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Arbitration Claim Application in the Courts of United Kingdom

A Claim or Application for Arbitration A claim or an application made to the English court with the subject being or the outcome affecting an existing or proposed agreement to arbitrate or to challenge its award, is termed as an ‘application for arbitration’ or an ‘arbitration claim’. The Civil Procedure Rules which statutorily govern the rules and procedures to be adopted by the English Courts…

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The Seat of Arbitration in International Commercial Arbitration

The seat of arbitration (also known as the place or locale) is one of the most important factors to take into consideration when drafting international arbitration clauses in a contract and is often confused with the venue of the arbitration, which is not the same thing.

The choice of the seat of arbitration can have major implications for an arbitration that later arises. Mandatory provisions of the seat of arbitration will always apply to the arbitration: for instance, if the seat of arbitration is chosen as Riyadh, then the arbitration must be Shari’a compliant, without the awarding of interest. The seat of arbitration will also typically determine the procedure governing arbitral proceedings as well as the court that has the power to interfere in arbitration proceedings, for instance by issuing interim measures or by annulling an award. A choice of London as the seat of arbitration, for instance, will generally permit applications for security for costs under the Arbitration Act 1996. A choice of a U.S. seat of arbitration, on the other hand, may allow the intervention of domestic courts to force the production of documents under 28 USC section 1782.

The seat of arbitration must be distinguished from the physical place where hearings are to be conducted, even though they usually are at the same location. The difference between the place and the venue is emphasized in certain arbitration rules, such as for example Article 18 of the ICC Rules (2017) and Article 16 of the LCIA Rules (2014).

Traditionally, the most popular seats for international commercial arbitration were London, Paris, New York and Geneva, where the oldest and most popular arbitral institutions are based. However, recent statistics reveal increasing diversity as to the arbitral seat.

2016 ICC Statistics on the Seat of Arbitration

ICC statistics for 2016 show that out of 106 cases registered in 2016, 96 had their seat in Paris, 65 in London and 54 in Geneva. The top three places chosen by the parties for the seat were followed by Belize City, a popular jurisdiction for the incorporation of special purpose vehicles, followed by New York, Zurich, Singapore and Madrid.

Regarding ICC cases with their seat in the USA, out of 80 cases registered in 2016, 41 had their seat in New York, NY, 10 in California, 10 in Texas, 7 in Florida, 2 in Illinois, 2 in Washington and 2 Washington D.C. For ICC arbitrations with their seat in Canada, most Canadian seats were in the provinces of Ontario, Alberta and Quebec. Finally, Hong Kong was the place of arbitration in 8 ICC cases seated in China.

What Has Changed Regarding the Seat of Arbitration and Why?

Pursuant to a comprehensive report prepared by the IBA in 2015 entitled “The Current State and Future of International Arbitration: Regional Perspectives”, it appears that in Europe and North America traditionally “safe” seats for arbitration maintain their popularity. These include London, Paris and Geneva but also Zurich, Stockholm, New York, Washington DC, Toronto, Houston and Vancouver, British Columbia. Records also show that Madrid is becoming an increasingly popular venue for Latin-American and Spanish parties. The Hague, Vienna and Frankfurt are also frequent seats of arbitration.

Well-established seats have also maintained their popularity among Latin American and African parties aiming for a neutral seat in their arbitration clauses. In Africa, for example, parties still prefer London, Paris and Geneva, but it is interesting to note that Mauritius has gained traction as a seat of arbitration for African parties.

Asia, on the other hand, has seen significant developments in the field of international arbitration over the past decade that mirror its economic growth. As the global economy changes and arbitration grows in popularity, the financial centers of Asia have emerged as popular new international arbitration hubs. Singapore and Hong Kong, in particular, have become major seats of arbitration in Asia. Singapore is today the most popular seat in Asia, with well-developed infrastructure, modern national legislation and a strong position as a financial and commercial center. Furthermore, Singapore is also situated in a geographically convenient location and is a neutral venue for parties from two opposite sides of the globe.

In the Middle East, while the predominant seats remain Paris, London and Geneva, significant changes over the past years have also led to positive changes that have impacted parties’ choice of the seat. The United Arab Emirates, and in particular Dubai, has seen an immense growth in popularity as the preferred seat of arbitration for parties from the Middle East after 2006, when the UAE acceded to the New York Convention for Recognition and Enforcement of Arbitral Awards. Furthermore, as Middle Eastern countries open up towards arbitration and modernize their national legislation, many see Cairo (a historically important seat of arbitration but less so today), Tunis, Beirut and Riyadh as emerging arbitration hubs in the region, especially for parties speaking Arabic and wishing to conduct proceedings in their own language.

In conclusion, traditionally popular seats of arbitration have maintained their popularity among parties when choosing a safe, neutral and arbitration-friendly seat to solve their disputes. However, following rapid changes in the global economy and the fact that the arbitration is growing and expanding to the other continents as well, new centers, especially in Asia and the Middle East have established their place in the global arbitration community.

Only a few decades ago, a neutral and independent place of arbitration was sometimes halfway across the globe. Parties will likely have more possibilities to solve their international commercial disputes in their own language and in a more familiar environment in years to come.

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Screening Arbitrator Appointments

Is screening arbitrator appointments a potential solution to the perceived bias of party-appointed arbitrators?

Paul Slovic, a cognitive scientist from the University of Oregon, was part of an interesting experiment. He and his colleagues provided a survey of various technologies to participants, who were asked to list their benefits and costs. The initial results concluded that when respondents advocated for a product, they listed its benefits, whereas those who disliked it noted its risks, with few benefits. Test-takers then read about a technology’s benefits or disadvantages, and the outcome was eye-opening: those who had received messages extolling the benefits of a technology lowered their views on its risks, while those who read about mild risks increased their view of its benefits.

Slovic touched on a psychological trait, which is that humans, by collecting and organising data quickly and without much reflection, are vulnerable to simplify complex judgements into painless trade-offs. If a technology is deemed ‘good,’ it has fewer costs, and vice-versa.

Also known as the affect heuristic (or the tendency to “go with your gut”), this phenomenon is relevant to the debate over whether party-appointed arbitrators in international arbitrations are prone to unethical or partial decisions due to conscious or sub-conscious biases and whether the screening of arbitrator appointments would be useful to implement.

Debate over Party-Appointed Arbitrators

Notable advocate Jan Paulsson first posed the issue as a moral one when he argued that a selected arbitrator’s role as ‘arbitrator-advocate’ was mutually exclusive with mutual confidence by both parties and thus threatened the legitimacy of arbitration.[1]

Soon after, another thought leader, Albert Jan van den Berg, alleged that party-appointed arbitrators nearly always issue a dissenting opinion when the appointing party loses a case.[2] 

Then the pendulum swung back in favour of party-appointed arbitrators. In April 2013, Johnny Veeder concluded that party appointments were the “keystone” of international arbitration.[3]

Additionally, Judge Charles Brower and Charles Rosenberg deconstructed the Paulsson/van den Berg narrative by stressing the importance of procedural justice as a legitimation device and by distinguishing mutual confidence in the tribunal as a whole as opposed to one of the arbitrators.[4]

Interestingly, neither side truly considered screening arbitrator appointments as a potential compromise solution. It was mentioned once by Jan Paulsson in passing.

User Satisfaction regarding the Appointment of Arbitrators

Users have also weighed in on the debate over party-appointed arbitrators.

In a survey co-conducted by Queen Mary and White & Case LLP, 76% of respondents favoured party appointments.[5] Choosing an arbitrator also remains one of the top three most valuable attributes of the system.[6] Questions, however, still lurk.

Only sixty-six percent (66%) of arbitrators favoured unilateral appointments, however, whereas eighty-three percent (83%) of practitioners supported it.

Given this division, what should be done? Could screening arbitrator appointments serve as a potential middle ground?

The Screening of Arbitrator Appointments

The International Institute for Conflict Resolution & Prevention (“CPR”) recently implemented a screening arbitrator appointments process.

Under Rule 5.4(d) of the new CPR Rules for Administered Arbitration of International Disputes, if the parties have agreed to a three-member tribunal, two of those arbitrators will be appointed by the parties “without knowing which party designated each of them.”

How can parties appoint arbitrators but not know which arbitrator they appointed?

The CPR’s process is conducted as follows. First, after discussing the preferred credentials of potential arbitrators,[7] the CPR provides a list of candidates for parties to rank its top three candidates within a ten-day period.[8] During that time, the parties may object to any listed candidate based on “grounds of lack of independence or impartiality.”[9] If an objection is successful, CPR will appoint the next candidate by order of party preference.[10]

Interestingly, the Rules stipulate that “[n]either CPR nor the parties shall advise or otherwise provide any information or indication to any arbitrator candidate or appointed arbitrator as to which party selected either of the party-designated arbitrators.”[11]

This means that the CPR has potentially found a way to ensure objectivity and procedural legitimacy while maintaining the traditional party appointment process.

Conclusion

Because of the novelty of the CPR Rules, no reported arbitrations exist to date where arbitrators were appointed in this manner.

There will surely be forthcoming obstacles, most notably concerning arbitrator interviews, disclosure of the constitution of the tribunal and the challenging of arbitrators.

With future advancements in cognitive research, users and attorneys in the field may one day better understand the effects of affiliation and judgement. Until then, however, the CPR’s screening of arbitrator appointments may be a useful compromise to be emulated.

Thomas W. Davis, Aceris International Arbitration Law Firm

[1] Jan Paulsson, Moral Hazard in International Dispute Resolution, 25 ICSID Rev. 339 (2010).

[2] Albert Jan van den Berg, Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration, in Looking to the Future: Essays on International Law in Honor of W. Michael Reisman (2011), available at http://www.arbitration-icca.org/media/4/83547731316157/media012970228026720van_den_berg–dissenting_opinions.pdf.

[3] Sebastian Perry, Party Appointments are the Keystone of Arbitrations says Veeder, Global Arbitration Review, April 17, 2013.

[4] Charles N. Brower & Charles B. Rosenberg, The Death of the Two-Headed Nightingale: Why the Paulsson-Van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded, 6 World Arb. & Med. Rev. (2012), p. 25.

[5] Queen Mary University of London and White & Case LLP, The 2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process, available at http://www.arbitration.qmul.ac.uk/docs/164483.pdf.

[6] Queen Mary University of London and White & Case LLP, The 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, available at http://www.arbitration.qmul.ac.uk/docs/164761.pdf.  Other top characteristics included enforceability of awards (65 percent); avoiding specific legal systems/national courts (64 percent); and flexibility (38percent).

[7] Candidates are generally drawn from CPR’s “Panel of Distinguished Neutrals,” although parties are free to select their own candidates.

[8] Rule 5.4(a), CPR Rules. The CPR will also provide in its list “disclosure of any circumstances that might give rise to justifiable doubt regarding their independence or impartiality” to sit on the tribunal.

[9] Rules 5.4(b), CPR Rules.

[10] Rules 5.4(c), CPR Rules.

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Ljubljana Arbitration Centre at the Slovenian Chamber of Commerce and Industry

The Ljubljana Arbitration Centre (LAC) is a body organised within the Slovenian Chamber of Commerce and Industry and is the central arbitration institution in Slovenia. The LAC is an autonomous and independent administrative body that provides a wide range of dispute resolution services, most notably arbitration, mediation and conciliation.[1]

The LAC has a long-standing tradition of dispute resolution as it has developed from the Tribunal of the Ljubljana Chamber of Trade, Craft and Industry, established in 1928. Since Slovenia is an UNCITRAL Model law country, the LAC emphasises Slovenia’s geostrategic position and modern legislative framework as the main assets to be considered when opting for the LAC as the designated forum for dispute resolution in the region. The LAC also remains closely connected to UNCITRAL, and they co-organise a yearly event, Joint UNCITRAL-LAC Conference on Dispute Settlement. This event is well established in the region and allows practitioners and academics to exchange views on recent developments in dispute resolutions.[3]

Ljubljana Arbitration Rules

The Arbitration Rules of the Ljubljana Arbitration Centre at the Chamber of Commerce and Industry of Slovenia (the Ljubljana Arbitration Rules) entered into force on 1 January 2014.  The Ljubljana Arbitration Rules mirror recent developments in alternative dispute resolution. They are  available in Slovenian, English, German, Serbian, Macedonian, Croatian and Albanian. The standard arbitration clause reads as follows:

“Any dispute, controversy or claim arising out of or in connection with this contract, including the breach, termination or validity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the Ljubljana Arbitration Centre at the Chamber of Commerce and Industry of Slovenia”.[4]

Recommended additions to the standard clause include the choice of the number of arbitrators, the seat, the language of the arbitration and the applicable substantive law.

Rules for Expedited Arbitral Proceedings

For lower complexity disputes or disputes where the amount in dispute is small, the LAC suggests that parties include the standard arbitration opt-in clause in their contract for the application of the Rules for Expedited Arbitral Proceedings,[5] which are designed to enable a faster and more cost-effective resolution of a dispute.

Emergency Arbitrator Proceedings

The Ljubljana Arbitration Rules also provide for Emergency Arbitrator Proceedings by default.[6] Where the parties wish to opt out of Emergency Arbitrator Proceedings, the LAC recommends that they include the standard arbitration clause for the exclusion of the provisions on the Emergency Arbitrator Proceedings in their contract.

Alja Romsak, Aceris International Arbitration Law Firm

[1] LAC is composed of the Board and the Secretariat. The Board adopts key decisions on the operation of the LAC and renders opinions regarding the development of arbitration in the region and the Secretariat administers and supervises the day-to-day case management. For a more detailed presentation, see link: http://www.sloarbitration.eu/en/The-LAC/About-the-LAC.

[2] Official logo of LAC; Source: http://www.sloarbitration.eu/en/The-LAC/About-the-LAC.

[3] Ljubljana Arbitration Centre’s headquarters, Source: http://www.sloarbitration.eu/Portals/0/LiveRotator/526/Images/stalna-arbitraza-vstopna-gzs.jpg

[4] Link: http://www.sloarbitration.eu/en/Arbitration/Standard-Clauses/English.

[5] Article 48 of the Ljubljana Arbitration Rules.

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ICC Arbitration Clause

By including an ICC Arbitration Clause in a contract, the parties agree that their dispute will be resolved by arbitration and that the arbitration proceedings will be governed by the procedural rules in the ICC Rules of Arbitration, in addition to any mandatory rules at the seat of arbitration.

This also implies that the International Court of Arbitration will administer arbitration proceedings and assist the parties and the arbitral tribunal, e.g., confirming, appointing and replacing arbitrators, deciding on any challenges made against the arbitrators, overseeing emergency proceedings before the start of the arbitration, and scrutinizing and approving the arbitral award.

While dispute resolution clauses are one of the last issues on which parties tend to agree during the negotiations of the contract, a well-drafted arbitration clause can ensure that parties spend less time and costs should a dispute arise. In case the parties would like their dispute to be resolved in accordance with the ICC Arbitration Rules, the International Chamber of Commerce advises the parties to include in their contract the following standard ICC arbitration clauses and ICC mediation clauses.

Standard ICC Arbitration Clause

“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

We typically advise our clients to also include the flowing stipulations relating to the seat of arbitration, the language to be used in the arbitration proceedings as well as the substantive law governing the contract, which are frequently contentious issues after a dispute arises.

“The seat of arbitration shall be [… e.g., Singapore].

The language to be used in the arbitral proceedings shall be […e.g., English].

This contract shall be governed by the substantive law of […e.g., Switzerland].”

ICC Arbitration without the Possibility of an Emergency Arbitrator

In case the parties would like to exclude the possibility of requesting a ruling for conservatory measures by an Emergency Arbitrator, the following statement should be added after the standard clause in order to opt-out of this feature of ICC arbitration.

“The Emergency Arbitrator Provisions shall not apply.”

ICC Arbitration without the ICC’s Expedited Procedure

The parties may also opt-out and exclude the application of the Expedited Procedure Provisions.

“The Expedited Procedure Provisions shall not apply.”

Expedited Procedure Irrespective of the Amount in Dispute

The parties may also opt-in and provide in their contract that the Expedited Procedure will apply to disputes where the amount in dispute exceeds USD 2 million, with the goal of reducing the cost of resolving disputes through ICC arbitration.

“The parties agree, pursuant to Article 30(2)(b) of the Rules of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply irrespective of the amount in dispute.”

Other Recommendations for ICC Arbitration Clauses

If the parties would like to have an ICC Arbitration with the seat of arbitration in Mainland China, the ICC suggests including an explicit reference to the ICC International Court of Arbitration in the arbitration clause.

“All disputes arising out of or in connection with the present contract shall be submitted to the International Court of Arbitration of the International Chamber of Commerce and shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

Option to Use the ICC Mediation Rules

While this option technically exists whenever a dispute arises, the parties may wish to encourage mediation by including the following option explicitly.

“The parties may at any time, without prejudice to any other proceedings, seek to settle any dispute arising out of or in connection with the present contract in accordance with the ICC Mediation Rules.”

Obligation to Consider the ICC Mediation Rules

Rather than making mediation optional, the parties may also require mediation prior to proceeding with arbitration.

“In the event of any dispute arising out of or in connection with the present contract, the parties agree in the first instance to discuss and consider referring the dispute to the ICC Mediation Rules.”

Obligation to Refer Dispute to the ICC Mediation Rules while Permitting Parallel Arbitration Proceedings if Required

Another option is to permit mediation and arbitration to run in parallel.

“In the event of any dispute arising out of or in connection with the present contract, the parties shall first refer the dispute to proceedings under the ICC Mediation Rules. The commencement of proceedings under the ICC Mediation Rules shall not prevent any party from commencing arbitration in accordance with sub-clause y below.

All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

Obligation to Refer Dispute to ICC Mediation, Followed by ICC Arbitration if Required

The parties may also provide for mediation to be attempted for a certain period of time, prior to commencing arbitration.

“In the event of any dispute arising out of or in connection with the present contract, the parties shall first refer the dispute to proceedings under the ICC Mediation Rules. If the dispute has not been settled pursuant to the said Rules within [45] days following the filing of a Request for Mediation or within such other period as the parties may agree in writing, such dispute shall thereafter be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules of Arbitration.”

If the parties would like to have recourse to the Emergency Arbitrator Provisions prior to expiry of the 45-day or other agreed period following filing of the Request for Mediation, the following precision should be added to the clause:

“The requirement to wait [45] days, or any other agreed period, following the filing of a Request for Mediation, before referring a dispute to arbitration shall not prevent the parties from making an application, prior to expiry of those [45] days or other agreed period, for Emergency Measures under the Emergency Arbitrator Provisions in the Rules of Arbitration of the International Chamber of Commerce.”

If the parties would like to have recourse to the Emergency Arbitrator Provisions, but only after expiry of the 45-day or other agreed period following the filing of the Request for Mediation, the following precision should be added to the clause:

“The parties shall not have the right to make an application for Emergency Measures under the Emergency Arbitrator Provisions in the Rules of Arbitration of the International Chamber of Commerce prior to expiry of the [45] days or other agreed period following the filing of a Request for Mediation.”

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The Protection of Foreign Investments: Towards a Reaffirmation of the State?

Aceris Law co-sponsored a one-day-conference on international arbitration and the protection of foreign investments organised on June 2, 2017 by Student Societies from 4 French universities: the Association des Juristes de Droit International (Paris 1 Panthéon-Sorbone), the Association du Master 2 de Droit International Economique (Paris 2 Panthéon-Assas), the Association des Anciens Etudiants de Droit International de Nanterre (Paris Ouest Nanterre La Défense) and the Sciences Po Arbitration Society (Sciences Po) at the Centre Panthéon in Paris.

Four panels of prominent legal scholars and practitioners discussed significant changes to the protection of foreign investments, questioning to what extent recent treaty drafting and practice suggests a reaffirmation of the State.

The topic of the first panel was the evolution of mechanisms of substantive protections of foreign investment. The first presentation dealt with the distinction between competence and admissibility, underscoring contrasting practices between international jurisdictions and arbitral tribunals. The second panellist discussed the fair and equitable treatment standard, emphasising the fact that, after allowing the freedom of interpretation of arbitrators, States now tend to circumscribe its scope and effects through a new wording of fair and equitable treatment clauses. In the third presentation, it was emphasised that the use of expropriation clauses seems to be gaining importance, whereas the scope of such clauses remains uncertain. Finally, the last panellist considered non-discrimination (most favoured nation and national treatment clauses), insisting in particular on the express limits of the principle of non-discrimination.

The next panel dealt with recent innovations concerning substantive protections to foreign investments. The first presentation was focused on the definition of protected investments and investors and how States have acted in order to control interpretations developed in practice by arbitral tribunals. The second panellist, with CETA as an example, analysed express derogations provided by treaties and the right to regulate of States. The third panellist then discussed the gradual taking into account of human rights and environmental law in bilateral investment treaties, introducing the practice and discussing innovations in this area. To conclude this panel, the final presentation was on making investors responsible through new obligations under bilateral and multilateral agreements.

The topic of third panel was hypothetical alternatives and complements to arbitration for the protection of foreign investments. The first panellist started by considering former, actual and future projects of regional and international jurisdictions concerning investment. The second presentation dealt with the central question of interpretation in investment arbitration, a question that can be determined before or after the conclusion of treaties. The third panellist discussed the opportunity of going before a national Court, and in particular the case between the nuclear giant Vattenfall and the German State before the Bundesverfassungsgericht. Finally, the last presentation concerned prior attempts to create an appellate mechanism for investment arbitration and the peculiar system enshrined in the CETA was emphasised.

The final panel dealt with the active role of States in investment arbitration proceedings. The first panellist spoke about the issue of third party funding, its control in different jurisdictions and treaties (Singapore, Hong-Kong, CETA) and the powers of a tribunal when confronted by third party funding. The second panellist then discussed the opposite side of third party funding, including financial obstacles to State actions and their financing. The third presentation then considered the new paths opened by the Urbaser v. Argentina case regarding State counterclaims, although the possibility for States to be claimants was denied. To conclude this conference, the last panellist talked about the promotion of transparency in investment arbitration proceedings and the great leaps that have been made over the past 10 years in this matter.

A summary of the conference on the protection of foreign investments will be published in full in « Les Cahiers de l’Arbitrage » (Lextenso Editions).

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Provisional Measures in ICSID Investment Arbitration

The International Centre for the Settlement of Investment Disputes (ICSID) Convention allows parties to an ICSID arbitration to request provisional measures from arbitral tribunals. Provisional measures are frequently requested in the course of arbitrations, and the ICSID has compiled a comprehensive table with past requests for provisional measures, showing when requests for provisional measures in ICSID investment arbitration were granted and when they were rejected.

According to Article 47 of the ICSID Convention, arbitral tribunals are vested with the power to grant “any” provisional measures which they deem necessary.

“Except as the parties otherwise agree, the Tribunal may, if it considers that the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights of either party.”

Any such order that a tribunal makes is considered binding, despite the use of the word “recommend” in the text of the Convention.[1]

In addition, Rule 39 of the ICSID Arbitration Rules lays out the procedure for granting provisional measures in ICSID investment arbitration. An application to a tribunal must include the rights the party is seeking to preserve, the types of measures requested and the circumstances that make them necessary.

“(1) At any time after the institution of the proceeding, a party may request that provisional measures for the preservation of its rights be recommended by the Tribunal. The request shall specify the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures.

(2) The Tribunal shall give priority to the consideration of a request made pursuant to paragraph (1).

(3) The Tribunal may also recommend provisional measures on its own initiative or recommend measures other than those specified in a request. It may at any time modify or revoke its recommendations.

(4) The Tribunal shall only recommend provisional measures, or modify or revoke its recommendations, after giving each party an opportunity of presenting its observations.

(5) If a party makes a request pursuant to paragraph (1) before the constitution of the Tribunal, the Secretary-General shall, on the application of either party, fix time limits for the parties to present observations on the request, so that the request and observations may be considered by the Tribunal promptly upon its constitution.

(6) Nothing in this Rule shall prevent the parties, provided that they have so stipulated in the agreement recording their consent, from requesting any judicial or other authority to order provisional measures, prior to or after the institution of the proceeding, for the preservation of their respective rights and interests.”

ICSID tribunals have accepted that, in order to be able to grant provisional measures pursuant to Article 47 and Rule 39, they must be satisfied that they have prima facie jurisdiction to hear the case. This assessment will not, however, prejudice their findings on jurisdiction in later stages of the dispute.

Furthermore, the threshold for granting provisional measures of any kind is usually high and tribunals are guided by the principles of urgency and necessity in their assessment of whether the circumstances warrant the requested protection to prevent irreparable harm to the rights of the party.

Provisional measures may take any form that the parties request or the tribunals consider appropriate. Among others, these may be measures that ensure the preservation of evidence, or provide for security for costs.

A controversial category of provisional measures includes measures ordering States to halt judicial proceedings against the investors in their jurisdiction. Such orders not only limit a State’s legitimate exercise of sovereignty, but at the same time arguably constitute an affront to the separation of powers, since they may involve an interference by the executive into judicial matters. In fact, a recent ICSID tribunal, when requested to order the cessation of criminal investigations in the Respondent State, declared that it lacked the ability to make such an order, considering that no convincing evidence of bad faith on the part of the Respondent State had been presented.[2] This decision is reproduced below.

Despite the high threshold required, provisional measures in ICSID investment arbitrations are an important tool for both investors and Respondent States, as they can guarantee both parties’ cooperation during the arbitration, safeguard the parties’ interests and help to ensure compliance with an eventual award.

Anastasia Choromidou, Aceris Law

Download the PDF file .

[1] Emilio Agustin Maffezini v The Kingdom of Spain, Procedural Order No 2, 28 October 1999, para. 9, available at https://www.italaw.com/sites/default/files/case-documents/ita0477.pdf.