Investment & Trade Dispute Settlement (Lecture 2)

Question 1

Principal features of WTO DS system ? (6)

Answer 1

1/ single unified DS system
2/ principle of reverse consensus (=> compulsory jurisdiction of WTO panels)
3/ exclusive jurisdiction (Art 23 DSU)
4/ procedure for appellate review
5/ improved surveillance mechanisms for implementation of rulings + recommendations
6/ strict timeframes for each stage of DS

Question 2

4 steps of WTO DS process ?

Answer 2

1/ consultation
2/ panel procedures
3/ appellate procedures
4/ implementation + enforcement

Question 3

Characteristics of WTO DSB ? (3)

Answer 3

1/ political organ composed of all WTO Member gvts

2/ ‘reverse consensus’ for key decisions

3/ authority to :

i) establish panels
ii) adopt panel + AB reports
iii) supervise implementation of rulings + recommendations
iv) authorise suspension of concessions or other obligations under covered agreements (retaliation)

Question 4

Who has access to WTO DSB ? (2)

Answer 4

1/ only WTO members

2/ amicus curiae briefs are allowed

Question 5

Causes of action (& types of complaint) setting in motion WTO DS system ?

Answer 5

Types of causes of action :

1/ nullification and impairment of benefits

2/ impedance of attainment of objective of WTO agreement

Types of complaint :

1/ violation complaint
2/ non-violation complaint
3/ situation complaint

Question 6

Applicable law in WTO DS system ? (3)

Answer 6

1/ no explicit provisions in DSU

2/ thus, generally application of relevant provisions of covered agreements

3/ but, question abt relationship btwn WTO rules/IL rules :

i) VCLT rules often cited as rules of CIL
ii) IL rules as supplementary means of interpretation of WTO agreements ?
iii) panels + AB cannot add or diminish rights & obligations provided in WTO agreements

Question 7

Characteristics of consultation in WTO DS system ? (4)

Answer 7

1/ first step of DS system
2/ strict timeframe
3/ DSB plays a role
4/ can continue during panel proceedings

Question 8

Composition WTO panels ? (3)

Answer 8

1/ 3 or 5 panellists
2/ Secretariat proposes nominations
3/ well qualified individuals + independence and impartiality

Question 9

Scope of jurisdiction WTO panels ?

Answer 9

Only claims under WTO covered agreements

( ! ) but debate about broad interpretation of jurisdiction so as to allow decisions on all issues necessary to settle dispute

Question 10

3 steps of the WTO panel procedure ?

Answer 10

1/ examination
2/ interim review
3/ issuance of final report

Question 11

Legal effects of panel and AB reports ? (3)

Answer 11

1/ no provision in DSU

2/ parties must accept + implement rulings/recommendations

3/ no principle of binding effect (but nuance, becomes part of the acquis of WTO DS system and creates legitimate standards of expectation)

Question 12

3 remedies for breach of WTO law ?

Answer 12

1/ withdrawal or modification of WTO-inconsistent measures

2/ compensation

3/ suspension of concessions/other obligations (i.e. retaliation)

Question 13

Characteristics of compensation ? (3)

Answer 13

1/ voluntary

2/ offers a benefit

3/ measure extended to all members

Question 14

Characteristics of retaliation ? (5)

Answer 14

1/ must be authorised by DSB upon request

2/ various requirements

3/ level of suspension must be equivalent to the level of nullification or impairment

4/ applies until removal of inconsistent measures or mutually satisfactory decision

5/ if objection to suspension, arbitration is mandatory

Question 15

Difficulties with retaliation ? (3)

Answer 15

1/ countermeasures are of a bilateral nature (pertinent for weaker members ?)

2/ raise of trade barriers (threat to progress of trade liberalisation & free trade principles)

3/ determination equivalent level to level of nullification/impairment is difficult

Question 16

Legal nature WTO panel procedure ?

Answer 16

Sui generis system with mixed character of judicial settlement and conciliation :

1/ ad hoc basis (arbitration)

2/ panel procedures + predetermination of applicable law by DSU + AB’s ultimate role to deal with cases (judicial settlement)

3/ regular consultation with parties + opportunities to dvp mutually satisfactory decisions (conciliation)

Question 17

3 ways arbitration is integrated in the WTO system ?

Answer 17

1/ notification of agreement to resort to arbitration to all WTO members

2/ notification of arbitral award to DSB

3/ DSB involved in implementation of arbitral award

Question 18

How does the DSU take the situation of dvping States into consideration ?

Answer 18

1/ particular attention has to be paid to interests of dvping States at the stages of consultation, panel proceedings, implementation

2/ WTO Secretariat is required to provide additional legal advice + assistance in respect to DS

Question 19

3 general considerations about ICSID ?

Answer 19

1/ created by 1965 ICSID Convention, established in 1966

2/ facilities for conciliation + arbitration of investment disputes btwn contracting States and nationals of other contracting States

3/ Administrative Council + Secretariat

Question 20

Characteristics of ICSID’s jurisdiction ? (5)

Answer 20

1/ ratione personae : only for disputes btwn contracting State/national other contracting State

2/ ratione materiae : any legal dispute arising directly out of investment (but separate written consent of parties is necessary)

3/ ratione temporis : no time requirement, left to parties’ consent

4/ possibility to decide binding provisional measures (upon request or on its own initiative)

5/ no advisory jurisdiction

Question 21

Applicable law before ICSID ? (3)

Answer 21

1/ rules of law agreed by parties

2/ if no ^, then law of the contracting State + applicable rules of IL

3/ possible to rule ex aequo et bono if parties so agree

Question 22

4 characteristics of the ICSID’s awards ?

Answer 22

1/ binding

2/ no appeal/remedies allowed, except for the ones provided for by ICSID Convention

3/ execution of awards has to be accomplished according to domestic law of State party to the dispute (which creates a risk of non-execution in cases of immunity from execution)

4/ parties can request interpretation, revision, or annulment of award (but only under specific conditions)

Question 23

2 types of mixed arbitration (MA) ?

Answer 23

1/ MA for settlement of investment disputes btwn States/investors

2/ MA as part of peace process btwn hostile States

Question 24

Characteristics of mixed arbitration ?

Answer 24

1/ combines features of public and private international arbitration

2/ for settlement of disputes btwn States and juridical/natural persons

Question 25

General considerations about Iran-US Claims Tribunal ? (3)

Answer 25

1/ created by Claims Settlement Declaration (which is part of the 1981 Algiers Accords) 2/ binding third-party arbitration 3/ mixed character : i) disputes btwn 2 gvts as well as disputes btwn private party and a gvt ii) interpretation + application of IL, municipal law, and general principles of law

Question 26

Scope of jurisdiction of Iran-US Claims Tribunal ? (3)

Answer 26

1/ ratione personae : nationals of Iran/US + gvts of these two States 2/ ratione temporis : claims prior to/outstanding/filed 1 year from 19 January 1981 3/ ratione materiae : various situations (see Art. II)

Question 27

Applicable law in front of Iran-US Claims Tribunal ? (3)

Answer 27

1/ rules of PIL and private law 2/ wide discretion of choice of applicable rules 3/ Tribunal can rule ex aequo et bono if parties so agree

Question 28

Differences btwn Iran-US Claims Tribunal and ICSID ? (3)

Answer 28

1/ limited locus standi (Iran/US) 2/ temporal role of Iran-US Claims Tribunal 3/ part of peace process to normalise Iran/US relationship

Question 29

Purpose of ICSID ? (2)

Answer 29

1/ promote flows of foreign investment 2/ present stable legal framework to impulse economic development

Question 30

Background ICSID ? (2)

Answer 30

1/ expropriation (direct & indirect) harmed foreign investors and their investments 2/ remedies prior to ICSID had weaknesses (litigation in national courts ; diplomatic protection)

Question 31

Conditions for legal expropriation ? (4)

Answer 31

1/ public purposes 2/ non-discriminatory 3/ due process 4/ adequate compensation

Question 32

Conditions diplomatic protection ? (2)

Answer 32

1/ investor has nationality of claiming State 2/ exhaustion of local remedies

Question 33

Reasons why States may not engage procedure of diplomatic protection ? (4)

Answer 33

premise : State discretion 1/ negotiations are complex + need evidence 2/ may not want to disrupt relations with host State 3/ cooperation may be impossible if hostile relations btwn both States 4/ risk of onslaught of similar claims if negotiations made public

Question 34

Inconveniences related to litigation in national courts ? (3)

Answer 34

1/ judges of host State might side with their State against investor 2/ conduct of host State might not violate domestic laws 3/ sovereign immunity and impossibility of third States jurisdiction for DS

Question 35

Positive aspects of investor-State arbitration ? (4)

Answer 35

1/ more efficient approach to DS bc reduces host State's role 2/ claimant has control over initiation of litigation 3/ avoid delays and litigation in national courts 4/ confidentiality of proceedings if desired

Question 36

Characteristics of mixed proceedings before ICSID ? (2)

Answer 36

1/ private actor and State 2/ negative nationality requirement (investor cannot be national of host State)

Question 37

What does it mean that ICSID is a self-contained system ? (6)

Answer 37

1/ no resort to other remedies for DS (litigation in national courts, diplomatic protection) (Art 26 and 27 ICSID Conv) 2/ no reliance on diplomatic protection 3/ no appeal or other remedy than the ones set out in ICSID Convention (Arts 53 ICSID Conv) 4/ awards cannot be challenged in national courts 5/ award is binding on parties 6/ States parties commit themselves legally to enforcing ICSID awards (Art 54 ICSID Conv)

Question 38

Annulment proceedings under ICSID ? (5)

Answer 38

1/ ad hoc committee 2/ only procedural legitimacy of decision-making process 3/ do not concern substantive proceedings of arbitral tribunal 4/ if annulment procedure upheld, initial award is annulled and procedure has to be started again 5/ Art 52 ICSID Conv

Question 39

2 gaps left out by ICSID Convention ?

Answer 39

1/ consent : even if party to Convention, States do not consent to the jurisdiction of an arbitral tribunal (they have to give their consent separately) 2/ applicable law : substantive int investment law not addressed in Convention, so application of CIL and BITs

Question 40

Advantages of ICSID Convention ? (4)

Answer 40

1/ provides set of standard procedural rules 2/ designed to ensure proceedings are not frustrated by disagreement btwn disputing parties 3/ tribunal can proceed even if one party does not appear 4/ facilitates recognition and enforcement of arbitral award (States have to give effect to these)

Question 41

Backlashes of investor-State arbitration ? (2)

Answer 41

1/ challenge to regulatory authority of States 2/ procedural issues (excessive costs, duration of arbitration, independence and impartiality of decision-makers, etc.)

Question 42

History before advent of WTO ? (7)

Answer 42

1/ 19-20th centuries : debate about how to remove trade & protectionist barriers 2/ after WW1, end of relative liberal era of int trade 3/ during WW2, desire to make sure the protectionist legacy would be unmade 4/ 1944 : meeting at Bretton Woods and creation of Bretton Woods system (World Bank, IMF, ITO which never came into existence) 5/ 1947 Havana Charter, which was not ratified by US and thus became a dead body 6/ 1947 : conclusion of GATT (treaty and provisional organization). Main goal was to reduce tariffs and host trade negotiations 7/ 1986-1994 : Uruguay Trade Rounds which lead to creation of WTO

Question 43

Basic principles of GATT ? (3)

Answer 43

1/ trade liberalization (reduce tariffs and non-tariff barriers) 2/ no favouritism (most favoured nation treatment) 3/ non-discrimination (national treatment) ( ! ) Exceptions : public welfare, environment, security matters

Question 44

Positive outcome of GATT ?

Answer 44

Successful at reducing tariffs to low levels => spread of world trade

Question 45

Downsides / problems of GATT system ? (2)

Answer 45

1/ need for new regulations (expansion of services ; increase of gvts taking innovative protectionist actions) 2/ problems with DS system : no fixed timetables, positive consensus which allowed unhappy litigant to block adoption of ruling

Question 46

General characteristics of WTO DS system ? (3)

Answer 46

1/ framework for settling disputes arising under WTO Agreement, multilateral agreements, and plurilateral treaties 2/ 164 members (States and non-State actors) 3/ members are obliged to use DS methods provided for by WTO system

Question 47

Timeframe surrounding WTO panels ? (3)

Answer 47

1/ 45 days for assembly of panel 2/ 6 months from appointment to write report and get parties' feedback 3/ from conclusion of report, DSB has 60 days to adopt it

Question 48

What mechanism has been adopted to fill in the absence of AB activity ?

Answer 48

Multi-party interim appeal arbitration arrangement (Art 25 DSU)

Question 49

What are the 2 different terms used to designate the person initiating litigation in front of ICJ/ITLOS on the one side and ICSID tribunals on the other side ?

Answer 49

1/ ICJ, ITLOS, etc. : applicant 2/ ICSID arbitral tribunals : claimant