'Abuse of Process' in Investment Treaty Arbitration

in The Journal of World Investment & Trade
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'Abuse of Process' in Investment Treaty Arbitration

in The Journal of World Investment & Trade

References

  • 2 Phoenix Action Ltd. v. the Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009; Europe Cement Investment & Trade v. Republic of Turkey, 1(:six) Case No, ARB (AF)/07/2, Award, 13 August 2009; Cementownia "Nowa Huta" S.A. v. Republic of Turkey, ICSID Case No. ARB (AF)/06/2, Award, 17 September 2009. 3 interim Report: "Res Judicata" and Arbitration, International Law Association, Berlin Conference (2004) ("Im Interim Report"), pp. 11,25; the Interim Report also suggests that "it is generally assumed that arbitral tribunals do not apply any principle akin to abuse of process", at p. 22.

  • 4 Toronto (City) v. C.U.P.E., Local 7, [2003] 3 S.C.R. 77 and Canam Enterprises Inc. v. Coles [2000], 51 O.R. (3d) 481 (C.A.). 5 [1990J 3 S.C.R. 979. 6 Ibid., at p. 1007. 7 Rogers v. The Queen [1994J Hca 42. 8 Ibid. 9 Attorney General v. Baker [2000] The Times, 7 March 2000. 10 ILA Interim Report, p. 12. n Rosen v. American Bank of Rolla, 627 A.2d 190, 192 (Pa. Super. Ct. 1993) (quoting Restatement (Second) of Torts § 682). 12 Kendra v. Nazareth Hosp., 868 F. Supp. 733, 738 (E.D. Pa. 1994) (citing Shaffer v. Stewart, 473 A.2.d 1017, 1019 (Pa. Super. Ct. 1984). tj See e.g., Lindsay v. Jenkins, 574 N.E. 2d 324, 326 (Ind. Ct. App. 1991). ). 14 M Byers, Abuse of Rights, an Old Principle a New Age, McGill Law Journal, 2002, at 392-393. �5 See e.g., Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals (Oxford University Press, 2003) at 255-260.

  • 16 Byers, op. cit. Free translations: Art. 1382. C. civ reads: "Tout fait quelconque de l'homme, qui cause a autrui un dommage, oblige celui par la faute duquel il est arrivé à Ie reparer." Art. 1383. C. civ reads: "Chacun est responsable du dommage qu'il a cause non seulement par son fait, mais encore par sa negligence ou par son imprudence." 18 Ibid. Free translation; art. 32.1 C pro civ reads, "Celui qui agit en justice de maniere dilatoire ou abusive peut etre condamnc a one amende civile d'un maximum de 3 000 euros, sans prejudice des dommages-interets qui seraient reclames" Civ, 3e, 3 mars 1981: Jcp 1981. m. 181; the case concerned a plaintiff who failed to obtain a desired judgment in a previous proceeding and thus institutes a new action with vindictive purpose and malice in the form of a vexatious proceeding against his former tenant. Cov. ler, l9jui11. 1977: Bull. civ. 1, n°342; the case concerned plaintiffs who initiated an action in bad faith and with malicious intent. 22 H.C. Gutteridge, "Abuse of Rights" (1935) 5 Cambridge L.J. 22 at 31-35. 23 Vaughan Lowe, Overlapping Jurisdiction in International Tribunals, Avsa, Volume 20, 1999, at 203. z4 Ibid., p. 202.

  • ZS Zimmermann et al, The Statute of the International Court of Justice: a Commentary, Oxford University Press 2006, p. 831; the question of whether abuse of process ought to be considered as a procedural manifestation of the abuse of rights doctrine in investor-State disputes will be discussed later in this article. 26 Phoenix Action Ltd. v. the Czech Republic, ICSID Case No. ARH/06/5. Award, 15 April 2009; Europe Cement Investment & Trade v. Republic of Turkey, ICSID Case No. ARE (AF)/07/2, Award, 13 August 2009; Cementownia "Nowa Huta" S.A. v. Republic of Turkey, Icsm Case No. Aim (AF)/06/2, Award, 17 September 2009. 27 Rompetrol Group NV v. Romania, ICSID Case No. ARB/06/03, Decision on Respondent's Preliminary Objections on Jurisdiction and Admissibility, 18 April 2008. 21 Ibid., para. 115. Indeed, this appeared to be the Tribunal's starting point in Europe Cement, but no specific analysis of the ECT or the ICSID Convention, Regulation or Rules seems to follow in the Tribunal's analysis.

  • z9 Ibia. 3o United Nations Convention on the Law of the Sea of 10 December 1982; see also Article 96 of the Rules of the Tribunal, ITLOS/8. 31 Convention for the Protection of Human Rights and Fundamental Freedoms, 213 U.N.T.S. 222, entered into force Sept. 3, 1953, as amended by Protocols Nos 3, 5, 8, and 11 which entered into force on 21 September 1970, 20 December 1971,1 January 1990, and 1 November 1998 respectively. 3z Arbitral Award of 31 July 1989, Judgment, LC.J. Reports 1991. 33 Ibid. para. 27. 3^ Verbatim Record of a public sitting held on Tuesday 12 November 1991, at 10 a.m., at the Peace Palace in the case conceming Certain Phosphate Lands in Nauru (Nauru v. Australia).

  • 35 Ibid., at 37. 3� Verbatim Record of a public sitting held on Friday 15 November 1991, at 10 a.m., at the Peace Palace in the case concerning Certain Phosphate Lands in Nauru (Nauru v. Australia), at 42. 37 Certain Phosphate Lands in Nauru (Nauru v. Australia), Preliminary Objections, Judgment, I.C.J. Reports 1992, at 255, para. 38; in Case concerning the Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Rwanda), Counsel for Congo treated the first sentence of para. 38 of the Court's judgment as constituting the test for determining whether there was an abuse of Court's process (Verbatim Record of a public sitting held on Tuesday, 5 July 2005, at 10 a.m., at the Peace Palace in the case concerning Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Rwanda), p.42). 38 Verbatim Record of a public sitting held on Thursday 19 June 2008, at 3 p.m., at the Peace Palace in the case concerning the Request for Interpretation of the Judgment of 31 March 2004 in the Case concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mexico v. United States of America). 39 Verbatim Record of a public sitting held on Thursday 19 June 2008, at 3 p.m., at the Peace Palace, in the case concerning the Request for Interpretation of the Judgment of 31 March 2004 in the Case concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mexico v. United States of America), at 50 paras. 19-20; the text in italics is taken from Zimmerman, op. cit., 830.

  • ^° Verbatim Record of a public sitting held on Thursday 19 June 2008, at 3 p.m., at the Peace Palace in the case concerning the Request for Interpretation of the Judgment of 31 March 2004 in the Case concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mexico v. United States of America), para. 13 (footnote omitted). 41 Ibid., para. 27. 4z Ibid., para. 28. 43 Request for Interpretation of the Judgment of 31 March 2004 in the Case Concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mexico v. United States of America), Order of 16 July 2008, para. 32. 44 Zimmermann. op. cit., p. 831. ^5 Judge Rosalyn Higgins, as she was then, observed: [t]hc Court's inherent jurisdiction derives from its judicial character and the need for powers to regulate matters connected with the administration of justice, not every aspect of which may have been foreseen in the Rules" (Legality of Use of Force (Serbia and Montenegro v. United Kingdom), Preliminary Objections, Judgment, I.C.J. Reports 2004, 1359, para. 10.); Judge Weeramantry referred to the Court's "undoubted power to regulate its procedure" (Sovereignty over Pulau Ligitan and Pulau Sipadan (Indonesia/Malaysia), Separate Opinion, LC.J. Reports 2001).

  • ;� Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals, Cambridge University Press, Reprinted Edition, 2004, at 129. 47 Yuval Shany, The Competing Jurisdictions of International Courts and Tribunals, Oxford University Press 2005, at 255-260. 48 WTO Appellate Body - Decision WT/DS58/AB/R of 12 December 1998 - US Import prohibition of certain shrimps and shrimps products, para. 158.

  • 11 The only other authorities cited by the Tribunal were a reference to restrictions on State rights in Hersch Lauterpacht's classic work. Development of International Law by the International Court (1958), and a dictum in the IesW case, Amco Asia Corporation v. Indonesia (Amco Asia Corporation and others v. Republic of Indonesia, ICSID Case No. AR.B/81/1, Decision on Jurisdiction. September 25, 1983, para, 14), concerning good faith in the interpretation of treaties in circumstances where the Tribunal rejected the Respondent's "doubts" on its jurisdiction, finding that the requirements of Article 25 at the ICSID Convention were fulfilled in that case. so Chevron Corporation and Texaco Petroleum Corporation v. the Republic ofEcuador, UNCITRAL Interim Award, 1 December 2008, para. 143; Phoenix Action Ltd. v. the Czech Republic, ICSID Case No. Atzs/06/5, Award, 15 April 2009, para. 143; Cementownia 'Nowa Huta' S.A. v. the Republic of Turkey, ICSID Case No. ARB (AF)/06/2, Award, 17 September 2009, para. 158. e Phoenix Award, para 113. s= In World Duty Free Company Ltd v. Kenya, 1(:.�ID Case No. Arb/00/7, Award, 25 September 2006, the Tribunal held that the claimant: "is not legally entitled to maintain any of its pleaded claims in these proceedings as a matter of ordre public international and public policy under the contract's applicable laws." (para. 188) The Tribunal did not specifically refer to abuse of process in arriving at its decision and it would not appear to have been pleaded.

  • 53 Phoenix Award., para. 140. sa Ibid., para 142. ss Idem. 56 lnceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. Ans/03/26. 57 Phoenix Action, para 143.

  • 5R Ibid., paras 142-144. s9 (ICSID Case No. Ann/07/27, Decision on Jurisdiction, 10 June 2010. 60 Ibid., para. 205. It is strongly arguable that the claims in question could have been dismissed on the basis that the Tribunal enjoyed no jurisdiction ratiotie rnaterine to hear such claims without having to invoke the abuse of process doctrine. 61 Europe Cement Investment & Trade v. Republic of Turkey, (ICSID Case No. ARB (AF)/07/2, Award, 13 August 2009.

  • Europe Cement Investment & Trade v. Republic of Turkey, ICSID Case No. ARt3 (AF)/07/2, Award, 13 August 2009. 63 Ibid., para. 171 (footnotes omitted). 64 Ibid., para. 176.

  • 65 Cementownia 'Nowa Huta' S.A. v. the Republic of Turkey, ICSID Case No. A� (AF)/06/2, Award, 17 September 2009. fifi Ibid., para. 116. 67 Ibid., para. 153 (referring to Methanex Corporation v. United States of America, a NAFTA Chapter 11 case under the UNCITRAL Arbitration Rules, Final Award, Part II - Chapter I, para. 54); this language is also reminiscent of the submissions on behalf of the United States in the Case concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mexico v. United States of America) (see section m. B., supra).

  • '■" Ibid., para 156. 69 Ibid., para. 157; a finding or at least declaration that the Tribunal in European Cement declined to make. 70 Although it would appear to have acceded to that request in so far as it constituted a declaration that the claimant filed a fraudulent claim before ICSID. Op. cit., paras 162-163. 'z Atlantic Triton v. Guinea, Award, 21 April 1986, 3 ICSID Reports 17. '3 Ronald S. Lauder v. the Czech Republic, UNCITRAL Final Award of 3 September 2001, paras 176 et seq. " Ibid. 75 CME Czech Republic B.V. (the Netherlands) v. the Czech Republic, UNCITRAL Partial Award of 13 September 2001, para. 409 et seq. 76 Waste Management, Inc. v. United Mexican States, ICSID Case No. AM (AF)/00/3, Decision on Mexico's Preliminary Objection Concerning the Previous Proceedings, 26 June 2002, para. 48 et seq; the Tribunal observed obiter that it believed it "appropriate" to apply the same approach adopted by the International Court ofJustice in the Nauru case, i.e., to consider whether the claim "has been properly submitted [by the claimant] in the framework of the remedies open to it." �� Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. AnB/03/29, Decision on Jurisdiction, 14 November 2005, para. 165 et seq.

  • �s Saipem S.p.a. v. the People's Republic of Bangladesh, lcs!D Case No. AR.B/05/07, Decision on Jurisdiction and Recommendation on Provisional Measures, 21 March 2003, para. 154 et seq. �y Pan American Energy Lt and BP Argentina Exploration Company v. the Argentine Republic, ICSID Case No. ARB/04/8, Decision on Preliminary Objections, 27 July 2006, paras. 177-180. "" The Rompetrol Group N.V. v. Romaaa, ICSID Case No. Aan/06/3, Decision on Respondent's Preliminary Objections on Jurisdiction and Admissibility, 18 April 2008, para. 115. 81 Chevron Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, UNCITRAL Interim Award, 1 December 2008, paras 136 et seq. s= Mobil Corporation and others v. Bolivarian Republic of Venezuela, ICSID Case No. APB/07/27, para. 205. 83 It is outside the scope of this paper to consider these decisions in detail. No doubt a detailed analysis of these cases would contribute to the scholarship in this area.

  • 8' Schreuer et al, The ICSID Convention: a Commentary, Cambridge University Press 2009, paras. 41-57, pp. 527-32; for a criticism of this analysis see Jan Paulsson, Jurisdiction and Admissibility, in Global Reflections on Intemational Law, Commerce and Dispute Resolution, Liber Amicorum in honour of Robert Briner, Icc Publishing, Publication 693, November 2005, p. 608.

  • H5 Ronald S. Lauder v. the Czech Republic, UNCITRAL Final Award of 3 September 2001, para. 419; the Tribunal in Chevron left open the question of whether abuse of process was a jurisdictional or an admissibility issue or indeed a defence for the merits (Interim Award, para. 137). 8(1 See e.g., Case concerning Certain Phosphate Lands in Nauru (Nauru v. Australia) and Case concerning the Request for Interpretation of the Judgment of 31 March 2004 in the Case concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mexico v. United States of America). a� See e.g., Case concerning the Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Rwanda). 11 Andrew Newcombe, Investor misconduct and investment treaty arbitration: Mapping the terrain, Kluwer Arbitration Blog, http://kluwerarbitranonblog.com/blog/2010/01/25/investor-misconduct-and-investment-treaty- arbitration-mapping-the-terrain/(last viewed on June 2, 2010). Newcombe expands on this analysis in subsequent postings to the Kluwer Arbitration Blog. 89 Ibid. 9o Ibid.; Newcombe states that "It might also be noted that viewing investor misconduct as a jurisdictional issue has two further implications. If investor misconduct is jurisdictional, a state may be unable to bring a counterclaim to a merits determination. Second, upon review by either an IcsiD annulment committee or a national court, an arbitral award dismissing a case for lack of jurisdiction might be subject to a higher degree of review for failure to exercise jurisdiction compared to a review of an award where a tribunal dismisses the claim on the merits or on the basis of substantive inadmissibility." 91 Paulsson, Jurisdiction and Admissibility, in Global Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in honour of Robert 13riner, Icc Publishing, Publication 693, November 2005, p. 603. 1)2 Ibid., at 603.

  • v3 Ibid., at 616, n. 47 (emphasis in original). 94 Ibid., at 617 (footnote omitted) (emphasis added). 9S Whilst the characterisation of the objection (of abuse of process) may be influenced by the manner in which it is pleaded, it is suggested that an investment treaty tribunal will be well served by adopting a critical view of the moving party's submission. vb It is suggested that investment treaty tribunals ought to address abuse of process objections in the order of jurisdiction, first, and admissibility, second. In other words, once it is established that the parties have consented to the jurisdiction of the ICSID tribunal, matters of admissibility may be considered, but not before.

  • '�� The Rompetrol Group N.V. v. Romania, ICSID Case No. ARB/06/3, Decision on Respondent's s Preliminary Objections on Jurisdiction and Admissibility, 18 April 2008; Chevron Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, (UNCITRAL Interim Award, 1 December 2008. 98 Rompetrol, op. cit., para. 115 (emphasis added); cited with approval in Chevron v. Ecuador, op. cit., para. 146. 99 Chevron Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, UNCITRAL Interim Award, 1 December 2008, para. 147.

  • 100 Zimmermann, op. cit., 831. 101 Chevron Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, UNCITRAL Interim Award, 1 December 2008, para. 144. 102 Chevron Corporation and Texaco Petroleum Corporation v. the Republic of Ecuador, UNCITRAL Partial Award on the Merits, 30 March 2010. 103 Ibid., para. 354 �°4 Ibid., the Tribunal found in that case that the Claimant had not committed an abuse of process (section 1.3 of the Partial Award on the Merits). 105 Ibid., 607 (emphasis in original).

  • 106 Trans-Global Petroleum Inc. v. Jordan, ICSID No. ARB/07/25, Decision on Rule 41 (5) Objection, 12 May 2008. 107 Brandes Investment Partners LP v. Venezuela, ICSID Case No. Alut/08/3, Decision on Rule 41(5) Objection, 2 February 2009. 1IJH Ibid., para. 59. 109 Ibid., para. 61. 110 Phoenix Award, paras 148-152; Europe Cement, paras 182-186; Cementownia, paras. 175-178.

  • 111 Europe Cement, para. 185. 112 Cementownia, para. 162. Ibid., paras 171, 172.

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