The Role of the Domestic Law of the Host State in Determining the Jurisdiction ratione materiae of Investment Treaty Tribunals

The Partial Revival of the Localisation Theory?

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Author: Reza Eftekhar
The Role of the Domestic Law of the Host State in Determining the Jurisdiction ratione materiae of Investment Treaty Tribunals: The Partial Revival of the Localisation Theory? focuses on the largely unexplored role of the host state law in determining the jurisdiction ratione materiae of investment treaty tribunals. Given domestic law’s essential role in subject-matter jurisdiction issues, and in the light of the broader function of host state law and host state courts in contemporary investment treaty law, the author argues that the dormant “localisation” theory that was raised and defended by developing countries in the 1960s-1970s in the context of foreign investment contract disputes has now been partially revived in the area of the investment treaty law. This is a significant milestone in the ongoing discussions on the reform of the investment treaty dispute settlement regime.

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Reza Eftekhar, Ph.D. (2019), Leiden University, is a Legal Adviser at the Iran-United States Claims Tribunal. He has published translations and co-authored articles and book chapters on international arbitration and investment treaty arbitration.
Acknowledgments
List of Abbreviations

Introduction
 I The Relevance of the Host State Domestic Law in Investment Treaty Arbitrations: Revival of the Localisation Theory?
 II Questions and Arguments
 III Structure
 IV Essential Concepts
  A  Applicable Law
  B  Domestic Law
 V Approach and Sources
  A  General Approach
  B  Interpretive Approach
  C  Sources

PART 1
The Role of the Domestic Law of the Host State in Determining the Jurisdiction ratione materiae of An Investment Treaty Tribunal

1 The Role of Domestic Law in Investment Treaty Arbitrations in General
 Introduction
 Section One: General Remarks with Regard to the Application of Domestic Law in Investment Treaty Arbitrations
  A  The Reason for the Importance of Host State Law in Investment Treaty Arbitrations
  B  The Guise in Which Domestic Law Applies in Investment Treaty Arbitrations: As Fact or as Law?
  C  The Legal Grounds of the Application of Domestic Law as Law in Investment Treaty Arbitrations
   A The Parties Have Expressly or Impliedly Chosen Domestic Law to Govern a Particular Issue
   B The Nature of the Legal Issue
  D  The Irrelevance of the Applicable Law Provision in Investment Treaties and the ICSID Convention

 Section Two: The Situations in Which an Investment Treaty Tribunal Has to Refer to Domestic Laws
 A  The Role of Domestic Law in Jurisdictional Issues
  A Jurisdiction Ratione Materiae
   I The Legality of Investment
   II Existence of Rights over Property Constituting Investment
   III Approval of Investments
  B  Ratione Personae
 B  The Role of Domestic Law in Issues Concerning Merits
  A Domestic Law as Fact in Issues Concerning Merits
  B Domestic Law as Law in Issues Concerning Merits
   I Express Treaty Reference to the Application of Domestic Law as Law
   II Contractual Claims
 Section Three: Ascertaining the Contents of the Host State Law: Methods and Means
  A  Ascertaining the Contents of the Host State Law: Methods
  B  Ascertaining the Contents of the Host State Law: Means
  C  Conclusion on the Methods and Means of Ascertaining the Contents of the Host State Law
 Conclusion

Introduction to Chapters 2 & 3: The Role of Domestic Law in Determining the Jurisdiction Ratione Materiae of Investment Treaty Tribunals

2 Application of Domestic Law to the Legality Requirement
 Section One: The Legal Bases for Referring to the Laws of the Host State
  A  Agreement by the Contracting Parties in the Underlying Investment Treaty
   A Express Agreement of the Treaty Contracting Parties
   I Varying Formulations and Its Impact
   II Varying Locations and Its Impact
  B Implicit Reference
  B  The Nature of the Legal Issue
  C  Relying on Principles of International Law for Dismissing Illegal Investments
 Section Two: The Actual Application of Domestic Law to Particular Questions Regarding the Legality Requirement
  A  The Scope of the Legality Requirement
   A The Formal Scope of the Legality Requirement
   B The Substantive Scope of the Legality Requirement
   I Approaches Adopted in Investment Treaty Arbitrations
   II The Proposed Solution Regarding the Substantive Scope of the Legality Requirement
   C Temporal Scope of the Legality Requirement
   D Conclusions on the Scope of the Legality Requirement
  B  The Consequences of the Application of the Legality Requirement
   A General and Specific Consequences of the Legality Requirement
   I General Consequence of Illegality
   II Specific Consequence of Illegality
   III The Missing Jurisdictional Condition
   B Possible Defences by Investors
   I Object and Purpose of the Underlying Investment Treaty
   II The Involvement of the Host State
 Conclusion

3 Application of Domestic Law to Questions Regarding the Existence of Rights over Property Constituting Investment
 Introduction
 Section One: The Applicable Law to the Question of Determining the Meaning, Scope, and the Legal Bearings of Rights over Property Constituting Investment
  A  Agreement by the Contracting Parties in the Underlying Investment Treaty
   I Express Choice by the Contracting Parties in the Underlying Investment Treaty
   II Implied Choice by the Contracting Parties in the Underlying Investment Treaty
  B  The Nature of the Legal Issue
  C  Conclusion
 Section Two: The Actual Application of Domestic Law to Particular Questions Regarding the Existence of Rights over Property Constituting Investment
  A  The General Function of Host State Law in Determining the Existence of Rights over Property Constituting Investment
  B  The Specific Function of Host State Law in Determining the Existence of Rights over Property Constituting Investment
   A Definition of Property
   B Conditions for Transfer of Title
   C Conditions for Protection of Contractual Rights
 Conclusion

PART 2
The Revival of the Localisation Theory in Light of the Developments in Investment Treaty Law

4 The Localisation Theory
Roots, Premises, and Its Legal Destiny
 Introduction
 Section One: Classic State-Centric Theories: The Calvo Doctrine and the Localisation Theory
 Section Two: The Emergence of Bilateral Investment Treaties
 Conclusion

5 Partial Revival of the Localisation Theory in the Field of Investment Treaty Arbitration: The Current Role of Host State Law and Host State Court
 Introduction
 Section One: The Current Role of Host State Law
  A  A Distillation of Chapters 1–3 regarding the Role of the Domestic Law of the Host State in Determining the Jurisdiction ratione materiae of An Investment Treaty Tribunal
  B  Developments in Investment Treaty Law Regarding the Role of Host State Law in the Resolution of Investment Treaty Arbitration Cases
   A  Developments in Investment Treaty Rulemaking Regarding the Role of Host State Law in the Resolution of Investment Treaty Arbitration Cases
    I Shift in the Approach towards the Role of the Host State Law in the Indian Model Investment Treaties
    II Shift in the Approach towards the Role of the Host State Law in the Dutch Model Investment Treaties
   A  Developments in Investment Treaty Jurisprudence Regarding the Role of Host State Law in the Resolution of Investment Treaty Arbitration Cases
 Conclusion
 Section Two: The Current Role of Host State Courts
  A  Recourse to Local Remedies for A Defined Period As A Precondition of Filing the Case before International Investment Arbitration
  B  Recourse to Host State Court As A Prerequisite of the Establishment of the Violation of Investment Treaty Standards
  C  Recourse to Host State Court’s Determinations As A Point of Reference for Clarifying Preliminary Points of the Domestic Law
   A The Interplay between Investment Treaty Tribunal and Host State Court in Substantive Matters
   B Jurisprudence of International Courts and Tribunals with Regard to the Weight and Value of Host State Court’s Determinations in International Proceedings
   C Concerns over the Legitimacy of Host State Court’s Determinations
   D Proposed Solutions to the Legitimacy Concerns
  D  Recourse to Host State Court As An Investment Dispute Settlement Venue
  A Host State Court as the Sole Venue for the Final Resolution of All Investment Treaty Disputes upon the Irreversible Choice by the Investor: Fork-in-the-Road Clauses
  B Host State Court as an Alternative Venue for the Final Resolution of All Investment Treaty Disputes
  C Host State Court as the Sole Venue for the Final Resolution of All Investment Treaty Disputes
  D Host State Court as the Sole Venue for the Final Resolution of Certain Investment Disputes
 Conclusion

Final Conclusion

Sources
Index

This book concerns the field of investment treaty arbitration. As it significantly deals with academic matters in this field, it will be of interest to the academia (lecturers, commentators, and students (post-graduate)). On the other hand, as this book extensively discusses specific technical matters of law, practitioners, in particular, arbitrators, advocates, and national judges will be the potential readers of this work.