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Arbitral Praeliminaria – Reflections on the Distinction between Admissibility and Jurisdiction after BG v. Argentina

  • FRIEDRICH ROSENFELD

Abstract

Arbitral tribunals have traditionally encountered difficulties in drawing the distinction between jurisdiction and admissibility. The various approaches range from the rejection of the concept of admissibility in arbitral proceedings to an overly expansive interpretation of the concept of admissibility so as to include aspects of jurisdiction. With BG Group v. Republic of Argentina, the US Supreme Court has further complicated the problem in what has become the first decision in its history on the interpretation of a bilateral investment treaty. The present article sets forth a test for distinguishing jurisdiction from admissibility which is in line with international jurisprudence and takes due account of the normative and institutional particularities of international investment arbitration proceedings.

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References

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1 See, e.g., In the Matter of an International Arbitration under Chapter 11 of the North American Free Trade Agreement and the UNCITRAL Arbitration Rules between Methanex Corporation and USA, Partial Award, 7 August 2002, para. 125. See also Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Award, 22 August 2012, para.194. Arbitrator Brower dissented with the finding of the majority and emphasized that he considered the local litigation requirement to be an admissibility criterion. Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Dissenting Opinion of Judge Charles N. Brower, 15 August 2012, para. 13.

2 The arbitral tribunal in Telefónica v. Argentine Republic, ICSID Case No. ARB/03/20, Decision of the Tribunal on Objections to Jurisdiction, 25 May 2006, para. 93, for example, held that the failure of compliance with the local litigation requirement constituted a ‘temporary lack of jurisdiction’ that is equivalent to ‘inadmissibility’. See also sub-subsection 3.2.2., infra.

3 BG Group PLC v. Republic of Argentina, 572 US 2014.

4 In proceedings pursuant to the Agreement between the Government of the United Kingdom and the Government of the Republic of Argentina for the Promotion and Protection of Investments, entered into on 11 December 1990, and the UNCITRAL Arbitration Rules: BG Group Plc. and The Republic of Argentina, Final Award, 24 December 2007, para. 3.

5 Ibid., paras. 148 et seq.

6 Ibid., para. 157.

7 Ibid., para. 466.

8 Republic of Argentina v. BG Group PLC, 715 F. Supp. 2d 108 (DDC 2010); Republic of Argentina v. BG Group PLC, 764 F. Supp. 2d 21 (DDC 2011).

9 US Court of Appeals for the District of Columbia Circuit, Argued 10 November 2011, decided 17 January 2012, No. 11 – 7021, Republic of Argentina, Appellant v. BG Group PLC, Appellee, Appeal from the US District Court for the District of Columbia (No. 1:08-cv-00485).

10 US Supreme Court, BG Group v. Argentina, supra note 3, at 19.

11 Ibid., at 8.

12 Ibid., at 7.

13 Ibid.

14 Ibid.

15 Ibid.

16 Ibid., at 10.

17 Ibid., at 10 et seq.

18 The dissenting opinion will be addressed in the analysis in Section 5.

19 Shany, Y., ‘Jurisdiction and Admissibility’, in Romano, C.P., Alter, K.J. and Avgerou, C., The Oxford Handbook of International Adjudication(2013), 779, at 781 et seq.; M. Waibel, ‘Investment Arbitration: Jurisdiction and Admissibility’, in Legal Studies Research Paper Series (February 2014), 2; Rosenne, S., The Law and Practice of The International Court, 1920 – 1996, Vol. II, (1997), 536; Williams, D.A.R., ‘Jurisdiction and Admissibility’, in Muchlinski, P., Ortino, F. and Schreuer, C., Oxford Handbook of International Investment Law (2008), 868, at 919 et seq.; I. Brownlie, Principles of Public International Law (2003), 457. See also Arthur, J.P. Hugues, ‘The Legal Value of Prior Steps to Arbitration in International Law of Foreign Investment: Two (Different?) Approaches, One Outcome’, (2015) 15 Annuario Mexicano de Derecho Internacional 449.

20 See Waibel, supra note 19, at 43.

21 On the distinction between foundational and specific jurisdiction see Y. Shany, Assessing the Effectiveness of International Courts (2014), 69 et seq.

22 Art. 25 of the ICSID Convention.

23 See C. Schreuer et al., The ICSID Convention: A Commentary (2009), 190 et seq.

24 Ibid., at 82 et seq.

25 Shany, supra note 19, at 785. For a different view see V. Heiskanen, ‘Ménage à trois? Jurisdiction, Admissibility and Competence in Investment Treaty Arbitration’, (2013) ICSID Review 1, at 8 et seq.

26 Armed Activities on the Territory of the Congo (New Application: 2002) (Democratic Republic of the Congo v. Rwanda), Jurisdiction and Admissibility, Judgment of 3 February 2006, [2006] ICJ Rep. 6.

27 Art. 29 of the CEDAW reads: ‘Any dispute between two or more States Parties concerning the interpretation or application of the present Convention which is not settled by negotiation shall, at the request of one of them, be submitted to arbitration. If within six months from the date of the request for arbitration the parties are unable to agree on the organization of the arbitration, any one of those parties may refer the dispute to the International Court of Justice by request in conformity with the Statute of the Court.’

28 Armed Activities on the Territory of the Congo, supra note 26, at 39, para. 88, with further references.

29 Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v. Russian Federation), Preliminary objections, Judgment of 1 April 2011, [2011] ICJ Rep.70. at 124, para. 131.

30 Art. 22 of the CERD reads: ‘Any dispute between two or more States Parties with respect to the interpretation or application of this Convention, which is not settled by negotiation or by the procedures expressly provided for in this Convention, shall, at the request of any of the parties to the dispute, be referred to the International Court of Justice for decision, unless the disputants agree to another mode of settlement.’

31 Application of the International Convention on the Elimination of All Forms of Racial Discrimination, supra note 29, at 128, para. 141.

32 Ibid., at 140, para. 184.

33 Numerous other cases lend further support to this proposition: Questions of Mutual Assistance in Criminal Matters (Djibouti v. France), Merits, Judgment of 4 June 2008, [2008] ICJ Rep. 177, at 200, para. 48; Application of the International Convention on the Elimination of All Forms of Racial Discrimination, supra note 29, at 124, para. 131; South West Africa (Ethiopia v. South Africa; Liberia v. South Africa), Preliminary objections, Judgment of 21 December 1962, [1962] ICJ Rep. 319, at 344 et seq.; Border and Transborder Armed Actions (Nicaragua v. Honduras), Jurisdiction and admissibility, Judgment of 20 December 1988, [1988] ICJ Rep. 69, at 88, paras. 42 et seq.; Questions of Interpretation and Application of the 1971 Montreal Convention arising from the Aerial Incident at Lockerbie (Libyan Arab Jamahiriya v. United Kingdom), Preliminary objections, Judgment of 27 February 1998, [1998] ICJ Rep. 16, paras. 16 et seq., and paras 39–40; Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. USA), Jurisdiction and Admissibility, Judgment of 26 November 1984, [1984] ICJ Rep. 392, at 427, paras. 81 et seq.; Mavrommatis Palestine Concessions (Greece v. United Kingdom), PCIJ Rep Series A No 2, at 11 et seq.; Interpretation of the Statute of the Memel Territory (United Kingdom and Italy v. Lithuania), PCIJ Rep Series A/B No 49, at 327 et seq.; Electricity Company of Sofia and Bulgaria (Belgium v. Bulgaria), PCIJ Rep Series A/B No 77, at 78 et seq.

34 A considerable number of tribunals have simply evaded the intricacies of making a distinction between admissibility and jurisdiction and left the question open. See, e.g., Yukos Universal Limited (Isle of Man) v. Russian Federation, PCA Case No. AA 227, Interim Award on Jurisdiction and Admissibility, 30 November 2009, para. 587; Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005, para. 87; Ambiente Ufficio S.p.A. and Others (case formerly known as ‘Giordano Alpi and Others’) v. Argentine Republic, ICSID Case No. ARB/08/9, Decision on Jurisdiction and Admissibility, 8 February 2013, para. 572. See also Pan American Energy LLC and BP Argentina Exploration Company v. Argentine Republic, ICSID Case No. ARB/03/13, and BP America Production Company, Pan American Sur SRL, Pan American Fueguina SRL and Pan American Continental SRL v. Argentine Republic, ICSID Case No. ARB/04/8, Decision on Preliminary Objections, 27 July 2006, para. 54.

35 Tulip Real Estate Investment and Development Netherlands B.V. and Republic of Turkey, ICSID Case No. ARB/11/28, Decision on Bifurcated Jurisdictional Issue, 5 March 2013, para. 61.

36 Ibid., para. 72.

37 Philip Morris Brands SÀRL, Philip Morris Products S.A. and Abal Hermanos S.A. v. Oriental Republic of Urugay, ICSID Case No. ARB/10/7, Decision on Jurisdiction, 2 July 2013, paras. 53, 61; In the Matter of an Arbitration Pursuant to the Agreement between the Government of the United Kingdom and the Government of the Republic of Argentina for the Promotion and Protection of Investments, signed 11 December 1990, and the UNCITRAL Arbitration Rules 1976 between ICS Inspection and Control Services Limited (United Kingdom) and Argentine Republic, PCA Case No. 2010–9, Award on Jurisdiction, 10 February 2012, para. 262; Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction, 14 January 2004, para. 88; Wintershall Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14, Award, 8 December 2008, para.172; Murphy Exploration and Production Company International v. Republic of Ecuador, ICSID Case No. ARB/08/4, Award on Jurisdiction, 15 December 2010, paras. 156–7; Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, Award, 21 June 2011, para. 94; Mondev International Ltd. v. USA, ICSID Case No. ARB(AF)/99/2, 11 October 2002, para. 43; Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. Argentine Republic, ICSID Case No. ARB/07/26, Decision on Jurisdiction, 19 December 2012, para. 130; Ambiente Ufficio S.p.A. and Others (case formerly known as Giordano Alpi and Others) v. Argentine Republic, supra note 34, para. 10; Abaclat and Others (case formerly known as ‘Giovanna A Beccara and Others’) v. Argentine Republic, ICSID Case No. ARB/07/5, Dissenting Opinion, Georges Abi-Saab, 28 October 2011, para. 23.

38 Hochtief AG and Argentine Republic, ICSID Case No. ARB/97/31, Decision on Jurisdiction, 24 October 2011, para. 90.

39 Ibid., para. 96.

40 SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision of the Tribunal on Objections to Jurisdiction, 6 August 2003, para. 184.

41 Final Award in the Matter of an UNCITRAL Arbitration between Ronald S. Lauder and Czech Republic, 3 September 2001, para. 187.

42 Treaty with the Czech and Slovak Federal Republic Concerning the Reciprocal Encouragement and Protection of Investment, available at www.state.gov/documents/organization/43557.pdf. Art. 6(3)(a) reads in relevant part: ‘At any time after six months from the date on which the dispute arose, the national or company concerned may choose to consent in writing to the submission of the dispute for settlement by conciliation or binding arbitration to the International Centre for the Settlement of Investment Disputes or to the Additional Facility of the Centre of pursuant to the Arbitration Rules of the United Nationals Commission on International Trade Law or pursuant to the arbitration rules of any arbitral institution mutually agreed between the parties to the dispute.’

43 Occidental Petroleum Corporation Occidental Exploration and Production Company v. Republic of Ecuador, ICSID Case No. ARB/06/11, Decision on Jurisdiction, 9 September 2008, para. 46.

44 Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, 24 July 2008, para. 348.

45 Ibid., para. 343.

46 See, e.g., Phoenix Action Ltd v. Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009, paras. 94–5.

47 Philip Morris Brands SARL, Philip Morris Products S.A. and Abal Hermanos S.A. v. Oriental Republic of Urugay, supra note 37, para. 148.

48 TSA Spectrum de Argentina S.A. v. Argentine Republic, ICSID Case No. ARB/05/5, 19 December 2008, para. 112.

49 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Preliminary objections, Judgment of 18 November 2008, [2008] ICJ Rep. 441, para. 87.

50 Mavrommatis Palestine Concession, supra note 33, at 34; Electricity Company of Sofia and Bulgaria, supra note 33, at 150 and 109, para. 24 (Judge van Eysinga, Dissenting Opinion).

51 See also J. Crawford, Brownlie's Principles of Public International Law (2012), 693, stating that an ‘objection to the admissibility of a claim invites the tribunal to dismiss (or perhaps postpone) the claim on a ground which, while it does not exclude its authority in principle, affects the possibility or propriety of its deciding the particular case at the particular time.’ See also Williams, supra note 19, at 919 et seq.; Brownlie, supra note 19, at 457.

52 Shany, supra note 21, at 67 et seq.

53 Art. 79(9) of the ICJ provides that ‘[a]fter hearing the parties, the Court shall give its decision in the form of a judgment, by which it shall either uphold the objection, reject it, or declare that the objection does not possess, in the circumstances of the case, an exclusively preliminary character. (. . .)’.

54 Northern Cameroons (Cameroon v. United Kingdom), Preliminary objections, Judgment of 2 December 1963, [1963] ICJ Rep. 97 (Judge Sir Gerald Fitzmaurice, Separate Opinion). See also G. Fitzmaurice, The Law and Procedure of the International Court of Justice, Vol. II, (1986), 438 et seq.

55 Northern Cameroons, supra note 54, at 101.

56 Ibid.

57 Ibid., at 103.

58 Application of the Convention on the Prevention and Punishment of the Crime of Genocide, supra note 49, at 456, para. 120.

59 Case Concerning Oil Platforms (Islamic Republic of Iran v. USA), Preliminary objection, Judgment of 12 December 1996, [1996] ICJ Rep. 161, para. 29.

60 Panevezys-Saldutiskis Railway (Estonia v. Lithuania), PCIJ Rep Series A/B No 76 4. See also, Electricity Company of Sofia and Bulgaria, supra note 33, at 49, paras. 5 et seq. (Judge Erich, Separate Opinion).

61 Mavrommatis Palestine Concessions, supra note 33, at 16.

62 See e.g., Dispute regarding Navigational and Related Rights (Costa Rica v. Nicaragua), Merits, Judgment of 13 July 2009, [2009] ICJ Rep. 213, at 264, paras. 137 et seq.; Fisheries Jurisdiction (Spain v. Canada), Jurisdiction, Judgment of 4 December 1998, [1998] ICJ Rep. 432, at 447, paras. 29 et seq. See also Certain Phosphate Lands in Nauru (Nauru v. Australia), Preliminary objections, Judgment of 26 June 1992, [1992] ICJ Rep. 240, at 266, paras. 68 et seq.; Avena and Other Mexican Nationals (Mexico v. USA), Merits, Judgment of 31 March 2004, [2004] ICJ Rep. 12, at 37, para. 44.

63 Dispute regarding Navigational and Related Rights, supra note 62, at 264, paras. 137 et seq.

64 Fisheries Jurisdiction, supra note 62, at 447, para. 29 et seq. See also Certain Phosphate Lands in Nauru, supra note 62, at 266, paras. 68 et seq.

65 Ibid.

66 See also Zeiler, G., ‘Jurisdiction, Competence, and Admissibility of Claims in ICSID Arbitration Proceedings’, in Binder, C.et al. (Eds.), International Investment Law for the 21st Century – Essays in Honor of Christoph Schreuer (2009), 76, at 79.

67 The French version of Art. 41(1) of the ICSID Arbitration Rules reads: ‘Tout déclinatoire fondé sur le motif que le différend ou toute demande accessoire ne ressortit pas à la competence du Centre ou, pour toute autre raison, à celle du Tribunal, est soulevé aussitôt que possible. (. . .)’

68 Schreuer et al., supra note 23, at 85 et seq. See also Zeiler, supra note 66, at 91. ICSID Arbitration Rule 41(5) may, however, be interpreted so as to cover admissibility objections.

69 For a different view see The Rompetrol Group N.V. v. Romania, ICSID Case No. ARB/06/3, Decision on Respondent's Preliminary Objections on Jurisdiction and Admissibility, 18 April 2008, para. 112.

70 CMS Gas Transmission Company and the Republic of Argentina, ICSID Case No. ARB/01/8, Decision of the Tribunal on Objections to Jurisdiction, 17 July 2003, para. 41.

71 Methanex v. USA, supra note 1, para. 123. See also Laird, I.A., ‘A Distinction without Difference? An Examination of the Concepts of Admissibility and Jurisdiction in Salini v. Jordan and Methanex v. USA’, in Weiler, T., International Investment Law and Arbitration, Leading Cases from the ICSID, IAFTA, Bilateral Treaties and Customary International Law(2005), 201, at 222.

72 Methanex v. USA, supra note 1, para. 125.

73 See also Shany, supra note 19, at 797.

74 Decision No DEC 134-A3/A8/A9/A14/B61-FT), IUSCT, Decision Ruling on Request for Revision by Iran of July 1, 2011, para. 59.

75 Hrvatska Elektroprivreda v. Republic of Slovenia, ICSID Case No. ARB/05/24, Ruling of May 6, 2008, para. 33.

76 RSM Production Corporation v. Grenada, ICSID Case No. ARB/05/14 (Annulment Proceeding), Decision on RSM Production Corporation's Application for a Prelminary Ruling of 29 October 2009, para. 20.

77 Schreuer et al., supra note 23, at 688. See also In the Matter of an Arbitration Before a Tribunal Constituted in Accordance with the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion nad Protection of Investments, signed on 15 September 1993, and United Nations Commission on International Trade Law Rules of Arbitration as Revised 2010 between Philip Morris Asia Limited and Commonwealth of Australia, Procedural Order No. 8, 14 April 2014, para. 118.

78 Decision No DEC 134-A4/A8/A9/A14/B61-FT, supra note 74, para. 61.

79 Shany, supra note 21, at 67 et seq.

80 This was correctly observed by the majority in Daimler v. Argentina, supra note 1, para. 194. However, the majority incorrectly drew the conclusion that admissibility has no role to play in arbitration proceedings.

81 See Alvarez, J.E., ‘What are International Judges for? The Main Functions of International Adjudication’, in Romano, C.P.R., Alter, K.J. and Avgerou, C., The Oxford Handbook of International Adjudication (2013), 159.

82 Admissibility issues that have been recognized by arbitral tribunals include the specification of claims, the principles of res judicata, the requirements for submitting a counterclaim or a breach of the principle of good faith. See e.g., In the Matter of an Arbitration before a Tribunal constituted in Accordance with the Treaty between the Federal Republic of Germany and the People's Republic of Bulgaria concerning the Reciprocal Encouragment and Protection of Investments, signed 12 April 1986, entered into Force 10 March 1988, and Arbitration Rules of the United Nations Commission on International Trade Law, 2010, between ST-AD (Germany) and Republic of Bulgaria, Award on Jurisdiction, 18 July 2013, para. 295; Helnan International Hotels A/S v. Arab Republic of Egypt, ICSID Case No. 05/19, Award, 3 July 2008, para.126; Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplún v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Decision on Jurisdiction, 27 September 2012, paras. 292, 298. In cases of manifest fraud, this may in exceptional cases also affect the jurisdiction of an arbitral tribunal. See David Minnotte and Robert Lewis v. Republic of Poland, ICSID Case No. ARB(AF)10/1, Award, 16 May 2014, para. 138; Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, 4 October 2013, para. 407.

83 See Section 3.2, supra.

84 572 US (2014), Justice Sotomayor, concurring in part, at 4.

85 Cf. Art. 31 of the VCLT.

86 572 US (2014), Justice Roberts, dissenting, at 2 et seq.

87 Ibid., at 17.

88 Ibid.

89 BG Group PLC v. Republic of Argentina, Motion for Leave to File Brief Amicus Curiae and Brief of AWG Group Limited as Amicus Curiae in Support of Petitioner, 30 August 2012; BG Group PLC v. Republic of Argentina, Motion for Leave to File and Brief of Amicus Curiae The United States Council for International Business in Support of Petitioner; BG Group PLC v. Republic of Argentina, Motion for Leave to File Brief Amicus Curiae of the American Arbitration Association as Amicus Curiae in Support of Petitioner, 27 August 2012; BG Group PLC v. Republic of Argentina, Motion for Leave to File Brief Amicus Curiae Brief and Brief of Professors and Practitioners of Arbitration Law as Amici Curiae in Support of Petition for a Writ of Certiorari, 29 August 2012.

90 Cf. Alvarez, supra note 81, at 161. Some scholars have rejected the application of principal agent analysis and characterized the relationship between parties and arbitral tribunal as a relation of trusteeship. See e.g., K.J. Alter, ‘Delegation to international courts and the limits of re-contracting political power’, in D.G. Hawkins et al., Delegation and Agency in International Organizations (2014), 312, at 334 et seq.

91 Cf. Shany, supra note 19, at 785.

* Dr. Friedrich Rosenfeld practices arbitration with Hanefeld Rechtsanwälte in Hamburg, Germany. He is also Global Adjunct Professor of Law at NYU Law in Paris, Visiting Professor at the International Hellenic University in Thessaloniki and Lecturer at Bucerius Law School in Hamburg []. The author wishes to thank Professor Franco Ferrari for most valuable comments on prior versions of this article. The standard disclaimers apply.

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