To date, lack of compliance with awards has not been a major issue in investor-state treaty arbitration. States, with few exceptions, have paid the monetary compensation ordered by arbitral tribunals. As a result, discussion as to what can be done in case of lack of compliance has been very limited. This panel, however, takes place at a time of growing interest in this topic.
One catalyst has been Argentina's failure in recent years to comply with at least three awards rendered in favor of U.S. investors under the United States-Argentina Bilateral Investment Treaty and the prospect of U.S. government action to put pressure on Argentina to pay. Action has actually taken place just this week. On March 26, 2012, the decision by President Obama to suspend Argentina, for failure to enforce arbitral awards, from the Generalized System of Preferences (GSP) program was announced. This decision illustrates the role that sanctions may be called to play in international investment law in the future.
This lone (if striking) example raises a number of issues to be addressed in the panel that transcend the Argentine situation and are of systemic importance. They include:
--What can the International Centre for Settlement of Investment Disputes (ICSID) do when a state fails to enforce an award?
--What is the role of "diplomatic protection" by the home state of the investor in case of failure to abide by and comply with an award (as provided in Article 27 of the ICSID Convention)?
--What types of "sanctions" are compatible with the international investment law regime and its primary reliance on the award of monetary damages?
--What can be learned from the imposition of sanctions in other regimes, such as trade law?
--What can be learned from other sanction-based regimes, such as the World Bank Group Sanctions Board?
--What are alternatives to the imposition of sanctions to encourage compliance with awards (including "naming and shaming" and state-state dispute settlement)?