State consent, temporal jurisdiction, and the importation of continuing circumstances analysis into international investment arbitration.

• Published date: 22 September 2011
• Author: Blanchard, Sadie
• Date: 22 September 2011

ABSTRACT

The international investment law regime has recently been characterized as facing a "crisis of legitimacy" and exhibiting "an incumbent lack of transparency ... and legal uncertainty." This crisis has arisen in large part from poor reasoning and real or perceived overreach by international investment tribunals, who derive their jurisdictional competence from the consent of states and private investors. To bolster the perceived fairness and thereby the authority of their decisions, investment tribunals must be vigilant about clearly stating their reasoning and explicitly grounding their legal analyses in the relevant treaties. In jurisdictional decisions, respect for the limits of parties' consent to arbitrate must be a fundamental concern of arbitrators.

Investment tribunals frequently face disputes involving continuing acts, facts, and situations that appear to have begun before the relevant treaties entered into force and continued after that point. When addressing such matters, tribunals have borrowed analyses of similar issues from outside international investment law. Thus, the question arises whether this borrowing is appropriately used to determine jurisdiction based on a particular investment treaty with a specific jurisdictional consent clause. Of particular concern is investment tribunals' adoption of human rights jurisprudence that uses continuing violations to expand temporal jurisdiction.

This paper will examine how investment tribunals have incorporated continuing circumstances analysis from human rights and other adjudicatory bodies. It will evaluate whether it is ever possible for investment arbitrators to appropriately use such "precedent" in their jurisdictional analyses and whether they have applied it correctly in particular awards. Continuing circumstances issues arise under two different categories of temporal restrictions, each serving distinct purposes. The first category of restrictions excludes from jurisdiction acts, facts, situations, or disputes occurring before the treaty entered into force. The second category of restrictions prescribes a limited time after breach within which a party can bring a particular claim. To determine whether continuing circumstances analysis has been and can be properly applied in investment arbitration, one must consider the specific language and purpose of the relevant treaty's temporal limitations. Thus, this Article examines the two types of restrictions separately, considering their purposes and examining in detail how international tribunals have analyzed continuing circumstances under each.

TABLE OF CONTENTS
                I. INTRODUCTION
                II. CONSENT: THE BASIS OF INVESTMENT TRIBUNAL JURISDICTION
                III. JURISDICTION OVER ACTS OCCURRING BEFORE ENTRY INTO FORCE
                 OF THE RELEVANT TREATY
                 A. The Rule Against Retroactivity of Treaties
                 B. Unless a Different Intention Appears: Four Categories of
                 Temporal Limitations in Consent Provisions
                 C. The Origin of Continuing Circumstances Outside Human
                 Rights Jurisprudence
                 D. Further Development of Continuing Circumstances Analysis
                 Human Rights Jurisprudence
                 E. Continuing Circumstances and Pre- Treaty Acts and Disputes
                 in Investment Arbitration
                 1. Arbitral Decisions Based on Unrestrictive BITs
                 2. Arbitral Decisions Based on Single Exclusion Clauses
                 3. Arbitral Decisions Based on Subject Matter Exclusion
                 Clauses
                 F. Should Arbitral Tribunals Borrow Continuing Circumstances
                 Analysis When Deciding on Jurisdiction Over Pre-BIT
                 Circumstances
                IV. EXPANSION OF THE PERIOD OF LIMITATION THROUGH CONTINUING
                 CIRCUMSTANCES
                 A. The Doctrine of Extinctive Prescription and Periods of
                 Limitation
                 B. The History of Derogations from Extinctive Prescription and
                 Periods of Limitation
                 C. Derogation from the Period of Limitation in Human Rights
                 Law
                 D. Continuing Violations and the Period of Limitation in
                 Investment Arbitration
                 E. Should Investment Arbitral Tribunals Borrow Continuing
                 Circumstances Analysis to Overcome the NAFTA Period of
                 Limitation
                V. CONCLUSION
                

I. INTRODUCTION

The international investment law regime has recently been characterized as facing a legitimacy crisis (1) and exhibiting "an incumbent lack of transparency, differentiation, partial contradiction and legal uncertainty." (2) This crisis has arisen in large part from poor reasoning and real or perceived overreach by international investment tribunals, whose jurisdictional competence is based completely on the consent of states and private investors. (3) In carefully negotiated and drafted agreements, states limit the categories of disputes they consent to submit to jurisdiction. For example, temporal limitations may exclude ongoing disputes or future disputes based on pre-treaty events. To bolster the authority and perceived fairness of their decisions, investment tribunals should clearly state their reasoning and explicitly ground their analyses in the relevant treaty. Clear reasoning and express basis in the relevant treaty are particularly important in jurisdictional decisions to demonstrate respect for the limits states set on their consent to arbitration.

Temporal jurisdiction has long been a source of contention between states in international adjudication. The language of temporal jurisdiction provisions is often ambiguous. Additionally, ongoing acts, facts, and situations--that is, "continuing circumstances" (4)--present difficulties. Parties to arbitration often dispute whether a continuing circumstance is within the tribunal's jurisdiction. Disagreements also arise over whether a circumstance is in fact continuing or instead, whether a series of individual situations or disputes has occurred, some within jurisdiction and others outside. International tribunals have faced such questions for over a century and have developed a jurisprudence of continuing circumstances.

International investment tribunals have invoked continuing circumstances analysis developed in other areas of international law to find that they have jurisdiction over acts that appear on their face to have occurred outside the temporal scope of the relevant treaty. They have also used continuing circumstances analysis to find that they do not have jurisdiction when they might at first appear to. Given the importance of respecting the limits of consent to arbitration, the question arises whether it is appropriate for investment arbitration tribunals to apply continuing circumstances analysis from outside international investment law. (5) Particular concerns have been raised about investment tribunals' adoption of human fights jurisprudence that uses continuing violations to expand temporal jurisdiction. (6)

This Article will examine how investment tribunals have incorporated continuing circumstances analysis developed by human rights and other adjudicatory bodies and will evaluate whether this incorporation has been executed appropriately. It will also evaluate whether it is ever legitimate for investment tribunals to incorporate such "precedent" into their jurisdictional analyses. Continuing circumstances issues arise under two categories of treaty provisions restricting jurisdiction, each serving distinct purposes. One category of provisions excludes from jurisdiction acts, facts, situations, or disputes occurring before the treaty entered into force. The other category of provisions prescribes a limited time after a breach within which a party can bring a particular claim. To determine whether continuing circumstances analysis has been and can be properly applied in investment arbitration, the purpose of the underlying treaties' temporal restrictions must be considered. Therefore, this Article examines the two types of restriction separately, considering their purposes and examining in detail how international tribunals have analyzed continuing circumstances under each.

This Article proceeds as follows. Part II discusses the consensual basis of investment arbitration and identifies legal authority for arbitrators' use of sources of law outside the relevant investment treaty for interpretative guidance. Part HI examines continuing circumstances under treaty provisions that exclude from jurisdiction facts, acts, situations, or disputes that began before the treaty entered into force. Part IV examines continuing circumstances as they interact with treaty-mandated periods of limitation. Part V concludes by discussing the legitimacy crisis in international investment law and proposing a principle to guide investment arbitrators in the proper use of outside sources of law to interpret jurisdictional consent clauses.

II. CONSENT: THE BASIS OF INVESTMENT TRIBUNAL JURISDICTION

Tribunals convened under the International Centre for Settlement of Investment Disputes (ICSID), which hear most investor-state arbitrations, obtain jurisdiction by consent of the state and investor parties to the arbitration, as specified in Article 25 of the International Convention on the Settlement of Investment Disputes (ICSID). (7) To grant an ICSID-sanctioned tribunal jurisdiction over a dispute, a state must have agreed, in addition to signing the ICSID Convention, to submit the specific dispute or a class of disputes. (8) The instrument of consent may be a bilateral investment treaty (BIT) (most commonly), a multilateral treaty, or an agreement between a State and an individual investor. (9) Nothing in the ICSID Convention prevents parties from circumscribing their consent to a subset of disputes, and parties often do limit their consent in this way. Many investment treaties limit consent to arbitration to disputes arising after the treaty's entry into force, (10) or--even more restrictively--to disputes based on factual circumstances arising after the treaty's entry into force. (11)

Under the principle of consent, a tribunal should seek to ascertain and apply the shared intention of the parties to the relevant agreement regarding what disputes are within the tribunal's jurisdiction. As...