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2016 | OriginalPaper | Chapter

6. Claims and Counterclaims Under Asian Multilateral Investment Treaties

Authors : Trisha Mitra, Rahul Donde

Published in: Judging the State in International Trade and Investment Law

Publisher: Springer Singapore

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Abstract

Asian States are in the spotlight of global foreign investment flows. They are increasingly entering into international investment agreements (“IIAs”) at both the bilateral and multilateral level to attract, protect and safeguard foreign investment. And yet, some Asian States have felt the need to reform or terminate their IIAs inter alia because of their disenchantment with investment arbitration. The perception that the State must be a “perpetual respondent”, always playing the defence has undermined the legitimacy of investment arbitration, a feeling which is growing in Asia. In these circumstances, it is useful to consider whether Asian States can vindicate their own claims within the existing investment arbitration system. Can Asian States start an arbitration (i.e., bring claims) or raise counterclaims against foreign investors? What are the factors necessary for doing so? Are there lessons to be learnt from the experiences of other States? These are precisely the questions that this contribution attempts to answer, with a focus on prominent multilateral investment treaties in the Asian region.

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See ibid, 479; H Bubrowski, Balancing IIA Arbitration through the Use of Counterclaims, in, A de Mestral & C Lévesque (eds) Improving International Investment Agreements (Routledge, United Kingdom, 2013) 212, 229; E Boomer, Rethinking Rights and Responsibilities in Investor-State Dispute Settlement: Some Model International Investment Agreement Provisions, 11(1) Transnational Dispute Management (TDM) (January 2014) 31.

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G Laborde, The Case for Host State Claims in Investment Arbitration, 1(1) Journal of International Dispute Settlement (2010) 97–122.

C Schreuer, Consent to Arbitration in P Muchlisnki, F Ortino & C Schreuer (eds), The Oxford Handbook of International Investment Law (Oxford University Press, 2008) 837 (“There are ways in which an investor may be induced to give consent. Submission to arbitration may be made a condition for admission of investments in the host State and may form part of the licensing process.”).

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M Toral & T Schultz, The State, A Perpetual Respondent in Investment Arbitration? Some Unorthodox Considerations in Waibel M et al (eds) The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International, Netherlands, 2010) 577–602, 590–591.

Press reports suggest that another ICSID arbitration had been brought by Nicaragua against Grupo Barcelo´ Montelimar in 2008. However, the case remains unlisted at the ICSID to this date and has therefore, not been elaborated upon by the authors. See M Toral & T Schultz, The State, A Perpetual Respondent in Investment Arbitration? Some Unorthodox Considerations, in, M Waibel et al. (eds) The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International, 2010) 577–602, 589.

Gabon v Société Serete S.A, ICSID Case No ARB/76/1. See M Toral & T Schultz, The State, A Perpetual Respondent in Investment Arbitration? Some Unorthodox Considerations, in, M Waibel et al (eds) The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International, 2010) 577–602, 589.

T Kelsall, Governance, Democracy and Recent Political Struggles in Mainland Tanzania, 41 Commonwealth & Comparative Politics (2003) 55, 70–71.

Tanzania Electric Supply Company Limited v Independent Power Tanzania Limited., ICSID Case No ARB/98/8. See M Toral & T Schultz, The State, A Perpetual Respondent in Investment Arbitration? Some Unorthodox Considerations, in, M. Waibel M et al. (eds) The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International, Netherlands, 2010) 577–602, 591–595.

Government of the Province of East Kalimantan v PT Kaltim Prima Coal and others, ICSID Case No ARB/07/3.

M Toral & T Schultz, The State, A Perpetual Respondent in Investment Arbitration? Some Unorthodox Considerations, in, Waibel M et al. (eds) The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International, 2010) 577–602, 595–600.

Government of the Province of East Kalimantan v PT Kaltim Prima Coal and others, ICSID Case No ARB/07/3, Award on Jurisdiction (28 December 2009).

See M Waibel & W Rylatt, Counterclaims in International Law, University of Cambride Faculty of Law Research Paper No 66/2014 (December 2014) 1; B Larschan & G Mirfendereski, The Status of Counterclaims in International law, With Particular Reference to International Arbitration Involving a Private Party and a Foreign State, 15(1) Denv. J. Intl’l L. & Pol’y (1986) 11; Islamic Republic of Iran v The United States of America, Case No B1, Counterclaim, Interlocutory Award, Award No ITL 83-B1-FT (9 September 2004) [87].

S Rosenne, Essays on International Law and Practice (Martinus Nijhoff Publishers, Netherlands, July 2007) 267; A Blomeyer, Chapter 4 – Types of Relief Available (Judicial Remedies), in, M Cappelletti (ed) International Encyclopaedia of Comparative Law, Vol XVI (Brill, Neijhoff, United Kingdom, 1982); J Simpson & H Fox, International Arbitration: Law and Practice (Steven and Sons Ltd, United Kingdom, 1959).

J Kalicki, Counterclaims by States in Investment Arbitration, Investment Treaty News (14 January 2013); HE Veenstra-Kjos, Counterclaims by Host States in Investment Treaty Arbitration 4(4) Transnational Dispute Management (2007) 1–48, 4–5; Case Concerning Oil Platforms (Islamic Republic of Iran v United States of America), Order of 10 MarCG 1998, Separate Opinion by Judge Oda, [1998] ICJ Rep 8; D Atanasova, D et al., The Legal Framework for Counterclaims in Investment Treaty Arbitration, 31(3) Journal of International Arbitration (2014) 357–392, 359.

IC Popova & F Poon, From Perpetual Respondent to Aspiring Counterclaimant? State Counterclaims in the New Wave of Investment Treaties, 2(2) BCDR Int. Arb. Rev. (2015) 223–260.

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Article 36(1) of the ICSID Convention, and Rule 40(1) of the ICSID Arbitration Rules.

Article 21(3) of the 2010 UNCITRAL Arbitration Rules.

Other requirements would have to be satisfied as well. For instance, as explained above, an investor must consent to a State claim. Further, in the ICSID framework, the counterclaim must “arise [...] directly out of the subject-matter of the dispute” (ICSID Convention, Art. 46; ICSID Rules, Rule 40(1)). There requirements are not considered here as they do not principally affect the standing of a State to raise a claim or a counterclaim.

See Article 9(1) of Agreement for Promotion and Protection of Investments between India and The Netherlands, 6 November, 1995.

C Schreuer, Consent to Arbitration, in, P Muchlisnki, F Ortino & C Schreuer (eds), The Oxford Handbook of International Investment Law (OUP, United Kingdom, 2008) 839; G Laborde, The Case for Host State Claims in Investment Arbitration, 1(1) JIDS (2010) 97–122. See Saluka Investments BV v The Czech Republic, UNCITRAL, Decision on Jurisdiction over the Czech Republic’s Counterclaim (7 May 2004) [39].

See, for e.g. the ASEAN-CIA and the ASEAN-NZ Agreements examined below.

Z Douglas, The International Law of Investment Claims (CUP, United Kingdom, 2009) 489; HE Veenstra-Kjos, Counterclaims by Host States in Investment Treaty Arbitration, 4(4) Transnational Dispute Management (2007) 1–48, 14 et seq.

Spyridon Roussalis v Romania, ICSID Case No ARB/06/1, Award (7 December 2011) [869].

Spyridon Roussalis v Romania, ICSID Case No ARB/06/1, Award (7 December 2011), Declaration by Prof M Reisman of 28 November 2011.

Antoine Goetz & Consorts and SA Affinage des Metaux v Burundi, ICSID Case No ARB/01/2, Award (21 June 2012) [279–280].

J Kalicki, Counterclaims by States in Investment Arbitration, Investment Treaty News (14 January 2013).

F Nariman, Investment Arbitration under the Spotlight – What next for Asia, Herbert Smith Freehills – Singapore Management University Arbitration Lecture Series (2014) 18 http://ink.library.smu.edu.sg/hsmith_lect/3.

A Newcombe & L Paradell, Law and Practice of Investment Treaties: Standards of Treatment (Kluwer Law International, Netherlands, 2009) 79, 82.

Vienna Convention on the Law of Treaties, 1155 UNTS 331 (27 January 1980) Article 31. Further, as per Article 42 of the ICSID Convention, the applicable law is the one agreed on by the parties. In the absence of such agreement, the laws of the host State together with applicable rules of international law would be applicable. However, in the case of BIT arbitration, the BIT constitutes the agreement on applicable law.

J Rivas, ICSID Treaty Counterclaim: Case Law and Treaty Evolution, 11(1) Transnational Dispute Management (January 2014); Statute of the International Court of Justice, Article 38(1)(c); Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award (2 August 2006) [226, 229].

J Rivas, ICSID Treaty Counterclaim: Case Law and Treaty Evolution, 11(1) Transnational Dispute Management (January 2014) 1–45, 42.

Saluka Investments BV v Czech Republic, UNCITRAL, Partial Award (17 March 2006) [204]; Plama Consortium Limited v Republic of Bulgaria, ICSID Case No ARB/03/24, Decision on Jurisdiction (8 February 2005) [138–140]; SAUR International SA v Argentine Republic, ICSID Case No ARB/04/4, Decision on Jurisdiction and Liability (6 June 2012) [307–310]. See also J Rivas, ICSID Treaty Counterclaim: Case Law and Treaty Evolution, 11(1) Transnational Dispute Management (January 2014) 1–45, 42.

For a list of treaties entered into by China, Republic of Korea and India, see http://investmentpolicyhub.unctad.org/IIA/IiasByCountry#iiaInnerMenu.

The ASEAN comprises of Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Singapore, Thailand and Vietnam,.

ASEAN Comprehensive Investment Agreement (2009).

Agreement on Investment under the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the Republic of India (12 November 2014) (ASEAN–India Agreement); Agreement on Investment of the Framework Agreement on Comprehensive Economic Co-operation between the People’s Republic of China and the Association of Southeast Asian Nations (15 August 2009) (ASEAN–China Agreement); Agreement on Investment of the Framework Agreement on Comprehensive Economic Co-operation among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea (2 June 2009) (ASEAN–Korea Agreement); Agreement establishing the ASEAN–Australia–New Zealand Free Trade Area (27 February 2009) (ASEAN–ANZ Agreement).

Agreement among the Government of Japan, the Government of the Republic of Korea and the Government of the People’s Republic of China for the Promotion, Facilitation and Protection of Investment (13 May 2012) (“Trilateral Treaty”).

M Dickie & C Oliver, Japan, China and S Korea in investment deal, Financial Times (22 March 2012), http://www.ft.com/intl/cms/s/0/ce26576c-7413-11e1-bcec-00144feab49a.html#axzz42fWoktlb.

Agreement for Promotion, Protection and Guarantee of Investments among Member States of the Organization of the Islamic Conference (5 June 1981). The Asian States in Organization of Islamic Conference are Afghanistan, Iran, Jordan, Kuwait, Lebanon, Palestine, Saudi Arabia, Yemen, Bahrain, Oman, Qatar, Syria, United Arab Emirates, Iraq, Kyrgyzstan, Turkmenistan, Uzbekistan, Indonesia, Pakistan, Brunei, Bangladesh, Maldives, and Malaysia.

For the text of the TPP, see https://www.mfat.govt.nz/en/about-us/who-we-are/treaty-making-process/trans-pacific-partnership-tpp/text-of-the-trans-pacific-partnership. Also see, Office of the United States Trade Representative, Overview of the Trans Pacific Partnership, available at: https://ustr.gov/tpp/overview-of-the-TPP. The treaty is yet to be ratified by all of its Member States.

Article 1 of TPP.

For example, Case Concerning Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v Uganda), Order (29 November 2001) [38]; Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Yugoslavia), Order (17 December 1997) [34]; Case Concerning Oil Platforms (Islamic Republic of Iran v United States of America), Order (10 March 1998) [138]; Case Concerning the Land and Maritime Boundary Between Cameroon and Nigeria (Cameroon v Nigeria: Equatorial Guinea intervening), Order (30 June 1999); Klöckner Industrie-Anlagen GmbH and others v. Republic of Cameroon, ICSID Case No. ARB/81/2, Award (21 October 1983) [553–557]; Sergei Paushok and Others v. Government of Mongolia, UNCITRAL, Award on Jurisdiction and Liability (28 April 2011) [689–699]; Saluka Investments BV v The Czech Republic, UNCITRAL, Decision on Jurisdiction over the Czech Republic’s Counterclaim (7 May 2004) 81.

Hesham Talaat M Al-Warraq v The Republic of Indonesia, UNCITRAL, Award (15 December 2014) [655–659].

Hesham Talaat M. Al-Warraq v The Republic of Indonesia, UNCITRAL, Award (15 December 2014) [663].

Hesham Talaat M. Al-Warraq v The Republic of Indonesia, UNCITRAL, Award (15 December 2014) [655–672].

H Bubrowski, Balancing IIA Arbitration through the Use of Counterclaims, in, A de Mestral & C Lévesque (eds) Improving International Investment Agreements (Routledge, United Kingdom, 2013) 212–229, 222.

Z Douglas, The International Law of Investment Claims (CUP, United Kingdom, 2009) 489. See also A Vohryzek-Griest, State Counterclaims in Investor–State Disputes: A History of 30 Years of Failure, 15 Intl Law: Revista Colombiana de Derecho Internacional (6 October 2009) 83–124, 112.

Article 20.31 of ASEAN–India Agreement.

Article 17.5 of the Trilateral Treaty specifies the applicable law for disputes among Contracting Parties only as the treaty itself as well as principles of international law.

See, for instance, International Bank for Reconstruction and Development, Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (18 March 1965) [13] <https://icsid.worldbank.org/ICSID/StaticFiles/basicdoc_en-archive/ICSID_English.pdf>.

See generally J Ahmad et al., Investment Arbitration in Asia, The Asia–Pacific Arbitration Review (Global Arbitration Review, 2016).

Title: Claims and Counterclaims Under Asian Multilateral Investment Treaties
Authors: Trisha Mitra
Rahul Donde
Publisher: Springer Singapore
Book: Judging the State in International Trade and Investment Law
Print ISBN: 978-981-10-2358-3

Electronic ISBN: 978-981-10-2360-6

Copyright Year: 2016
DOI: https://doi.org/10.1007/978-981-10-2360-6_6