Young ICCA Skills Training Workshop: Interim Measures in Investment Treaty Arbitration
Post Event Report
By Clara Boulanger, PhD candidate at the University Paris II Panthéon-Assas, jurist at McDermott Will and Emery, Paris and Anastasia Medvedskaya, qualified lawyer at the Paris Bar
On October 25th 2017, Young ICCA together with the Ministry of Finance of the Czech Republic organized the Skills Training Workshop on interim measures in investment treaty arbitration. Arnold & Porter Kaye Scholer, Freshfields Bruckhaus Deringer, Kinstellar, KPMG Czech Republic and LALIVE sponsored this event.
The workshop comprised eminent arbitration practitioners and was organized around two panels moderated by Erica Stein, National Partner at Dechert LLP (Brussels and Paris) and Noah Rubins, Partner at Freshfields Bruckhaus Deringer (Paris). The speakers of the two panels were Kabir Duggal, Senior Associate at Baker & McKenzie LLP (New York), Laura Halonen, Counsel at LALIVE (Geneva), Matthew Hodgson, Partner at Allen & Overy (Hong Kong), Ben Love, Senior Associate at Freshfields Bruckhaus Deringer (New York), Alfred Siwy, Partner at Zeiler Partners Rechtsanwälte GmbH (Vienna) and Marie Talašová, Head of International Legal Services Department in the Ministry of Finance of the Czech Republic.
The first panel focused on the types of interim measures and standards for granting them. Erica Stein gave a brief introduction and posed questions to each speaker on the panel, focusing on whether or not there is any harmonization in the way arbitral tribunals refer to and apply the standards for granting interim measures, and on the specific types of interim measures that have been sought and awarded in investment treaty arbitrations.
Kabir Duggal talked about the standards for granting interim measures. He mentioned that, generally speaking, there are five standards that must be met for an arbitral tribunal to grant interim measures: (1) prima facie jurisdiction, (2) prima facie establishment of a case, (3) urgency, (4) imminent danger of irreparable harm, and (5) proportionality. He pointed out that investment tribunals often rely on ICJ jurisprudence for evaluating such conditions. He then questioned this approach, stating that cases often relied upon, such as LaGrand or Avena, dealt with far more compelling circumstances, such as possible loss of life, whereas investment tribunals operate in different contexts. He also discussed evolving trends in the UNCITRAL Rules, with the latest amendments of 2010 being far more detailed on the subject than its predecessor. He thereafter briefly explained how the aforementioned criteria are looked upon in practice by investment tribunals, focusing on the distinctions between the ICSID and UNCITRAL frameworks.
Ben Love then tackled the issue of requests for security for costs, a remedy imported from English Common Law. He explained the differing approaches adopted towards security for costs; one questioned whether it was a ‘future’ hypothetical right, as was held in Maffezini, the other appeared to suggest that it was a procedural right that ought to be protected, as is the prevailing opinion. After having addressed the issue of whether security for costs is a true interim measure, he discussed the RSM v. Saint Lucia case, the only investment arbitration case to date where security for costs was granted. He clarified that the majority of the arbitral tribunal in that case considered the claimant’s behavior in previous cases as an extreme circumstance warranting the order on security for costs, thus suggesting how narrow the possibility of getting security for costs is. He then went on to compare the way in which requests for security for costs are assessed within the ICSID framework with the one within the UNCITRAL framework.
Finally, Alfred Siwy spoke on the topic of temporary restraining orders, a remedy sought pending the decision on interim measures. He stated that even though TROs are unique to the domestic systems, such as the US, they have found their way into investment arbitration. In particular, in the Burlington Resources Inc. v. Ecuador and Perenco Ecuador Ltd. v. Ecuador cases, the claimants requested a temporary restraining order with immediate effect to prevent Ecuador from seizing their assets. He noted that the tribunals in both cases were very frugal in reasoning their decisions to issue a temporary restraining order against Ecuador. He further added that the extremely urgent nature of a temporary restraining order does not seem to comply very well with the due process requirement under Article 39(4) of the ICSID Arbitration Rules.
Erica Stein followed up on each of the speakers’ presentations with questions and comments and then gave the floor to the audience, who shared their views on the existing practice of assessing interim measures requests and on possible developments related to the topic covered by the first panel.
The second panel, animated by Noah Rubins, discussed the procedure, enforcement of decisions on interim measures and emergency arbitrator proceedings.
Matthew Hodgson gave an overview of emergency arbitrator proceedings in the investment treaty context. First, he discussed general considerations regarding these proceedings and focused on considerations that are unique to the investment treaty context, such as the fact that a respondent State’s consent to a BIT was probably given at a time when the emergency arbitrator proceedings were not even envisaged. He also explained that emergency proceedings are meant to fill in temporal gaps in extreme situations where the case has to be heard before an actual arbitral tribunal has been constituted. He then turned to the different arbitration rules that provide for such a facility, such as the ICDR, SCC, ICC and LCIA Rules, noting that the main institutional rules for investment treaty arbitration, such as the ICSID and UNCITRAL Rules, do not contain emergency arbitrator provisions. He noted that in recent arbitral practice, only a minimal number of cases were decided under the SCC rules, such as the publicly available JKX Oil & Gas v. Ukraine case and the trilogy of cases against Moldova, where the national anti-corruption center’s decision to block Russian investors’ shares was at issue, gave rise to the following proceedings: TSIKinvest, Kompozit and Evrobalt. In the latter trio of cases, the respondent State barely participated in the emergency proceedings and the emergency arbitrators reached differing conclusions.
The audience and the moderator raised the question of appropriateness of the “irreparable harm” standard in the investment treaty context. One participant noted that in situations where arbitral tribunals can only grant reparation or restitution as an alternative order for compensation, it was hardly conceivable that any harm of an economic nature could qualify as irreparable. Kabir Duggal raised another criticism: the ability of States to partake in such fast paced proceedings preceded by a very short notice. Marie Talašová also highlighted this from the State’s perspective, adding that participating in emergency arbitrator proceedings is not possible within the same time for a State, as is for a private entity.
Laura Halonen presented her views on issues related to enforcement of arbitral tribunals’ decisions on interim measures and especially in case of respondent States’ non-compliance with such decisions. She explained that as arbitral tribunals have no coercive powers on parties, there are additional wrinkles in the investment context reflected by the non-binding nature of arbitral tribunals’ decisions on interim measures. For example, as per the travaux préparatoires of the ICSID Convention, the word “prescribe” was replaced by “recommend” precisely to indicate that there was no direct sanction for not complying with an arbitral tribunal’s decision on interim measures. She then presented what an arbitral tribunal can or should do in case of non-compliance. Noah Rubins and the audience suggested that although there was no direct impact on the outcome of the case, the State’s behavior regarding granted interim relief could color the arbitral tribunal’s global view of the case. Other questions raised during this discussion were whether the State would be able to comply with the order without violating its own legal system and whether an arbitral tribunal should take into account the enforceability of interim relief. Citing RSM v. Saint Lucia case, Laura Halonen questioned the possibility to disregard the respondent’s defence on the merits or draw adverse inferences from its conduct, in cases where it did not comply with the interim measures. She pointed out that both scenarios have never been used in actual practice. The panel then discussed the possibility of awarding damages to successful claimants and allocating costs of the proceedings in case of respondent States’ non-compliance with interim measures.
Marie Talašová talked about requests for security for costs from a State’s perspective. She pointed out that although the 2010 UNCITRAL Rules and Article 38 of the SCC rules explicitly give arbitral tribunals the power to order a claimant or counterclaimant to pay security for costs, investment tribunals have repeatedly been reluctant to grant security for costs orders. According to Marie Talašová, this issue has been particularly sensitive for the Czech Republic, as the expenses are borne by Czech taxpayers and, in cases where the State has prevailed, there are severe problems in collecting the awarded sums. Following her presentation, Noah Rubins commented on the practical impossibility for an impecunious claimant to secure costs of the arbitral proceedings and the discussions continued during an interesting and lively Q&A session.
To celebrate the end of a successful workshop, a cocktail reception was held at a cozy and informal venue, during which the participants and the speakers were able to continue exchanging views and experiences.
On the next day, the participants had the opportunity, through Young ICCA, to attend the 7th Investment Treaty Arbitration Conference organized by KPMG Czech Republic
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