Relevance of the Article 7 and pre-article 7 procedures for determinations of an investment treaty tribunal

Transcription

1 Relevance of the Article 7 and pre-article 7 procedures for determinations of an investment treaty tribunal Warsaw, 15 September 2017 dr Wojciech Sadowski Copyright 2017 by K&L Gates LLP. All rights reserved.

2 AGENDA I. Is the Rule of Law Important in Investment Treaty Disputes II. III. A case-study Formal vs. Actual Effect of Article 7 Decisions klgates.com 2

3 I. IS THE RULE OF LAW IMPORTANT IN INVESTMENT TREATY DISPUTES More than 2,500 bi and multilateral treaties on promotion and protection of international investment Most include similar standards of protection Relevance of the rule of law to: Expropriation Fair and equitable treatment, including denial of justice Impairment of investments by arbitrary and/or discriminatory measures, et al. klgates.com 3

4 I. IS THE RULE OF LAW IMPORTANT IN INVESTMENT TREATY DISPUTES Empirical research suggests the success rate is explained by conflation of democratic governance and development status Particular importance of: Host state s ability to protect property rights Host state s bureaucratic quality [D.Behn, T. Berge, M. Langford 2017] Neither quality can exist without an independent and efficient judicial system klgates.com 4

5 I. IS THE RULE OF LAW IMPORTANT IN INVESTMENT TREATY DISPUTES In these circumstances, the Tribunal finds that the Claimant has not established any want of due process under Polish or international law: that process has far to go in Poland, including the possibility for several judicial interventions by the Polish courts. In the Tribunal's view, the Claimant's complaint is premature. Moreover, there is no reason to assume that the Polish legal system, including the procedures and practices of Polish administrative bodies and Polish courts, would violate in the future the Respondent's obligations under Article 5(a) of the Treaty. Enkev Beheer BV v. Republic of Poland, First Partial Award of 29 April 2014, PCA Case No klgates.com 5

6 II. A CASE STUDY CASE A Shortly after taking office in 2003 President D.. promised to purge the public sector and the judiciary of corruption. Many welcomed the impeachment proceedings that followed in the Supreme Court, which removed some judges for misconduct and led to others resigning. This was seen by others, however, as unacceptable interference with the judicial branch. The new members of the Supreme Court appeared to include professionals with lower-grade qualifications and experience than those they replaced, giving the impression that the president had all along intended to create a more pliable Supreme Court. The president s control over the judiciary, as well as his apparent insincerity about addressing corruption, was exemplified by his treatment of friends and relatives discovered to be involved in corrupt practices. For example, the former interior minister, R.G..., an inner-circle member of the president s, was implicated by one prosecutor in the smuggling of compact discs, but managed to frustrate the penal investigation with the assistance of another prosecutor. The prosecutors involved were impeached for alleged formal matters relating to the case, while G.. was eventually appointed minister for national defence, the post he currently holds. Transparency International, Global Corruption Report 2008, p. 174, names redacted Bureau Veritas, Inspection, Valuation, Assessment and Control, BIVAC B.V. v. Republic of Paraguay (ICSID Case No. ARB/07/9) klgates.com 6

7 II. A CASE STUDY CASE B In his three Reports [the former Minister] has chronicled the 24 events of the Ecuadorian judiciary since the Correa administration took power. Since then, that administration has purged the Constitutional Court, has 2 twice replaced the judges on the National Court of Justice, and also the members of the Judicial Council. And the administration's own statistics for only an 18-month period show that they had dismissed 442 judges and suspended 334 judges. And, in fact, if we take into account all of the judges that were sanctioned in that 18-month period, it's well over half of the judges in Ecuador. As one news editorial said, those statistics show either widespread incompetence in the judiciary or political tampering with the judiciary, or both. Chevron Corporation and Texaco Petroleum Corporation v. The Republic of Ecuador, UNCITRAL, PCA Case No , Transcript of Track 2 Hearing, 21 April 2015, p klgates.com 7

8 II. A CASE STUDY In light of the above finding that the remedies presented by Ecuador did not rise to the level where their exhaustion is required under the standard of Article II(7), there is no need to pass judgment generally upon the independence or lack thereof of Ecuador s judiciary, and the Tribunal refrains from doing so. Chevron Corporation (USA) and Texaco Petroleum Company (USA) v. The Republic of Ecuador, UNCITRAL, PCA Case No , Partial Merits Award, 30 March 2010 klgates.com 8

9 III. FORMAL VS. INFORMAL EFFECT OF ARTICLE 7 DECISIONS Various acts and decisions involved in the pre-article 7 and Article 7 procedures Formal binding effect unlikely Arbitral Tribunals will need to make their own determinations Persuasive effect of Article 7 TUE decisions Opinio juris? Wording matters cautious or vague formulations likely to undermine the relevance of the instruments. klgates.com 9

10 Thank you for your attention klgates.com 10