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Litigating International Investment Disputes
International Litigation
in Practice

General Editors

Loretta Malintoppi
Eduardo Valencia-Ospina

Advisory Board

David Anderson
John R. Crook
Gilbert Guillaume
Sean D. Murphy
Alain Pellet
Brigitte Stern
Prosper Weil
Rüdiger Wolfrum
Sir Michael Wood

VOLUME 8

The titles published in this series are listed at brill.com/inli


Litigating International
Investment Disputes
A Practitioner’s Guide

Edited by

Chiara Giorgetti

LEIDEN | BOSTON
Library of Congress Cataloging-in-Publication Data

Litigating international investment disputes : a practitioner’s guide / Edited by Chiara Giorgetti.


p. cm. — (International litigation in practice ; 8)
Includes index.
ISBN 978-90-04-27658-1 (hardback : alk. paper)—ISBN 978-90-04-27657-4 (e-book) 1. Investments,
Foreign—Law and legislation. 2. Arbitration and award. 3. Actions and defenses. I. Giorgetti, Chiara,
editor of compilation.
1. Developing countries—Economic conditions—Congresses. 2. Income distribution—Developing
countries—Congresses. 3. Sex role—Developing countries—Congresses. I. Foeken, D., editor of
compilation.

K3830.L583 2014
346’.092—dc23
2014013702

This publication has been typeset in the multilingual ‘Brill’ typeface. With over 5,100 characters covering
Latin, ipa, Greek, and Cyrillic, this typeface is especially suitable for use in the humanities.
For more information, please see brill.com/brill-typeface.

issn 1874-0502
isbn 978-90-04-27658-1 (hardback)
isbn 978-90-04-27657-4 (e-book)

Copyright 2014 by Koninklijke Brill nv, Leiden, The Netherlands.


Koninklijke Brill nv incorporates the imprints Brill, Brill Nijhoff, Global Oriental and Hotei Publishing.
All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior written permission from the publisher.
Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill nv provided
that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive,
Suite 910, Danvers, ma 01923, usa. Fees are subject to change.

Brill has made all reasonable efforts to trace all rights holders to any copyrighted material used in this work.
In cases where these efforts have not been successful the publisher welcomes communications from
copyright holders, so that the appropriate acknowledgements can be made in future editions, and to settle
other permission matters.

This book is printed on acid-free paper.


Per Alexander, Charlotte,
Andre,
Giorgio e Luisa.


Contents

Preface xv
List of Abbreviations xvi
About the Authors xvii

1 An Outline of Procedure in an Investment Treaty Arbitration—


Strategy and Choices1
Bart Legum and Anna Crevon
1 Introduction 1
2 Case Preparation 1
2.1 Initial Assessment of the Case2
2.2 Selection of Arbitration Rules3
2.3 Request for Arbitration and Response Thereto8
2.4 Selection of the Arbitrators9
2.5 First Session with the Tribunal10
3 Written and Oral Submissions 11
3.1 Written Submissions11
3.2 The Hearing12
4 Post-Hearing Activity 14
4.1 Pre-award activity15
4.2 Post-award activity17
5 Conclusion 17

2 Representing Claimant: Pre-Arbitration Considerations19


O. Thomas Johnson and David Z. Pinsky
1 Introduction 19
2 Has the Sovereign Consented to Arbitral Jurisdiction? 20
2.1 Source of Jurisdiction20
2.2 Scope of Jurisdiction23
2.3 Extending Treaty-Based Consent: MFN Clauses27
3 What Are the Substantive Bases of the Investor’s Claim? 28
3.1 Violation of Treaty Provisions28
3.2 Violation of Customary International Law32
3.3 Violation of Contract Terms32
3.4 Proving Your Case—Documents33
4 Can the Investor Prove Damages? 33
5 Must the Investor Satisfy Any Conditions Precedent
to Arbitration? 35
viii contents

6 What Forum Should the Investor Select? 36


6.1 Institutional or Ad Hoc?36
6.2 ICSID Arbitration37
7 The Request for Arbitration 39
8 Conclusion 40

3 Representing a Respondent State in Investment Arbitration41


Jeremy K. Sharpe
1 Introduction 41
2 Getting Organized 43
2.1 Designating Counsel45
2.2 Constituting the Tribunal54
2.3 Assessing the Claims and Options58
2.4 Designating a Lead State Agency58
2.5 Ensuring Adequate Funds Throughout the Arbitration
Proceedings61
2.6 Institutional Support61
3 The Arbitral Proceedings 62
3.1 Preliminary Objections to Jurisdictions or the Merits62
3.2 Alternative Dispute Resolution and Settlement64
3.3 First Session with the Tribunal66
3.4 Provisional Measures72
3.5 The Written Submissions73
3.6 The Hearing73
3.7 Working with Non-Disputing Treaty Parties74
3.8 Post-Hearing Submissions76
4 Post-Award 77
5 Conclusion 78

4 Institutional Arbitration and the Role of the Secretariat80


Eloïse Obadia and Frauke Nitschke
1 Introduction 80
2 Involvement at the Time of the Institution of the Proceeding 85
2.1 ICSID85
2.2 Other Rules105
3 Assistance with the Constitution of a Tribunal, Commission
or Committee 108
3.1 ICSID108
3.2 Other Rules118
4 Assistance in the Course of the Proceeding 123
4.1 ICSID123
4.2 Other Rules131
contents ix

5 Specific Functions Exercised by Secretariats in Connection


with a Dispute Settlement Proceeding 135
5.1 ICSID135
5.2 Other Rules140
6 Conclusion 143

5 The Arbitral Tribunal: Selection and Replacement of Arbitrators145


Chiara Giorgetti
1 Introduction 145
2 The Selection Procedure: How to Select an Arbitrator 146
2.1 Party Appointments146
2.2 Third-party Appointments149
3 The Selection Procedure: Who to Select 152
3.1 Necessary Requirements154
3.2 Desirable Qualities160
4 Constitution of the Tribunal 163
5 Procedures Related to Challenges of Members of the Tribunal 166
6 Replacement of the Arbitrator 171
7 Conclusion 172

6 Preliminary Matters: Objections, Bi-furcation, Request for


Provisional Measures173
Andrea Carlevaris
1 Introduction 173
2 The Screening Role of Arbitral Institutions 175
2.1 The Rationale: The “Gatekeeper” Function175
2.2 The Applicable Standard176
2.3 The Procedure178
2.4 The Nature and the Effects of the Decision179
3 Preliminary Issues in Investment Arbitration 180
4 Bifurcation of Preliminary Issues 182
4.1 The Problem182
4.2 The Arguments in Favour and Against Bifurcation183
4.3 The Relevant Rules185
4.4 The Time of the Jurisdictional Objections187
4.5 The Form of the Decision189
5 Summary Judgment of Unmeritorious Claims 191
6 Interim Measures 195
6.1 Interim Relief in Investment Arbitration195
6.2 Arbitrators’ and State Courts’ Respective Powers to
Grant Interim Relief196
6.3 The Binding Nature of the Measures198
x contents

6.4 The Procedure201


6.5 Emergency Arbitration203

7 Written Proceedings in International Investment Arbitration206


Mark A. Clodfelter
1 Introduction: The Importance of Written Submissions in
Investment Arbitration 206
2 Written Submissions Within the Overall Structure of
Investment Arbitrations 209
3 Types of Written Submissions Relevant to Jurisdiction
and the Merits 213
3.1 Pre-arbitration Notices of Dispute213
3.2 Requests for and Notices of Arbitration and Responses214
3.3 UNCITRAL Rules Notice Pleadings216
3.4 Written Submissions on Procedural Issues218
3.5 Written Submissions Relating to Provisional/
Interim Measures219
3.6 Written Submissions Relating to Preliminary Issues220
3.7 Written Submissions Relating to Document Production
Requests221
3.8 Written Submissions of the Parties’ Cases in Chief:
Memorials/Counter-memorials222
3.9 Post-hearing Written Submissions224
4 Common Issues Relating to Written Submissions 226
4.1 Communication of Written Submissions226
4.2 Sequence and Order of Submitting Written Submissions227
4.3 Number of Rounds of Written Submissions228
4.4 Time, Length and Content Limits on Written Submissions228
5 Conclusion 230

8 Oral Proceedings232
Catherine M. Amirfar
1 Introduction 232
2 Starting Points for the Effective Oral Advocate 233
2.1 The Arbitral Hearing: Its Own Species233
2.2 Using the Flexibility of Arbitral Procedure to the Advocate’s
Advantage235
3 Before the Hearing 238
3.1 Location of Hearing 238
3.2 Timing239
contents xi

3.3 Making Objections240


3.4 Evidentiary Documents242
3.5 Demonstratives242
3.6 Closing Argument or Post-hearing Submissions?243
4 At the Hearing 244
4.1 Opening Argument245
4.2 Documentary Evidence and Use of Demonstratives251
4.3 Examination of Witnesses and Experts252
4.4 Closing Argument259
5 Conclusion 260

9 Applicable Law in International Investment Disputes 261


Andrea K. Bjorklund
1 Rules on Applicable Law in Investment Arbitration 263
1.1 Applicable Law in International Investment Agreements264
1.2 “Applicable Law” Provisions268
1.3 Contractual Investment Arbitration272
1.4 General Observations About Applicable Law Rules in
Investment Arbitrations273
2 Application of Substantive Law in Practice 275
2.1 Law as Rule of Decision vs. Aid to Interpretation275
2.2 Compound Choice of Law and Depeçage277
2.3 Relationship Between Inconsistence or Conflicting Laws279
2.4 Interaction Between Different Sources of International Law281
3 Conclusion 286

10 Evidentiary Issues Arising in an Investment Arbitration 287


Rahim Moloo
1 Introduction 287
2 Background: General Procedures Relating to the Presentation
and Discovery of Evidence 289
2.1 Documentary Evidence290
2.2 Fact Witnesses291
2.3 Expert Witnesses292
3 The Rules Applicable to Evidentiary Issues 292
4 Substantive Rules Unique to Investment Disputes 297
4.1 Obtaining and Presenting Evidence297
4.2 Special Evidentiary Issues Dealing with Corruption307
4.3 Amicus Curiae Submissions310
5 Conclusion 315
xii contents

Appendix: Extract of Procedural Order Dealing with


Evidentiary Matters 317

11 Technical and Legal Experts in International Investment Disputes323


Brooks W. Daly and Fiona Poon
1 Introduction 323
2 Procedural Regimes under Institutional and ad hoc Rules 325
3 Additional Procedural Developments under the IBA Rules
on the Taking of Evidence in International Arbitration 329
4 The Types of Experts Used in International Investment
Disputes334
4.1 The Debate over Tribunal-appointed vs. Party-appointed
Experts335
4.2 Types or Categories of Experts336
4.3 Is an Expert Required?338
5 The Practice of Using Experts in International Investment
Disputes341
5.1 Selection and Appointment of Experts341
5.2 Preparation and Content of Expert Reports356
5.3 Hearing and Examination of Experts362
6 Recent Procedural Developments to Control Expert Evidence 367
6.1 Role of Ethical Standards367
6.2 Joint Expert Reports368
6.3 Expert Conferencing or ‘Hot-tubbing’371
6.4 Expert Teaming373
7 Conclusion 374

12 Transparency of the Proceedings and Third Party Participation 375


Neale H. Bergman
1 Introduction 375
2 Recent Developments 375
3 Transparency Standards and Practices 383
3.1 Initiation of Arbitral Proceedings383
3.2 Arbitral Documents389
3.3 Submissions by Third Parties392
3.4 Hearings and Transcripts401
3.5 Orders, Decisions, and Awards of the Tribunal403
3.6 Exceptions to Transparency and Redactions for Protected
Information405
4 Conclusion 410
contents xiii

13 Costs in Investment Treaty Arbitration 411


Michelle Bradfield and Guglielmo Verdirame
1 Introduction 411
2 Practical Aspects of Costs in Investment Treaty Arbitration 412
2.1 Arbitration Costs412
2.2 Legal Costs414
2.3 Security for Costs415
2.4 Recovery of Costs in the Award416
3 Who Will Have to Pay for the Costs of the Investment
Arbitration?416
3.1 The Approach to Costs in Public International Law418
3.2 Factors in Recent Arbitral Jurisprudence on Costs419
3.3 ICSID and UNCITRAL Rules on Costs422
4 Trends in Recent ICSID and UNCITRAL Jurisprudence 425
4.1 The ICSID Cases426
4.2 The UNCITRAL Cases434
5 Conclusion 440
Annex: Comparison Between ICSID and UNCITRAL
Figures 2010–2013 442

14 Award and Discontinuance of the Proceeding 443


John R. Crook
1 Introduction 443
2 The Effect of the Award 443
3 Arbitrators’ Responsibility to Produce an Enforceable Award 445
4 The Award’s Formal Elements 445
4.1 The Requirement for a Majority446
4.2 A Written Award, Signed by the Arbitrators448
4.3 Completeness and Reasons450
4.4 Dissents and Separate Opinions453
4.5 Publication of the Award454
4.6 Certification, Date of the Award457
5 The Effect of the Award 457
6 Awards on Agreed Terms 458
7 Discontinuance and Default 460
8 Conclusion 461
xiv contents

15 The Enforcement of Awards 462


Carolyn B. Lamm and Eckhard R. Hellbeck
1 Introduction 462
2 Applicable Treaties 463
3 Recognition 467
3.1 Article 54 of the ICSID Convention467
3.2 Articles III and V of the New York Convention470
3.3 A State’s Defenses to Recognition475
4 Execution 483
4.1 Sovereign Immunity from Execution484
4.2 Separate Legal Personality494
5 Conclusion 496

16 Post-Award Remedies 497


Veijo Heiskanen and Laura Halonen
1 Introduction 497
2 Avenues for Challenging Investment Awards 498
2.1 ICSID Arbitration498
2.2 Non-ICSID Arbitration499
3 Grounds of Review 500
3.1 ICSID Awards500
3.2 Non-ICSID502
3.3 Comparison Between ICSID and Model Law Annulment
Grounds503
4 Comparing ICSID Annulment With Setting Aside of
Non-ICSID Awards 510
4.1 Quality of Decision-making511
4.2 Immunity From Challenge514
4.3 Procedural Issues514
4.4 Finality and subsequent steps521
5 Other Methods of Review 523
5.1 Correction523
5.2 Interpretation524
5.3 Revision525
6 Conclusion 526

Index527
Preface

International investment arbitration is an increasingly important field of practice. A


growing number of complex and distinctive cases are filed every year in diverse forums
that specialize in international investment arbitration. Yet, no single manual has yet
guided the new practitioner through all the complexities of an international invest-
ment arbitral proceeding. This book seeks to fill this vacuum. Starting from the unique
issues that a potential claimant must consider before initiating arbitral proceeding,
and going up to the enforcement of the award and available post-award remedies, this
book explains all the steps of an international investment arbitration. By doing so, my
aim is to provide a comprehensive and straightforward text for those who approach or
study international investment arbitration for the first time, and to offer valuable and
thoughtful support to the seasoned practitioners.
The authors of each chapter of this book are experts and practitioners with many
years of experience. They have acted as counsel, arbitrators and experts, and have
served in institutions that routinely administer international investment arbitration
proceedings. I am grateful for their excellent contributions and for sharing their expe-
rience and knowledge. As always, authors have contributed in their personal capacity
only, and the views expressed in this book do not reflect the views of a particular insti-
tution to which an author may be affiliated.
I would like to thank my research assistant, Ryan Murphy, for his excellent and care-
ful editorial assistance, and Lisa Hanson and Diana Steele for a flawless publication
and production process.
I would also like to thank my husband, my children and my parents for their con-
stant love and support.

C. G.
February 2014
List of Abbreviations

BIT Bilateral Investment Treaty


ECT Energy Charter Treaty
IBA International Bar Association
ICC International Chamber of Commerce
ICSID International Center for Settlement of Investment Disputes
ICSID AF ICSID Additional Facility
ICSID Convention Convention on the Settlement of Investment Disputes between
States and Nationals of Other States
IIA International Investment Agreements
ILA International Law Association
ISDS Investor-State Dispute Settlement
LCIA London Court of International Arbitration
MFN Most-Favored-Nation
NAFTA North American Free Trade Agreement
PCA Permanent Court of Arbitration
SCC Stockholm Chamber of Commerce
SCC Rules Arbitration Rules of the Arbitration Institute of the Stockholm
Chamber of Commerce
UNCITRAL United Nations Commission on International Trade Law
About the Authors

Catherine Amirfar is a litigation partner based in New York in Debevoise &


Plimpton LLP’s International Dispute Resolution Group. Her practice focuses
on international commercial and treaty arbitration, and international and
complex commercial litigation. She routinely acts as counsel in arbitration
cases arising under the rules of the major arbitral institutions, and her recent
representations include disputes involving Latin America and disputes
dealing with the gas and energy and financial industry sectors. She is one of
the youngest advocates to argue before the International Court of Justice.
Ms. Amirfar is ranked among the leading international arbitration practitio-
ners by Chambers Global (2012, 2013), which describes her as a “highly
regarded young international lawyer,” and by Chambers USA (2010–2013),
which said that she “particularly impresses with her cross examination skills.”
She is described in the Legal 500 US (2011–2013) as “an extraordinarily good
technical lawyer and advocate”, who “quietly decimates witnesses without
their ever knowing it,” in Chambers Latin America (2011–2013) as “one of the
leading figures of the next generation,” and in Legal 500 Latin America as
being “very hands on,” and “always pay[ing] great attention to the client.” In
2011, Ms. Amirfar was recognized by the Global Arbitration Review in its “45
under 45,” a selection of the 45 leading figures of the international arbitration
bar under the age of 45, based on surveys of other practitioners. She was
selected as a 2013 Rising Star by The New York Law Journal. Ms. Amirfar has
served on the Executive Committee of the American Society of International
Law (ASIL) (2009–2012) and was a member of the Council on Foreign
Relations. She currently serves on the Executive Council of the American
Branch of the International Law Association (ILA), and was recently elected
Vice President. She serves on the Steering Committee of the Young
Arbitrators Forum. Ms. Amirfar has written numerous articles relating to
international arbitration and is a frequent lecturer on international law.

Neale H. Bergman is an Attorney-Adviser in the Office of the Legal Adviser’s


Office of International Claims and Investment Disputes at the U.S.
Department of State, where he represents the U.S. government in investment
treaty and State-to-State arbitrations and advises on related matters. He
served as a member of the U.S. delegation to UNCITRAL’s Working Group II
(Arbitration and Conciliation) that participated in the development of the
UNCITRAL Rules on Transparency. He is a member of the Bars of D.C. and
xviii about the authors

Maryland and received his J.D. from the University of Maryland School of
Law.

Andrea K. Bjorklund is the L. Yves Fortier Chair in International Arbitration


and International Commercial Law at McGill University Faculty of Law. She
previously taught at UC Davis School of Law. She has taught a variety of
courses in such areas as international arbitration and litigation, international
trade, international investment, public international law, international
business transactions, conflict of laws, and contracts. She is Chair of the
Academic Council of the Institute of Transnational Arbitration, co-rapporteur
of the International Law Association’s Study Group on the Role of Soft-Law
Instruments in International Investment Law and an adviser to the American
Law Institute’s project on restating the U.S. law of international commercial
arbitration. She also serves as Director of Studies for the American Branch of
the International Law Association.

Michelle Bradfield is a partner at Dentons where her practice focuses on


public international. Michelle has significant expertise in this area of law and
advises and represents States, private entities and international organizations
on a diverse array of both contentious and non-contentious international law
matters. The key areas of her practice include boundary disputes between
States, including before the International Court of Justice, maritime delimita-
tions and investment treaty arbitration. She also focuses on sanctions, treaty
interpretation, sovereign immunity and international commercial arbitra-
tions (LCIA, ICC, UNCITRAL). Michelle also regularly lectures on public
international law at various Universities. She has her LLM from the University
of Cambridge and was a research fellow at the Lauterpacht Centre for
International law at the University of Cambridge.

Andrea Carlevaris is Secretary General of the ICC International Court of


Arbitration and Director of the ICC Dispute Resolution Services. Before
joining ICC, Mr Carlevaris was a partner in the Rome office of Bonelli Erede
Pappalardo. He joined Bonelli Erede Pappalardo in 2003 and became partner
in 2010. Prior to that, Mr Carlevaris was counsel at the Secretariat of the ICC
International Court of Arbitration, a member of the ICC International Court
of Arbitration and of the ICC Commission on Arbitration. Mr Carlevaris is a
member of the Steering Committee of the International Arbitration
Commission of the Union international des Avocat (UIA) and of the Board of
Directors of the Italian Association for Arbitration (AIA) and one of the
founders of the Italian Forum on International Arbitration and ADR (ArbIt).
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