2. International Investment Treaties

See Hobe, ‘The Development of the Law of Aliens and the Emergence of General Principles of Protection under Public International Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 6. See also infra at 2.1.5.1.

See Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 158–60.

On diplomatic protection, see, e.g., Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 312–3.

See Shihata, ‘Towards a Greater Depoliticization of Investment Disputes’ (1986) 1 ICSID Rev. – For. Inv. L. J. 1; Vandevelde, Bilateral Investment Treaties: History, Policy, and Interpretation (Oxford University Press, 2010) 59. Suggesting a potential reform of the current system, inter alia by increasing home State control and responsibility, as well as by making State-to-State investment arbitration more acceptable in the future: Kessedjian, ‘Where Public meets Private: A few Thoughts on Investment Law and Arbitration’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1879, 1883, para. 13.

For an overview of the scope of application of international investment treaties, see Schlemmer, ‘Investment, Investor, Nationality, and Shareholders’, in Muchlinski, Ortino and Schreuer (eds.), The Oxford Handbook of International Investment Law (Oxford University Press, 2008) 49. See also Salacuse, The Law of Investment Treaties (Oxford University Press, 2014) 128–30.

See also Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 98 et seq. and 130 et seq.; Salacuse, The Law of Investment Treaties (Oxford University Press, 2014) 131–8; Vandevelde, Bilateral Investment Treaties: History, Policy, and Interpretation (Oxford University Press, 2010) 2–4; Schill, The Multilateralization of International Investment Law (Cambridge University Press, 2009) 74 et seq.; McLachlan, Shore and Weiniger, International Investment Arbitration: Substantive Principles (Oxford University Press, 2007) 11–3, paras. 1.24–31. See also Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008). On the standards of investment protection in international investment treaties, see in detail infra at 2.4.2.

See infra at 2.4.3.

See Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 6; Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 156, para. 4.

See Walker, ‘Provisions on Companies in United States Commercial Treaties’ (1956) 50 AJIL 373, 374. See Treaty of Amity and Commerce between the United States and France, signed 6 February 1778 (entered into force 17 September 1778).

See Treaty of Amity Commerce and Navigation between his Britannick Majesty and the United States of America, signed 19 November 1794 (entered into force 29 February 1796) (‘Jay Treaty 1794’), Art. VI and VII (reprinted in: U.S. Department of State, Treaties and Conventions concluded between The United States of America and Other Powers since July 4, 1776 (Washington, 1889) 379).

See Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 157, para. 6.

The expropriations led to important judgments and arbitral awards during the 1920s with regard to the loss of property. This includes the Chorzów Factory Case, which established that reparations for unlawful expropriations must “reestablish the situation which would, in all probability, have existed if that act had not been committed.” (Chorzów Factory Case (Merits) [1928] PCIJ (ser. A) No. 17, 47).

See Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 337. For treaty examples, see Vandevelde, Bilateral Investment Treaties: History, Policy, and Interpretation (Oxford University Press, 2010) 37–8.

General Agreement on Tariffs and Trade, opened for signature 30 October 1947, 55 UNTS 187 (entered into force 1 January 1948) (‘GATT’).

See immediately below at 2.1.3.

See also Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 179, para. 64. Reportedly, the 1969 Chad-Italy BIT began to offer investor-State arbitration (see Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 45).

See Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 12. See also Gazzini, ‘Bilateral Investment Treaties’, in Gazzini and De Brabandere (eds.), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff, 2012) 105.

See infra at 2.1.3.2; Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 180, para. 66.

See Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 180, para. 68.

See UNCTAD, Investment Policy Hub (2016) <http://​investmentpolicy​hub.​unctad.​org/​IIA> last accessed 11 May 2017. It is estimated that approximately 3000 BITs were signed since the 1960s (see Salacuse, ‘The Emerging Global Regime for Investment’ (2010) 51 Harv. Int’l L. J. 427, 428).

See also infra at 2.3.1.

North American Free Trade Agreement, signed 17 December 1992, 32 ILM 289, 605 (entered into force 1 January 1994) (‘NAFTA’).

Japan has entered into a total of 13 economic partnership agreements since 2002 (see <http://​investmentpolicy​hub.​unctad.​org/​IIA/​CountryOtherIias​/​105#iiaInnerMenu> last accessed 11 May 2017).

Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, signed 27 February 2009, [2010] ATS 1 (entered into force 1 January 2010) (‘ASEAN-Australia-New Zealand FTA’). The Agreement entered into force in 2012. For an overview, see, e.g., Bath and Nottage, ‘The ASEAN Comprehensive Investment Agreement and ‘ASEAN Plus’ – The Australia-New Zealand Free Trade Area (AANZFTA) and the PRC-ASEAN Investment Agreement’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 283.

Trans-Pacific Partnership Agreement, signed on 4 February 2016 (not yet in force) (‘TPP’), the consolidated text of the TPP is available at: <https://​ustr.​gov/​trade-agreements/​free-trade-agreements/​trans-pacific-partnership/​tpp-full-text> last accessed 11 May 2017.

Transatlantic Trade Investment Partnership (‘TTIP’), the Agreement’s negotiating text is available at: <http://​ec.​europa.​eu/​trade/​policy/​in-focus/​ttip/​> last accessed 11 May 2017.

Regional Comprehensive Economic Partnership (‘RCEP’), information available at: <http://​dfat.​gov.​au/​trade/​agreements/​rcep/​pages/​regional-comprehensive-economic-partnership.​aspx> last accessed 11 May 2017. See also Urata, ‘Constructing and Multilateralizing the Regional Comprehensive Economic Partnership: An Asian Perspective’ (ADBI Working Paper Series No. 449, ADB, December 2013) 8.

See also infra at 2.2.3.

For an overview, see, e.g., Schill, The Multilateralization of International Investment Law (Cambridge University Press, 2009) 31–40, 49–60; Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 161–77. Other multilateral treaty attempts include the International Law Association’s Draft Statutes of the Arbitral Tribunal for Foreign Investment and the Foreign Investment Court 1948 (see UNCTAD, International Investment Agreements: A Compendium (UN, 1996) vol. III, 259), the International Code of Fair Treatment for Foreign Investments 1949 drawn up by the ICC (see UNCTAD, International Investment Agreements: A Compendium (UN, 1996) vol. III, 273), the Harvard Draft Convention on the International Responsibility of States for Injuries of Aliens 1961 (see Sohn and Baxter, ‘Responsibility of States for Injuries to the Economic Interests of Aliens’ (1961) 55 AJIL 545), and the OECD Multilateral Agreement on Investment 1998 (‘MAI’) (available at: <http://​www.​oecd.​org/​investment/​internationalinv​estmentagreement​s/​multilateralagre​ementoninvestmen​t.​htm> last accessed 11 May 2017). On the failure of the MAI negotiations, see UNCTAD, Lessons from the MAI (UN, 1999).

See Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 162–3, para. 18.

Draft Convention on Investments Abroad 1959, reprinted in: UNCTAD, International Investment Instruments: A Compendium (UN, 2000) vol. V, 301–4.

OECD Draft Convention on the Protection of Foreign Property 1967, reprinted in (1968) 7 ILM 117 et seq.

Brown, ‘The Evolution of the Regime of International Investment Agreements: History, Economics and Politics’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 153, 175, para. 54.

Ibid. The Draft Convention also reads that “[t]he fact that certain nationals of any State are accorded treatment more favourable than that provided for in this Convention shall not be regarded as discriminatory against nationals of a Party by reason only of the fact that such treatment is not accorded to the latter” (OECD Draft Convention on the Protection of Foreign Property 1967, Art. 1, sentence 2).

See UNCTAD, Investment Policy Hub (2016) <http://​investmentpolicy​hub.​unctad.​org/​ISDS> last accessed 11 May 2017.

While capital-exporting countries establish international investment treaties to mitigate investment risks, capital-importing countries sign investment treaties to attract foreign capital. Several studies have tried to evaluate whether the conclusion of investment treaties such as BITs increases FDI inflows, with inconsistent results. A 1998 study conducted by UNCTAD found a weak positive correlation. See UNCTAD, Bilateral Investment Treaties in the Mid-1990s (UN, 1998) 6: “[I]t is more likely than not that the host country will marginally increase its share in the outward FDI of the home country … The effect, however, is usually small.” A compilation of relevant studies can be found in Vandevelde, Bilateral Investment Treaties: History, Policy, and Interpretation (Oxford University Press, 2010) 116–20.

On the protection of foreign investments under special domestic investment laws, see infra at 3.​1.

For an overview of the origins of regulatory changes, see especially infra at 4.​3.​1.​1.

See in detail infra at 4.​3.​1.​1 and 4.​3.​1.​2.

See infra at 2.1.5.1.

See infra at 2.4.2.3.

See infra at 2.4.3.

See infra at 2.5.1 and 2.5.2.

See also Shelton, ‘International Law in Domestic Systems’, in Brown and Snyder (eds.), General Reports of the XVIIIth of the International Academy of Comparative Law/Rapports Généraux Congress du XVIIIème Congrès de l´Académy Internationale de Droit Comparé (Springer, 2012) 509, 521; Hobe, Einführung in das Völkerrecht (Franke Verlag Tübingen, 10th ed., 2014) 244. See, e.g., Basic Law 2014 (Germany), Art. 25(1) (“general rules of international law shall be an integral part of federal law”); Federal Constitution 2012 (Austria), Art. 9(1) (“generally recognized rules of international law”).

Constitution of Mongolia 1992, published in the Official State Journal, Töriin Medeelel, 1992 No. 1 (‘Constitution’).

Emphasis added. For a similar provision, see, e.g., Constitution of Russia 1993, Art. 15(4).

Statute of the International Court of Justice 1945, signed 26 June 1945, 1 UNTS 993 (entered into force 24 October 1945) (‘ICJ Statute’).

See Treves, ‘Customary International Law’, in Wolfrum (ed.), EPIL (Oxford University Press, 2006) para. 8. See also North Sea Continental Shelf (Merits) [1969] ICJ Rep. 3, 43.

See, e.g., Crawford, Brownlie’s Principles of Public International Law (Oxford University Press, 8th ed., 2012) 607 et seq.

See infra at 2.4.2.3 (“Fair-and-Equitable-Treatment Clauses Linked to (Customary) International Law”) and 2.4.2.3 (“Overview of Content and Application of the Standard”).

Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 308–9. See also Cremer, ‘§ 235: Allgemeine Regeln des Völkerrechts’, in Isensee and Kirchhof (eds.), Handbuch des Staatsrechts (C.F. Müller, 3rd ed., 2013) vol. XI, 369, 397, para. 38.

This was subject to fierce debates. Famously, the Calvo doctrine, as adopted throughout Latin America at a time of U.S. domination, argues that diplomatic protection is not available unless there is a denial of justice and that aliens are only entitled to ‘equal treatment’ (see, e.g., Shaw, International Law (Cambridge University Press, 7th ed., 2014) 599). See also infra at 4.​3.​2.​3 (“Special Local-Law Requirements for Public Law Contracts”) on Calvo clauses in the context of investor-State contracts. In a 1938 exchange of correspondence between the Mexican Foreign Minister, Hay, and the U.S. Secretary of State, Hull, concerning the confiscation of land of U.S. citizens, Hay opposed the international minimum standard by arguing with the ‘principle of equality’: “[T]he foreigner who voluntarily moves to a country which is not his own, in search of a personal benefit, accepts in advance, together with the advantages he is going to enjoy, the risk to which he may find himself exposed. It would be unjust that he should aspire a privileged position” (reprinted in: ‘Official Documents October 1938’ (1938) 32 AJIL Supplement 181, 188). The U.S. argued that local law standards can be so low that international standards are violated: “When aliens are admitted into a country the country is obliged to accord them that degree of protection of life and property consistent with the standards of justice recognized by the law of nations … [It is] a self-evident fact … that the applicable precedents and recognized authorities on international law support … that, under every rule of law and equity, no government is entitled to expropriate private property, for whatever purpose, without provision for prompt, adequate, and effective payment therefor” (reprinted in: ‘Official Documents October 1938’ (1938) 32 AJIL Supplement 181, 198 et seq.).

See, e.g., Cremer, ‘§ 235: Allgemeine Regeln des Völkerrechts’, in Isensee and Kirchhof (eds.), Handbuch des Staatsrechts (C.F. Müller, 3rd ed., 2013) vol. XI, 369, 398, para. 40.

See, e.g., Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 238; Hailbronner and Gogolin, ‘Aliens’, in Wolfrum (ed.), EPIL (Oxford University Press, 2013) para. 26; Hobe, ‘The Development of the Law of Aliens and the Emergence of General Principles of Protection under Public International Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 6, 15, para. 24.

See, e.g., Sornarajah, The International Law on Foreign Investment (Cambridge University Press, 3rd ed., 2010) 84. After Latin American challenges, developing countries started to establish what was called the ‘New International Economic Order’ during the 1960s and 1970s, which resulted in a series of UN General Assembly resolutions on permanent sovereignty over natural resources and the economic rights and obligations of States. Opinions of whether the various UN resolutions resulted in international custom vary greatly (see Salacuse, The Three Laws of International Investment (Oxford University Press, 2013) 324–9). Some commentators have referred to the subsequent practice of developing countries of concluding BITs. The willingness to enter into bilateral investment treaties, as argued, demonstrates that customary international law had not evolved as developing countries had envisaged during the 1970s (see Weston, ‘The New International Economic Order and the Deprivation of Foreign Proprietary Wealth: Some Reflections upon the Contemporary International Law Debate’, in Lillich (ed.), International Law of State Responsibility for Injuries to Aliens (Univ. Press of Virginia, 1983) 89, 106).

Ibid., 331. See also Schill, The Multilateralization of International Investment Law (Cambridge University Press, 2009) 28.

For on overview of case-law, see, e.g., Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 18. See also, e.g., Merrill & Ring v. Canada, Award, 31 March 2010, para. 187: “Even if the Tribunal were to accept Canada’s argument … that good faith, the prohibition of arbitrariness … and other questions … are not stand-alone obligations under Article 1105(1) [of the NAFTA] … and might not be a part of customary law either, these concepts are to a large extent the expression of general principles of law and hence also a part of international law … Good faith and the prohibition of arbitrariness are no doubt an expression of such general principles and no tribunal … could be asked to ignore these basic obligations of international law.”

Wena Hotels v. Egypt, Decision on Annulment, 5 February 2002, para. 42. See also Antoine Goetz v. Burundi, Award, 10 February 1999, para. 98; CMS v. Argentina, Award, 12 May 2005, paras. 119, 120; Azurix v. Argentina, Award, 14 July 2006, para. 65; LG&E v. Argentina, Decision on Liability, 3 October 2006, paras. 90, 91.

Emphasis added.

Judges of the Constitutional Court are appointed by the Parliament for a term of six years, whereas four are full-time and five part-time court members. Three judges are nominated by the Parliament, three by the President, and three by the Supreme Court of Mongolia.

Arbitration Law 2003, published in the Official State Journal, Töriin Medeelel, 2003 No. 20. For example, this reference is particularly important in relation to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (see infra at 2.5.1), the rules of which will prevail over Mongolia’s domestic Arbitration Law if there is a norm conflict (see also Cottrill and Buxbaum, ‘Part C: Mongolia’, in Moser (ed.), Arbitration in Asia (Juris Publishing, 2nd ed., 2008) MON-5-6).

See, e.g., Law on Concessions 2010, published in the Official State Journal, Töriin Medeelel, 2010 No. 9, Art. 2.2; General Taxation Law 2008, published in the Official State Journal, Töriin Medeelel, 2008 No. 22, Art. 2(2); Law on Minerals 2006, published in the Official State Journal, Töriin Medeelel, 2006 No. 30, Art. 2(2); Civil Code 2002, published in the Official State Journal, Töriin Medeelel, 2002 No. 7, Art. 2(2); Civil Procedure Code 2002, published in the Official State Journal, Töriin Medeelel, 2002 No. 8, Art. 2(2).

Europe remains one of the world’s leading FDI powers in Asia (see Chaisse and Hamanaka, ‘The Investment Version of the Asian Noodle Bowl: The Proliferation of International Investment Agreements’ (ADB Working Paper Series on Regional Economic Integration No. 128, Asian Development Bank, April 2014) 22).

See also Gaffney and Akçay, ‘European Bilateral Approaches’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 186, 199, para. 47.

Regulation (EU) No. 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing Transitional Arrangements for Bilateral Investment Agreements between Member States and Third Countries, [2012] OJ L 351/40 (‘Regulation (EU) No. 1219/2012’).

The European Union has the exclusive competence in the area of common commercial policy (see Treaty on the Functioning of the European Union, signed 13 December 2007, [2012] OJ C 326/47 (entered into force 1 December 2009) (‘TFEU’), Art. 3(1)(e)).

Emphasis added. For a literature review, see Griebel, ‘The New EU Investment Policy Approach’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 304, 305.

On the definition of ‘FDI’ at the international level, see already supra at 1.​2.

See Griebel, ‘The New EU Investment Policy Approach’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 304, 305, para. 1.

Regulation (EU) No. 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing Transitional Arrangements for Bilateral Investment Agreements between Member States and Third Countries, [2012] OJ L 351/40 (‘Regulation (EU) No. 1219/2012’).

EU Member States must notify the European Union of their intentions to amend or conclude BITs (Regulation (EU) No. 1219/2012, Art. 8). The EU Commission authorises negotiations or amendments, unless it concludes that such a course would be “in conflict with Union law”, “superfluous, because the Commission has submitted or has decided to submit a recommendation to open negotiations with the third country concerned”, “inconsistent with the Union’s principles and objectives for external action”, or “constitute a serious obstacle to the negotiation or conclusion of bilateral investment agreements with third countries by the Union” (Regulation (EU) No. 1219/2012, Art. 9(1)(a)–(d)). The EU Commission can require to include or remove clauses from a prospective BIT if it deems such action necessary to ensure consistency with the EU’s investment policy or compatibility with EU law (see Regulation (EU) No. 1219/2012, Art. 9(2)).

See also Griebel, ‘The New EU Investment Policy Approach’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 304, 311, para. 19.

See Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Towards a Comprehensive European International Investment Policy, COM(2010)343 final, 7 July 2010, 7 (‘Communication from the EU Commission’), available at: <http://​eur-lex.​europa.​eu/​legal-content/​en/​ALL/​?​uri=​CELEX%3A52010DC0343> last accessed 11 May 2017.

For an overview, see Shan and Zhang, ‘The Potential EU-China BIT: Issues and Implications’, in Bungenberg, et al. (eds.), EU and Investment Agreements – Open Questions (C.H. Beck, Hart Publishing, Nomos, 2013) 87.

See also Reinisch, ‘The Likely Content of Future EU Investment Agreements’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1884.

European Parliament Resolution of 6 April 2011 on the Future European International Investment Policy (2010/2203(INI)), 2012/C 296 E/05, para. 10 (‘EU Parliament Resolution’), available at: <http://​eur-lex.​europa.​eu/​legal-content/​EN/​TXT/​?​uri=​celex%3A52011IP0141> last accessed 11 May 2017. See also ibid., para. 9 (where the EU Parliament asks the EU Commission to develop an investment strategy by drawing on best practice standards of bilateral investment treaties and to provide “a strong EU template for investment agreements, which would also be adjustable according to the level of development of the partner country.”).

See also Griebel, ‘The New EU Investment Policy Approach’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 304, 315, para. 34.

See Communication from the EU Commission, COM(2010)343 final, 7 July 2010, 8–9; Council of the European Union, Conclusions on a Comprehensive European International Investment Policy (3041st Foreign Affairs Council Meeting, 25 October 2010), para. 14 (‘EU Council Conclusions’), available at: <https://​www.​consilium.​europa.​eu/​uedocs/​cms_​data/​docs/​pressdata/​EN/​foraff/​117328.​pdf> last accessed 11 May 2017.

EU Parliament Resolution of 6 April 2011 (2010/2203(INI)), 2012/C 296 E/05, para. 19. See also ibid., para. 20 (where the EU Parliament requires from the EU Commission “to assess the potential impact of the inclusion of an umbrella-clause in future European investment agreements and to present a report”). On the relationship between FET clauses in international investment treaties and customary international law, see infra at 2.4.2.3 (“Fair-and-Equitable-Treatment Clauses Linked to (Customary) International Law”).

See Communication from the EU Commission, COM(2010)343 final, 7 July 2010, 9–10 (where the Commission notes that the main challenges of investor-State arbitration are transparency, consistency, and predictability of investment treaty interpretation, and that quasi-permanent arbitrators and/or appellate mechanisms should be considered for international investment agreements that are likely to produce many claims); EU Parliament Resolution of 6 April 2011 (2010/2203(INI)), 2012/C 296 E/05, para. 32 (see also ibid., para. 31, where the EU Parliament takes the view “that changes must be made to the present dispute settlement regime, in order to include greater transparency, the opportunity for parties to appeal, the obligation to exhaust local judicial remedies where they are reliable enough to guarantee due process, the possibility to use amicus curiae briefs and the obligation to select one single place of investor-state arbitration.”); EU Council Conclusions (3041st Foreign Affairs Council Meeting, 25 October 2010), para. 18 (where the EU Council invites “the Commission to carry out a detailed study on the relevant issues concerning international arbitration systems, including inter alia the legal and political feasibility of EU membership in international arbitration institutions as well as the question of liability arising from arbitration procedures and the responsibilities of the Member States in this respect.”).

Initially, friendship, commerce and navigation (FCN) treaties addressed foreign property rather incidentally. During the 20th century, FCN treaties put a real focus on the protection of foreign investments (on the genesis of modern international investment treaties, see already the overview supra at 2.1.2).

See also Schill and Jacobs, ‘Trends in International Investment Agreements, 2010–2011: The increasing Complexity of International Investment Law’, in Sauvant (ed.), Yearbook on International Investment Law & Policy 2011–2012 (Oxford University Press, 2013) 141, 144 et seq.

See Denters, ‘Preferential Trade and Investment Treaties’, in Gazzini and De Brabandere (eds.), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff, 2012) 49, 51–4; Qingjiang, ‘Bilateral Investment Rule-Making: BITs or FTAs with Investment Rules?’ (2013) 14 JWIT 638, 642.

See already supra at 2.2.3.

Vienna Convention on the Law of Treaties, opened for signature 23 May 1969, 1155 UNTS 331 (entered into force 27 January 1980) (‘VCLT’).

See UNCTAD, Investment Provisions in Economic Integration Agreements (UN, 2006) 132 et seq. On conflict resolution techniques under general international law (lex posterior, lex specialis, lis pendens, res judicata) and VCLT treaty interpretation, see Binder, ‘An International Law Approach to Interaction between Preferential Trade and Investment Agreements and the BIT World’, in Hofmann, Schill and Tams (eds.), Preferential Trade and Investment Agreements: From Recalibration to Reintegration (Nomos, 2014) 71, 77–9.

See Ziegler, ‘Preferential Trade and Investment Agreements (PTIAs) and the Bilateralism/Multilateralism Divide’ in Hofmann, Schill and Tams (eds.), Preferential Trade and Investment Agreements: From Recalibration to Reintegration (Nomos, 2014) 187; Marboe, ‘The Proliferation of Preferential Trade and Investment Agreements: ‘Stumbling Blocks’ or ‘Building Blocks’ of Multilateralism?’, in Hofmann, Schill and Tams (eds.), Preferential Trade and Investment Agreements: From Recalibration to Reintegration (Nomos, 2014) 229.

See also Salacuse, The Law on Investment Treaties (OUP, 2010) 103; Hofmann, Schill and Tams, ‘Preferential Trade and Investment Agreements: From Recalibration to Reintegration’, in Hofmann, Schill and Tams (eds.), Preferential Trade and Investment Agreements: From Recalibration to Reintegration (Nomos, 2014) 9, 13–4.

Initially, ASEAN focused on regional peace and political stability. In 1992, ASEAN created the ASEAN Free Trade Area, which has now been virtually established among its Members.

See Cai, The Politics of Economic Regionalism: Explaining Regional Economic Integration in East Asia (Palgrave, 2010) 93, 108; Kumar, ‘Toward an Asian Economic Community?’, in Capannelli and Kawai (eds.), The Political Economy of Asian Regionalism (Springer, 2014) 169, 170.

See already supra at 2.1.2.3. RCEP negotiations have been launched in November 2012. The 16 participating States accounted for 24% of global investment flows (see UNCTAD, World Investment Report 2014 (UN, 2014) 47 and 49).

Agreement between Japan and Mongolia for an Economic Partnership, signed 10 February 2015 (entered into force 7 June 2016) (‘Japan-Mongolia EPA’).

See Campi, ‘Mongolian-Japanese Economic Partnership Agreement: Counterbalancing China and Russia’ on Jamestown Foundation (8 August 2014). Another sideline topic concerned Mongolia’s bilateral ties with North Korea. Prime Minister Abe said insofar: “We shared the view that the [Mongolian] president and I will jointly contribute to the stability and prosperity of the region and the global community” (‘Mongolia and Japan wrap up Free Trade Deal’, UB Post, 24 July 2014). Mongolia is one of the world’s few nations with good diplomatic relations to both North and South Korea. This is because North Korean orphans and children found a home in Mongolian families during the Korean War. On Mongolia’s role for political dialogues in the region of Northeast Asia, see Park, ‘Northeast Asian Security: Mongolia and Korea’ (2009) 2 Ritsumeikan J. Asia Pac. Stud. 41.

Article 10.17 of the Japan-Mongolia EPA expressly states that the treaty parties “shall refrain from encouraging investment by investors of each Party or of a non-Party by relaxing their respective health, safety or environmental measures or by lowering its labour standards” and that ”[t]o this effect each Party should not waive or otherwise derogate from such measures or standards as an encouragement for the establishment, acquisition or expansion in its Area of investments by investors of each Party or of a non-Party.”

On the admission of foreign investments and admission requirements in Mongolia, see infra at 3.​2.​3.

The Japan-Mongolia EPA entered into force on 7 June 2016.

The Energy Charter Treaty (‘ECT’) is based on the European Energy Charter, which was signed in The Hague as a political declaration of intend in December 1991. For an overview of the history of the ECT, see, e.g., Cameron, International Investment Energy Law: The Pursuit of Stability (Oxford University Press, 2010) 152–4.

See also infra at 2.4.1.

Annex NI to the Energy Charter Treaty exempts certain activities from the treaty’s scope of application.

Mongolia is a contracting party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (see infra at 2.5.1) and adopted a domestic arbitration law (see, e.g., infra at 4.​4.​3.​1). Both instruments address the enforcement of arbitral awards in Mongolia.

See infra at 2.4.4.1 (Alstom Power Italia v. Mongolia) and 2.4.4.4 (Khan Resources v. Mongolia).

See also Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 126; Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008) v; Schill, The Multilateralization of International Investment Law (Cambridge University Press, 2009) 70.

See supra at 2.3.3.2.

See Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2013) 47. See, e.g., Mongolia-Netherlands BIT 1995, Art. 1(b)(ii); Energy Charter Treaty 1994, Art. 1(7)(a)(ii).

See Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 129–30. See also Autopista v. Venezuela, Decision on Jurisdiction, 27 September 2001, para. 107. See, e.g., Germany-Mongolia BIT 1991, Art. 1(4): “(a) in bezug auf … Deutschland: jede juristische Person sowie jede Handelsgesellschaft oder sonstige Gesellschaft oder Vereinigung mit oder ohne Rechtspersönlichkeit, die ihren Sitz in … Deutschland hat … b) in Bezug auf die Mongolische Volksrepublik: jede wirtschaftliche Vereinigung, die nach den Gesetzen der Mongolischen Volksrepublik gegründet worden ist und ihren Sitz in der Mongolischen Volksrepublik hat.”

See, e.g., Mongolia-Switzerland BIT 1997, Art. 1(b); Iran-Switzerland BIT 1998, Art. 1(b).

See, e.g., Mongolia-Netherlands BIT 1995, Art. 1(b)(iii). See also Venezuela Holdings v. Venezuela, Decision on Jurisdiction, 10 June 2010, para. 160; Iran-Switzerland BIT 1998, Art. 1(c).

See, e.g., Egypt-United States of America BIT 1986, Art. I(b).

See supra at 2.3.1.1.

See also Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2013) 198. For a comprehensive overview of national treatment clauses in investment treaties, see, e.g., Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 159 et seq. For an overview of relevant case-law, see, e.g., Bjorklund, ‘National Treatment’, in Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008) 29, 37–56; McLachlan, Shore and Weiniger, International Investment Arbitration: Substantive Principles (Oxford University Press, 2007) 251–4.

See, e.g., Energy Charter Treaty 1994, Art. 10(7). On types of national treatment clauses, see, e.g., Dolzer and Stevens, Bilateral Investment Treaties (Kluwer Law International, 1995) 63.

See, e.g., Mongolia-United States of America BIT 1994, Art. II(1). See also NAFTA 1992, Art. 1102.

See, e.g., Mongolia-Netherlands BIT 1995, Art. 3(1) (emphasis added).

Kriebaum, ‘Arbitrary/Unreasonable or Discriminatory Measures’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 790, 797–8, paras. 21–3.

See already supra at 2.3.1.2.

See, e.g., Mongolia-United States of America BIT 1994, Art. II(1).

See, e.g., Austria-Mongolia BIT 2001, Art. 3(2); China-Mongolia BIT 1991, Art. 3(3).

See Reinisch, ‘National Treatment’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 846, 856–64.

See also Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 162; Reinisch, ‘National Treatment’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 846, 855, paras. 30, 31.

Investors bear the burden of proof. On the burden shift once the investor has established a prima facie discrimination case, see Bjorklund, ‘National Treatment’, in Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008) 29, 56–8.

See, e.g., Pope & Talbot v. Canada, Award on the Merits, 10 April 2001, para. 78. On the criterion, see also Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 164–5.

Feldman v. Mexico, Award, 16 December 2002, para. 169. See also Archer Daniels Midlands v. Mexico, Award, 21 November 2007, para. 193; Alpha Projektholding v. Ukraine, Award, 8 November 2010, para. 426; Pope & Talbot v. Canada, Award on the Merits, 10 April 2001, para. 43; Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 250.

S.D. Myers v. Canada, Partial Award, 13 November 2000, para. 252. See also Corn Products v. Mexico, Decision on Responsibility, 15 January 2008, para. 138.

See, e.g., Siemens v. Argentina, Award, 6 February 2007, para. 321 (“intent is not decisive or essential for a finding of discrimination”, whereas “the impact of the measure on the investment would be the determining factor to ascertain whether it had resulted in non-discriminatory treatment”); Parkerings v. Lithuania, Award, 11 September 2007, para. 368 (national treatment “does not … depend on subjective requirements such as the bad faith or the malicious intent”); S.D. Myers v. Canada, Partial Award, 13 November 2000, para. 254; Feldman v. Mexico, Award, 16 December 2002, para. 183; Bayindir v. Pakistan, Award, 27 August 2009, para. 390. Requiring intent: LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 146; Genin v. Estonia, Award, 25 June 2001, para. 369.

Pope & Talbot v. Canada, Award on the Merits, 10 April 2001, para. 78. See also S.D. Myers v. Canada, Partial Award, 13 November 2000, para. 250: “The assessment … must also take into account circumstances that would justify governmental regulations that treat them differently in order to protect the public interest.”

GAMI v. Mexico, Award, 15 November 2004, para. 114; S.D. Myers v. Canada, Partial Award, 13 November 2000, para. 250 (with respect to environmental protection); Methanex v. U.S., Award, 3 August 2005, part IV, ch. B, paras. 13 and 20.

See Finland-Mongolia BIT 2007, Art. 3(1): “[T]reatment no less favourable than the treatment it accords to its own investors … with respect to the acquisition, expansion, operation, management, maintenance, use, enjoyment and sale or other disposal of investments” (emphasis added); Mongolia-United States of America BIT 1994, Art. II(1): “Each Party shall permit and treat investment, and activities associated therewith, on a basis no less favourable than that accorded in like situations to investment or associated activities of its own nationals or companies, or of nationals or companies of any third country, whichever is the most favourable” (emphasis added); Canada-Mongolia BIT 2016, Art. 4(1)(2). With regard to the Japan-Mongolia EPA, see already supra at 2.3.2.2.

See Japan-Mongolia BIT 2001, Art. 2(1): “Each Contracting Party shall, … subject to the same rights, … admit such investment” (emphasis added).

See Denmark-Mongolia BIT 1995, Art. 3; Kyrgyzstan-Mongolia BIT 1999, Art. 4(2); Lithuania-Mongolia BIT 2003, Art. 4(2); Mongolia-Netherlands BIT 1995, Art. 3(1); Mongolia-Philippines, Art. IV(2); Mongolia-Russia BIT 1995, Art. 3(2); Mongolia-Switzerland BIT 1997, Art. 4(2).

See Canada-Mongolia BIT 2016, Art. 16 and annex I (see, e.g., ibid., Art. 16(5) and (6), according to which the BIT’s national treatment guarantee does not apply to government procurement and State subsidies).

See, e.g., Austria-Mongolia BIT 2001, Art. 3(1); Mongolia-United States of America BIT 1994, Art. II(1).

See, e.g., Mongolia-United States of America BIT 1994, Art. II(1): “Each Party shall … treat investment, and activities associated therewith, on a basis no less favourable than that accorded in like situations to investment … of … nationals or companies of any third country”.

See, e.g., Mongolia-Republic of Korea BIT 1991, Art. 3(1) and (2); Israel-Mongolia BIT 2003, Art. 3(1) and (2).

See, e.g., Finland-Mongolia BIT 2007, Art. 3(1) and (2).

Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 570. See also infra at 2.4.4.2.

See also Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2012) 211. For an overview of relevant case-law, see, e.g., Reinisch, ‘Most Favoured Nation Treatment’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 807, 820–24.

On (pre-) conditions of treaty-based investment arbitration, see infra at 2.4.3.3.

See Maffezini v. Spain, Decision on Jurisdiction, 25 January 2000, para. 38 et seq.

For an overview of relevant case-law, see, e.g., Reinisch, ‘Most Favoured Nation Treatment’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 807, 824–40.

See, e.g., Suez v. Argentina, Decision on Jurisdiction, 3 August 2006, para. 55: “The word ‘treatment’ is not defined in the treaty text. However, the ordinary meaning of that term within the context of investment includes the rights and privileges granted and the obligations and burdens imposed by a Contracting State on investments made by investors covered by the treaty. In the present situation, Argentina concluded a BIT with France which permits aggrieved investors, after six months’ of attempting to resolve their disputes to have recourse to international arbitration without the necessity of first bringing a case in the local courts of a Contracting State. Consequently, French investments in Argentina, as a result of the Argentina-France BIT, receive a more favorable treatment than do Spanish investments in Argentina under the Argentina-Spain BIT.”

See, e.g., Gas Natural v. Argentina, Decision on Jurisdiction, 17 June 2005, para. 49: “We remain persuaded that assurance of independent international arbitration is an important – perhaps the most important – element in investor protection. Unless it appears clearly that the state parties to a BIT or the parties to a particular investment agreement settled on a different method for resolution of disputes that may arise, most-favored-nation provisions in BITs should be understood to be applicable to dispute settlement.”

See Douglas, ‘The MFN Clause in Investment Arbitration: Treaty Interpretation Off the Rails’ (2011) 1 JIDS 97, 113. See also Plama v. Bulgaria, Decision on Jurisdiction, 8 February 2005, para. 200 (a most-favoured-nation clause “cannot be said to be a typical incorporation by reference clause as appearing in ordinary contracts. It creates doubt whether the reference to the other document (in this case the other BITs concluded by Bulgaria) clearly and unambiguously includes a reference to the dispute settlement provisions contained in those BITs.”).

See, e.g., Trans-Pacific Partnership Agreement, signed on 4 February 2016 (not yet in force), ch. 9, Art. 9.5(3): “For greater certainty, the [MFN] treatment referred to in this Article does not encompass international dispute resolution procedures or mechanisms, such as those included in Section B (Investor-State Dispute Settlement).” (emphasis added). The consolidated text of the Trans-Pacific Partnership Agreement is available at: <https://​ustr.​gov/​trade-agreements/​free-trade-agreements/​trans-pacific-partnership/​tpp-full-text> last accessed 11 May 2017.

See, e.g., Austria-Kazakhstan BIT 2010, Art. 3(3): Treatment “no less favourable than that it accords to … investors of any third State and their investments … with respect to the management, operation, maintenance, use, enjoyment, sale and liquidation as well as dispute settlement of their investments.” (emphasis added).

See Canada-Mongolia BIT 2016, Art. 5(1) and (2); Finland-Mongolia BIT 2007, Art. 3(2); Japan-Mongolia BIT 2001, Art. 2(2); Japan-Mongolia EPA 2015, ch. 10, Arts. 10(4) and 10(2)(e); Mongolia-Turkey BIT 1998, Art. 2(1); Mongolia-United States of America BIT 1994, Art. II(1).

See Denmark-Mongolia BIT 1995, Art. 3; Democratic People’s Republic of Korea-Mongolia BIT 2003, Art. 3(1); Lithuania-Mongolia BIT 2003, Art. 4(2); Mongolia-Netherlands BIT 1995, Art. 3(1); Mongolia-Philippines BIT 2000, Art. IV(2); Mongolia-Russia BIT 1995, Art. 3(2); Mongolia-Switzerland BIT 1997, Art. 4(2).

See Canada-Mongolia BIT 2016, Art. 16 and annex I/II. See also, e.g., ibid., Art. 16(5) and (6) (stipulating that the BIT’s MFN guarantee neither applies to government procurement nor to subsidies by the host State).

See, e.g., Austria-Mongolia BIT 2001, Art. 2(1): “Each Contracting Party shall … admit such investments in accordance with its legislation and in any case accord such investments fair and equitable treatment.”

See, e.g., China-Mongolia BIT 1991, Art. 3(1): “Investments … shall be accorded fair and equitable treatment and shall enjoy protection in the territory of the other Contracting State.”

On the wording of fair-and-equitable-treatment clauses, see, e.g., UNCTAD, Fair and Equitable Treatment: A Sequel (UN, 2012) 17–35.

See, e.g., France-Mongolia BIT 1991, Art. 3: “Chacune des Parties contractantes s’engage à assurer, sur son territoire et dans sa zone maritime, un traitement juste et équitable, conformément aux principes du droit international.” See also UNCTAD, Fair and Equitable Treatment: A Sequel (UN, 2012) 23 (noting that “[t]his formulation prevents the use of a purely semantic approach to the interpretation of the FET standard and is meant to ensure that the interpreter uses principles of international law, including, but not limited to, customary international law.”).

See Argentina-France BIT 1991, Art. 3: “Each Contracting Party shall undertake to accord in its territory and maritime zone just and equitable treatment, in accordance with the principles of international law, to the investments of investors of the other Party and to ensure that the exercise of the right so granted is not impeded either de jure or de facto.” (emphasis in the original).

On the investment treaty standard of ‘full protection and security’, see infra at 2.4.2.4.

Japan-Mongolia EPA 2015, ch. 10, Art. 10.5(1). See also ASEAN-Australia-New Zealand FTA 2009, Art. 6(1)(2)(c) (for further examples, see UNCTAD, Fair and Equitable Treatment: A Sequel (UN, 2012) 25–8).

See comprehensively Paparinskis, International Minimum Standard and Fair and Equitable Treatment (Oxford University Press, 2013); Kläger, ‘Fair and Equitable Treatment’ in International Investment Law (Cambridge University Press, 2014) 48–88.

See, e.g., Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2013) 134; Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 226–7.

See already supra at 2.1.3.2.

Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 269. See also UNCTAD, Fair and Equitable Treatment: A Sequel (UN, 2012) 5 (“[b]y referring to the OECD Model and using it systematically, they are also referring to this standard as defined by the Draft Convention of 1967.”).

See, e.g., Mann, ‘British Treaties for the Promotion and Protection of Investments’ (1981) 52 BYIL 241, 244; Crawford, Brownlie’s Principles of Public International Law (Oxford University Press, 8th ed., 2012) 616; Vandevelde, Bilateral Investment Treaties: History, Policy, and Interpretation (Oxford University Press, 2010) 192–3 (in Neer v. Mexico “the Tribunal held that customary law protects aliens against host-state conduct involving outrage or bad faith … [and thus] [e]ven the weakest reading of the terms ‘fair and equitable’ would seem to require more than a mere avoidance of outrage and bad faith.”); Yannaca-Small, ‘Fair and Equitable Treatment Standard: Recent Developments’, in Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008) 111; Muchlinski, Multinational Enterprises and the Law (Oxford University Press, 2nd ed., 2007) 682–3; Salacuse, The Law of Investment Treaties (Oxford University Press, 2013) 226–7. See also Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 264–8 (with references to arbitral practice).

See, e.g., LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 122; Enron v. Argentina, Award, 22 May 2007, para. 259; MTD v. Chile, Award, 25 May 2004, paras. 110–5; Azurix v. Argentina, Award, 14 July 2006, para. 130.

The Concise Oxford Dictionary of Current English defines the terms as “just”, “even-handed”, “unbiased”, and “legitimate” (referred to in MTD Equity Sdn. Bhd. and MTD Chile v. Chile, Award, 25 May 2004, para. 113).

See Mondev v. U.S., Award, 11 October 2002, para. 118; Waste Management v. Mexico, Award, 30 April 2004, para. 99.

One of the most comprehensive definition, which, as noted by UNCTAD, is nearly impossible to achieve (see UNCTAD, Fair and Equitable Treatment: A Sequel (UN, 2012), 65) requires “treatment that does not affect the basic expectations that were taken into account by the … investor to make the investment. The … investor expects the host State to act in a consistent manner, free from ambiguity and totally transparently in its relations with the … investor, so that it may know beforehand any and all rules and regulations that will govern its investments, as well as the goals of the relevant policies and administrative practices or directives, to be able to plan its investment and comply with such regulations. Any and all State actions conforming to such criteria should relate not only to the guidelines, directives or requirements issued, or the resolutions approved thereunder, but also to the goals underlying such regulations. The … investor also expects the host State to act consistently, i.e. without arbitrarily revoking any pre-existing decisions or permits issued by the State that were relied upon by the investor to assume its commitments as well as to plan and launch its commercial and business activities … [and] to use the legal instruments that govern the actions of the investor or the investment in conformity with the function usually assigned to such instruments, and not to deprive the investor … without the required compensation.” (Tecmed v. Mexico, Award, 29 May 2003, para. 154).

See Jacob and Schill, ‘Fair and Equitable Treatment: Content, Practice, Method’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 700, 714–5, para. 31 (noting that the first approach lacks a clear normative vanishing point, the second (see, e.g., Mondev v. U.S., Award, 11 October 2002, para. 118) fails to clarify the content of fair and equitable treatment and obscures decision reasoning, and the third approach (see, e.g., Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 253), which can ensure consistency and predictability, bears the risk of transplanting methodologically questionable findings).

See Jacob and Schill, ‘Fair and Equitable Treatment: Content, Practice, Method’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 700, 704, para. 4.

Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, paras. 253, 625. See also Rumeli & Telsim v. Kazakhstan, Award, 29 July 2008, para. 609 (“[t]he parties rightly agree that [the FET principle] encompasses … the following concrete principles … The case law also confirms that to comply with the standard, the State must respect the investor’s reasonable and legitimate expectations.” (emphasis added).

See, e.g., Waste Management v. Mexico, Award, 30 April 2004, para. 108; Rumeli & Telsim v. Kazakhstan, Award, 29 July 2008, para. 651; Jan de Nul v. Egypt, Award, 6 November 2008, para. 188. On the FET instance in tribunal practice, see, e.g., Schernbeck, Der Fair and Equitable Treatment Standard in Internationalen Investitionsschutzabkommen (Nomos, 2013) 51 et seq.

See, e.g., Rwanda-United States of America BIT 2008, Art. 5(2)(a).

See Jan de Nul v. Egypt, Award, 6 November 2008, para. 255; Toto v. Lebanon, Decision on Jurisdiction, 11 September 2009, para. 164.

See Azinian v. Mexico, Award, 1 November 1999, para. 102 (see also Mondev v. U.S., Award, 11 October 2002, para. 126).

Mondev v. U.S., Award, 11 October 2002, para. 127. See also Jan de Nul v. Egypt, Award, 6 November 2008, para. 193.

Azinian v. Mexico, Award, 1 November 1999, para. 103. See also Feldman v. Mexico, Award, 16 December 2002, para. 139; Rumeli & Telsim v. Kazakhstan, Award, 29 July 2008, para. 652.

See Rumeli & Telsim v. Kazakhstan, Award, 29 July 2008, para. 657. See also the recent case of Dan Cake v. Hungary, Decision on Jurisdiction and Liability, 24 August 2015, para. 117 et seq.

See, e.g., Loewen v. U.S., Award, 25 June 2003, para. 136 (the NAFTA Tribunal dismissed the Loewen case in favour of the United States, which was subject of criticism; see, e.g., Rubins, ‘Loewen v. United States: The Burial of an Investor-State Arbitration Claim’ (2005) 1 Arb. Int’l 1).

ELSI Case (United States of America v. Italy) (Judgment) [1989] ICJ Rep. 15, 76 (see, e.g., Genin v. Estonia, Award, 25 June 2001, para. 98; Pope & Talbot v. Canada, Award in Respect of Damages, 31 May 2002, para. 63).

EDF v. Romania, Award, 8 October 2009, para. 303 (emphasis added) (also including measures that are not based on legal standards but on prejudice or personal preference or “taken for reasons that are different from those put forward by the decision maker … [or] in wilful disregard of due process and proper procedure.”). See also Lemire v. Ukraine, Decision on Jurisdiction and Liability, 14 January 2010, para. 262.

Saluka v. Czech Republic, Partial Award, 17 March 2006, para. 460. See also Plama v. Bulgaria, Award, 27 August 2008, paras. 183–4.

See also UNCTAD, Fair and Equitable Treatment: A Sequel (UN, 2012) 82; Jacob and Schill, ‘Fair and Equitable Treatment: Content, Practice, Method’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 700, 731, para. 74.

For relevant case-law, see, e.g., Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 294–5.

See also Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 280. Instructively: Wälde, Separate Opinion, para. 37 (rendered in Thunderbird v. Mexico, Award, 26 June 2006 and available at: <https://​www.​italaw.​com/​cases/​571> last accessed 11 May 2017): “A legitimate expectation is assumed more readily if an individual investor receives specifically formal assurances that display visibly an official character and if the official(s) perceive or should perceive that the investor intends, reasonably, to rely on such representation … The strongest way to build a legitimate expectation is if both formal and official elements are followed and reinforced by conduct that carries the same message as the investor reads – and can reasonably read – into an interpretative assurance or ‘comfort letter’.”

Parkerings v. Lithuania, Award 11 September 2007, para. 331 (emphasis added). See also Total v. Argentina, Decision on Liability, 27 December 2010, para. 120: “In other words, an investor’s legitimate expectations may be based ‘on any undertaking and representations made explicitly or implicitly by the host State.’”

See Wälde, Separate Opinion, para. 37 (rendered in Thunderbird v. Mexico, Award, 26 June 2006 and available at: <https://​www.​italaw.​com/​cases/​571> last accessed 11 May 2017).

See, e.g., Glamis Gold v. U.S., Award, 8 June 2006, para. 766 (“investment-backed expectation requires, as a threshold circumstance, at least a quasi-contractual relationship between the State and the investor, whereby the State has purposely and specifically induced the investment.”); Suez v. Argentina, Decision on Liability, 30 July 2010, para. 227: “Argentina through its laws … government statements, and especially the elaborate legal framework which it designed and enacted, deliberately and actively sought to create those expectations in … investors in order to obtain the capital and technology that it needed.”

See infra at 4.​3.​1 and 4.​4.​1.

See, e.g., Parkerings v. Lithuania, Award, 11 September 2007, para. 332; EDF v. Romania, Award, 8 October 2009, para. 218; Total v. Argentina, Decision on Liability, 27 December 2010, para. 117.

See infra at 4.​3.​1 and 4.​4.​1.

On tax-rate-stabilisation certificates issued under the 2013 Mongolian Investment Law, see infra at 3.​2.​4.​2.

See Micula v. Romania, Award, 11 December 2013, para. 671 et seq. See also infra at 4.​3.​1.​2.

Saluka v. Czech Republic, Partial Award, 17 March 2006, para. 305 (emphasis added) (decision cited in: National Grid v. Argentina, Award, 3 November 2008, para. 175; Spyridon Roussalis v. Romania, Award, 7 December 2011, para. 317).

See, e.g., Lemire v. Ukraine, Decision on Jurisdiction and Liability, 14 January 2010, para. 273 (“the preferential treatment of foreigners [must] be balanced against the legitimate right of Ukraine to pass legislation and adopt measures for the protection of what as a sovereign it perceives to be its public interest.”).

See also Parkerings v. Lithuania, Award, 11 September 2007, para. 332 (“[w]hat is prohibited however is for a State to act unfairly, unreasonably or inequitably in the exercise of its legislative power.”); Merrill & Ring v. Canada, Award, 31 May 2010, para. 233 (“regulations addressed to social well-being are evidently within the normal functions of a government and it is not legitimate … to expect to be exempt from them.”).

See Parkerings v. Lithuania, Award, 11 September 2007, paras. 335–6: “[T]he political environment in Lithuania was characteristic of a country in transition from its past being part of the Soviet Union to candidate for the [European Union] … Thus, legislative changes, far from being unpredictable, were in fact to be regarded as likely. As any businessman would, the Claimant was aware of the risk that changes of laws would probably occur … Therefore, in such a situation, no expectation that the laws would remain unchanged was legitimate. By deciding to invest notwithstanding this possible instability, the Claimant took the business risk to be faced with changes of laws possibly or even likely to be detrimental to its investment. The Claimant could (and with hindsight should) have sought to protect its legitimate expectations by introducing into the investment agreement a stabilisation clause or some other provision protecting it against unexpected and unwelcome changes.” See also Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 303: “[I]nvestors are acutely aware that significant modification of taxation levels represents a serious risk, especially when investing in a country at an early stage of economic and institutional development.”

Jacob and Schill, ‘Fair and Equitable Treatment: Content, Practice, Method’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 700, 740, para. 99.

Total v. Argentina, Decision on Liability, 27 December 2010, para. 123 (quoting Saluka v. Czech Republic, Partial Award, 17 March 2006, paras. 305–6).

See BLEU-Mongolia BIT 1992, Art. 3(3); Finland-Mongolia BIT 2007, Art. 2(2) (“in any case … no less favourable than that required by international law”); Mongolia-Sweden BIT 2003, Art. 2(4); Mongolia-United States of America BIT 1994, Art. II(2)(a).

See Croatia-Mongolia BIT 2006, Art. 3(2); Cuba-Mongolia BIT 1999, Art. 2(2); France-Mongolia BIT 1991, Art. 3(1) (“conformément aux principes du droit international”).

See Kuwait-Mongolia BIT 1998, Art. 3(1); Mongolia-United Arab Emirates BIT 2001, Art. 3(1).

See Japan-Mongolia EPA 2015, ch. 10, Art. 10.5(1). On the international minimum standard of treatment of aliens under customary international law, see already supra at 2.1.5.1.

See Canada-Mongolia BIT 2016, Art. 6(1) and (2). See also ibid., Art. 16(6) (according to which the BIT’s fair-and-equitable-treatment clause does not apply to taxation measures).

Noble Ventures v. Romania, Award, 12 October 2005, para. 164. See also ELSI (United States of America v. Italy) (Judgment) [1989] ICJ Rep. 15, 66 (“the ‘protection and security’ must conform to the minimum international standard”); Amco v. Indonesia, Award, 20 November 1984, para. 172: “It is a generally accepted rule of international law, clearly stated in international awards and judgements and generally accepted in the literature, that a State has a duty to protect aliens and their investments against unlawful acts committed by some of its citizens.” See also Dickerson, ‘Minimum Standards’, in Wolfrum (ed.), EPIL (Oxford University Press, 2010) para. 11.

See supra at 2.4.2.3.

See, e.g., Japan-Mongolia EPA 2015, ch. 10, Art. 10.5(1) and note 1. See also United States of America Model BIT 2004, Art. 5(2), available at: <https://​www.​state.​gov/​documents/​organization/​117601.​pdf> last accessed 11 May 2017.

For an overview, see supra at 2.1.5.1.

See Lorz, ‘Protection and Security (Including the NAFTA Approach)’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 764, 767, para. 5; Zeitler, ‘Full Protection and Security’, in Schill (ed.), International Investment Law and Comparative Public Law (Oxford University Press, 2010) 183, 190.

See, e.g., Finland-Mongolia BIT 2007, Art. 2(2) (“accord [fair and equitable treatment] and full and constant protection and security. In any case … treatment no less favourable than that required by international law.”). See also Azurix v. Argentina, Award, 14 July 2006, para. 361 (such a treaty reference sets “a floor, not a ceiling, in order to avoid a possible interpretation of these standards below what is required by international law.”).

See Lorz, ‘Protection and Security (Including the NAFTA Approach)’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 764, 772–3, para. 21.

El Paso Energy v. Argentina, Award, 31 October 2011, para. 522; Noble Ventures v. Romania, Award, 12 October 2005, para. 164 (“it seems doubtful whether that provision can be understood as being wider in scope than the general duty to provide for protection and security … found in the customary international law of aliens.”).

See also Lorz, ‘Protection and Security (Including the NAFTA Approach)’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 764, 788, para. 68.

See Rumeli v. Kazakhstan, Award, 29 July 2008, para. 668 (“certain level of protection … from physical damage”); PSEG v. Turkey, Award, 19 January 2007, para. 258 (“physical safety of persons and installations”); Suez v. Argentina, Decision on Liability, 30 July 2010, para. 173 (“physical injury” as the “traditional interpretation”); Saluka v. Czech Republic, Partial Award, 17 March 2006, paras. 483–4 (“civil strife and physical violence”, as well as “physical integrity of an investment against interference by use of force”).

Lauder v. Czech Republic, Award, 3 September 2001, para. 308. See also, e.g., Wena Hotels v. Egypt, Award, 8 December 2000, para. 84; Noble Ventures v. Romania, Award, 12 October 2005, paras. 165–6.

See, e.g., Noble Ventures v. Romania, Award, 12 October 2005, para. 164 (“general duty to provide for protection and security of foreign nationals … requiring due diligence to be exercised by the State”); Lauder v. Czech Republic, Award, 3 September 2001, para. 308 (“due diligence … as reasonable under the circumstances”); Saluka v. Czech Republic, Partial Award, 17 March 2006, para. 484 (“adopt all reasonable measures to protect assets and property from threats or attacks which may target particularly foreigners”).

Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 324 (emphasis added). See also Wena Hotels v. Egypt, Award, 8 December 2000, para. 94 (“neither EHC nor its senior officials were seriously punished for their actions in forcibly expelling Wena and illegally possessing the hotels for approximately a year”). On repressive protection, see, e.g., Lorz, ‘Protection and Security (Including the NAFTA Approach)’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 764, 782–3.

Zeitler, ‘Full Protection and Security’, in Schill (ed.), International Investment Law and Comparative Public Law (Oxford University Press, 2010) 183, 202. See also Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 310 (“tribunals will likely consider the state’s level of development and stability as relevant … in determining whether there has been due diligence. An investor investing in an area with endemic civil strife and poor governance cannot have the same expectations of physical security as one investing in London, New York or Tokyo.”). See also Pantechniki v. Albania, Award, 30 July 2009, para. 77: “A failure of protection and security is … likely to arise in an unpredictable instance of civic disorder which could have been readily controlled by a powerful state but which overwhelms the limited capacities of one which is poor and fragile … it seems difficult to maintain that [such] a government incurs international responsibility for failure to plan for unprecedented trouble of unprecedented magnitude in unprecedented places.”

See Suez v. Argentina, Decision on Liability, 30 July 2010, paras. 171–3; Saluka v. Czech Republic, Partial Award, 17 March 2006, para. 483; BG v. Argentina, Award, 24 December 2007, para. 326; Rumeli & Telsim v. Kazakhstan, Award, 29 July 2008, para. 668.

See also Enron v. Argentina, Award, 22 May 2007, para. 286; PSEG v. Turkey, Award, 19 January 2007, para. 259.

See also infra at 4.​3.​1.​2.

See in more detail infra at 4.​3.​1.​2.

Biwater Gauff v. Tanzania, Award, 24 July 2008, para. 729. See also National Grid v. Argentina, Award, 3 November 2008, para. 189 (“‘protection and constant security’ … does not carry with it the implication that this protection is inherently limited to protection and security of physical assets. This conclusion is reinforced by the inclusion of this commitment in the same article of the Treaty as the language on fair and equitable treatment.”).

See the case-law references supra in fn. 426. See also AES v. Hungary, Award, 23 September 2010, paras. 13.3.2 and 13.3.5.

See Lorz, ‘Protection and Security (Including the NAFTA Approach)’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 764, 785, para. 59.

See BLEU-Mongolia BIT 1992, Art. 3(3); Finland-Mongolia BIT 2007, Art. 2(2); Mongolia-Sweden BIT 2003, Art. 2(4), Mongolia-United States of America BIT 1994, Art. II(2)(a).

See Japan-Mongolia EPA 2015, ch. 10, Art. 10.5(1); Canada-Mongolia BIT 2016, Art. 6(1) and (2).

See Belarus-Mongolia BIT 2001, Art. 2(2); Mongolia-Russia BIT 1995, Art. 2(2).

See Shaw, International Law (Cambridge University Press, 7th ed., 2014) 602; Crawford, Brownlie’s Principles of Public International Law (Oxford University Press, 8th ed., 2012) 622–3.

Kriebaum, ‘Expropriation’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 959, 970, para 29.

For relevant case-law, see, e.g., Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 346–7.

See Kriebaum, ‘Expropriation’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 959, 964, para. 8.

See, e.g., Tecmed v. Mexico, Award, 29 May 2003, para. 114: “[A] difference should be made between creeping … and de facto expropriation, although they are usually included within the broader concept of ‘indirect expropriation’.” See also Generation Ukraine v. Ukraine, Award, 16 September 2003, para. 20.22: “[A] form of indirect expropriation with a distinctive temporal quality in the sense that it encapsulates the situation whereby a series of acts attributable to the State over a period of time culminate in the expropriatory taking.”

See Newcombe and Paradell, Law and Practice of Investment Treaties (Kluwer Law International, 2009) 341 et seq.; Hoffmann, ‘Indirect Expropriation’, in Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008) 151, 158 et seq.

See Vivendi v. Argentina, Award, 20 August 2007, para. 7.5.20 (“[w]hile intent will weigh in favour of showing a measure to be expropriatory, it is not a requirement”); Tecmed v. Mexico, Award, 29 May 2003, para. 116 (“intention is less important than the effects of the measures on the owner of the assets or on the benefits arising from such assets …; and the form of the deprivation measure is less important than its actual effects.”).

Sempra Energy v. Argentina, Award, 28 September 2007, para. 285. See also GAMI v. Mexico, Award, 15 November 2004, para. 126 (“the affected property must be impaired to such an extent that it must be seen as ‘taken’”); S.D. Myers v. Canada, Partial Award, 13 November 2000, para. 283 (“a lasting removal of the ability of an owner to make use of its economic rights”); Pope & Talbot v. Canada, Award on the Merits, 10 April 2001, para. 102; Eastern Sugar v. Czech Republic, Partial Award, 27 March 2007, para. 210.

For an overview of relevant case-law, see, e.g., Hoffmann, ‘Indirect Expropriation’, in Reinisch (ed.), Standards of Investment Protection (Oxford University Press, 2008) 151, 159–60.

See Kriebaum, ‘Expropriation’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 959, 1005–6, paras. 170–3.

See, e.g., Methanex v. U.S., Award, 3 August 2005, Part IV, Ch. D, para. 7: “[A]s a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects, inter alios, a foreign investor or investment is not deemed expropriatory and compensable unless specific commitments had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation.”

See, e.g., Kriebaum, ‘Expropriation’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 959, 1000, para. 150.

See, e.g., Tecmed v. Mexico, Award, 29 May 2003, para. 122: “After establishing that regulatory actions and measures will not be initially excluded from the definition of expropriatory acts, in addition to the negative financial impact of such actions or measures, the Arbitral Tribunal will consider, in order to determine if they are to be characterized as expropriatory, whether such actions or measures are proportional to the public interest presumably protected thereby and to the protection legally granted to investments, taking into account that the significance of such impact has a key role upon deciding the proportionality.” See also LG&E v. Argentina, Decision on Liability, 3 October 2006, para. 195: “With respect to the power of the State to adopt its policies, it can generally be said that the State has the right to adopt measures having a social or general welfare purpose. In such a case, the measure must be accepted without any imposition of liability, except in cases where the State’s action is obviously disproportionate to the need being addressed.”

Japan-Mongolia EPA 2015, annex 10, Arts. 2 and 3 (emphasis added). See also United States of America Model BIT 2012, annex B, available at: <http://​www.​state.​gov/​documents/​organization/​188371.​pdf> last accessed 11 May 2017.

See already supra at 2.1.2.1 and 2.1.5.1.

See, e.g., Cuba-Mongolia BIT 1999, Art. 5(1); Indonesia-Mongolia BIT 1997, Art. IV(c); Israel-Mongolia BIT 2003, Art. 5(1).

India-Mongolia BIT 2001, Art. 5(1); Mongolia-Qatar BIT 2007, Art. 5(1).

See, e.g., Czech Republic-Mongolia BIT 1998, Art. 5(2); Denmark-Mongolia BIT 1995, Art. 5(4); Egypt-Mongolia BIT 2004, Art. 5(3); Finland-Mongolia BIT 2007, Art. 5(5); Germany-Mongolia BIT 1991, Art. 4(2); India-Mongolia BIT 2001, Art. 5(2).

Continental Casualty v. Argentina, Award, 5 September 2008, para. 239. For an overview of other international systems governing the transfer of funds and questions of convertibility (e.g. under the Articles of the IMF, available at: <http://​www.​imf.​org/​external/​pubs/​ft/​aa/​> last accessed 11 May 2017), which are lex generalis to bilateral investment treaties, see, e.g., Kern, ‘Transfer of Funds’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 870, 872–6.

Mongolia-United States of America BIT 1994, Art. IV(1) (emphasis added). See also ibid., Art. I(1)(d) (‘return’ means “an amount derived from or associated with an investment, including profit; dividend; interest; capital gain; royalty payment; management, technical assistance or other fee; or returns in kind.”).

See, e.g., China-Mongolia BIT 1991, Art. 5(1).

See, e.g., Belarus-Mongolia BIT 2001, Art. 6(1).

Japan-Mongolia EPA 2015, ch. 10, Art. 10.11(3) (referring to “(a) bankruptcy, insolvency or the protection of the rights of creditors; (b) issuing, trading or dealing in securities; (c) criminal or penal offenses; or (d) ensuring compliance with orders or judgments in adjudicatory proceedings.”). See also United States of America Model BIT 2012, Art. 7(4).

See, e.g., France Model BIT 2012, Art. 6(4): “When, in exceptional circumstances, capital movements from or to third countries cause or threaten to cause a serious disequilibrium to its balance of payments, each Contracting Party may temporarily apply safeguard measures to the transfers, provided that these measures shall be strictly necessary, would be imposed in an equitable, non-discriminatory and in good faith basis and shall not exceed in any case a six months period.”

Draft Articles on Responsibility of States for Internationally Wrongful Acts 2001, printed in: ‘Report of the International Law Commission on the Work its Fifty-Third Session (23 April-1 June and 2 July-10 August 2001)’ [2001] vol. II(2) UNYBILC 1, 26; Crawford, The International Law Commission’s Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge University Press, 2002) 61 et seq.

See Kern, ‘Transfer of Funds’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 870, 882–3. See also the contribution of Tams (‘Defence of Necessity – as Reflected in Recent Investment Arbitrations’) in Bering, et al., ‘General Public International Law and International Investment Law – A Research Sketch on Selected Issues’ (Beiträge zum Transnationalen Wirtschaftsrecht Heft 105, International Law Association German Branch/Sub-Committee on Investment Law, March 2009) 60 et seq.

See Malaysia-Mongolia BIT 1995, Art. 6(1) (“subject to its laws, regulations and national policies”); Democratic People’s of Korea-Mongolia BIT 1991, Art. 6(1) (“under its laws and regulations”); Malaysia-Mongolia BIT 1995, Art. 6(1) (“subject to its laws and regulations”).

See Belarus-Mongolia BIT 2001, Art. 6(1); Bulgaria-Mongolia BIT 2000, Art. 6(1); Cuba-Mongolia BIT 1999, Art. 6(1); Israel-Mongolia BIT 2003, Art. 6(1); Italy-Mongolia BIT 1993, Art. 6(1); Kyrgyzstan-Mongolia BIT 1999, Art. 5(1); Mongolia-Republic of Korea BIT 1991, Art. 6(3); Laos-Mongolia BIT 1994, Art. 6(3); Mongolia-Poland BIT 1995, Art. 6(3); Mongolia-Russia BIT 1995, Art. 5.

See Canada-Mongolia BIT 2016, Art. 11(3); Israel-Mongolia BIT 2003, Art. 6(3); Japan-Mongolia BIT 2001, Art. 8(3); Japan-Mongolia EPA 2015, ch. 10, Art. 10.11(3); Mongolia-Romania BIT 1995, Art. 4(2).

See, e.g., Israel-Mongolia BIT 2003, Art. 6(3).

See, e.g., Mongolia-United States of America BIT 1994, Art. II(2)(c).

See infra at 4.​5.

Private investors as non-State actors are not directly bound by human rights law and cannot be held liable in individual complaint procedures before international human rights courts (see, e.g., Convention for the Protection of Human Rights and Fundamental Freedoms, opened for signature 4 November 1950, 213 UNTS 221 (entered into force 3 September 1953), Art. 34: “The Court may receive applications from any person, nongovernmental organisation or group of individuals claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention.” (emphasis added). In response, international organisations have adopted codes of conduct, including the UN Guiding Principles on Business and Human Rights (as endorsed by the UN Human Rights Council on 16 June 2011 as a set of non-binding rules for both States and private companies to prevent, address, and remedy human rights violations (also known as ‘Ruggie-Principles’, available at: <https://​business-humanrights.​org/​en/​un-guiding-principles-on-business-and-human-rights-1> last accessed 11 May 2017)). See Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, with Guiding Principles in the Annex (UN Doc. A/HRC/17/31) of 21 March 2011, Principle 1, adopted by the Human Rights Council, UN Doc. A/HRC/RES/17/4.

See Riedel, ‘The Human Right to Water’, in Dicke, et al. (eds.), Weltinnenrecht: Liber Amicorum Jost Delbrück (Duncker & Humblot, 2005) 585, 587. See also Viñuales, ‘Access to Water in Foreign Investment Disputes’ (2009) 21 Geo. Int’l Envtl L. Rev. 733.

See, e.g., the contributions and case studies in Dupuy, Francioni and Petersmann (eds.), Human Rights in International Investment Law and Arbitration (Oxford University Press, 2009).

On the attribution of responsibilities in and the protection of public interests by investor-State contracts concluded with the Government of Mongolia, see infra at 4.​2.​4.​4 and 4.​2.​5.

Similarly: Dupuy and Viñuales, ‘Human Rights and Investment Disciplines: Integration in Progress’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1739, 1753. See also ‘Principles for Responsible Contracts: Integrating the Management of Human Rights Risks into State-Investor Contract Negotiations: Guidance for Negotiators,’ Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie, UN Doc. A/HRC/17/31/Add. 3, 25 May 2011.

International Covenant on Civil and Political Rights, opened for signature 16 December 1966, 999 UNTS 171 (entered into force 23 March 1976) (‘ICCPR’).

International Covenant on Economic, Social and Cultural Rights, opened for signature 16 December 1966, 993 UNTS 3 (entered into force 3 January 1976) (‘ICESCR’). See Riedel, ‘International Covenant on Economic, Social and Cultural Rights (1966)’, in Wolfrum (ed.), EPIL (Oxford University Press, 2011).

On the nature and realisation of rights of the ICESCR, which generally do not entitle individuals to require a specific State action but rather provide the State with a regulatory (i.e. political) leeway (or ‘corridor’) with respect to the protection and fulfilment of ICESCR obligations, see Cremer, ‘Wirtschaftliche, soziale und kulturelle Rechte – eine sinnvolle Normkategorie?’, in Giegerich and Zimmermann (eds.), Wirtschaftliche, soziale und kulturelle Rechte im globalen Zeitalter (Duncker und Humblot, 2008) 35, 44–63.

United Nations Committee on Economic, Social and Cultural Rights, General Comment No. 15 (2002), The Right to Water (Arts. 11 and 12 of the Covenant), UN Doc. E/C.12/2002/11 (20 January 2003), para. 3. For an overview of genesis and content, see Riedel, ‘The Human Right to Water and General Comment No. 15 of the CESCR’, in Riedel and Rothen (eds.), The Human Right to Water (Berliner Wissenschafts-Verlag, 2006) 19, 25–32.

For an overview of Mongolia’s international human rights obligations, see <http://​www.​ohchr.​org/​EN/​Countries/​AsiaRegion/​Pages/​MNIndex.​aspx> last accessed 11 May 2017.

On the hierarchy of sources of international law and ius cogens, see, e.g., Shaw, International Law (Cambridge University Press, 7th ed., 2014) 87–91.

On investor-State arbitration as a procedural standard of international investment protection, see infra at 2.4.3.

See, e.g., Azurix v. Argentina, Award, 14 July 2006, para. 254 (where Argentina referred to an alleged conflict between the applicable bilateral investment treaty and applicable human rights treaties relating to the protection of consumer rights). See also Siemens v. Argentina, Award, 6 February 2007, para. 75: “Argentina draws to the Tribunal’s attention that the constitutional reform of 1994 recognized a number of international instruments on human rights to have constitutional rank. Argentina claims that the human rights so incorporated in the Constitution would be disregarded by recognizing the property rights asserted by the Claimant given the social and economic conditions of Argentina.” Both investment treaty tribunals found that the respondent States had not sufficiently established their arguments (see Azurix v. Argentina, Award, 14 July 2006, para. 261; Siemens v. Argentina, Award, 6 February 2007, para. 79).

See Dupuy and Viñuales, ‘Human Rights and Investment Disciplines: Integration in Progress’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1739, 1754–9 (referring to lex superior and ius cogens, as well as the principle of ‘systemic integration,’ to determine whether an ‘external’ rule, i.e. an international human rights rule, affects the interpretation of a provision in an applicable bilateral investment treaty).

Additionally, whether an investment treaty tribunal is empowered to hear a human rights-related counterclaim by the respondent State is also a question of arbitral jurisdiction. On the scope of State consent to investor-State arbitration given in dispute settlement clauses in international investment treaties, see infra at 2.4.3.3 (“Scope of Consent to Investment Treaty-Based Investor-State Arbitration”). See also Urbaser v. Argentina, Award, 8 December 2016, para. 1143 et seq. (where the Urbaser Tribunal confirms its jurisdiction over a human rights-related counterclaim raised by the respondent State under a wide dispute settlement clause in the applicable bilateral investment treaty).

Energy Charter Treaty 1994, Art. 26(6) (emphasis added) (on the Energy Charter Treaty, see already supra at 2.3.3). See also Japan-Mongolia EPA 2015, ch. 10, Art. 10.13(13). Furthermore, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature 18 March 1965, 575 UNTS 159 (entered into force 14 October 1966) (‘ICSID Convention’) contains a similar applicable-law reference in Article 42(1) (see infra at 4.​3.​2.​2). On the ICSID Convention as an important tool for the enforcement of international investment treaties, see also infra at 2.5.2.

Spiermann, ‘Investment Arbitration: Applicable Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1373, 1385, para. 36 (emphasis added) (with references to relevant case-law).

Dupuy and Viñuales, ‘Human Rights and Investment Disciplines: Integration in Progress’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1739, 1763, para. 69. On customary international law and human rights, see, e.g., Shaw, International Law (Cambridge University Press, 7th ed., 2014) 201.

Spiermann, ‘Investment Arbitration: Applicable Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1373, 1385, para. 37. See also Dupuy and Viñuales, ‘Human Rights and Investment Disciplines: Integration in Progress’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1739, 1764, para. 71 (who arrive at the same result). See also Suez v. Argentina, Decision on Liability, 30 July 2010, para. 262 (the Suez award considers Argentina’s international obligation to protect the human right to water and states that in the Tribunal’s view international human rights law forms part of the law applicable to the investment treaty arbitration).

See, e.g., Mongolia-Singapore BIT 1995, Art. 1(1); China-Mongolia BIT 1991, Art. 1.

Generally on obligations of foreign investors under different sources of investment law, see Nowrot, ‘Obligations of Investors’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1154.

Salini v. Morocco, Decision on Jurisdiction, 23 July 2003, para. 46. Also in the absence of such a ‘compliance clause’ investment treaty tribunals have expressed the view that foreign investments must be established in accordance with national law to benefit from bilateral investment treaties. For relevant case-law and the criteria used to determine the applicability of compliance clauses in international investment treaties, see Diel-Gligor and Hennecke, ‘Investment in Accordance with the Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 566, 568, para. 7, and 572–5.

See already supra at 2.1.5.3. However, the domestic-law effect of international human rights treaties in Mongolia does not imply that private investors are directly bound by international human rights provisions.

Reading that “[e]ach State Party to the present Covenant undertakes to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.”

See infra at 4.​3.​2 (“Contracting on the Applicable Law”).

See supra at 2.4.2.3 (“The Doctrine on the Protection of Legitimate Expectations”) and infra at 4.​3.​1.​2.

See also Spiermann, ‘Investment Arbitration: Applicable Law’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1373, 1387, para. 43. On the requirement of ‘national-law validity’ of stabilisation clauses in investor-State contracts, see infra at 4.​3.​1.​4, and with special regard to stabilisation clauses in investor-State contracts concluded with the Mongolian Government infra at 4.​4.​1.

See also Dupuy and Viñuales, ‘Human Rights and Investment Disciplines: Integration in Progress’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1739, 1764, para. 72.

See supra at 2.4.2.

Peters, Beyond Human Rights: The Legal Status of the Individual in International Law (Cambridge University Press, 2016) 285. See also Petersmann, ‘Introduction and Summary: ‘Administration of Justice’ in International Investment Law and Adjudication?’, in Dupuy, Francioni and Petersmann (eds.), Human Rights in International Investment Law and Arbitration (Oxford University Press, 2009) 3, 11.

See UNCTAD, World Investment Report 2015 (UN, 2015) 114, fig. III.7. The dispute settlement system of investment treaty arbitration entered the public mind-set in the mid-1990s after several foreign investors brought claims under the NAFTA (see Van Harten, Investment Treaty Arbitration and Public Law (Oxford University Press, 2008) 3).

That is, 243 pending, 444 concluded, and nine unknown cases. See UNCTAD, Investment Policy Hub (2016) <http://​investmentpolicy​hub.​unctad.​org/​ISDS> last accessed 30 August 2016.

See also Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 71, para. 2.01.

See immediately below at 2.4.3.2.

See also Schreuer, et al., The ICSID Convention: A Commentary (Cambridge University Press, 2nd ed., 2009) Art. 25, para. 378.

See supra at 2.3.1.

See also Waibel, ‘Investment Arbitration: Jurisdiction and Admissibility’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1212, 1226, para. 51, fn. 55.

See in detail infra at 3.​3.​2.

See infra at 3.​3.​2.​1.

This is consistent with an a contrario reading of the decision in AES and Tau Power v. Kazakhstan, where the Tribunal hold that the repealed Kazakh Investment Law, including its ‘standing arbitration offer’, continues to apply to foreign investments made before the Law’s repeal. In this respect, the Kazakh Investment Law provided an express legal assurance (in form of a 10-year stabilisation provision) that rights and guarantees offered by the State vis-à-vis investors under the Investment Law of Kazakhstan would not be unilaterally revoked (see AES and Tau Power v. Kazakhstan, Award, 1 November 2013, para. 207 et seq.).

See infra at 4.​3.​3.

See also the introductory remarks infra at 4.​1 and infra at 4.​3.​3.

See also Blackaby, et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed., 2015) 28–30.

In recent years, investor-State arbitration has increasingly faced criticism, inter alia under aspects of transparency, democratic legitimacy, the predictability of outcomes, and potential interferences with public policy choices by both developed and developing countries. See, e.g., the contributions in Waibel, et al. (eds.), The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International, 2010). See also von Bogdandy and Venzke, In Whose Name? A Public Law Theory of International Adjudication (Oxford University Press, 2014) 93–4.

See infra at 2.5.1.

See infra at 2.5.2.

A sample survey of 1660 BITs found that 93% of the examined international investment treaties contain an investor-State arbitration clause and that there are more than 1200 different clauses in the roughly 1500 BITs providing for investor-State arbitration (see Pohl, Mashigo and Nohen, ‘Dispute Settlement Provisions in International Investment Agreements: A Large Sample Survey’ (OECD Working Papers on International Investment No. 2012/02, OECD, 14 December 2012) 43).

See infra at 2.5.2.

UNCITRAL Arbitration Rules 1976, as revised in 2010, available at: <http://​www.​uncitral.​org/​uncitral/​en/​uncitral_​texts/​arbitration/​2010Arbitration_​rules.​html> last accessed 11 May 2017 (‘UNCITRAL Arbitration Rules’).

Japan-Mongolia EPA 2015, ch. 10, Art. 10.13(4). For an overview of arbitration institutions and systems, see, e.g., Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2013) 238 et seq.

On the question of whether disputes arising under investor-State contracts fall within the scope of application of ‘wide’ dispute settlement provisions in international investment treaties, see infra at 4.​5.​5.​2.

See Energy Charter Treaty 1994, Art. 26(1): “Disputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III.” The Energy Charter Treaty belongs to Mongolia’s portfolio of international investment treaties. See already supra at 2.3.3.

Reportedly, Romanian BITs introduced such limitations in the 1970s before other East European States and China followed suit (see Peters, ‘Dispute Settlement Arrangements in Investment Treaties’ (1991) 22 Neth. Ybk. Int’l L. 91, 129). China expanded its investor-State arbitration offers in its bilateral investment treaties from 1998 onwards (see Weeramantry, ‘Investor–State Dispute Settlement Provisions in China’s Investment Treaties’ (2012) 1 ICSID Rev. – For. Inv. L. J. 192, 194, 197).

Emphasis added. On the contrary, treaty-related State-to-State investment arbitration is fully available under the China-Mongolia BIT (see China-Mongolia BIT 1991, Art. 7(2)). On the controversial question of whether most-favoured-nation clauses in international investment treaties apply to more favourable procedural conditions in investment treaties between the host State and third parties, see already supra at 2.4.2.2 (“The Extension of Most-Favoured-Nation Treatment to Dispute Settlement Provisions”).

Japan-Mongolia EPA 2015, ch. 10, Art. 10.13(3). See also, e.g., Energy Charter Treaty 1994, Art. 26(2) (3 months).

See, e.g., Malta-United Kingdom BIT 1986, Art. 8(1) and (2); Argentina-Germany BIT 1991, Art. 10(2) and (3): “If a dispute … cannot be settled within six months …, it shall … be submitted to the competent courts … The dispute may be submitted to an international arbitral tribunal … where, after a period of 18 months has elapsed from the moment when the judicial process provided for by paragraph 2 … was initiated, no final decision has been given or where a decision has been made but the Parties are still in dispute.”

See Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2013) 264. In case of investor-State arbitrations conducted under the ICSID Convention, this can be taken from Article 26 of the ICSID Convention, according to which “[c]onsent … to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention.” (emphasis added). See also Generation Ukraine v. Ukraine, Award, 16 September 2003, paras. 13.4–5.

See, e.g., RosInvest v. Russia, Award on Jurisdiction, 1 October 2007, para. 153; Mytilineos v. Serbia and Montenegro, Partial Award on Jurisdiction, 8 September 2006, para. 225. For a discussion of the exclusion or dispensation of the exhaustion-of-local-remedies rule under customary international in ‘non-ICSID arbitrations’, see, e.g., Markert, Streitschlichtungsklauseln in Investitionsabkommen (Nomos, 2010) 197–207.

See, e.g., Denmark-Romania BIT 1980, Art. 4(2): “If any dispute between an investor of one Contracting Party and the other Contracting Party concerning the amount of compensation continues to exist after the exhaustion of remedies available in the territory of the Contracting Party in which the investment was made, either Party to the dispute shall be entitled to submit the case for conciliation or arbitration.”

See, e.g., Argentina-France BIT 1991, Art. 8(2): “Once an investor has submitted the dispute to the courts of the Contracting Party concerned or to international arbitration, the choice of one or the other of these procedures is final.”

Toto Costruzioni v. Lebanon, Decision on Jurisdiction, 11 September 2009, para. 211 (emphasis added). On the triple identity test, see, e.g., Markert, Streitschlichtungsklauseln in Investitionsabkommen (Nomos, 2010) 226–40.

See, e.g., Belarus-Mongolia BIT 2001, Art. 9(2); Bulgaria-Mongolia BIT 2000, Art. 9(2); Croatia-Mongolia BIT 2006, Art. 10(2); Finland-Mongolia BIT 2007, Art. 9(2); India-Mongolia BIT 2001, Art. 9(2); Israel-Mongolia BIT 2003, Art. 8(2); Italy-Mongolia BIT 1993, Art. 9(2); Mongolia-Romania BIT 1995, Art. 9(2).

Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, available at: <http://​www.​sccinstitute.​com/​dispute-resolution/​rules/​> last accessed 11 May 2017 (‘SCC Arbitration Rules’).

See, e.g., Mongolia-United Kingdom BIT 1991, Art. 8(2); Austria-Mongolia BIT 2001, Art. 8(2); Czech Republic-Mongolia BIT 1998, Art. 8(2); Denmark-Mongolia BIT 1995, Art. 9(2); Egypt-Mongolia BIT 2004, Art. 8(3); Germany-Mongolia BIT 1991, Art. 11(2) in connection with Arts. 10(3) and 11(4); Hungary-Mongolia BIT 1994, Art. 8(2); Japan-Mongolia BIT 2001, Art. 10(2); Mongolia-Sweden BIT 2003, Art. 8(2); Mongolia-Switzerland BIT 1997, Art. 8(2).

See Malaysia-Mongolia BIT 1995, Art. 7(1); Mongolia-Netherlands BIT 1995, Art. 8; Mongolia-Singapore BIT 1995, Art. 13(2). See also BLEU-Mongolia BIT 1992, Art. 10(2); France-Mongolia BIT 1991, Art. 8; Indonesia-Mongolia BIT 1997, Art. 8(3); Mongolia-Republic of Korea BIT 1991, Art. 9(3); Laos-Mongolia BIT 1994, Art. 9(3); Mongolia-Poland BIT 1995, Art. 9(3).

ICC Rules of Arbitration 2012, available at: <http://​internationalarb​itrationlaw.​com/​about-arbitration/​international-arbitration-rules/​2012-icc-arbitration-rules/​> last accessed 11 May 2017.

See Japan-Mongolia EPA 2015, ch. 10, Art. 10.13(4). See also Mongolia-United Arab Emirates BIT 2001, Art. 9(3).

On the question of whether wide investor-State arbitration offers in international investment treaties cover claims arising under investor-State contracts, see infra at 4.​5.​5.​2.

See China-Mongolia BIT 1991, Art. 8(1) and (2). For a discussion of the question of whether this narrow arbitration offer can be ‘circumvented’ via a broad contractual arbitration agreement between the investor and the host State, see infra at 4.​4.​3.​3 (“Claims in Relation to International Investment Treaties”).

See infra at 2.4.4.3.

See Bulgaria-Mongolia BIT 2000, Art. 9(2); Mongolia-Tajikistan BIT 2009, Art. 9(2).

Mongolia-United Kingdom BIT 1991, Art. 8(1) (“[d]isputes … concerning an obligation … under this Agreement”); Cuba-Mongolia BIT 1999, Art. 8(1); India-Mongolia BIT 2001, Art. 9(1); Mongolia-Qatar BIT 2007, Art. 8(1).

Mongolia-United States of America BIT 1994, Art. VI(1). See also ibid., Art. I(1)(g), according to which an ‘investment agreement’ “means a written agreement between the national authorities … and … a national or company of the other Party that (i) grants rights with respect to natural resources or other assets controlled by the national authorities and (ii) the … national or company relies upon in establishing or acquiring an investment.”

Austria-Mongolia BIT 2001, Art. 8(2)(a). See also Croatia-Mongolia BIT 2006, Art. 10(2)(b). The prevailing view seems to be that there is no exhaustion-of-local-remedies requirement where the host State has consented to investment treaty arbitration by virtue of an investor-State dispute settlement provision in an international investment treaty (see also, e.g., Dolzer and Schreuer, Principles of International Investment Law (Oxford University Press, 2nd ed., 2013) 264).

Emphasis added.

Including, for example, claims arising in connection with rights conferred upon foreign investors by domestic laws or exclusive investor-State contracts. See also infra at 4.​5.​5.​2.

See Finland-Mongolia BIT 2007, Art. 9(3); Israel-Mongolia BIT 2003, Art. 8(4); Japan-Mongolia BIT 2001, Art. 10(5).

Alstom Power Italia SpA and Alstom SpA v. Republic of Mongolia (Settlement) (ICSID Case No. ARB/04/10) (‘Alstom Power Italia v. Mongolia’).

Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. The Government of Mongolia (Award on Jurisdiction and Liability) (UNCITRAL, 28 April 2011) (‘Paushok v. Mongolia’). See also the case discussion supra at 2.4.2.2 (“Overview of Content and Application”), 2.4.2.3 (“Principles of protection commonly associated with fair and equitable treatment”), 2.4.2.4 (“Overview of content and application”) and infra at 4.​3.​1.​2 and 4.​5.​5.​1.

Law on Imposition of Price Increase (Windfall) Taxes on some Commodities 2006, published in the Official State Journal, Töriin Medeelel, 2006 No. 20.

In November 2008, the Parliament of Mongolia raised the WPT law threshold to USD 850. In August 2009, it repealed the WPT law with effect from 2011.

See especially infra at 4.​3.​1.​2.

In rejection of the investors’ claim, the Paushok Tribunal examined domestic decisions of the Capital Administrative Court of Mongolia and the cassation instance of the Mongolian Supreme Court concerning the investors’ appeal against the State’s tax assessments. See Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 622 et seq.

Paushok v. Mongolia, Award on Jurisdiction and Liability, 28 April 2011, para. 370. On tax-rate-stability certificates issued under the 2013 Mongolian Investment Law, see infra at 3.​2.​4.​2. On the implementation of stabilisation clauses in investor-State contracts (with the Mongolian Government), see infra at 4.​3.​1.​3 and 4.​4.​1.

China Heilongjiang International Economic & Technical Cooperative Corp., Beijing Shougang Mining Investment Company Ltd., and Qinhuangdaoshi Qinlong International Industrial Co. Ltd. v. Mongolia (UNCITRAL) (‘China Heilongjiang v. Mongolia’).

China-Mongolia BIT 1991, Art. 8(3) (emphasis added). See already supra at 2.4.3.4 (“Narrow Dispute Settlement Provisions in International Investment Treaties”).

See also Chaisse, ‘The Regulation of Trade-Distorting Restrictions in Foreign Investment Law’, in Hermann and Terhechte (eds.) 2012 European Yearbook of International Economic Law (Springer, 2012) 159, 185 (noting that controversies over matters other than the amount of compensation for expropriation, “such as the existence of expropriation itself, or breaches of treatment obligations, were to be settled in domestic courts.”) (emphasis added). Similarly: Cymrot, ‘Investment Disputes with China’ (2006) 3 DRJ 80, 83; Xiao, ‘Chinese BITs in the Twenty-First Century: Protecting Chinese Investment’, in Chaisse and Gugler (eds.), Expansion of Trade and FDI in Asia: Strategic and Policy Challenges (Routledge, 2011) 122, 131. On the question of whether the BIT’s narrow dispute settlement provision can be circumvented by entering into contractual arbitration agreements with the host State, see infra at 4.​4.​3.​3 (“Claims in Relation to International Investment Treaties”).

Ibid., para. 28 (emphasis in the original). See also ibid., para. 31: “An investor seeking an award of compensation under Article 10 may thus face more than one conceptual building block. It may face a disagreement as to quantification. But it may also (or only) face a challenge as to whether an obligation has arisen under Article 6. Such an obligation is the evident predicate to any amount being ‘due’ and thus the object of the type of debate allowed under Article 10. The existence of the basic predicate of a remedy under Article 10 cannot be deemed outside the purview of a tribunal constituted under that very Article. Russia correctly observes that ‘international courts and tribunals must decline jurisdiction over prerequisite cognate issues that are outside the bounds of the parties’ consent’ … But this principle does not apply here. It is precisely Article 10 that defines the bounds of the State-parties’ consent. The present Tribunal is both empowered and obligated to construe the scope of authority thereby created.”

See Russia v. GBI 9000 SICAV (Swedish Court of Appeal, Judgment, 18 January 2016). An unofficial English language translation is available at: <http://​www.​arbitration.​sccinstitute.​com/​Views/​Pages/​GetFile.​ashx?​portalId=​89&​cat=​79572&​docId=​2629145&​propId=​1578> last accessed 11 May 2017. Additionally, Russia initiated set-aside proceedings.

Ibid. See also Tza Yap Shum v. Peru, Decision on Jurisdiction, 19 June 2009, para. 151: “El Tribunal hace referencia, primero, a las palabras específicas utilizadas por el inciso tercero del Artículo 8. El APPRI utiliza la palabra ‘involucra’ que … significa ‘abarcar, incluir, comprender’. Una interpretación de buena fe de estas palabras indica que el único requisito establecido en el APPRI reside en que la controversia debe ‘incluir’ la determinación de un monto de la compensación y no en que la controversia deba estar restringida a este elemento. Obviamente se encontraban otras formulaciones disponibles tales como: ‘limitado a’ o ‘exclusivamente’, pero el lenguaje utilizado de esta disposición dice ‘involucra’.”

See already supra at 2.4.3.3 (“(Pre-) Conditions of Investment Treaty-Based Investor-State Arbitration”).

Sanum v. Laos, Award on Jurisdiction, 13 December 2013, para. 332 (emphasis added). Similarly: Tza Yap Shum v. Peru, Decision on Jurisdiction, 19 June 2009, para. 154 et seq. The China-Mongolia BIT’s expropriation clause does only refer to expropriation ‘against compensation’ rather than ‘appropriate and effective compensation’ (see China-Mongolia BIT 1991, Art. 4(1)).

See supra at 2.4.2.5 (“Overview of Content and Application of the Standard”).

Khan Resources Inc., Khan Resources B.V., and Cauc Holding Company Ltd. v. The Government of Mongolia (Award) (UNCITRAL, 2 March 2015) and Khan Resources Inc., Khan Resources B.V., and Cauc Holding Company Ltd. v. The Government of Mongolia (Decision on Jurisdiction) (UNCITRAL, 25 July 2012) (‘Khan Resources v. Mongolia’).

Foreign Investment Law 1993, published in the Official State Journal, Töriin Medeelel, 1993 No. 4–5, as amended on 3 January 2002 (‘Foreign Investment Law 2002’). See also infra at 3.​2.​1.​2.

Emphasis added.

Emphasis added.

See insofar the analysis infra at 4.​4.​3.​3 (“Claims in Relation to Domestic Laws”).

See Khan Resources v. Mongolia, Decision on Jurisdiction, 25 July 2012, para. 436: “Foreign Investment Law claims fall within the broad scope of [the arbitration clause], as they, like the breach of … international obligations claims … arise out the relationship between the Parties defined by the [investment contract].” See also Trevino, ‘As Jurisdictional Decision Surfaces in Mongolia Case, Light is Shed on Reading of Local Investment Statute and Energy Charter Umbrella Clause’ on IAReporter (15 May 2015): “[T]he tribunal, in a terse paragraph, concluded that the contract expressed the consent … to arbitrate customary international controversies.”

Above all, the Tribunal rejected, as unproven and/or immaterial, alleged breaches of laws by storing radioactive materials in protected areas, violating radiation protection and safety rules, the non-registering of uranium reserves explored with the State, and by offering investment shares in the Toronto Stock Exchange contrary to the obligation of trading no less than 10% of shares at the Mongolian Stock Exchange. See Khan Resources v. Mongolia, Award, 2 March 2015, para. 319 et seq.

See infra at 4.​4.​2 on the application of umbrella clauses in international investment treaties to legal promises and guarantees by the host State in domestic laws. See also Trevino and Peterson, ‘A Look inside the Liability and Damages Holdings in the Khan Resources v. Mongolia Uranium Arbitration’ on IAReporter (12 May 2015) (noting that “the Tribunal also held, in a terse fashion, that the respondents were liable … under … the umbrella clause”).

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 UNTS 38 (‘New York Convention’).

On the international obligation to enforce awards rendered by arbitral tribunals operating under the ICSID Convention, see immediately below at 2.5.2.1.

UNCITRAL Model Law on International Commercial Arbitration 1985, printed in (1985) 24 ILM 1302, with amendments as adopted in 2006, available at: <http://​www.​uncitral.​org/​uncitral/​en/​uncitral_​texts/​arbitration/​1985Model_​arbitration.​html> last accessed 11 May 2017 (‘UNCITRAL Model Law on International Commercial Arbitration 2006’), Art. 35(1): “An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36 [grounds for refusing enforcement].”

Emphasis added. The same conditions are often set out by domestic arbitration laws (see UNCITRAL Model Law on International Commercial Arbitration 2006, Art. 36(1)). On the legal capacity of the Mongolian Government to enter into arbitration agreements with private individuals, including foreign investors, and the validity of (contractual) investor-State arbitration agreements under Mongolian law, see infra at 4.​4.​3.

Emphasis added. On the arbitrability of investor-State contracts under the domestic laws of Mongolia, see infra at 4.​4.​3.

See already the discussion supra at 2.4.4.3.

Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965, 575 UNTS 159 (entered into force 14 October 1966) (‘ICSID Convention’).

For an overview of the enforcement of arbitral awards rendered in investor-State arbitrations, see, e.g., Kröll, ‘Enforcement of Awards’, in Bungenberg, et al. (eds.), International Investment Law: A Handbook (C.H. Beck, Hart Publishing, Nomos, 2015) 1482.

On the annulment of awards rendered by arbitral tribunals operating under the ICSID Convention, see immediately below at 2.5.2.2.

Emphasis added.

See supra at 2.5.1.2.

See supra at 2.4.2.3 (“Evaluation of International Investment Treaties”).

The 2015 Japan-Mongolia EPA introduced a fair-and-equitable treatment clause.

On the consequences, see infra at 4.​5.​5.​2.