EXAM

Question 1

Definition of Investor

Question 2

Definition of Investment

Question 3

Possibilities to solve a conflict between investor and host country

Answer 3

1. National law system of the host system
2. International law: Diplomatic protection

Question 4

What is the problem with domestic protection?

Answer 4

Compensation is given to the home state, not to the investor

Question 5

What are the absolute standards?

Answer 5

Fair and equitable treatment
Full protection and security

Question 6

Explain the Fair and equitable treatment

Answer 6

Party made a specific representation to an investor to induce a covered investment, that created a legitimate expectation, and upon which the investor relied in deciding to make or maintain the covered investment

Question 7

Case Spain v. 9REIN

Answer 7

Energy subsidy.

Question 8

What kind of risks does the BIT cover?

Answer 8

Sovereign risks

Question 9

What kind of risks does the BIT cover?

Answer 9

Sovereign risks (Behaviour of the Host State)

Question 10

What is the definition of the full protection of security (FPS) standard?

Answer 10

Protect the investor, due dilligence.
The standard of full protection and security doesn’t impose strict liability upon the host state but rather requires a host state to exercise due diligence

Question 11

Arab Spring

Question 12

AAPL v. Sri Lanka

Answer 12

Related to FPS –> Due Diligence:

Majority vote: the government should have taken important precautionary measures.
Objective due diligence: The State should be capable to control the situation

Disserting vote: the tribunal’s application of due diligence rules fails to take into account the national emergency and extraordinary conditions because the situation provoked that the State was no longer capable to exercise due diligence. Also, the government was confronting a force majeure situation

The government had a compelling sovereign duty to undertake a military operation to regain control, the timing and modalities of the security operation must fall within its exclusive discretion 
The government wasn’t capable to exercise due diligence

Question 13

Ampal v. Egypt

Answer 13

FPS

Due Diligence

Majority vote: Tribunal tried to look the specific situation of the host state to acknowledge that certain circumstances were difficult

Question 14

What is the definition of due diligence?

Answer 14

The due diligence is a demonstration of effort to avoid damages, but not a demonstration of results.

Question 15

Criteria of due diligence

Answer 15

Objective assessment criterion of due diligence
 Reasonable measures of prevention, which a well-administrated government could be expected to exercise under similar circumstances

Subjective due diligence standard
 Taking into consideration the means at the disposal of the State, and the specific circumstances and capability of the State.

Question 16

• Extended war clause

Answer 16

it was necessary the destruction

Question 17

Expropriation

Question 18

• 3 elements of expropriation

Answer 18

o Measure
o Public benefit
o Compensation

Question 19

• Requirements of expropriation

Answer 19

o Acting in public interest
o Non-discriminator
o Legality (Observation of a national procedure where appropriate and, if need be, its verifiability in a domestic court)
o Compensation (without delay, subject to interest, effectively realizable + freely transferable

Question 20

• Types of expropriation

Answer 20

o Direct: Transfer of title to property form one legal subject to another by an official act
o Indirect: impairment of usage, controlling or performance possibilities, or generally as significant loss of value of the investment, principally every state measure can influence the value of the investment

Question 21

Criteria – Perspectives – effects: expropriation

Answer 21

Sole effects:
o Perspective of the investor
o Investor cannot influence in their investment.
o The investment is no longer usable.
o Investors argue that the State shall bear the burden of the costs, that it want to receive compensation

Police Powers
o Perspective of the Host State
o The State’s rights to influence in the investment
o Social or general welfare purpose, in such case the measure should be accepted without any imposition of liability

Proportionality
o You look at the purpose and you look at the measure, you simply balance whether the effect of that particular measure is the one with the least effect on the affected investor

Question 22

Relative Standards

Answer 22

MFN: Most Favoured Nation Treatment
Umbrella Clause
National treatment

Question 23

MFN: Most Favoured Nation Treatment

Answer 23

look which further treaties and instruments has the host state, that the host state concluded with other States.This allows me to import a better standard of a third BIT in my arbitration

Ensure equality of competitive conditions between foreign investors of different nationalities.

No cherry picking

Question 24

Shall MFN be used to procedural provisions?

Answer 24

• Argument in counter: There is no reason to import some clauses from a BIT to another, when the latter doesn’t have anything to do in the negotiation process of the first one.
• Argument in favor: the BIT has an MFN clause, so it’s included to guarantee its accomplishment. Also, the procedure is a right such as the substantive rights.

Question 25

Umbrella Clause

Answer 25

o This standard allows you when there is a contractual regulation, the State can elevate the contractual claim on the international claim in the international arbitration.

Question 26

What kind the contractual claims should be affected of the umbrella clause, or according to which criteria?

Answer 26

When the action of the host State violates the BIT and breach the contract.

Question 27

 Which contracts should be elevated with the Umbrella Clause?

Answer 27

o Broad interpretation: Every contract breach is a treaty breach.
o Narrow interpretation: Contract breach should be a sovereign act

Question 28

• National treatment

Answer 28

o The BIT also demands that the foreign investor must be treated as a national investor