Despite the critical importance of applicable law in international arbitration, the concept remains misunderstood and often ignored. In the field of international investment law, whether the arbitration proceedings arise from an investment treaty or from a contract, the cornerstone principle of party autonomy applies when it comes to the choice of applicable law, as provided, for example, in article 42 of the ICSID Convention. Even that principle, however, is subject to debate, for example with respect to whether initiating arbitration proceedings under an investment treaty amounts to an implicit choice of applicable law. In an attempt to clarify the notion of applicable law, this contribution first distinguishes the rules of decision, i.e. the law applicable to the specific claims submitted by an investor against a state, from incidentally applicable law, i.e. the other laws which may be relevant for the resolution of the dispute but that do not form a basis for the decision on the merits. In a second part, this contribution analyses several questions arising from the application of choice-of-law provisions in practice, with an emphasis on article 42 of the ICSID Convention. Finally, the consequences of erring in the application of the correct applicable law are examined.

The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) provides for a ‘self-contained’ annulment mechanism independent from domestic courts and laws. This mechanism is available to challenge the awards rendered by arbitration tribunals operating only under this Convention. Chapter 16 focuses on the annulment proceedings that this Convention establishes, while annulment in other contexts is dealt with in Chapter 11. More specifically, it first sheds light on the main features of ICSID Convention annulment proceedings before analysing in light of the relevant arbitration practice the main grounds for annulment relied upon before annulment committees – namely, manifest excess of powers, serious departure from a fundamental rule of procedure and failure to state reasons. Chapter 16 then provides an overview of the two additional grounds mentioned in the Convention: improper constitution of a tribunal and corruption on the part of a member of the tribunal.

At the core of the settlement of investor–State disputes, there is a dialectic between the facts and the law. The legal component of this dialectical exercise draws our attention to two issues in particular: the law to be applied in the settlement of disputes and the interpretation of international investment agreements (IIAs). Each of these issues is analysed in turn in Chapter 12. For applicable law, it provides an analysis of the choice of substantive applicable law and the content thereof. It then sheds light on how arbitration tribunals interpret IIAs, specifically what means they employ and how these are used to interpret those agreements. It focuses in particular on the means of interpretation explicitly mentioned in the Vienna Convention on the Law of Treaties, i.e. the general rule of interpretation, supplementary means of interpretation and the rules pertaining to the interpretation of treaties authenticated in two or more languages.

Chapter 11 introduces the main features of investor–State arbitration from a threefold perspective: historical, institutional and procedural. For the history, it examines the origin of international arbitration and then focuses in succession on the emergence and consolidation of investor–State arbitration and the growing criticism it has been facing since the turn of the last century. With regards to institutional and procedural aspects, this chapter introduces the main dispute settlement centres operating in investor–State arbitration and the main arbitration rules that can be availed of, prior to analysing the key procedural features and phases of investor–State arbitration. More specifically, it examines in detail the proceedings that lead to the deliberation and award as well as post-award proceedings and enforcement, focusing on the ICSID Convention Arbitration Rules, the UNCITRAL Arbitration Rules and the SCC Arbitration Rules. Attention is also paid to the main features of treaty practice, which increasingly regulates the settlement of investor–State disputes. The following chapters delve into salient aspects of these proceedings in more detail.

This chapter addresses shareholders’ claims for reflective loss in the context of international investment law. It starts by analyzing the treatment of shareholders and shares in international investment agreements and under the ICSID Convention. In this regard, it sets forth the extent to which shares are considered as covered investments and to which shareholders qualify as foreign investors in investment treaty practice, as well as whether shares qualify as investments under article 25 of the ICSID Convention as interpreted by investment tribunals. This chapter also studies the difference between shareholders’ claims for reflective loss and claims brought under article 25(2)(b) of the ICSID Convention, as well as derivative actions in investment arbitration. Finally, this chapter undertakes an exhaustive analysis of investment arbitration cases that have addressed shareholders’ claims for reflective loss and highlights the reasons relied upon by investment tribunals to generally accept such claims.