MINISTRY OF JUSTICE MINISTRY OF EDUCATION AND TRAINING THE ROLE OF PRECEDENTS IN INVESTMENT TREATY ARBITRATION FINAL DISSERTATION Hanoi - 2024 MINISTRY OF JUSTICE MINISTRY OF EDUCATION AND TRAINING PHAM PHU AN 453056 THE ROLE OF PRECEDENTS IN INVESTMENT TREATY ARBITRATION Major: International Trade Law FINAL DISSERTATION THE DISSERTATION SUPERVISOR LLM. Ngô Trọng Quan Hanoi - 2024 THE PLEDGE I hereby certify that this is my own research work The conclusions and data presented in the thesis are honest and ensured / Supervisor's confirmation Dissertation Author LLM. Ngô Trọng Quan Pham Phi An LIST OF ABBREVIATIONS BIT Bilateral Investment Treaty. cIL Customary International Law.
Icc International Chamber of Commerce. 1CJ International C ourt of Justice. ICSID International C entre for Settlement of Investment Dispute. HA International Investment Agreement.
ITA Investment Treaty Arbitration. NAFTA North American Free Trade Agreement. spc Supreme People’s C oust UNCITRAL United Nations Commission on International Trade Law. UNCTAD United Nations C onference on Trade and Development.
TABLE OF CONTENTS Page number Cover page i The Pledge it List of Abbreviation iii Table of Contents iv INTRODUCTION 1 CHAPTER 1: OVERVIEW OF PRECEDENT IN 9 INVESTMENT TREATY ARBITRATION 1. Definitions of precedent 9 1. Definitions ofprecedent in national law 9 1. Definitions of precedent in international law 16 1.
Investment Treaty Arbitration 19 1. Investment Treaty Arbitration 21 1. Precedents in the realm of investment treaty arbitration 23 1. The theoretical status of precedents 23 1.
The practical status ofprecedents 24 Conclusion of Chapter 1 28 iv CHAPTER 2: THE ROLE OF PRECEDENTSIN INVESTMENT TREATY ARBITRATION 2. Precedents as a law interpreter 3.1 The challenges surrounding applicable law in investment treaty arbitration 2. Arbitral precedents as a subsidiary means for the 31 determination of the rules of law 3. Arbitral precedents as a resource for comparative 34 analysis ie) ie.
Precedents as a source for development 36 2. The impact ofprecedents on subsequent arbitration cases 36 2. Material sources for the development of international 39 investment law Conclusion of Chapter 2 CHAPTER 3: RECOMMENDATIONS FOR’ USING 45 PRECEDENTS IN INVESTMENT TREATY ARBITRATION 3. The challenges surrounding the adoption of a precedent 45 system inITA 3.
Tribumals dissenting opinions on the application of 45 precedent 3. Inherent setbacks of precedent in investment treaty 47 arbitration 3. Recommendation for a system of precedent in investment 49 treaty arbitration 3. Towards Jurisprudence constante 49 3.
Dialectic model Conclusion of Chap ter 3 55 CONCLUSION 56 LIST OF REFERENCES 57 INTRODUCTION 1. The necessity of the topic Investment treaty arbitration (ITA) is nowadays one of the most important dispute settlement mechanisms in international law. Despite having fairly ancient roots, the protection of foreign investors has over the past two decades evolved from arather peripheral branch of the law, which had attracted little attention in scholarship and practice, to one of the most vibrant areas of research, interest and concern in public international law.! Given the unprecedented surge in cross-border investments, the necessity for a structured and equitable framework to manage conflicts has become increasingly apparent. ITA operates as a forum where investors can seek compensation for damages incurred by host states, ensuring a fair and impartial resolution that aligns with the complexities of contemporary global investments.
The significance of ITA extends beyond the immediate parties involved, influencing the broader landscape of international law and shaping the delicate balance between investor protection and state regulatory authority. In the realm of investment treaty arbitration, precedents are among the most widely used instruments. Referring to precedent is a common practice in legal proceedings, and it serves to establish persuasive authority for the arguments put forth As arbitrators draw upon prior decisions, the ITA's legal framework gains stability and predictability, benefiting both investors and states entangled in disputes. These characteristics of precedent would be valuable for investors, states, and legal practitioners who are seeking to anticipate outcomes and make well-informed decisions.
Additionally, these precedents play a pivotal role in the development and evolution of international investment law. By citing and building on previous decisions, investment treaty arbitration could be a more nuanced and sophisticated legal landscape. While bringing in undeniable values, precedent, however, is only considered as a “subsidiary means”? in the realm of ITA. More importantly, there is no duty, as ‘De Brabandere E.
(2014), “hvestmnent Treaty Arbitration as Public International Law: Procedural Aspects and Implications”, Canbriäge University Press, p.1 `Article 38(1)(@) ofthe ICTS tatate 1 such, to refer to previous decisions. An arbitral award will be valid even if it contains no references to any previous cases.? Similarly, there is no “doctrine of precedent” or “stare decisis” in investment arbitration in the sense of tribunals being obliged to follow previous decisions when the same point falls for determination in a subsequent case. In theory, given its limited principal rights, arbitral precedent is anticipated to have minimal impact on the practice of international investment law. However, a cursory glance into available investment arbitration awards shows that international tribunals cite the rulings of their predecessors with increasing frequency.* In addition, precedent seems to lay the principal authority for the rules of international law on which they base their awards.
There might be several reasons for this contradictory role of precedent, including perhaps fractured legal frameworks of ITA, thus there are not much of consistent legal frameworks for arbitrators to rely on. Therefore, it requires them to have recourse to some highly subjective threshold of what constitutes “compelling contrary grounds’ that allow them not to ‘adopt’ the ‘solutions’ to which they supposedly lead * Another reason for this practice may simply be as a matter of courtesy, because the parties refer to past awards. Regardless of the motivation for incorporating references to prior judgments, the fundamental question persists regarding the contradictions in the role of precedent in ITA and how it affects the cases before it still remains an ambiguous and worthwhile question. This article endeavors to explore and elucidate this matter.
By delving into the role of precedent, the outcome of this paper would inform related parties, especially arbitrators and scholars in this field. Due to the aforementioned considerations, the author chose the topic "The Role of Precedents in Investment Treaty Arbitration" for this dissertation. 3 Judith Gill (2010), Is There a Special Role for Precedent in Investment Asbitration?, ICSID Review - Foreign investment Law Jornal Volione 25, Issue 1. p8S, https-//doi org/10.
Chen (2019), Precedent and Dialogue in Investment Treapy Arbitration, Harvard Jnternational Law Jounal, Vol.47 * Jan Paulsson (2018), The Role of Precedent in Investment Treaty Arbitration, Arbitration Under Jnternational Invespment Agreements: A Guide to the Key Issues (Second edition), para 4.07 * Marvin Roy Feldman Karpa v. United Mexican States, Award, 16 December 2002 para 107 5 2. Foreign literature Since the beginning of the 21st century, tribunals in investment treaty arbitration (ITA) have been referencing prior decisions with growing frequency. Scholarship in this area has focused on explaining the rise of de facto doctrine of precedent and evaluating the merits of the practice.
The course of delving into this subject has referred to various relevant research papers and works. The articles mentioned below are among what I found most suitable and beneficial during the thesis-making process. Chen (2019), “Precedent and Dialogue in Investment Treaty Agbitration”, Harvard International Law Journal, Vol 60. The article delineates three key values of precedent in ITA and then explains the need for a unique operational model to pursue those merits.
Notably, it is the first to introduce a comprehensive framework to guide ITA tribunals in both applying and authoring precedent. It addresses the dual perspectives of how much deference is owed when applying precedent and the extent to which precedent should be authored, considering the balance between predictability, accuracy, and legitimacy. The proposed framework recogmzes the distinctive features of ITA that differentiate it from common law systems, advocating for a departure from stable, incremental decision-making to embrace a model of robust and contentious dialogue. This approach encourages tribunals to scrutinize past decisions skeptically and in crafting their own decisions, contribute to advancing the broader discourse within the field.
Norton (2018), “The Role of Precedent in the Development of International Investment Law”, IC'SID Review, Vol. 280-301 This article examines the contradiction in the role of precedent inITA On one hand, ITA tribunals practically rely on previous arbitral decisions as a principal source of international law, and in some cases re-apply prior reasonings to similar circumstances. Orthodox international legal doctrine, on the other hand, totally rejects the rulings of earlier tribunals as a source of that law. This paper encompasses seven sections, the first two sections provide a brief review of the sources of international law as well as a cursory glance at the predominance of precedent on the background ITA jurisprudence.
Sections 3-4 delineate the foundation for the utilization of precedent in International Investment Treaty Arbitration (ITA). Initially, the author provides commentary excerpts from preceding awards elucidating the necessity for tribunals to reference precedent in their rulings. Subsequently, the paper identifies various textual ambiguities within the International Investment Agreement (ILA) 3 terms, contributing to arbitrators’ subjective interpretations of the highly indeterminate aspects of ILAs. Concluding in Sections 5-6, the article asserts that arbitrators rely on past judgments to validate their decisions.
Crucially, it underscores the principal obstacles preventing judges from avoiding precedent, inherent in the nature of international law. These impediments encompass the absence of effective international legislative and judicial institutions authorized to establish primary rules of international law, the positivist underpinnings of orthodox international legal doctrine, and the inductive reasoning applied in identifying and applying customary international law rules. Ten Cate (2013), “The Costs of Consistency. Precedent in Investment Treaty Arbitration”, Coltanbia Jotznal of Transnational Law, Vol.
51 This paper is one of the few works that stand against the application of the precedent doctrine or “stare decisis” in investment arbitration It suggests that to maintain consistent rulings, some important things like accuracy, sincerity, and transparency might be compromised. This trade-off is often considered acceptable in many legal systems because it helps achieve goals like fairness, certainty, predictability, and perceived legitimacy in resolving disputes. However, in the context of investment treaty arbitration, parties value transparency and independence in decision-making. In addition, the rules are constantly changing and there are many different laws involved, relying on previous decisions may not be the best approach Instead, arbitrators should focus on making decisions that contribute to the development of the law in this area.
While they should not blindly follow past decisions, they are counseled to consider how their rulings will impact future cases and the public interest by providing reasons that benefit the wider investment community and future tribunals, even though they aren't bound to follow precedent. Jan Paulsson explores the role of precedent inITA and contends that while it lacks a “legal term of art’, its use is known for ensuring the legitimacy of dispute resolution by treating similar cases alike. The article discusses two contradictory conceptions regarding the arbitrator's role, with one emphasizing a duty to presume the applicability of rules derived from a consistent series of cases for the harmonious development of investment law, while the other insists on deciding each case on its own merits, potentially leading to unpredictability. The author ? words or expressions that have thuough usage by legal professionals acquired a distinct legal meaning 4 underscores the need for arbitrators to consider parties reliance on prior decisions, suggesting it as a matter of due process, and raises questions about arbitrators awareness of pertinent decisions not invoked by the parties.
Finally, the author concludes that since arguing with the ICJ statute would be an enduring process, the ICSID tribunals should operate with intentional flexibility, thus emphasizing the importence of self-restraint on the part of international adjudicators - Tai-Heng Cheng (2006), “Precedent and Control in Investment Treaty Agbitration” Fordham International Law Journal, Volume 30, Issue 4. This article addresses the proliferation of arbitrations in the field of investment treaty arbitration due to the substantial growth in global trade and investment treaties.