The Impact of Investment Treaties on Contracts between Host States and Foreign Investors (Studies on the Law of Treaties)

Introduction -- Contracts Between Host States And Foreign Investors In The Absence Of International Investment Treaties -- The Regime Established By Investment Treaties -- The Substantive Coverage Of Contracts Between Host States And Foreign Investors Through Investment Treaty Standards -- The Umbrella Clause -- The Relationship Of Parallel Treaty-based International Arbitral Proceedings And Contract-based Domestic Court Proceedings In Investment Treaty Disputes -- Final Conclusion. By Jan Ole Voss. Includes Bibliographical References (p. [337]-359) And Index. The Impact of Investment Treaties on Contracts between Host States and Foreign Investors......Page 4 Copyright......Page 5 Contents......Page 6 Foreword......Page 16 Acknowledgements......Page 18 List of Abbreviations......Page 20 Table of Cases......Page 28 From the Protection of Foreign Property to Global Economic Governance......Page 40 The Contracts between Host States and Foreign Investors as Instruments of Investment Protection......Page 46 The Modern Interrelationship between Treaties and Contracts in Investment Treaty Arbitration......Page 48 The Research Methodology and the Structure of the Work......Page 52 I. The Notion of State Contract and Its Legal Nature......Page 54 1. Traditional Forms......Page 56 2. Modern Forms......Page 58 a. Modern Concession Agreements......Page 59 c. Management Agreements/Technical Assistance Agreement/Service Contracts......Page 60 e. Joint Venture Agreements......Page 61 f. Licensing and Transfer of Technology Agreements......Page 62 III. Conclusion......Page 63 I. Introduction......Page 64 1. State Contracts as International Law/Per Se Application......Page 68 2. Genuine Legal Orders......Page 69 3. Customary International Law and Incorporation of International Law......Page 72 III. Indirect Internationalisation......Page 73 1. The Origin of the Principle of Party Autonomy......Page 74 a. The Content and General Limitations of the Principle of Party Autonomy......Page 76 b. The Participation of the State as a Sovereign......Page 78 a. The Choice of a Genuine or Non-National Legal Order......Page 80 b. The Choice of Public International Law......Page 83 c. The Choice of the Host State’s Internal Law......Page 86 4. Implied Choice......Page 87 IV. Conclusion......Page 89 I. The Evolution of the Investment Treaty Network......Page 90 II. The Reasons for the Emergence of Investment Treaties......Page 91 III. The Present Existence of a Worldwide Network of Investment Treaties......Page 93 IV. The Creation of Customary International Law through Investment Treaties......Page 94 I. Three Methods of Establishing Consent in International Investment Arbitration......Page 96 1. International Centre for the Settlement of Investment Disputes (ICSID)......Page 101 2. ICSID Additional Facility......Page 102 3. International Chamber of Commerce (ICC)......Page 103 1. The Scope of the Host State’s Consent......Page 104 b. Qualified Access to International Arbitration......Page 105 a. Arbitral Practice......Page 107 b. Discussion of the Contradicting Approaches......Page 112 I. Conferral of Rights upon the Private Individual......Page 120 1. The “Derivative” Model......Page 121 2. The “Direct” Theory......Page 124 a. Wording of the Substantive Provisions......Page 126 b. Direct Access to International Dispute Settlement......Page 127 c. Comparison with the Systemic Features of Diplomatic Protection......Page 128 d. Waiver of Diplomatic Protection......Page 132 e. Difference between State—State Proceedings and Diplomatic Protection......Page 133 II. Consequences of a Treaty Breach: State Responsibility and the Investment Treaty Regime......Page 134 a. Consequences of Breach under the General System of State Responsibility......Page 135 b. Sub-Systems of State Responsibility......Page 136 a. The Differences between the Investment Treaty System and the General System......Page 137 b. Relationship to General Rules of State Responsibility......Page 139 3. Special Consequences under the Investment Treaty Regime......Page 141 1. General......Page 142 a. The Source of the Choice of Law Rule......Page 143 b. The Direct Choice by Treaty......Page 144 a. Framework of Arbitral Rules......Page 146 b. Investment Treaties as International Law......Page 147 a. Necessity of the Application of Domestic Law......Page 149 b. The Relationship between Domestic Law and International Law......Page 150 c. The Contractual Choice of Domestic Law......Page 153 D. The Notion of “Investment” and Contracts Between Foreign Investor and Host State......Page 154 I. The Specific Regulations concerning Contracts......Page 155 1. Exclusion of Contractual Contents......Page 156 2. Limited Protection of Contractual Contents......Page 157 3. Full Protection of Contractual Contents......Page 158 II. Contracts and Contractual Contents as “Investment” under the ICSID Convention......Page 163 1. Substantial Contributions......Page 164 2. Duration......Page 167 3. Risk-Assumption/Return of Gains or Profit......Page 170 4. Significant Contribution to Economic Development......Page 173 5. Investment Treaties as Lex Specialis......Page 176 E. Investment Treaties and Sub-State Entities as Parties to Contracts......Page 177 1. General Aspects......Page 178 2. Attribution of Conduct to the State......Page 179 II. Investment Treaty Arbitration and Attribution of Conduct of Sub-State Entities......Page 187 1. Attribution of Conduct under International Law......Page 188 2. Determination of the Parties to a Contractual Dispute......Page 194 III. Special Regimes of Attribution of Particular Investment Treaties......Page 195 1. Articles 22 and 23 of the ECT......Page 196 2. Article 2(2) of the 2004 US Model BIT......Page 197 IV. Conclusion......Page 198 I. Conceptual Distinction......Page 199 II. Relevance of the Distinctions......Page 201 1. The Authoritative Annulment Decision in Vivendi—Analytical Separation and the Principle of Coincidence......Page 202 a. Competence/Competence of International Arbitral Tribunals......Page 206 b. Determination of Jurisdiction......Page 207 1. The Nature of Investment Treaties and the Consequent Distinction between International Commercial Arbitration and Investment Arbitration......Page 212 2. The Distinction between Commercial and Governmental Conduct......Page 216 1. Expropriation under Customary International Law......Page 218 2. Expropriation of Contracts under Customary International Law......Page 220 a. Coverage of State Contracts......Page 226 b. Distinction between Breach of Contract and Expropriation......Page 228 c. Findings of an Expropriation of State Contract......Page 231 d. Conclusion......Page 235 a. Origins of the Standard......Page 236 b. Fair and Equitable Treatment and the International Minimum Standard......Page 238 c. Specifications of the Content......Page 240 a. Legitimate Expectations......Page 243 b. Failure to Provide a Stable Framework for the Investment and Other Violations of the Standard......Page 250 3. Conclusion......Page 253 1. Non-Discrimination......Page 254 1. The Dogma of the Governmental—Commercial Distinction......Page 255 2. The Difference between the Fair and Equitable Treatment Standard and the Non-Expropriation Standard......Page 258 3. The Broad Discretion of Arbitrators......Page 259 A. General Considerations......Page 260 1. Anglo-Iranian Oil Company......Page 262 2. The Abs-Shawcross Draft Convention on Investments Abroad......Page 264 3. OECD Draft Convention on the Protection of Foreign Property 1967......Page 266 II. Contemporary Occurrence and Use of the Clause......Page 267 1. Occurrence at Present......Page 268 2. Multilateral Agreements......Page 269 a. Mandatory Language......Page 270 b. Scope of Obligations......Page 271 d. Requisitions of the Wording......Page 272 I. The Narrow Interpretation or Rejection of an Elevating Effect......Page 274 II. The Elevating Effect......Page 277 III. Distinction between Commercial and Non-Commercial Conduct......Page 282 1. Narrow Interpretation......Page 284 2. Broad Interpretation......Page 286 3. Conclusion......Page 289 1. In Dubio Mitius......Page 291 2. Effective Interpretation......Page 293 1. The Narrow Approach......Page 295 2. The Middle Approach......Page 298 3. The Broad Approach......Page 300 IV. The Location of the Clause......Page 304 V. Alternative Functions of the Clause......Page 306 E. Resolution of Central Aspects......Page 308 I. Threshold of Elevation......Page 309 II. Manner of Elevation......Page 312 III. The Contracts Covered......Page 314 A. Conflicting Jurisdictions under International Investment Treaties and Contracts between a Foreign Investor and a Host State......Page 316 1. Generation and Risks of Parallel and Multiple Proceedings......Page 317 2. Contract-Related Parallel Proceedings: "Asymmetrical” and “Symmetrical” Conflicts......Page 323 3. Traditional Means of Jurisdictional Conflict Resolution and Their Effect under the Investment Treaty Regime......Page 324 a. The Exhaustion of Local Remedies Rule......Page 325 b. The Principles of Litis Pendens and Res Judicata......Page 327 1. The “Fork in the Road Clause”......Page 329 2. Prior Recourse to State Courts for a Fixed Period of Time......Page 332 a. Article 1121 of the NAFTA......Page 335 b. Article 26 of the ICSID Convention......Page 337 c. Transaction-Based Approaches and Dispute-Based Approaches......Page 339 I. General Considerations......Page 340 1. The Superior Status of International Tribunals......Page 342 2. The Primacy or “Independency” of International Investment Tribunals......Page 344 III. The Impact of the Contractual Dispute Resolution Clause on Symmetrical Conflicts......Page 348 1. Traditional Forms—The Calvo Clause......Page 349 2. The Interpretation in Modern Investment Arbitration......Page 352 a. Waiver of Right to Treaty Protection......Page 359 b. The Effects of a Contractual Dispute Resolution Clause......Page 362 IV. Conclusion......Page 370 Final Conclusion......Page 371 Bibliography......Page 376 Index......Page 400