R. Dolzer and M. Stevens, BilateralInvestmentTreaties, The Hague, 1995, p. 49; C. Schreuer, TheICSIDConvention:ACommentary, Cambridge, 2001, p. 130. InceysaI�allisoletanaS.L.v.RepublicofElSalvador(Inceysa), Award, 2 August 2006, available at: http://ita.law.univic.ca/documents/Inceysa Vallisoletana_en_OOO.pdf FraportAGFrankfurtAirportServicesWor(du.idev.RepublicofthePhilippines(Fraport), Award, 16 August 2007, available at: http://ita.law.univic.ca/documents/FraportAward.pdf. loannisKardassopoulosv.Georgia(Kardassopoulos), Decision on Jurisdiction, 6 July 2007, available at: http://ita.law.uvic.ca/documents/Kardassopoulos-jurisdiction.pdf.
aAguasdelTunariS.A.v.RepublicofBolivia(AguasdelTunan), Decision on Respondent's Objections to Jurisdiction, 21 October 2005, available at: http://ita.law.uvic.ca/documents/AguasdelTunari jurisdiction- eng_000.pdf. 5 In the case mentioned in the previous footnote, the tribunal dismissed Bolivia's argument and observed that the "Respondent's interpretation would permit a host State to take its affirmative responsibility to 'promote economic cooperation through the protection of investments of nationals of the other Contracting Party in its territory' and to transform it into an opportunity to introduce exclusive local jurisdiction for investment disputes" (para. 153). Reference to local law was contained in the Bolivia-Netherlands BIT'S provision concerning the promotion and admission of investments. The tribunal examined the above two aspects separately and concluded, in respect of the former, that reference to the State's "framework of its laws and regulations" was "limited to the details of how each contracting party undertakes to promote economic cooperation in its national laws and regulations through the protection of investments" (para. 146); and, in respect of the latter, that "the reference specifically subjects the State's duty to admit investments not to the laws and regulations of Bolivia, but rather to the 'right to exercise powers' conferred by such laws and regulations" (para. 147). 6 See also Article 1 (1) of the Sri Lanka model BIT: "The term 'investment' means every kind of property or asset invested by an investor of one Contracting Party in the territory of the other Contracting Party inaccordancewiththelawsandregulationso�theContractinqParty ..." See also Article 2 of the El Salvador-Spain BIT: "This Agreement will also apply to investments made by the investors of a Contracting Party before its entry into force inaccordancewiththelawsof theotherContractingParty".
8 Article 2 of the Netherlands model BIT: "Each Contracting Party shall, withinthe frameworkofitslawsandregulations, promote economic cooperation through the protection in its territory of investments of nationals of the other Contracting Party"; Article 3 of the French model BIT: "Each Contracting Party shall, withinthe frameworkofitslawsandregulations, encourage and admit investments made by investors of the other Contracting Party on its territory and on its maritime zone"; almost identical is Article 2 of the 1994 Bolivia-United States BIT. Cfr. Dolzer and Stevens, supra, footnote 1, p. 51, according to whom some BITS "record the parties' undertaking to 'promote' investments under the treaty ... as long as they are made in accordance with the host country's legislation". 9 Article 3 of the Australia-Egypt Bm: "Each Party shall encourage and promote investments of the other Party and shall, inaccordancewithitslawsandinvestmentpoliciesapplicable fiomtimetotime, admit such investments"; Article 2 of the Netherlands-Czech Republic BIT: "Each contracting Party ... shall admit such investments inaccordancewithitsprovisionsof law". See also Article 2 (1) of the German model BIT: "Each Contracting State shall, in its territory, promote as far as possible, investments by investors of the other Contracting State, and admit such investments inaccordancewithitslegislation". 10 SaliniCostruttoriS.�.�i.etItalstradeS.p./4.c.RoyaumedaMaroc(Stth'Mt), Decision sur la competence, 23 July 2001,Journal du droit international, 2002, pp. 196-216; English translation of the French original in 42 I.L.M. 609, 2003.
11 Ibid., at para. 46. 12BayindirInsaatTurizmTicaretVeSanayiA.S.v.IslamicRepublicofPakistan(Bayindir), Decision on Jurisdiction, 14 November 2005, available at: www.worldbank.org/icsid/cases/awards.htm, at paras. 109-110. r3 ConsortiumGroupementl.esi-Dipentac.RepubliqueAlgerienneDemocratiqueetPopulaire(ConsortiumGroupementLesi-Dipenta), Award, 10 January 2005, in 19 1(:SID Rev.- F.I.L.J. 426, 2004, para. 24(iii); LesiS.p.A.etAstaldiS.p.A.c.RepubliqueAlgerienneDemocratiqueetPopulaire(Lesi), Decision on Jurisdiction, 12 July 2006, available at: www.worldbank.org/icsid/cascs/awards.htm, at para. 83(iii).
ra See F. Yala, 'IheNotionof"Investment"inIcstnCaseLaw:ADriftingJurisdictionalRequirement?Some"Un-Conventional"'Thougdrtson Salini, Scs and Mihali, in Journal of International Arbitration, 2005, p. 105. See, for example, M. K. Yasseen, L'interpretationdestraitesd'apresla Convention deVienne surle droitdestraités, 151 Recucil des Cours 1, 1976; C. Fernandez de Casadevante Roman!, Lainterpretaci6ndelasnormasinternacionales, Pamplona, 1996; E. J. Criddle, T7ieViennaConventionontheLawof theTreatiesinIJ.S.TreatyInterpretation, in Virginia Journal of International Law, 2004, p. 431; B. Conforti, Dirittointemazionale, Napoli, 2006, p. 98; in the English case law, see the judgment of the House of Lords of 19 December 2000, Reginav.Secretaryof State: fortheHomeDepartment,ExparteAdan, in 40 I.L.M. 727, 2001; see also the two abovementioned Lesi decisions, supra, footnote 13, at paras. 24(iii) and 83(iii) respectively: "because the Bilateral Agreement is an international treaty, its meaning should be the one given it by both parties, as opposed to a meaning based on one party's domestic legislation". rb Schreuer, supra, footnote 1, p. 234. In addition to the three cases referred to in footnotes 2 and 3, and to the TokiosTokeles case (examined in the present paragraph), the same objection was raised by the State in AresInternationalS.r.l.andMetalGeoS.r.l.v.Republicof Georgia (ICSID Case No. ARB/05/23), in which a decision on Georgia's jurisdictional objection is still pending at the time of writing this article. �sTokiosTokelesv.Ukraine(TokiosTokeles), Decision on Jurisdiction, 29 April 2004, in 20 ICSID Rev — F I LJ 205, 2005.
w Ibid., at para. 86. 20 Para. 85. 21 See Article II ("This Agreement will also apply to investments made before its entry into force by the investors of a Contracting Party inaccordancewiththelawsoftheotherContractingParty") and Article III ("Each Contracting Party shall protect in its territory the investments made, inaccordancewithitslegislations, ..."). ). 22 See paras. 84, 192-205 of the Award: "the will of the parties to the BIT was to exclude from the scope of application and protection of the Agreement, disputes originating from investments which were not made in accordance with the laws of the host State" (Inceysa,supra, footnote 2, at para. 195). 23 Ibid., para. 206.
24 The State's argument focused on the conclusion of secret shareholder agreements which had allegedly allowed the investor to obtain defacto control of the terminal in breach of the Philippine law on nationality requirements ("Anti-Dummy Law"; Fraport,supra, footnote 2, para. 38). 25 See Article 1 of the Germany-Philippines BIT: "The terms 'investment' shall mean any kind of asset accepted inaccordancewiththerespectivelawsandregulationsof eitherContractingState". 26 Article 2 (1): "Each Contracting State shall promote, as far as possible, investments in its territory by investors of the other Contracting State, and admit such investments inaccordancewithitsConstitution,lawsandregulations". The tribunal noted that further explicit references to the host State law were contained in a Protocol to the BIT, and in the Preamble of the Philippines' instrument of ratification (Fraport,supra, footnote 2, paras. 336-337 of the Award). z� Ibid., at para. 398. zs The tribunal found that, on the basis of the doctrine of estoppel, the State could not have invoked breaches of domestic law by the investor as a bar to jurisdiction if it had known them, or might have known them, and had knowingly overlooked them upon admission of the investment (ibid., at paras. 346-347). 29 Para. 385.
3o See especially para. 394. 31 See para. 11 fF of the Dissenting Opinion; Cremades recognised that the investor's behaviour could theoretically be identified in a BIT as a jurisdictional requirement, but excluded that this was the meaning of the relevant provision of the Germany-Philippines BIT. According to Cremades, the "in accordance with host State law clause" contained therein, only considers the assets invested, which, in the case at hand, were in accordance with the host State law. The dissenting arbitrator also stated that no breach by Fraport of the Philippine Anti- Dummy Law had been established (paras. 12-14, 36). 3z Any investor's wrongful act might of course give rise to counterclaims of the State in the merits phase; for IcsiD practice concerning the investor's unlawful conduct during negotiation, stipulation and performance of the investment agreement, see S. Manciaux, InvestissementsetrangersetarbitrageentreEtatsetressortissantsd'autresEtats, Dijon, 2004, p. 350.
33 See SalukaInvestmentsBVv.TheCzechRepublic(Saluka), Partial Award, 17 March 2006, available at http://ita.law.uvic.ca/documents/Saluka-PartialawardFinal.pdf, where the tribunal operating under the Ut�enrRni Arbitration Rules concluded that the investor's conduct was lawful on the basis of awards issued in different arbitral proceedings, on the assumption that they had res judicata effects under Czech law (para. 216); for a comment of the Saluka Partial Award, see V. Balas, SalukaInvestmentsB.V.(TheNetherlands)v.77ieCzechRepnblic-CommentsonthePartialArbitralAwardof17March2006, in The Journal of World Investment & Trade, Vol. 7, 2006, p. 371. 3^ See Inceysa,supra, footnote 2, para. 224. The tribunal started its analysis from the Brr and found that it contained no substantive provisions that would allow it to assess the legality of the investor's investment. It then moved on to assess the investor's conduct in light of the four general principles referred to above, without, however, motivating its choice in this respect. These critical remarks are shared by C. Knahr, Investments"inaccordancewiththehoststatelaw", in Transnational Dispute Management, September 2007, pp. 17 and 28: "If a violation of national law is at issue, it should primarily be the national law itself to provide an answer to the question of legality or illegality of the action" (p. 17). 3sKardassopoulos,supra, footnote 3, para. 146: "In the present case, Georgian law is relevant as a fact to determine whether or not Claimant's investment is covered by the terms of the ECT and the BIT. But, whatever may be the determination of a municipal court applying Georgian law to the dispute, this Tribunal can only decide the issue in dispute in accordance with the applicable rules and principles of international law". Reference to the host State law was contained in Article 12 of the Georgia-Greece BIT, concerning the ratiorretemporis scope of the treaty: "This Agreement shall also apply to investments made prior to its entry into force by Investors of either Contracting Party in the Territory of the other Contracting Party, consistentwiththelatter'slegislation".
36 Ibid., at para. 174. 3� See also M. Sornarajah, TheIntemationalLawonForeignInvestments, Cambridge, 2004, p. 106: "no State has taken its fervour for foreign investments to the extent of removing any controls on the How of foreign investments intothe host State". 38Kardassopoulos,supra, footnote 3, at para. 184. 39 Ibid., at paras. 185-194. 40 The tribunal expressly referred to Article 7 of the United Nations International Law Commission's Articles on Responsibility of States for Internationally Wrongful Acts of 2001, which allows the attribution to the State of ultravires acts committed by persons or entities empowered to exercise elements of governmental authority, and to the ICSID precedent SouthemPacificProperties(MiddleEast)Limitedv.Egypt, Award, 20 May 1992, which stated that acts "cloaked with the mantle of Governmental authority and communicated as such to foreign investors who relied on them in making their investments" were attributable to the State (see Kardassopoulos,supra, footnote 3, para. 193).
11 See G. R. l7elaume, LaConventionpourler�glementdesdifferendsrelatifsausinvestissernentsentreEtatsetressortissantsd'autresEtats, in Journal du droit international, 1966, p. 26; Manciaux, supra, footnote 32, p. 43; for the analysis of the travaux preparatoires, Schreuer, supra, footnote 1, p. 121. 'z See Z. Douglas, TheHybridFoundationsofInvestmentTreatyArbitration, in B.Y.I.L., Vol. 74, 2003, p. 211: "the treaty tribunal must also determine whether or not the rights inrem that have been identified in accordance with the municipal law of the host state constitute an investment as defined by the investment treaty itself This is a question of treaty interpretation that is ultimately governed by principles of international law". See WilliamNagelv.CzechRepublic(NageQ, Award, 9 September 2003, in which a tribunal constituted under the auspices of the Arbitration Institute of the Stockholm Chamber of Commerce interpreted the words 'asset' and 'investment' contained in the Czech Republic-United Kingdom BIT and stated that they "refer to rights and claims which have a financial value for the holder. This creates a link with domestic law, since it is to a large extent the rules of domestic law that determine whether or not there is a financial value" (see C. McLachlan, L. Shore and M. Weininger, InternationallnvestmentArbitration,SubstantivePrinciples, Oxford, 2007, pp. 183-184). a3 The situation is mentioned in the Partial Award in Saluka(supra, footnote 33). The tribunal stated that even if the unlawful conduct were demonstrated, it would have been imputable to NomuraEurope, the entity which had originally acquired the investment and subsequently transferred it to the claimant Saluka, and not to Saluka itself (at para. 218).
z See Fraport,supra, footnote 2, paras. 396-398: "in some circumstances, the law in question of the host state may not be entirely clear and mistakes may be made in good faith ... the violation could not be deemed to be inadvertent and irrelevant to the investment ... The awareness that the arrangements were not in accordance with Philippine law was manifested by the decision to make the arrangements secretly and to try to make them effective under foreign law"; see also Inceysa,supra, footnote 2, at para. 236. 4, See the World Bank Guidelines: "Each State is encouraged to publish, in the form of a handbook or other medium easily accessible to other States and their investors, adequate and regularly updated information about its legislation, regulations and procedures relevant to foreign investment and other information relating to its investment policies" (Guidelines on the Treatment of Foreign Direct Investment, 7 ICSID Rev.-F.LL.J. 297, 1992); see also Articles 10 and 11 of the 2004 United States model BIT, especially Article 10 (1): "Each Party shall ensure that its: (a) laws, regulations, procedures and administrative rulings of general application; and (b) adjudicatory decisions respecting any matter covered by this Treaty are promptly published or otherwise made publicly available". 4� See Manciaux, supra, footnote 32, p. 343. 47 See Fraport,supra, footnote 2, para. 346: "Principles of fairness should require a tribunal to hold a government estopped from raising violations of its own law as a jurisdictional defense when it knowingly overlooked them and endorsed an investment which was not in compliance with its law". s8Kardassopoulos,supra, footnote 3, paras. 191-192: "The assurances given to Claimant regarding the validity of the JVA and the Concession were endorsed by the Government itself ... The Tribunal also notes that the Concession was signed and 'ratified' by the Ministry of Fuel and Energy, an organ of the Republic of Georgia. The Tribunal further observes that in the years following the execution of the Jvn and the Concession ... Georgia never protested nor claimed that these agreements were illegal under Georgian law. In light of all of the above circumstances, the Tribunal is of the view that Respondent created a legitimateexpectation for Claimant that his investment was, indeed, made in accordance with Georgian law and, in the event of breach, would be entitled to treaty protection". 49 See TokiosTokeles,supra, footnote 18, at para. 86, in which the tribunal referred interalia to the fact that, despite the alleged irregularities, the entity through which the investment was made was registered by the relevant Ukrainian authorities, which raised no objection during the following eight years; see also Saluka,supra, footnote 33, at para. 217, in which the tribunal observed that the Czech authorities never questioned the legality of either NomuraEurope's original investment or its subsequent acquisition by Saluka.
50 Ibid., at para. 86; Ukraine alleged that the full name under which the investor had registered its local subsidiary ("subsidiary enterprise" instead of "subsidiary private enterprise") was not a recognised legal form under Ukrainian law, and that the documents provided in relation to asset procurement and transfer contained errors and defects, such as the absence of signature or notarization (para. 83). 51ConsortiurnGroupementLesi-Dipenta,supra, footnote 13, at para. 24(iii), and Lesi,supra, footnote 13, at para. 83(iii). 5z V. Knahr, supra, footnote 34, p. 17: "This approach, however, seems problematic since it will probably be difficult in many instances to determine whether an investor had actually acted in good faith or whether he had knowingly committed a violation of a host state's domestic law. Hence, an objective assessment of the severity of the violation as performed by the TokiosTokeles tribunal seems preferable".
53 See, for example, Knahr, ibid., p. 24, who distinguishes "formal errors", which, as in 1'okios1 bkelcs, would not exclude protection under the BiT, and "actions either leading to civil liability or constituting criminal offences", which could not qualify as being "in accordance with host State law": "One possible threshold one could think of would be to consider simple formal errors, like in TokiosTokeles, as minor, hence still meeting the requirement of being "in accordance with host state law", whereas actions either leading to civil liability or constituting criminal offences under domestic law would be illegal, consequently not being "in accordance with host state law". This criterion cannot be shared since it does not necessarily reflect the seriouness of the violation. 54 For an example of different wording and the tribunal's statement that it does not allow a different conclusion, see Bayindir,supra, footnote 12, at para. 109: "The mere fact that in Salini the phrase 'in accordance with' qualified the words 'assets invested' and not the term 'investment' is not a sufficient basis to distinguish Salini";Fraport,supra, footnote 2, paras. 341-342: "There are some linguistic differences between the provisions ... this linguistic difference does not appear to indicate an intentional nuance and hence to be legally significant". ss Article 31 (1) of the 1969 Vienna Convention on the Law of Treaties.
56 See, for example, AguasdeTunari,supra, footnote 4, at para. 153: "the Tribunal concludes that the State Parties cannot have intended the references to national law in Article 2 to be so encompassing as to defeat theobjectandpurpose of the Treaty"; TokiosTokeles,supra, footnote 18, at para. 86; contra, see Fraport,suyra, footnote 2, para. 340: "It is also clear that the parties were anxious to encourage investment, which was the raisond'etre of the treaty. But while a treaty should be interpreted in the light of its objectand purposes, it would be a violation ofall the canons of interpretation to pretend to use its objects and purposes, which are, by their nature, a deduction on the part of the interpreter, to nullify four explicit provisions". 5� McLachlan, Shore and Weininger, supra, footnote 42, p. 181: "The plain meaning of this phrase is that investments which would be illegal upon the territory of the host State are disqualified from protection of the BIT".