Book Chapter

Reference

The growth in investment litigation: perspectives and challenges

BOISSON DE CHAZOURNES, Laurence

BOISSON DE CHAZOURNES, Laurence. The growth in investment litigation: perspectives and

challenges. In: Roberto Echandi & Pierre Sauvé.

Prospects in International Investment

Law and Policy

. Cambridge : Cambridge University Press, 2013. p. 306-309

Available at:

http://archive-ouverte.unige.ch/unige:30046

Disclaimer: layout of this document may differ from the published version.

[ Downloaded 29/01/2014 at 14:47:42 ]

1 / 1

19

The growth in investment litigation: perspectives

and challenges

LAURENCE BOISSON DE CHAZOURNES

In their chapters, Margrete Stevens and Roberto Echandi have both

advanced some thought-provoking ideas on investor-state dispute settlement.

A few points raised by their contributions will be addressed below.

Let me first refer to the proposal for having rules of ethics for counsel

acting before Internatioual Centre for Settlement of Investment Disputes

(ICSID) tribunals and supposedly also before

other

investment tribunals.

Although I consider that it is important to have a set of international rules

of ethics governing counsel, as we]J as rules of ethics governing arbitrators

and experts, I would be cautious about making it a sort of

lex specialis

in the investment area. We should have a

lex professionalis

that is closely

modelled on similar rules that also apply to international courts and tribunals

and reinforce systemic integrity.

1

I would like to refer to the recently adoptl(d International Law

Association (ILA)

Hague Principles on Ethical Standards for Counsel

Appearing before International Courts and Tribunals,

which concern

counsel in ICSID and other dispute settlement proceedings to which a

state is party. These Principles constitute an attempt to establish minimal

common standards of conduct for counsel in international fora. They

were intended to stimulate discussion in the international community

of lawyers and practitioners and to encourage further developments.

2

Having been involved in the drafting process of these rules, I believe that

1

See, e.g., Chi!pler 4 of the Regulations of the lnternntionaJ Criminal Court ('Counsel

Issues and

Legal

Assistance'); the Code of Conduct for European Lawyer.!> (produced

by the Council of Bars and Law Societies of Europe); and the ongoing work of the IBA

Arbitration Committee's Task Force on Counsel Eth ics, www.ibaoet.org/Arliclc/Dctnll.

as px? Article Uid

= 610 bbf6e -cf02-4 5ne-8c3n • 70d fdb227 4

aS.

2

See P. Sands, 'Introduction to the I LA Hague Principles on Ethical Standards for

Counsel Appearing before lntcrnn tional Courts and Tribunals',

The Law and Practice of

International Courts and Tribunals

10(1) (2011),

1-5.

306

THE GROWTH IN INVESTMENT LITIGATION 307.

the Principles have greatly benefited from an exchange ofknowledge concerning

counsels' experiences and the practices of various courts and tribunals.

3

In this context I believe that, if it is necessary to have a

specific set

of rules in the investment field, investment arbitration should draw from

this experience in other international dispute settlement fora.

However, while we should not isolate ICSID, we should still take into

account its peculiarities. ICSID is one of the institutions of the World

Bank Group, and much of the desired change and restructuring would

have to rely on Wotld Bank decision-makers for its implementation.

There is thus a need to raise the profile of the Centre within the World

Bank Group. In this respect, it is interesting to note that in the reports

produced in the context of the last round ofBretton Woods reforms (catalysed

in large part by the initiative of the Group of Twenty {G20)), no mention

was made ofiCSID. This need to strengthen ICSID within the World

Bank Group is particularly timely,_as the World Bank- and not just the

International Finance Corporation (IFC) and Multilateral Investment

Guarantee Agency (MIGA) - is increasingly involved in activities linked

to the private sector. The World Bank and the ICSID clearly have a common

interest in strengthening the capabilities of the latter, particularly

the solidity and fairness of its procedures.

A second issue with a similar thrust concerns the enforcement of

awards. Stevens' chapter reminds us of Articles 53 and 54 of the ICSID

Convention. Obviously, these provisions do not have the legal persuasiveness

that they should. There is room for creativity so as to ensure better

compliance with ICSID awards, and ways to strengthen compliance

should be explored.

There, too, inspiration could be drawn from other fora for ensuring

compliance with awards.

It

is interesting in this context to note the initiatives

that the United Nations (UN) Secretary-General and other UN

bodies took to ensure compliance with the decisions of the International

Court of Justice (ICJ) through the establishment of mixed commissions

or the sending of observers. The President of the World Bank as well as

the Administrative Council of ICSID might be inspired to develqp similar

initiatives. These initiatives could, inter alia, allow for the monitoring

of compliance with awards. At present, there is no such monitoring

system. The practice of the World Trade Organization (WTO) could also

3

See Study Group on the Responsibility of International Organisations, 'Report of the

Seventy-Fourth Conference (Held in The Hague,

15-19 August 2010)',

International Law

Association Reports of Conferences

74 (2011), 956-60.

308

LAURENCE BOISSON DE CHAZOURNES

provide some insights in this respect, if one considers its surveillance

mechanism.

4

Another avenue that could be explored is the establishment of a group

of'friends ofiCSID'. Many international organisations have established

such groups to help Lhem confront the future. With this, I mean a group

of state representatives or a group of people with a high profile on the

international scene- working or not with the World Bank- and possibly

with a connection to the ICSID dispute settlement practice. Such a group

could devise new ways of thinking about the importance of ensuring the

viability of ICSID in the long term and about ensuring compliance with

arbil.ration decisions in particular.

The third point I would like to raise concerns the 'finality' of an award.

Echandi alludes to this point in an

a contrario

manner when discussing

the sensltive poUUcal consequences of voluntary settlement through

diplomatic means. He rightly reminds us that, for political reasons, His

often easier eo permit an independent international tribunal to take decisions

in the last resort. This relieves slates of the responsibility to resolve

disputes through negotiations and to face the domestic political consequences

arising from lhe concessions inevitably made in the process. This

behaviour pattern is also familiar in other dispute settlement fora, such as

the WTO and the ICJ.

In this context, the investor-state dispute prevention concept that was

introduced has great virtue . Obviously, there is a need for better coordination

in the way governments internally manage and respond to investment

decisions and issues. This can be achieved through the development

of dispute prevention policies. In particular, the creation of 'focal points'

within host state governments - to which parties can turn when difficulties

arise - could prevent conflicts from evolving into legal disputes. Here

I would refer to the so-called Internal Market Problem Solving System

(SOLVIT) system introduced by the European Commission to take some

pressure off the normal infringement procedure against Member States.

In this system a Member State citizen or business that alleges a public

authority's misapplication of internal market law can submit its case to

its local SOL VIT centre, which generally proposes a resolution within ten

weeks.

5

4

See Article 21 of the Understanding on Rules and Procedures Governing the Settlement

of Disputes, Annex 2 of the World Trade Organization (WTO) Agreement, available at:

www.wto.org/english/tratop_e/dispu_e/dsu_e.htm#21.

5

Internal Market Problem Solving System (SOLVIT) website, http:l/ec.europa.eu/solvit/

site/about/index_en.htm.

THE GROWTH IN INVESTMENT LITIGATION 309

.

Now turning to the internationally concerted mechanisms that Echandi

proposed, they raise a challenging paradox or an 'open dialectic:. In an

area where encouraging private sector foreign investment througli direct

access to remedies used to be an article of faith, more and more interstate

mechanisms are now proposed for consultation and conciliation purposes.

This emerging interstate trend has the colour of diplomatic protection

without the content. Owing to the risk of politicisation of investment

disputes that states' intervention carries, safeguards should be considered

to ensure that these mechanisms do not create hurdles to investor remedies.

Principles of global administrative law, such as the principles of

accountability and openness, might be able to play the role of procedural

safeguards.

6

Principles of comity may also play a role in this context.

My fourth point is that alternative dispute resolution (ADR) techniques

have positive features that should also be promoted in investment

disputes. They play both a preventive and a remedial role. As suggested

by both authors, there is room to persuade the stakeholders of the advantages

of ADR. In the first place, Echandi has rightly targeted the economic

costs, but he has also mentioned the political and social costs attached

to international litigation. In this context, ADR imposes lighter burdens.

However, there would be a need to work more on the social aspects of

ADR and their acceptance by groups of concerned citizens. There might

~e

a need for more transparency in order to involve all stakeholders in the

decisions. More access to information may encourage greater use of ADR,

as it would contribute to broadening the acceptance of ADR's legitimacy.

I would like to end by noting that neither Stevens nor Echandi has

referred to the need to establish an appeal mechanism or a

Cour de

Cassation

in the field of investment dispute resolution. Discussion of

'finality' might extend beyond the rendering of an award. I do not have a

settled view on this issue, but looking once more to other dispute settlement

fora, one can note a .trend towards embracing two-tiered judicial

mechanisms in judicial fora in which non-state parties have access. Can

the legitimacy of the investment dispute settlement system escape discussion

of this issue?

6

On these principles, see B. Kings bury, N. Krisch and R. B. Stewart, 'The emergence of global

administrative law',

Law and Contemporary Problems

68(3) (2005), 16-61.