INTERNATIONAL INVESTMENT AGREEMENTS
AND INVESTOR-STATE ARBITRATION
LECTURE 2. Investor-State Arbitration
Sergey Ripinsky
International Investment Agreements Section
Division on Investment and Enterprise
Geneva, 4 May 2012
Historical context
Previously, two options available to a foreign investor:
1)
2)
Seek relief in the local courts or administrative tribunals
of the host state.
Request diplomatic protection by home government.
Need for a neutral forum that would:
–
–
–
–
–
Allow direct claims by investors
Be impartial and independent
Consist of highly-qualified specialists
Fast
Cheap
1965 ICSID Convention
• “A-national” forum to administer investment disputes
• Part of the World Bank group
• Can be engaged if both disputing parties consent to arbitration
• Each disputing party appoints one arbitrator
• Awards are enforceable in all ICSID Contracting States (147)
ICSID and UNCITRAL – key differences
•
•
•
•
•
•
Institutional v. ad hoc
Nationality of arbitrators
Arbitrator fees
Confidentiality
Review of awards
Enforcement of awards
Statistics of IIA-based disputes 2011
• 46 new known cases filed (34 of them in ICSID)
• In 38 cases, respondents are developing or transition
economies: e.g., Venezuela (10), Ecuador (4), Egypt (4),
Peru (3) and Poland, Philippines and Turkmenistan (2
each)
• 35 of the 46 new cases filed by investors from developed
countries.
50
500
45
450
40
400
35
350
30
300
25
250
20
200
15
150
10
100
5
50
0
0
2011
2010
All cases cumulative
2009
2008
2007
2006
2005
2004
2003
2002
2001
Non-ICSID
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
ICSID
Cumulative number of cases
Annual number of cases
Known investor-State disputes 1987-2011
Distribution of claims by economic sector
(ICSID statistics)
Largest pending IIA claims
• Yukos shareholders v. Russia
– $114 billion in damages claimed
• Conoco Philips v. Venezuela
– Around $30 billion in damages claimed
Public interest disputes: examples
•
•
•
•
Philip Morris v. Uruguay, Philip Morris v. Australia,
(challenges the countries’ anti-smoking policies)
Vattenfall v. Germany (nuclear phase-out)
Abaclat et al v. Argentina (sovereign debt)
Chemtoura v. Canada (pesticide ban)
Criticisms of IIA arbitration
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•
•
•
High costs
Slow
Severance of relationship between investor and host State
Issuance by tribunals of inconsistent decisions: (1) divergent
interpretations of identical treaty provisions, and (2) differences in
the assessment of identical facts
• Secrecy: especially important when public-interest measures at
stake. Damages paid from the public pocket.
• A club: same people serve as arbitrators in some cases and as
counsel in others.
• Party appointments: emergence of “pro-State” or “pro-investor”
arbitrators.
10