1. INTERNATIONAL INVESTMENT AGREEMENTS AND INVESTOR-STATE ARBITRATION LECTURE 2. Investor-State Arbitration
Sergey Ripinsky
International Investment Agreements Section
Division on Investment and Enterprise
Geneva, 4 May 2012

2. Historical context
Previously, two options available to a foreign investor:
Seek relief in the local courts or administrative tribunals of the host state.
Request diplomatic protection by home government.
Need for a neutral forum that would:
Allow direct claims by investors
Be impartial and independent
Consist of highly-qualified specialists
Fast
Cheap

3. 1965 ICSID Convention
“A-national” forum to administer investment disputes
Part of the World Bank group
Can be engaged if both disputing parties consent to arbitration
Each disputing party appoints one arbitrator
Awards are enforceable in all ICSID Contracting States (147)

4. ICSID and UNCITRAL – key differences
Institutional v. ad hoc
Nationality of arbitrators
Arbitrator fees
Confidentiality
Review of awards
Enforcement of awards

5. Statistics of IIA-based disputes 2011
46 new known cases filed (34 of them in ICSID)
In 38 cases, respondents are developing or transition economies: e.g., Venezuela (10), Ecuador (4), Egypt (4), Peru (3) and Poland, Philippines and Turkmenistan (2 each)
35 of the 46 new cases filed by investors from developed countries.

6. Known investor-State disputes 1987-2011

7. Distribution of claims by economic sector (ICSID statistics)

8. Largest pending IIA claims
Yukos shareholders v. Russia
$114 billion in damages claimed
Conoco Philips v. Venezuela
Around $30 billion in damages claimed

9. Public interest disputes: examples
Philip Morris v. Uruguay, Philip Morris v. Australia, (challenges the countries’ anti-smoking policies)
Vattenfall v. Germany (nuclear phase-out)
Abaclat et al v. Argentina (sovereign debt)
Chemtoura v. Canada (pesticide ban)

10. Criticisms of IIA arbitration
High costs
Slow
Severance of relationship between investor and host State
Issuance by tribunals of inconsistent decisions: (1) divergent interpretations of identical treaty provisions, and (2) differences in the assessment of identical facts
Secrecy: especially important when public-interest measures at stake. Damages paid from the public pocket.
A club: same people serve as arbitrators in some cases and as counsel in others.
Party appointments: emergence of “pro-State” or “pro-investor” arbitrators. 10