This panel was convened at 10:45 a.m., Friday, March 25, by its moderator, Nassib G. Ziade of the International Centre for Settlement of Investment Disputes, who introduced the panelists: Rudolf Dolzer of the University of Bonn, Institute of International Law; Donald Francis Donovan of Debevoise & Plimpton LLP; Carolyn B. Lamm of White & Case LLP; and Loretta Malintoppi of Eversheds LLP.
INTRODUCTORY REMARKS BY NASSIB G. ZIADE *
It has become commonplace to preface the discussion of the topic of international investment arbitration by pointing out that it has rapidly gained prominence just in the last two decades. We continue to witness a proliferation of bilateral, regional, and multilateral investment treaties in the field. These have led to an attendant increase in the number of cases submitted to the International Centre for Settlement of Investment Disputes (ICSID)--which remains the premier investment treaty arbitration facility--but also to other arbitration institutions and to ad hoc arbitration.
As a reflection of the global reach of this field, we are also observing a diversification of its users, whether investors or states, not to mention third-party participants. The burgeoning caseload in the field has necessitated an expansion of the pool of arbitration specialists, whether arbitrators, counsel, or experts. As a result of the field's growing sophistication, procedural issues are becoming more complex, a point that will be reflected in the remarks of the speakers today.
The large increase in the number of investment treaty arbitration cases has contributed to a rapid development of international investment law, which is becoming a specialized field in itself. Universities are now offering courses on this topic. Conferences are increasingly featuring panels addressing this topic. If one has any doubts, one may simply consult the programs of the ASIL Annual Meetings from the last several years. In case of further doubts, one may check the number of conferences, panels, and speakers addressing this topic this week in Washington alone.
Today, we will hear presentations on four salient topics which will further contribute to the lively debate taking place, and which will no doubt show that there is harmony and dissonance within this specialized field of international law.
I will not attempt to link today's presentations to each other, except to say that they are all timely and will be presented by prominent experts.
Our first presentation will address the independence and impartiality of investment treaty arbitrators and will analyze the rapid growth in the filing of challenges and disqualification requests. To give but one example, there have been 51 proposals for disqualification of tribunal members filed at ICSID since the registration of its first case in 1972. Of these, 30 requests were filed only in the last four years. In addition to the challenges of arbitrators, a new phenomenon has emerged in recent times, namely the challenge of opposing counsel before arbitration tribunals. This phenomenon is not in itself regulated by express provisions in arbitration rules. One may ask whether the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration contain adequate responses to all questions surrounding challenges in this field.
Our second topic is on provisional measures, which are a common feature in international adjudication and international arbitration, including international investment treaty arbitration. Provisional measures are designed to preserve the respective rights of the parties appearing before a court or a tribunal, pending the final decision of that court or tribunal. In drafting Article 47 of the ICSID Convention, which concerns provisional measures, the drafters were clearly inspired by the corresponding provision in the Statute of the International Court of Justice (ICJ). As present and former members of the ICJ occasionally sit as members of ICSID arbitration tribunals, and as counsel and advocates before the ICJ also appear before ICSID tribunals or serve on them as arbitrators, it will be useful to examine whether decisions on provisional measures at these institutions have influenced each other's over the years.
Our third presentation covers the review of investment awards, and more particularly the ICSID annulment mechanism. The ICSID Convention allows the annulment of an ICSID award only under one or more of the limited and narrow grounds provided for in the ICSID Convention. The ICSID Secretariat, ICSID ad hoc committees, and commentators have consistently stressed the exceptional character of the annulment remedy. Successive ad hoc committees have further emphasized that annulment is different from appeal.
Our last topic concerns recent developments in the European Union relating to foreign investment. Under the Lisbon Treaty, which came into force in December 2009, the European Union acquired exclusive competence in several areas, including common commercial policy. Foreign direct investment is among the many components of "common commercial policy." This suggests that the European Commission will have exclusive competence to conclude bilateral investment treaties (BITs) with non-European countries. In this context, the European Commission in July 2010 issued a Communication as well as a Proposal for a Regulation establishing transitional arrangements for BITs between Member States and third countries.
NASSIB G. ZIADE, Deputy Secretary-General, International Centre for Settlement of Investment Disputes (ICSID); Visiting Professor at the University of Miami School of Law and at the University of Paris I Pantheon Sorbonne.
REMARKS BY LORETTA MALINTOPPI
If it is incumbent upon the parties to a given arbitration or the arbitral institutions carefully to select the arbitrators who will decide the dispute, it is the responsibility of the arbitrators to avoid any conflict of interest and even the appearance of impropriety. This may seem an uncontroversial truth, but the debate on the independence and the impartiality of arbitrators continues to be lively.
A review of recent challenge decisions made in investment arbitration cases shows that there are a number of questions that are central to the discussion. First, when it comes to "issue conflict" challenges, a new generation appears to have surfaced, one in which some challenges are based on academic opinions provided by arbitrators nominated by a party, which arguably show preconceived positions with regard to some of the central issues of the arbitration. An example is provided by the Urbaser v. Argentina arbitration where the Claimant argued that the views expressed by the arbitrator in certain publications on the legal question of the state of necessity and on most-favored-nation (MFN) provisions showed a preference or partiality for the position that Argentina would most likely have taken in the case. (1) However, the two unchallenged members of the Tribunal--who decided the disqualification--rejected the request. In their view, the arbitrator's publications did "not meet the threshold of presenting an appearance that he is not prepared to hear and consider each party's position with full independence and impartiality." (2)
A different permutation of the "issue conflict" challenges is represented by challenges made on the basis of "repeat appointments" of arbitrators, i.e., situations where the same individual is appointed by the same party---or by the same counsel representing different parties--in several cases. It is argued that the potential threat to the arbitrator's independence and impartiality in these cases is two-pronged: on the one hand, the fact that the same arbitrator is appointed more than once by the same party or counsel may lead to procedural inequalities because the arbitrator may be privy to information that the other members of the tribunal do not have. In addition, this kind of situation may also indicate a close connection between the same individuals---or between the arbitrator and a particular party--and suggest the existence of potential bias, as the arbitrator may be more inclined to rule in favor of the party to whom he/she "owes" the appointment.
An example of this type of challenge is offered by the ICSID case Tidewater v. Venezuela, where the Claimant also sought to disqualify an arbitrator who had not disclosed prior appointments by the party that nominated her, Venezuela, and by the law firm representing Venezuela. (3)
The challenged arbitrator argued that information in the public domain, such as the composition of ICSID tribunals, does not need to be disclosed. The two non-challenged arbitrators deciding on the challenge disagreed with that position and held that arbitrators should disclose appointments made by the same party (or an affiliate) since not all these appointments are necessarily in the public domain. Nevertheless, in recognition of the fact that the composition of tribunals is made public and is readily accessible in the ICSID system, the two members of the Tribunal stressed that any disclosure in this regard should be made "out of an abundance of caution," (4) presumably in order to avoid even the appearance of impropriety.
The unchallenged arbitrators in Tidewater emphasized two points: (1) repeat appointments should not automatically be read as "an indication of justifiable doubts about" an arbitrator's independence and impartiality, but may in fact result from the arbitrator's independence and impartiality; (5) and (2) an arbitrator should not necessarily be disqualified because he/she "was exposed to similar legal or factual issues in concurrent or consecutive arbitrations." (6) The two members agreed with the rulings in other cases that if such disqualification requests were automatically to be accepted, "investment and commercial arbitration would become unworkable." (7)
One example that stands on its own...