Article contents
The Transnational Protection of Private Rights: Issues, Challenges, and Possible Solutions
Published online by Cambridge University Press: 23 September 2014
Abstract
The global community faces the challenge of dealing with movements in opposite directions: the emphasis on decolonization and self-determination in the postwar world has encouraged the building of barriers and boundaries between jurisdictions, while globalization has encouraged the breaking or transcending of the same. This paper focuses on the legal protection of private economic rights in the transnational arena by considering the regulation of transnational economic relationships at three different levels: (a) where a party's rights are not regulated or governed by any contract; (b) where there is a contract between the parties; and (c) where a foreign investor looks to protect its investment against unlawful interference by a host state. It concludes with some thoughts on what might lie ahead and suggests possible solutions to the issues and challenges faced.
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Footnotes
Chief Justice, Supreme Court of Singapore. This paper is adapted from the Charles N. Brower Lecture that I delivered on 10 April 2014. The views and ideas contained here are personal. I am deeply grateful to my colleague, Justin Yeo, Assistant Registrar of the Supreme Court, for the considerable assistance he gave me in the research and preparation of this lecture and for his valuable contributions to the ideas which are contained here.
References
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60. The bilateral approach had the potential to create a “depoliticized and technocratic environment” that would enable private decision-making while avoiding wide consultation with a large and diverse group of stakeholders. See supra note 58 at para. 78.
61. The first BIT was entered into between Germany and Pakistan in 1959. The adoption of the 1966 ICSID Convention (also known as the Washington Convention) saw a significant development in the realm of investment dispute resolution.
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67. The 7−2 split decision by an eminent bench is illustrative of the difficult questions that can sometimes be raised in investor-state arbitration. The case concerns the distinction between questions of “arbitrability” (i.e. whether there is an agreement to arbitrate at all, and the enforceability and scope of that agreement), which are decided by courts, and questions on “procedural preconditions” (i.e. whether there was adequate notice, whether waiver or estoppel were applicable, etc.), which are decided by arbitrators. There was a provision in the UK-Argentina BIT entitling a party to proceed unilaterally to arbitration provided the dispute was first submitted to a court in the country where the investment was made (“local litigation requirement”). In 2003, Argentina changed the way it calculated gas “tariffs”, and this negatively impacted the BG Group. The BG Group sought arbitration against Argentina for violating substantive provisions of the BIT (expropriation and denial of fair and equitable treatment). BG Group did not first seek relief in the courts of Argentina. Argentina argued that the arbitration was improper because BG Group did not comply with the local litigation requirement. The panel disagreed and awarded BG Group $185 million. BG Group sought to confirm the monetary award in US courts, while Argentina sought to vacate the award arguing that the panel lacked jurisdiction. The majority (Breyer, J, with whom Scalia, Thomas, Ginsburg, Alito, and Kagan JJ joined, and Sotomayor J joined in part) noted that a BIT is simply a contract and should be interpreted in a manner similar to ordinary private contracts. The majority concluded that whether the “local litigation requirement” was excused in this case was for the arbitrators to decide, as it was a “purely procedural precondition to arbitrate”. It therefore upheld the arbitrators’ decision under the “considerable deference” standard. The minority (Roberts CJ, with whom Kennedy J joined) focused on the fact that the treaty was not a contract between the parties to the dispute, and was instead a “unilateral standing offer” by Argentina and the UK to arbitrate with investors if the local litigation requirement was met. The minority viewed the “local litigation requirement” as a condition to the formation of an agreement between the investor and the state. The issue should be analyzed as one of contract formation, and therefore would be for the court to decide on whether there was any agreement to arbitrate at all.
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73. On this basis, the tribunal awarded White Industries the amount of AUD4.08 million, which was the amount due under the ICC award.
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88. The US-Singapore Free Trade Agreement (6 May 2003) includes a section titled “Transparency of Arbitral Proceedings”, and provides in art. 15.20(2) that:
The tribunal shall conduct hearings open to the public and shall determine, in consultation with the disputing parties, the appropriate logistical arrangements. However, any disputing party that intends to use information designated as protected information in a hearing shall so advise the tribunal. The tribunal shall make appropriate arrangements to protect the information from disclosure.
Online: <http://www.fta.gov.sg/ussfta/chapter_15_us.pdf>.
89. European Commission, “Investment Provisions in the EU-Canada Free Trade Agreement (CETA)” (3 December 2013), online: EC <http://trade.ec.europa.eu> at 3.
90. I have explored some of these deficiencies elsewhere, and do not propose to provide a detailed analysis of them here: see Sundaresh MENON, “International Investment Arbitration in Asia: The Road Ahead”, 4th Annual Singapore International Investment Arbitration Conference, 3 December 2013, at paras. 34−46.
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95. Ibid.
96. Most-Favoured-Nation Treatment, United Nations Conference on Trade and Development (UNCTAD) Series on Issues in International Investment Agreements II, UN Doc. UNCTAD/DIAE/IA/2010/1 (2010), online: UNCTAD <http://unctad.org/en/docs/diaeia20101_en.pdf>.
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98. Ibid., at para. 46.
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100. The London tribunal refused to award any damages, while the Stockholm tribunal ordered $355 million in damages.
101. See Lauder v. Czech Republic, Final Award, 3 September 2001, online: <http://www.italaw.com> at 66−72 and CME Czech Rep. B.V. (The Netherlands) v. Czech Republic, Partial Award, 13 September 2001, online: < http://www.italaw.com> at 5−7.
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104. Supra note 89 at 3−4.
105. Bolivia served a written notice of its denunciation of the ICSID Convention on 2 May 2007, and the denunciation took effect six months after the receipt of notice, i.e. on 3 November 2007. See International Centre for the Settlement of Investment Disputes, “List of Contracting States and Other Signatories of the Convention” (11 April 2011), online: ICSID <https://icsid.worldbank.org>.
106. Ecuador served a written notice of its denunciation of the ICSID Convention on 6 July 2009, and the denunciation took effect six months after the receipt of notice, i.e. on 7 January 2010. See ibid.
107. Venezuela served a written notice of its denunciation of the ICSID Convention on 24 January 2012, and the denunciation took effect six months after the receipt of notice, i.e. on 25 July 2012. See ibid.
108. Australian Government Department of Foreign Affairs and Trade, “Gillard Government Trade Policy Statement: Trading Our Way to More Jobs and Prosperity” (April 2011), online: < http://www.acci.asn.au/> at 14. Also see Ministry of Trade and Investment, Australia, “Gillard Government Reforms Australia's Trade Policy” (12 April 2011), online: <http://trademinister.gov.au>.
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110. Ibid.
111. Ibid., citing Helmut WAGNER, “Costs of Legal Uncertainty: Is Harmonization of Law a Good Solution?”, delivered at the Fortieth Annual Session of UNCITRAL, Vienna, 9−12 July 2007, online: <http://www.uncitral.org/pdf/english/congress/WagnerH.pdf> at 1.
112. Ibid., at para. 52 et seq.
113. See The Hague Conference for Private International Law, “The Hague Convention of 30 June 2005 on Choice of Court Agreements—Outline of the Convention” (May 2013), online: <http://www.hcch.net>.
114. See The Hague Conference for Private International Law, “Status Table” (19 November 2010), online: <http://www.hcch.net>.
115. See art. 31(1), The Hague Choice of Court Convention, 30 June 2005, 44 I.L.M. 1291.
116. YEO Tiong Min, “International Litigation in Asia: Will the Hague Choice of Court Convention Make Any Difference?”, online: <http://www.jsil.jp> at para. 18.
117. See The Hague Choice of Court Convention, 30 June 2005, online: <http://www.hcch.net>.
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119. Ibid.
120. See Singapore International Arbitration Forum, online: <http://www.siaf.sg/>.
121. Sundaresh MENON, Closing Address at the Singapore International Arbitration Forum, 2 December 2013 (on file with author).
122. Sundaresh MENON, “Some Cautionary Notes for an Age of Opportunity”, keynote address at the Chartered Institute of Arbitrators International Arbitration Conference, 22 August 2013, online: <www.singaporelaw.sg> at para. 51.
123. A “final draft” dated 18 February 2014 has been uploaded onto the LCIA website. Art. 18 (on party representation) is certainly more substantial in the draft than in the existing LCIA Rules. There is also an Annex that provides general guidelines for the Parties’ legal representatives. Art. 18.6 provides for sanctions, including:
(a) a written reprimand; (b) a written caution as to future conduct in the arbitration; (c) a reference to the legal representative's regulatory and or professional body; and (d) any other measure necessary to maintain the general duties of the arbitral tribunal.
See LCIA, “New LCIA Rules 2014”, online: <www.lcia.org>.
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125. Ibid., at para. 54.
126. Sundaresh MENON, “Contemporary Challenges in International Arbitration”, seminar hosted by the School of International Commercial Arbitration, Queen Mary, University of London and the Singapore International Arbitration Centre, London, 27 September 2012, online: <http://www.arbitration-icca.org>.
127. International Council for Commercial Arbitration, Miami 2014, online: <http://www.iccamiami2014.com/>.
128. In the context of investor-state arbitration, see Katia YANNACA-SMALL, “Improving the System of Investor-State Dispute Settlement”, OECD Working Paper on International Investment (February 2006), online: OECD <http://dx.doi.org/10.1787/631230863687> at 10. See also FRANCK, Susan, “The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law Through Inconsistent Decisions” (2005) 73 Fordham Law Review 1521Google Scholar.
129. In the context of investor-state arbitration, this could ensure that the interpretive approaches adopted at first instance give the necessary weight to treaty texts, as well as expressions of state intent in preambles and statements of objectives. On the issue of interpretive approaches in investor-state arbitration, see further Menon, supra note 90 at para. 48 et seq.
130. ICSID Secretariat, “Possible Improvements of the Framework for ICSID Arbitration”, Discussion Paper (22 October 2004), online: ICSID <https://icsid.worldbank.org>.
131. Under the WTO appellate mechanism, appeals are permitted, although these are limited to issues of law and questions of interpretation. Each appeal is heard by three members of a seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. See World Trade Organization, “Understanding the WTO: Settling Disputes”, online: <www.wto.org>.
132. Menon, , supra note 90 at para. 62Google Scholar.
133. US Trade Act of 2002, 19 U.S.C. §§ 3803–3805. This has been the basis for concluding several US FTAs.
134. 19 USC s 2102(b)(3)(G)(iv). See also SAUVANT, Karl P., Appeals Mechanism in International Investment Disputes (New York: Oxford University Press, 2008)Google Scholar at 232, and Yannaca-Small, supra note 128 at 9.
135. Yannaca-Small, supra note 128.
136. See the US-Dominican Republic-Central American FTA. Chapter 10, art. 10.20 at para. 10: Office of the United States Trade Representative, “CAFTA-DR (Dominican Republic-Central America FTA)”, online: <http://www.ustr.gov/sites>.
137. European Commission, supra note 89 at 3.
138. Menon, , supra note 37Google Scholar at para. 56.
139. Menon, , supra note 109Google Scholar at para. 60.
140. Ministry of Law, Singapore, “Report of the Singapore International Commercial Court Committee” (29 November 2013), online: <http://www.mlaw.gov.sg>.
141. Ibid., at para. 22.
142. Rajah & Tann LLP, “The Development of the Singapore International Commercial Court” (December 2013), online: < http://eoasis.rajahtann.com> at 3.
143. Report of the Singapore International Commercial Court Committee, supra note 140 at para. 31.
144. Ibid., at para. 32.
145. WILKOF, Neil, “Can Patent Judges ‘Colloquy’ Themselves to Greater Uniformity?” (30 August 2013)Google Scholar, online: <http://ipkitten.blogspot.sg/2013/08/can-patent-judges-colloquy-themselves.html>. Wilkof was referring to a comment by Chief Judge Randall Rader of the United States Court of Appeals for the Federal Circuit.
146. In re Maxwell Communication Corporation 170 B.R. 800 (Bankr. S.D.N.Y. 1994), affirmed in 186 B.R. 807 (S.D.N.Y. 1995).
147. James M. FARLEY, “Judicial Cooperation: Good Practices in the Field of Cross-border Insolvency Proceedings in Light of the Proposed Hague Draft General Principles for Judicial Communications”, Joint European Union-Hague Conference on Private International Law Conference on Direct Judicial Communications on Family Law Matters and the Development of Judicial Networks, 15−16 January 2009, online: <http://www.cambridgeforums.com>.
148. Ibid.
149. Westacre Investments Inc v. The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) [2009] 2 SLR(R) 166.
150. International Chamber of Commerce, “The New Incoterms® 2010 Rules”, online: ICC <http://www.iccwbo.org>.
151. International Federation of Consulting Engineers, “About FIDIC”, online: FIDIC <http://fidic.org/node/13 #sthash.on7HSusc.dpuf>.
152. Menon, , supra note 37Google Scholar at para. 2.
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