not awarding any damages for such breaches are discussed in greater depth in two separate articles:.. and.. * This article was first published under a lengthier headline in the email version of.. : "In an unusual outcome, Tanzania held to have violated treaty protections owed to foreign water services company, Biwater Gauff, but no damages flow from these breaches; ICSID tribunal holds that firm's ill-managed operation of Dar es Salaam water supply had brought company to brink of collapse by the time Tanzanian Government actions served to breach UK-Tanzania investment treaty".. The award is available on the ICSID website:.. http://icsid.. worldbank.. org/ICSID/FrontServlet?requestType=GenCaseDtlsRH actionVal=Lis tConcluded.. ** City Water was 51% owned by BGT, and 49% owned by a Tanzanian investor.. BGT was required by the tender conditions to include a local partner with at least 20% ownership of City Water.. Relations between the two partners deteriorated over time, contributing to the difficulties faced by BGT in Tanzania..

    Original link path: /articles/20091229_10
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  • Title: Award in ADM & TLIA v. Mexico finds discrimination & imposition of performance requirements, but no expropriation - Investment Arbitration Reporter (IAReporter)
    Descriptive info: Award in ADM & TLIA v.. Mexico finds discrimination & imposition of performance requirements, but no expropriation.. Jul 16, 2008.. Can't view this article? If you are a subscriber, and we have your IP addresses on file, you MUST click on the subscriber log-in button in the top-left corner of this page.. This will ensure you are "recognized".. If you are a subscriber, and you use a log-in ID and password for the site, please click.. If you are NOT a subscriber, why not join today? Learn more about.. subscriber benefits.. Click here to join..

    Original link path: /articles/20091001_69
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  • Title: ICSID’s longest-running claim is resolved as newspaper owner prevails in dispute with Chile; Chile held liable for denial of justice for delay in remedying Pinochet-era expropriation - Investment Arbitration Reporter (IAReporter)
    Descriptive info: ICSID’s longest-running claim is resolved as newspaper owner prevails in dispute with Chile; Chile held liable for denial of justice for delay in remedying Pinochet-era expropriation.. May 16, 2008.. The longest running dispute at the International Centre for Settlement of Investment Disputes (ICSID has finally culminated in an award.. On 8 May 2008, a decade after the claim was initially filed, an arbitral tribunal ordered Chile to pay over US$10 million for breaching the Chile Spain bilateral investment treaty.. The ICSID claim arose out of Augusto Pinochet s coup d etat, over twenty years before the claim was filed.. Following the coup, Pinochet s government shut down the El Clarin newspaper, which was sympathetic to the previous president, Salvador Allende, and dissolved the company that owned it.. One of the claimants, Victor Pey Casado, owned shares in that company.. After fleeing to his native Spain, Mr.. Pey Casado joined with other former friends of Allende to establish the philanthropic Salvador Allende Foundation to promote freedom of the press and democratic values.. Mr.. Pey Casado returned to Chile in the late 1980s when the government that succeeded Pinochet promised to remedy the losses sustained during the General s rule.. However, Mr.. Pey Casado was unable to secure any remedies in Chilean courts and turned to the Chile-Spain bilateral investment treaty.. He was joined by the Salvador Allende Foundation, to which he had donated 90% of his shares.. Extraordinarily, none of the three arbitrators that unanimously issued the award were part of the original tribunal convened by ICSID to hear the dispute.. The original tribunal president, Francisco Rezek, resigned after he was challenged by the claimants.. He was replaced by Prof.. Pierre Lalive.. Following a subsequent challenge by Chile to all three current tribunal members, the other two original members, Galo Leoro Franco and Mohammed Bedjaoui exited the tribunal - the former through resignation and the latter through disqualification.. The tribunal which ultimately resolved the case consisted of Prof.. Lalive, Prof.. Emmanuel Gaillard, and Mr.. Mohammed Chemloul.. In its Award* of May, 8, 2008, the reconstituted tribunal began by dismissing a series of objections to its jurisdiction that had been raised by Chile.. Most notably, the tribunal rejected an argument that the shares in the Chilean company were not investments protected by either the bilateral  ...   it was actually controlled by Chileans accords with the approach taken in another recent ICSID case Rompetrol v.. Romania, which is also reviewed in this edition of IA Reporter);.. * the Foundation was not a protected investor because it did not pay for the shares it received from Mr.. Pey Casado;.. * the investment was not protected because it did not involve a transfer of capital into Chile;.. * the dispute arose before the treaty came into force and, therefore, was outside the tribunal s temporal jurisdiction; and.. * the litigation before Chilean courts barred the treaty claim through the fork in the road mechanism.. After accepting it had jurisdiction, the tribunal considered the merits of the claim.. Coup Actions Do Not Breach Bit, But Later Hearing Delays Do.. The tribunal rejected the argument that Chile breached the treaty through its actions at the time of the coup because the treaty was not yet in force.. Provisions in the Chile-Spain agreement protecting investments made before it came into force and specifying that it did not apply to disputes arising before that time were held not to disrupt the general rule that actions before a treaty comes into force cannot breach the treaty.. The tribunal also rejected the argument that Chile s actions at the time of the coup were the beginning of a continuing or composite act ending after the treaty came into force.. Nonetheless, the tribunal found that Chile s actions after that date did breach its treaty obligations.. According to the tribunal, Chile failed to provide fair and equitable treatment by compensating others for the dissolution of the company that owned the newspaper, but refusing to compensate the claimants.. Chile also breached the provision requiring fair and equitable treatment through the failure of its judicial system to render a decision within seven years.. While it awarded the claimants US$10 million, the tribunal refused to award moral damages.. According to the tribunal, the claimants failed to present sufficient proof to enable the evaluation of such damages and, moreover, the award, itself, provided moral satisfaction.. Ultimately, Chile was ordered to pay three quarters of the arbitration costs and US$2 million of the claimants legal fees because it failed to cooperate with the arbitration.. * A copy of the Award is available here:.. ca/documents/Peyaward..

    Original link path: /articles/20091001_94
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  • Title: Interview: Author of forthcoming study on arbitrator disqualification explains why ICSID arbitrators are so difficult to unseat - Investment Arbitration Reporter (IAReporter)
    Descriptive info: Interview: Author of forthcoming study on arbitrator disqualification explains why ICSID arbitrators are so difficult to unseat.. Jun 8, 2011.. Recent weeks have seen a flurry of decisions resolving challenges to ICSID arbitrators.. None of these challenges were upheld.. That s nothing new, according to Karel Daele, the author of a forthcoming book on arbitrator-challenges in international arbitration.. * His book** is slated for release in October 2011, but given the timeliness of the subject-matter, we invited him to chat about ICSID arbitrator-challenges and why they never seem to succeed.. * * *.. IAReporter:.. You ve spent several years surveying the history of arbitrator-challenges at ICSID, can you give us some numbers to contextualize our discussion?.. Karel Daele:.. Since the early 1980s, there have been 41 challenges in arbitrations under the ICSID rules.. In 9 instances an arbitrator has resigned voluntarily.. *** In the rest of these instances, the challenge has had to be adjudicated.. And, out of those 32 challenges, how many have been successful thus far?****.. Daele:.. Only one.. How does that compare with other arbitral institutions?.. In my (forthcoming) book, I compare five different systems, and I would say that it is not easy to disqualify an arbitrator under any of those systems.. But in the ICSID system, it is extremely difficult.. In fact, it s virtually impossible.. But, is it fair to compare these different systems?.. Well, you can see a number of cases, for example, in the ICC or the SCC systems which lead to successful disqualifications.. But ICSID challenges based on similar fact-patterns are not successful.. So, you see a problem with the ICSID s track record?.. Yes.. The ICSID system does not work.. It is hard to see how in 30 cases, none but one challenge was worthy of upholding.. I am sure that in many of these cases, the decision was appropriate.. But, in at least some of them, arbitrators should have been disqualified.. What makes ICSID arbitrators virtually immune from being unseated?.. There are two key factors.. The first is procedural.. If a challenge is to a single member of a tribunal, it is resolved by the other tribunal members.. Only if the remaining co-arbitrators can t agree between themselves or if the underlying challenge targets more than one member of the tribunal the decision is taken by the Chairman of the ICSID Administrative Council.. So, the large majority of challenge decisions are taken by the co-arbitrators.. That does not provide for a good system.. These are people with whom the challenged individual may have been sitting for a while.. There may be broader personal relationships, maybe even unconscious ones.. Many of those who are asked to adjudicate a challenge, may have faced one themselves.. Thus, they may have sympathy for what it is like to have one s fitness questioned.. These adjudicators are also deciding issues that could affect their own professional livelihoods.. I think that's troubling, but do you reckon that it matters?.. Absolutely.. A number of the challenges would have considerable consequences for the sitting arbitrators themselves: for example,.. the recent challenge.. to Prof.. Sands where he was challenged due to his having had multiple appointments, or.. to Campbell McLachlan where he was challenged on the basis of positions taken in his academic writings.. To some extent, any case-law that is developed on these issues will apply equally, in the future, to the arbitrators who are resolving a particular challenge.. To some extent, we are asking arbitrators to cut the branch of the tree on which they are sitting.. I don t want to question anyone s integrity; not at all..  ...   required to serve as an ICSID arbitrator.. Under most other arbitration rules, arbitrators can be disqualified if there is a reasonable or justifiable doubt, but some argue that the ICSID standard is higher.. In a number of cases, the co-arbitrators emphasize that if there is a lack of qualities, but it is not manifest, then the disqualification must fail.. Are there different schools of thought?.. One school seems to view the manifest wording as setting a high qualitative bar.. But, there are also quite a number of cases, including the first Vivendi v.. Argentina annulment proceeding, that find a different balance.. The two co-arbitrators said that manifest doesn t require a smoking gun.. Nor should it be based on mere speculation.. Rather, if there are serious facts, and in the eyes of a reasonable third party the arbitrator should not sit, then that is the threshold.. So, you think the proper legal interpretation is to read the bar as having been set a bit lower?.. If you look at the drafting of the ICSID Convention in the 1960s, you see that states didn t want anything less than absolute independence from arbitrators.. A lot of these arbitrations involve matters of national interest!.. From a legal perspective, it s worth remembering that Article 14 of the ICSID Convention says that all arbitrators have to possess the qualities of independence and impartiality.. So, if there is doubt about this, can you still say that you have these qualities? Article 57 may provide for disqualification in cases where there is a manifest lack of these qualities, but if Article 14 says that you need these qualities, then there is an argument that parties are short-changed when arbitrators are permitted to sit despite there being reasonable doubts as to their independence or impartiality.. So, you think that the interests of the parties are taking a back seat to the interests of ICSID arbitrators?.. Yes, sometimes.. You also see this where arbitrators adjudicate challenges to their colleagues and they point to policy arguments: like the fear that experienced arbitrators may be excluded and that this might hurt arbitration as a whole.. You get a conflict between the interest of investment arbitration and the interests of individual parties.. From the perspective of an investor or a state involved in a high-stakes case, you just want a tribunal where all three arbitrators are totally independent and impartial.. Obviously the remaining co-arbitrators are not to blame for the challenge system that the ICSID Convention has provided them with.. Nonetheless, what sometimes seems to be forgotten is that the challenge system has not been designed to protect the interests of the arbitrators.. It has been designed to safeguard the parties fundamental right to an impartial and independent Tribunal.. Therefore, in the assessment of a challenge, the rights of the parties should come first.. Daele, has practiced at several international law firms, before becoming a Partner with Mkono and Co.. Advocates in Tanzania*.. Currently, he is representing Tanzania in several pending arbitrations, and he has been involved in at least one effort to disqualify an ICSID arbitrator.. However, the views expressed in this interview are his own, and not those of any of his clients.. ** The Challenge and Disqualification of International Arbitrators (Kluwer Law International).. *** In most of these instances, the arbitrator resigned swiftly.. But, in one case, that arbitrator waited until the two co-arbitrators had deadlocked, and then after the matter was handed to ICSID, the challenged arbitrator stepped aside.. **** Two challenges were not adjudicated because the arbitration proceedings were discontinued before a decision on the challenge was taken..

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  • Title: Investment Arbitration Reporter (IAReporter)
    Descriptive info: Recent Articles in Arbitrator Challenges and Recusals.. Challenge to popular arbitrator is rejected; colleagues see no grounds for disqualification due to multiple appointments by Venezuela and non-disclosure.. Jan 4, 2011.. One challenge to oft-appointed arbitrator Prof.. Brigitte Stern is rejected (in Slovak case), but others arise.. Nov 25, 2010.. Arbitral award will stand in Vivendi v.. Argentina case, but an arbitrator is criticized over lack of disclosure.. Sep 15, 2010.. Argentina calls for discussion at upcoming World Bank meeting following Annulment Committee Member’s allegation of meddling by ICSID Secretariat in annulment process.. Co-Arbitrators reject argument that colleague should be disqualified due to positions taken in academic writings (Urbaser v.. Arbitrator disqualification based on nationality of arbitrator falls by way side, as case is discontinued.. Briefly Noted: New Tanzania claim surfaces as debt-holder sues State.. Jun 16, 2010.. Canada moves to terminate NAFTA claim, after claimant fails to post funds for arbitration.. May 26, 2010.. Government objects to attempt to disqualify arbitrator because of his prior academic writings (Urbaser v.. May 7, 2010.. As new case lands at ICSID, and several more loom, Bolivia turns up the heat on arbitral system.. Apr 22, 2010.. Arbitrator in treaty dispute challenged due to academic writings (Urbaser v.. Apr 9, 2010.. Challenge rejected against arbitrator on basis of shared educational background.. Arbitrator resigns in ICSID arbitration, after tribunal dead-locks on challenge.. Mar 15, 2010.. Arbitrator decries “revolving door” roles of lawyers in investment treaty arbitration.. Feb 25, 2010.. Some arbitrators eschew counsel work but for various reasons.. Pending challenge to arbitrator spawned by articles posted on-line by assistant.. Feb 9, 2010.. Lawyer can’t wear  ...   steps down in UNCITRAL arbitration; obliged to choose between arbitrator work and Gov't advisory work.. Backgrounder: Eureko v.. Poland reaches anti-climax after notable liability award and battle over arbitrator challenge.. Oct 14, 2009.. Gabon challenges arbitrator on basis of his chairing previous arbitration.. Sep 2, 2009.. Thailand challenged its own nominee to Walter Bau tribunal; not the first time this has happened in BIT arbitration.. Aug 6, 2009.. ANALYSIS: Does independence of judgment demand dissents in some cases?.. Jun 29, 2009.. Arbitrator steps down following challenge by Romania at ICSID; replacement appointed by S & T Oil Equipment.. May 11, 2009.. Romania challenges arbitrator whose law firm represents investor with separate potential claim against Romania.. Apr 17, 2009.. Law firm press release discloses successful challenge to arbitrator in ICC contract case.. Feb 28, 2009.. BIT claim against Iran by Turkcell unfolds under UNCITRAL rules; tribunal constituted, and challenge to Brower fails.. Barrister may not appear as counsel for state in arbitration where another member of chambers sits on tribunal.. Nov 25, 2008.. ICSID arbitrators reject challenge to third member of tribunal in Lemire v.. Ukraine arbitration.. Oct 1, 2008.. Remaining arbitrators in EDF v.. Argentina case reject challenge to Prof.. Gabrielle Kaufmann-Kohler; jurisdiction then upheld.. Aug 7, 2008.. IN-DEPTH: Other treaty breaches, including of Fair and Equitable Treatment standard, upheld in Biwater v.. Tanzania.. Challenge to ICSID arbitrator fails on basis of concurrent arbitral appointments by the same government.. Jun 18, 2008.. IN-DEPTH: Co-arbitrators see connections between arbitrator and claimants as too tenuous to justify disqualification.. Jun 3, 2008.. New challenge to arbitrator fails in Argentine (Suez & Vivendi) water arbitrations..

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  • Title: UN Working Group finalizes UNCITRAL transparency rules, but they won't apply automatically to stockpiles of existing investment treaties - Investment Arbitration Reporter (IAReporter)
    Descriptive info: UN Working Group finalizes UNCITRAL transparency rules, but they won't apply automatically to stockpiles of existing investment treaties.. Feb 14, 2013.. Following two years of discussions, members of a UN Working Group have finalized rules that may bring greater transparency to some investor-state treaty-based arbitrations conducted under the set of ad-hoc arbitration rules that are frequently provided as a dispute resolution option under many international investment treaties.. In an important stride for transparency, government delegations to the Working Group II of the UN Commission on International Trade Law (UNCITRAL) agreed last week in a meeting in New York City to new transparency rules that will apply on a default basis to UNCITRAL arbitrations pursuant to.. future.. investment treaties unless the parties to a given treaty expressly opt-out.. (This opt-out ability may explain why some skeptics of greater openness agreed to relatively strong transparency rules.. The new rules will provide for open oral hearings (without any express provision for parties to a dispute to veto or override this requirement), as well as the publication of key documents, including Notices of Arbitration, pleadings, transcripts, and all decisions and awards issued by the tribunal.. * However, in a departure from the emerging practice under some U.. and Canadian investment treaties, Notices of Arbitration will not be mandated for release immediately, but only once an arbitral tribunal has been constituted to hear a case.. In the mean time, some basic details about the claimant and respondent will be posted on a public registry, similar to that of the Washington-based ICSID, prior to the constitution of a tribunal.. The transparency rules must still be subjected to a legal scrub and then approved by the UNCITRAL Commission at its next meeting in July in Vienna.. It is expected that the 2010 UNCITRAL Rules will also be amended once the new transparency rules come into force so that the 2010 Rules are updated so as to reference these new rules.. Gov ts nix proposal to allow tribunals to interpret old treaties so that new rules apply.. In a notable setback for the broad application of these rules, delegations rejected a push by a handful of governments to provide a foothold for the new rules to be applied to arbitrations arising under the large number of international investment treaties that are currently in force.. Many delegations have made clear for some time that they would not accept wording in the transparency rules that would apply them automatically to existing treaties that reference the UNCITRAL rules.. Moreover, at its latest meeting in New York the Working Group also  ...   a potentially dynamic arbitration-offer (for e.. g.. a reference to the UNCITRAL rules as revised or amended from time to time) that could have provided an arguable basis for arbitrators to find that the transparency rules could be read as part of such a dynamic arbitration offer.. **.. Proposed convention on transparency could be catalyst for mass-consents.. While the recent outcome is disappointing for those who had hoped that new transparency rules would apply to the large swath of investment treaties already in force, it remains possible that some governments under the auspices of UNCITRAL or otherwise could negotiate an international convention or instrument that would allow signatories to express their consent to the application of the new transparency rules to existing treaties.. The Working Group has instructed the UNCITRAL Secretariat to prepare certain materials for consideration by the Commission at its upcoming meeting in July.. Among the tasks assigned to the Secretariat is to develop wording for a draft text of a convention on transparency , as well as narrower model declarations that could be used by individual states seeking to make clear that they wish for the new rules on transparency to apply to disputes arising under investment treaties concluded before their adoption.. One government source who did not wish to be named suggested to.. that such a narrow convention or instrument could be useful insofar as it would allow governments to signal their willingness to apply the new transparency rules to existing treaties while not needing to open bilateral renegotiations with each treaty partner (and perhaps see those renegotiations slowed or complicated by other legal issues which a given country might wish to put on the table for consideration.. * While hearings and documents are presumed to be public in arbitrations governed by the new transparency rules, certain exceptions to protect confidential information or the integrity of the arbitral process remain available to arbitrators.. These exceptions may serve to keep some information from public release or delay its publication for a period of time.. ** Even in these cases where a treaty contains a dynamic arbitration clause, referencing the UNCITRAL rules as amended or revised from time to time, the wording of Article 1(2) of the new transparency rules makes clear that this could.. be construed as a consent of the treaty-parties to have the transparency rules applied.. Article 1(2) provides that the treaty-parties must have agreed.. after.. the date of coming into effect of the rules on transparency.. Related Articles:.. Government views vary widely on eve of meeting to discuss transparency in UN arbitration rules..

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  • Title: In policy switch, Australia disavows need for investor-state arbitration provisions in trade and investment agreements - Investment Arbitration Reporter (IAReporter)
    Descriptive info: In policy switch, Australia disavows need for investor-state arbitration provisions in trade and investment agreements.. Apr 14, 2011.. (Editor's Note: This article is one of a small number on our website that is made available to non-subscribers free of charge).. The Government of Australia has announced that it will no longer pursue investor-state arbitration provisions in future international economic agreements with developing countries.. The policy shift builds upon Australia s longer-standing concerns about including such provisions in agreements with higher-income developed economies.. (In its Free Trade Agreement with the United States, Australia famously declined to be bound by an investor-state arbitration (ISA) mechanism pointing instead to the reliability of its own legal system for resolving disputes involving U.. investors).. In a Trade Policy Statement released on Tuesday (April 12, 2011), the Australian government notes that it had included ISA provisions in some past agreements with developing countries at the behest of Australian business interests, but that it will not do so in future.. If Australian businesses are concerned about sovereign risk in Australian trading partner countries, they will need to make their own assessments about whether they want to commit to investing in those countries, the Statement notes.. The government has signaled that it will continue to support the principle of National Treatment, so that foreign and domestic businesses are treated equally under the law.. However, the government will not negotiate treaty protections that would confer greater legal rights on foreign businesses than those available to domestic businesses or that constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses.. The Statement is remarkable for citing concerns that foreign investors might target particular public policies, including a prescription drug policy that has drawn the ire of global pharmaceutical companies and proposals for the plain packaging of tobacco products that have drawn criticism from foreign tobacco companies.. Indeed, calls by the Philip Morris tobacco company for an investor-state arbitration mechanism in a pending Trans-Pacific Trade Agreement between Australia, the U.. and other countries, have led to a flurry of headlines in  ...   to the merits and rationale of investor-state arbitration provisions, and lead to a final report wherein the Commission concluded that there were few clear benefits, and several worrying risks, associated with such provisions.. On Bonnitcha s view, the government s new policy may be explained more by the Commission s failure to find an economic justification for a core plank of Australia s trade policy, as by concerns that Australia will be sued by foreign investors.. He notes, however, that the Commission also weighed other considerations, including concerns about the quality of rule of law in developing countries.. Bonnitcha says that the Commission held that such concerns might be better addressed by capacity-building and financial support for domestic legal reform than by creating a system of international arbitration permitting foreigners to opt out of such legal systems altogether.. Effects on investors and arbitration industry to be watched closely.. While the new developments will be welcomed by critics concerned with the over-reach of investor-state arbitration, the policy shift may be met with greater concern from some law firms and arbitrators engaged in investor-state arbitration work.. One Australian practitioner, Michael Polkinghorne of the law firm White Case, tells.. that investors may have the ability to work-around the absence of arbitration clauses in Australian agreements by free-riding on the treaties concluded by other countries.. It certainly creates a concern for Australian investors seeking to invest abroad, although frequently these concerns can be addressed by intelligent corporate structuring.. The real problems may well be for those investors who never think about treaty rights in the first place.. Another observer from the Asia-Pacific region, New Zealand lawyer James Hosking, tells.. that he will be watching for any ripple effect from Australia s new policy.. Other free trade agreements from the region - like the China-New Zealand FTA - have produced very nuanced investor-state dispute mechanism provisions, he says.. Hosking, a Partner with Chaffetz Lindsey LLP in New York City, adds that he hopes the new Australian policy doesn't lower the benchmark for other treaties being considered.. * Australia s Trade Policy Statement is.. available here.. ** See our.. reporting from last year.. (Subscribers only)..

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  • Title: Australian government commission sees little need for investment protections and arbitration mechanisms in international economic agreements - Investment Arbitration Reporter (IAReporter)
    Descriptive info: Australian government commission sees little need for investment protections and arbitration mechanisms in international economic agreements.. Dec 16, 2010.. A research body tasked by the Australian government with preparing a report on preferential trade and investment agreements has published findings which take a dim view of the investor-state arbitration process commonly contained in such agreements.. In a report published on December 13, 2010, the Australian Productivity Commission indicated that it saw few clear benefits of investor-state dispute settlement provisions, and several potential risks which warranted a sceptical posture toward such provisions.. Indeed, the Commission concluded that the potential risks of such provisions gravitated against their inclusion in Australia s international trade and investment agreements.. Among the risks identified by the Commission were the threat of investor claims against welfare-enhancing public policy measures, as well as the prospect that foreign investors would enjoy more favourable treatment in Australia than Australian nationals and businesses.. With respect to the former, the Commission cited a pending arbitration claim by the tobacco company Philip Morris  ...   which seems to reflect the ongoing and often-bruising debate seen in many countries as to the concrete import of such agreements.. As for the potential benefits , the Commission noted that the economic literature failed to highlight any clear evidence that investor-state dispute settlement provisions yielded economic benefits.. Indeed, the Commission added that it had not received positive feedback from Australian businesses or industry associations with respect to these provisions.. Australia s Department of Foreign Affairs and Trade (DFAT), which is the lead negotiator of such international agreements made a submission to the Commission in September, which took a sunnier view of investor-state dispute settlement provisions.. DFAT argued that many of the investment protections which may be the subject of arbitration under ISDS provisions already exist under customary international law.. DFAT also expressed the opinion that the investor protections contained in investment treaties do not tend to confer better treatment on foreigners than would be enjoyed by Australians under their own law.. The Commission s report can be.. downloaded here..

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  • Title: New Chinese treaty with Switzerland replaces 1986 pact - Investment Arbitration Reporter (IAReporter)
    Descriptive info: New Chinese treaty with Switzerland replaces 1986 pact.. Oct 20, 2010..

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