By Dr Antoine P. Martin

Attempts to limit the jurisdiction and reach of ICSID seem to be progressing as South American states’ efforts to foster regional cooperation through a new regional organisation (regrouping Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela) gain in precision.

Given the numerous investment claims brought by foreign investors against South American States lately, governments have thought about setting rules for an alternative investment protection and dispute settlement mechanism in which greater consideration would be given to sovereign and regulatory needs (see our previous post on Venezuela’s withdrawal from ICSID), and where appeal and precedents mechanisms would be put in place. Following the entry into force of the ‘Unión de Naciones Suramericanas’ (UNASUR) constitutional statutes in 2011 (for a chronology, see this very informative piece by the IIS), the famous EFE Press Agency indicated in Mid April that efforts towards the creation of a dispute settlement centre are becoming more concrete.

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Just a quick line about a report published ten days ago in an Indian online newspaper regarding Indian’s plans to abandon international arbitration in investment disputes.

Everything is here: India seeks treaty revisions to deal with corporate suits – Indian Express.

ImageThe full extent of the 1789 Alien Tort Claims Act (ATCA) which allows non-U.S. citizens to file suits in the U.S. for international human rights violations has been the subject of many debates in recent U.S. cases (Sosa v. Alvarez-Machain,KiobelBoimah Flomo I and IIExxon). This comment looks at the key points relied upon in recent decisions to reject the existence of a corporate liability principle under customary international law. The concurring observations of Judge Leval, who argued that the Kiobel decision might have kept the door open to major corporate abuses and created a precedent of corporate impunity, are especially relevant because they have been confirmed by more recent decisions. This comment also considers the arguments presented in the Kiobel re-hearing rejection regarding the policy impact of the decision and the policy-making role of U.S. tribunals. Finally, this comment questions whether U.S. courts should be expected to get involved in international justice, thereby risking being characterized as imperialist, self-appointed world judges.

The paper is availble here, and as a pdf version

By Julián Cárdenas García, Doctoral Fellow at the Research Center of International Investment and Trade Law, CREDIMI – Université de Bourgogne

 

The Ministry of Foreign Affairs of Venezuela recently denounced the ICSID Convention through a Ministry of Foreign Affairs Press Release (Spanish):

Unofficial translation:

Venezuelan Government Withdraws from ICSID
Venezuelan Ministry of People’s Power for Foreign Affairs.-

The government of the Bolivarian Republic of Venezuela gave notice to  the World Bank on January 24th, of its irrevocable denunciation of the  “Convention on the Settlement of Investment Disputes between States  and Nationals of Other States” of 1966, which established the  International Centre for Settlement of Investment Disputes (ICSID).
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The decision of the ICSID tribunal on the GEA Group Aktiengesellschaft v. Ukraine case -ICSID Case No. ARB/08/16- was made publicly available on the 31st March (link at the end of the comment). The award is pretty straightforward and does not raise any major issue, but it nevertheless provides insights regarding the definition of ‘investments’, expropriation, the notion of fair and equitable treatment, and the issue of award enforcement (i.e. whether the refusal of a state to enforce a decision systematically amounts to a lack of due process and generates state responsibility). Overall, the decision is interesting because it clearly shows that investment tribunals do not systematically give undue deference to the interests of investors, whilst investment protections do not represent a right to be compensated for everything.

New Klöckner, a company acquired by GEA (the claimant) entered in an agreement with Oriana –a public but independent company– to provide 200.000 tons of fuel per year for conversion. The claimant eventually noticed that a significant quantity of finished product went missing, and a Settlement Agreement was signed whereby Oriana acknowledged being indebted. In addition, the parties agreed on a Repayment Agreement for US$27,6 million, to be paid in finished products rather than cash (at ¶47-55).

In 2001, an arbitral procedure was started before the ICC regarding the execution of the Repayment Agreement. This gave rise to further polemics because Oriana eventually objected to the recognition and enforcement of the award and questioned the tribunal’s jurisdiction and the validity of the various Agreements. Essentially, it argued that its own Vice President had no authority to sign the original Agreement, part of which had never approved by the Ukrainian authorities anyway (at ¶57-61). The ICC Appellate Court, as a matter of fact, confirmed that the agreement was not valid because it had been concluded by unauthorised persons, a point reiterated by Ukrainian Courts which refused to enforce the ICC original decision (at ¶65-69).

The claimant therefore started a procedure before the ICSID on the ground that the respondent failed to honour “repeated promises” (as to the payment of the products) and took “multiple steps” to ensure that no compensation would be paid, thereby breaching its investment commitments (at ¶86-87).

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Adding up to our posts on foreign direct investments in agriculture, the Surrey International Law Centre and the Environmental Regulatory Research Group just published a fact-finding report on the so-called ‘land-grab’ which will be used as a basis for a more in-depth piece of research.

The abstract reads as follows, and the full document can be found here.

Following the 2008 world food crisis, many international investors have engaged in a race for land acquisition and food production. This new form of Foreign Direct Investment (FDI) is increasingly criticised in the public sphere, which commonly refers to it as a ‘land grab’.

In the absence of consequent primary sources relating to the subject matter, however, this working document provides an overview of what the authors describe as an ‘agri-FDI’ trend, based on the cross analysis of secondary sources. It first draws a geographical map of the trend as a means to emphasise who invests and where. Second, it considers the origins of the trend are, including the 2008 food crises and the impact of increased demand for biofuel. This document, overall, constitutes the basis of a forthcoming paper which, in turn, will formulate hypotheses and questions as to whether agriculture-oriented investments differ from traditional FDI.

A. Martin and M. Ayalew, Acquiring Land Abroad for Agricultural Purposes: ‘Land Grab’ or Agri-Fdi? Report of the Surrey International Law Centre and Environmental Regulatory Research Group (March 2011). Surrey Law Working Papers – 08/2011 Available on SSRN at http://ssrn.com/abstract=1788948

We are happy to annouce the publication of an peer-reviewed article taking into consideration the issue of investors’ nationality in foreign direct investments, or more specifically, the issue of abuses of corporate structures in transnational investment deals. The article compares the facts in two ICSID cases, Tokios Tokelés v Ukraine and TSA Spectrum v Argentina, where ICSID tribunals had to choose between the place of incorporation of the entity and the controling nationality of the investors (corporate veil piercing) to establish ‘foreign control’ and the Centre’s jurisdiction. The Phoenix Action v Czech Republic is also cited because of its insights on “bona fide” investments. 

A. Martin, International investment dipsutes, nationality and corporate veil: some insights from Tokios Tokeles and TSA Spectrum de Argentina, Transnational Dispute Management, Volume.8 Issue.1 February 2011

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