1 The Law Applicable to Procedural Issues
Jeffery Commission, Rahim Moloo
- Precedent — Applicable law
1.01 International arbitration, as a discipline, is concerned primarily with the body of law that governs procedure. The source of that law is often a combination of international law, domestic law, and customary practice. So it is with investment arbitration. Yet, few studies have sought to place the various sources of arbitral procedural law, let alone in the investment arbitration context, in a comprehensive normative framework. It is true that many studies identify the procedural rules chosen by the parties as the applicable procedural law to the extent that it does not violate any mandatory procedural laws at the seat of the arbitration (at least in the non-ICSID context); however, such studies rarely identify a role for other sources of procedural rules, such as customary practice and precedent.1 (p. 2) The question of the applicable procedural law in investment arbitration is further complicated in the ICSID context where there is no legal seat of the arbitration. This chapter’s goal is to identify the various sources of procedural law in investment arbitration, and to articulate a hierarchy among those sources.
1.02 Thus, we proceed to discuss the various sources of law hierarchically. First, we will begin by discussing the procedural law selected by the parties to the arbitration. Some of the laws selected by the parties impose mandatory rules that cannot then be deviated from, while others are binding, unless the parties later decide on a separate course. Second, we discuss how to determine the appropriate governing rules when the rules selected by the parties are silent. Here, we discuss the tribunal’s role to fill ‘gaps’ in the rules, and suggest that, in doing so, the tribunal and the parties look to the context of the applicable procedural rules, certain soft law protocols, and prior arbitral practice for guidance.
1.03 International arbitration derives its legitimacy from party consent. The rules governing the procedure of the arbitration—including the mandatory rules—are derived from the choices made by the parties. Thus, when considering the law applicable to procedure in an investment arbitration (like any arbitration), an arbitral tribunal must begin with the parties’ arbitration agreement.
1.04 As discussed in the Introduction, in the context of investment treaty arbitration, consent to arbitration is generally perfected when the investor chooses one of the procedural options offered in an investment treaty. These treaties often provide the choice to arbitrate under the ICSID system or under the UNCITRAL Rules (or some other non-ICSID arbitral institution). A choice for ICSID arbitration means that the arbitral tribunal will be guided by the ICSID Convention and the ICSID Arbitration Rules.2 On the other hand, choosing UNCITRAL arbitration requires an important supplemental choice—the lex arbitri, or the seat of the arbitration—which governs procedural matters. In this section, we discuss the implication of the procedural choices made by parties.
(a) Mandatory procedural rules
1.05 No matter the governing international arbitration framework, the procedural law chosen to apply by the parties will normally contain certain rules that are (p. 3) of primary importance, from which the tribunal and the parties cannot later deviate. These mandatory rules can normally be identified by referencing the grounds on which the arbitral award can be annulled.
1.06 In the ICSID system, the place of the arbitration has no impact on the governing procedural rules.3 Instead, the ICSID Convention provides for the overarching governing framework. Article 52 of the ICSID Convention sets out the procedure for the annulment of ICSID arbitration awards. It provides for an internal mechanism, whereby, on the application of one of the parties, the chairman of the ICSID Administrative Council will appoint an ad hoc committee of three persons to preside over the annulment proceedings.4 One of the grounds for annulment relates to the procedure employed by the tribunal over the course of the proceedings. That ground allows the ad hoc committee to annul the award where ‘there has been a serious departure from a fundamental rule of procedure’.5 Thus, certain rules of procedure are important enough to be considered ‘fundamental’, and any deviation therefrom renders the resulting award susceptible to annulment. Given that a tribunal’s failure to follow fundamental rules of procedure may render an award annullable, we suggest that these ‘fundamental’ rules are mandatory.
1.07 Similarly, in the non-ICSID context, where the law at the seat of the arbitration generally provides the grounds for annulling an award, one (or more) of the grounds for annulment normally considers the procedure followed by the tribunal. Specifically, Article 34(2)(a)(ii) of the UNCITRAL Model Law (which forms the basis for the arbitration laws in many countries) allows a court at the seat of the arbitration to annul an award if it was not given ‘proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.’6 Article 34(2)(a)(iv) allows for annulment where: ‘the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law.’7 Here, the law contemplates (p. 4) certain procedural norms ‘from which the parties cannot derogate’. Like the ‘fundamental’ rules contemplated by Article 52(1)(d) of the ICSID Convention, the procedural rights that form the basis for the annulment of an award at the seat of the arbitration ought to be considered mandatory on an arbitral tribunal.8
1.08 The reference to ‘fundamental’ rules of procedure, and laws ‘from which the parties cannot derogate’, begs the question: how does one identify the rules that achieve this higher status, such that they become mandatory? In the non-ICSID context, the identification of such rules is relatively straightforward. The lex arbitri will normally identify which rules are derogable, and which are not. For the most part, non-derogable procedural rules fall into two categories: (a) the right to be heard and to participate fully in the proceedings, and (b) the right to be treated equally.9 As such, Article 18 of the UNCITRAL Model Law provides that ‘[t]he parties shall be treated with equality and each party shall be given a full opportunity of presenting his case’.10 Article 34(2)(a)(ii) itself contemplates the inability of a party to properly participate in the proceedings—either by the failure of being properly notified of the appointment of an arbitrator or of the arbitral proceedings, or being unable to present his case—as a ground for annulment.11
(p. 5) 1.09 In the ICSID context, however, one must look to international law to understand what is meant by a ‘fundamental rule of procedure’.12 As explained by the ad hoc committee in Wena Hotels v. Egypt, such ‘fundamental’ rules are only those ‘set of minimal standards of procedure to be respected as a matter of international law’.13 Accordingly, ‘only procedural principles of special importance would qualify as ‘fundamental rules; and … a mere violation of one of the arbitration rules would not necessarily suffice’.14
1.10 Though a determination of the mandatory rules in the ICSID context requires one to look at international law, the content of the law is unsurprisingly the same as one normally finds in domestic laws around the world. Indeed, when several nations adopt a similar legal principle, it is elevated to a general principle of law.15 Thus, the tribunal in MINE v. Guinea found that ‘a clear example of such a fundamental rule is to be found in Article 18 of the UNCITRAL Model Law on International Commercial Arbitration which provides: The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.’16 Similarly, the ad hoc committee in Fraport v. Philippines confirmed that ‘[t]he requirement that the parties be heard is undoubtedly accepted as a fundamental rule of procedure, a serious failure of which could merit annulment’.17 The committee went on to note that:
[t]he right to present one’s case is also accepted as an essential element of the requirement to afford a fair hearing accorded in the principal human rights instruments. This principle requires both equality of arms and the proper participation of the (p. 6) contending parties in the procedure, these being separate but related fundamental elements of a fair trial.18
1.11 The ad hoc committee in Klockner v. Cameroon also suggested that a tribunal’s lack of impartiality,19 or the failure of a tribunal to deliberate,20 ought to be considered violations of fundamental rules of procedure. However, both of those violations could equally be cast in terms of the failure of a tribunal to treat each party equally, or to properly consider a particular party’s arguments (thus, ultimately violating the right to be heard).
(b) Non-mandatory procedural rules agreed to by the parties
1.12 Aside from the mandatory rules contained in the applicable procedural law, the parties are generally free to agree to the rules that will govern the arbitral procedure. Article 19 of the UNCITRAL Model Law provides as much when it states that ‘[s]ubject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.’21 Occasionally, the parties will agree to certain procedural issues in the arbitration agreement itself,22 though, often, the parties will merely designate a set of arbitration rules to govern the proceedings. In the investment arbitration context, the most commonly utilized rules are those of ICSID and UNCITRAL. Indeed, most investment treaties provide the investor the choice between ICSID arbitration and ad hoc arbitration under the UNCITRAL Rules.23 In the ICSID (p. 7) context, the applicable rules include those contained in the ICSID Convention, the ICSID Arbitration Rules, the Administrative and Financial Regulations, and the Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.24 In an UNCITRAL arbitration, the governing rules are found in the UNCITRAL Arbitration Rules and the law at the seat of the arbitration.
1.13 Decisions about the applicable arbitration rules can also be made once a dispute arises. Indeed, arbitration rules are relatively short when compared to domestic legislation governing civil litigation procedure, so it is not uncommon for the tribunal to consult with the parties on additional procedural rules to supplement the rules selected by the parties in the arbitration agreement. Indeed, ICSID Arbitration Rule 20 directs the president of the tribunal to ‘ascertain the views of the parties regarding questions of procedure’, ‘[a]s early as possible after the constitution of a Tribunal’. Similarly, the UNCITRAL Arbitration Rules guide the tribunal to make certain procedural determinations—such as the procedural timetable and the language of the arbitration, subject to agreement by the parties—as soon as practicable after its constitution.25
1.14 The selection of these supplemental rules is often reflected in the first procedural order of the tribunal. For instance, the arbitration agreement and the arbitration rules may not provide guidance on the fees for arbitrators, the place where the hearing will take place, the language of the arbitration, the number and timing of pleadings, and details about discovery and other evidentiary matters.26 Several of these matters, among others, can often be agreed by the parties, and, accordingly, can be reflected in the tribunal’s first procedural order.27 Indeed, many such procedural orders are beginning to look similar in form and content.28
(p. 8) 1.15 Once the parties have agreed to a set of arbitral rules, the tribunal must generally follow them, unless, as discussed above, the parties’ choices derogate from mandatory rules. A tribunal’s failure to follow the rules selected by the parties may lead to annulment, especially in the non-ICSID context.29 There are, however, instances where the parties cannot agree on the rules to apply with respect to a particular procedural issue. It is in these circumstances that identifying the applicable procedural rule becomes most challenging but, at the same time, most important. The next section addresses how best to select the applicable procedural rule where there appears to be a gap in the rules selected by the parties.
1.16 Arbitral tribunals, like other international tribunals, generally have the authority and discretion to fill gaps in the procedural rules selected by the parties.30 In this regard, Article 44 of the ICSID Convention provides that ‘[i]f any question of procedure arises which is not covered by this Section or the Arbitration Rules or any rules agreed by the parties, the Tribunal shall decide the question.’31 As explained in the explanatory notes to the 1968 version of the ICSID Arbitration Rules,
whenever the parties do not agree on some procedural point that is also not, or is only inadequately covered by these Rules, then the Tribunal has a residual power to decide the question (Article 44 of the Convention); that provision is, in fact, only declaratory of the inherent power of any arbitral tribunal to formulate its own rules of procedure in the event of a lacuna.32
1.17 Article 44 of the ICSID Convention is ‘complemented by Rule 19 ICSID Arbitration Rules, according to which “the Tribunal shall make the orders required for the proceeding” ’.33 Likewise, Rule 17(1) of the UNCITRAL (p. 9) Arbitration Rules grants tribunals the ‘discretion’ to ‘conduct the arbitration in such manner as it considers appropriate’, but cabins this discretion by binding tribunals to several normative principles. In accordance with the mandatory rules discussed above, each party must be ‘treated with equality’ and ‘given a reasonable opportunity of presenting its case’.34 An UNCITRAL tribunal shall also ‘conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the parties’ dispute’.35 Even in the absence of express authority, ‘all international courts have the power to make rules of procedure and procedural orders as a necessary incident of their judicial functions’.36
1.18 In filling gaps in the applicable procedural rules, a tribunal is not without guidance. There are certain important factors to which tribunals can, and should, refer in order to fill rule gaps. These factors include: (a) considering the context of the applicable procedural rules, (b) soft law protocols that articulate customary practice in international arbitration, and (c) relevant international arbitration decisions. We address each of these factors below.
1.19 It should go without saying that rules of procedure created to fill a particular gap must not contradict the procedural rules adopted by the parties.37 NAFTA and ICSID tribunals have expressly recognized this limitation on their gap-filling powers.38 In this regard, one of the more difficult aspects to the gap-filling exercise is to identify that a gap in the procedural rules in fact exists.
(p. 10) 1.20 As explained by the tribunal in Abaclat v. Argentina, silence on a particular procedural issue does not necessarily mean that the rules contain a gap.39 There, in considering whether or not the mass proceeding with which it was confronted ought to be conducted in the form of a collective proceeding, the tribunal considered that it was tasked with the assessment of whether the silence in the ICSID framework with respect to collective proceedings ‘should be considered a “qualified silence,” meaning an intended silence indicating that it does not allow for something that is not provided, or whether it should be considered a “gap,” which was unintended and which the Tribunal has the power to fill.’40 It is only where a true ‘gap’ is present that a tribunal is tasked with assessing ‘whether the adaptations which would be needed to fill th[e] gap … fall within the scope of its power as deriving from Article 44 ICSID Convention and/or Rule 19 ICSID Arbitration Rules’.41 Based on its consideration of the types of investments covered by the applicable BIT, and the travau préparatoire of the ICSID Convention, the tribunal in the Abaclat case ultimately decided that ‘the silence of the ICSID framework regarding collective proceedings is to be interpreted as a “gap” and not as “qualified silence”.’42
1.21 Other ICSID tribunals have refused to gap-fill in instances where no ‘gap’ was found to exist. For example, in ConocoPhillips v. Venezuela, the tribunal found that it did not have the discretion to order the reconsideration of an interim decision. Although the Convention and the Arbitration Rules did not explicitly address the topic, the ‘overall structure and the detailed provisions of the ICSID Convention were plainly designed to provide for review or actions in respect of (p. 11) decisions of a tribunal only once the Award was rendered’.43 Thus, the tribunal concluded: ‘[t]here is no gap to be filled by the power proposed here.’44
1.22 Where a gap does exist, a tribunal filling that gap ought to do so within the context of the overall structure of the applicable rules. As explained by the Abaclat tribunal, ‘a tribunal’s role is not to complete or improve the ICSID framework in general. As such, a tribunal’s power to fill gaps will usually be limited to the design of specific rules to deal with specific problems arising in the proceedings at hand.’45 The tribunal made clear that ‘the filling of the gap does not consist of an amendment of the written rule itself, but rather of an adaptation of its application in a specific case’,46 and that ‘adaptations made to the standard procedure must be done in consideration of the general principle of due process and must seek a balance between procedural rights and interests of each party.’47
1.23 A number of projects—often spearheaded by a senior and diverse group of international arbitration practitioners—have sought to codify customary international arbitral practices that are otherwise unaddressed in most arbitration rules. To the extent that such protocols are successful in this pursuit, they can be useful sources for parties and tribunals in seeking to define a mutually acceptable process where none is defined.
1.24 The most well-known protocol in this regard is the International Bar Association Rules on the Taking of Evidence in International Arbitration (‘IBA Rules on Evidence’), which ‘reflect procedures in use in many different legal systems’, and thus ‘may be particularly useful when the parties come from different legal cultures.’48 Indeed, the IBA Rules on Evidence are often expressly adopted by the parties, in whole or in part, to apply to matters of evidence.49 However, even where they are not expressly chosen, both counsel and tribunals often look to them for guidance. For instance, in Churchill Mining v. Republic of Indonesia, the (p. 12) tribunal decided that it would ‘seek guidance, where appropriate, from Articles 3 and 9 of the 2010 International Bar Association Rules on the Taking of Evidence in International Arbitration’.50 The tribunal explained that the IBA Rules ‘reflect the current general practice in international arbitration …’.51 Similarly, in Glamis Gold v. the United States of America, despite the fact that the IBA Rules of Evidence were ‘not directly applicable to th[e] proceeding’, as part of ‘its authority under Article 15(1) [of the 1976 UNCITRAL Arbitration Rules] the Tribunal may look to the IBA Rules on Evidence for guidance’.52
1.26 Oftentimes, it will be the parties themselves who pepper their pleadings with references to the IBA Rules on Evidence, or other similar protocols, in support of their position on a particular matter not addressed by the applicable arbitration rules. In situations where both parties rely on a particular protocol for a procedural issue, it becomes much easier for the tribunal to accept that protocol as instructive to its decision.56 Indeed, the reference to such protocols is an attempt to meet the parties’ expectations of how the arbitral procedure will unfold. Following customary practice, especially when determined by an objective and reliable third party, is more likely to avoid objections from the parties than charting a novel path to which the parties have not consented.
1.28 Relying on a line of prior investment arbitration decisions has many of the same benefits to relying on soft law protocols. Where a similar procedure has been adopted in a series of prior investment arbitration cases, it becomes easier to adopt those practices without objection from the parties. Indeed, especially with respect to procedural matters, parties and their counsel come to expect that one arbitration will not look materially different in its form than the next. When a particular procedure has been shown to work effectively, it makes little sense to try and reinvent the wheel. A fortiori, procedural decisions taken earlier in the same case should most certainly be followed—barring good reason—when similar situations arise later in the same proceeding.
1.29 There are, however, two important caveats to adopting the procedural practices of prior investment arbitration tribunals. First, and most obviously, there is no formal system of precedent or stare decisis in investment arbitration.57 However, some tribunals have found themselves to have a ‘duty to adopt solutions established in a series of consistent cases’.58 And the new Permanent Court of Arbitration Rules includes ‘judicial and arbitral decisions’ ‘as a subsidiary means for the determination of rules of [international] law’.59 On the other hand, some tribunals have rejected the proposition that investment tribunals set precedent. For instance, the tribunal in Methanex v. the United States suggested that investment-treaty tribunals ‘can set no legal precedent, in general or at all’.60 But even the Methanex tribunal saw value in referring to prior decisions by NAFTA tribunals in deciding the case.61 Indeed, most tribunals purporting to oppose the (p. 14) idea that investment tribunals cannot make ‘precedent’, are likely referring to the concept in the formal, common-law, context. Accordingly, as a practical matter, most investment tribunals would likely agree that, while prior decisions are not binding, they are persuasive.
1.30 Second, not all prior decisions should be given the same weight. As one of the authors has detailed elsewhere, careful attention must be given to: (a) differences in the applicable rules in the precedent being considered (e.g., one should identify if the prior case involved a procedural rule where a gap may exist in the case at hand), (b) the regime from which the precedent arises (e.g., given the different contexts, the treatment of a case involving the Energy Charter Treaty may require a different approach than a case involving NAFTA), (c) the factual matrix at issue, (d) the quality of the reasoning in the prior decision, and (e) the identity and reputation of the arbitrators in the prior case.62
1.31 Parties and arbitral tribunals ought to proceed through the hierarchy of rules that govern the conduct of an investment arbitration whenever a procedural question arises. That hierarchy begins with the mandatory rules governing the arbitration. In most cases, those mandatory norms ensure that the parties have (a) the right to be heard and to participate fully in the proceedings, and (b) the right to be treated equally. Assuming those criteria are fulfilled, the parties are generally free to choose procedural rules that they see fit. The rules that the parties choose will, within reason, govern the tribunal’s conduct.63
1.32 Where the parties do not agree to the applicable procedural rule, it is for the tribunal to fill the gap with reference to a variety of factors, which must all be considered together. Those factors include: (a) the context of the applicable rules, (p. 15) (b) soft law protocols that reflect customary investment arbitration practice, and (c) prior investment arbitration decisions.
1.33 One final but important note bears mentioning. The parties should be permitted to make submissions to the tribunal with respect to important procedural decisions on which the parties disagree. It is through this adversarial process that the merits of different procedural options, including those that have been adopted in a series of prior decisions, can be assessed by the tribunal.64 This does not mean that the tribunal ought to require two rounds of written pleadings and a hearing to decide every procedural matter. For instance, some procedural decisions may be taken with both sides exchanging letters over the course of a week, or giving their views on a procedural conference call. While an arbitral tribunal is unlikely to be able to satisfy all of the parties all of the time, its consideration of the parties’ positions, and its application of the correct procedural law, will help it to chart a procedural course that most accurately reflects the parties’ expectations and protects the final arbitral award from annulment.
1 Certain recent studies have, however, focused exclusively on the application of soft law or precedent in investment arbitration. With respect to studies on soft law in investment arbitration, see Andrea K. Bjorklund and August Reinisch, eds., International Investment Law and Soft Law (Massachusetts, Edward Elgar Publishing, Inc., 2012); Lawrence W. Newman and Michael J. Radine, eds., Soft Law in International Arbitration (New York, JurisNet, 2014). With respect to studies on precedent in investment arbitration, see Jeffery P. Commission, ‘Precedent in Investment Treaty Arbitration: A Citation Analysis of a Developing Jurisprudence’, 24 Journal of International Arbitration, no. 2 (2007), p. 129; Stephan W. Schill, ‘System-Building in Investment Treaty Arbitration and Lawmaking’, 12 German Law Journal (2011), p. 1083; W. Michael Reisman, ‘ “Case Specific Mandates” versus “Systemic Implications”: How Should Investment Tribunals Decide?’, 29 Arbitration International (2013), p. 131; Irene M. Ten Cate, ‘The Costs of Consistency: Precedent in Investment Treaty Arbitration’, 51 Columbia Journal of Transnational Law (2013), p. 418.
2 ICSID also administers disputes under the ICSID Additional Facility, where the ICSID Convention does not apply. For purposes of determining the applicable procedural law, ICSID Additional Facility arbitrations ought to be treated like any other non-ICSID institutional arbitration.
7 UNCITRAL Model Law, Art. 34(2)(a)(iv). See also Malaysia Arbitration Act 2005, Sec. 37(1)(a)(iv); English Arbitration Act 1996, Sec. 36(1)(a)(iv); Canada Commercial Arbitration Act 1985, Art. 34(2)(a)(iv); Swedish Arbitration Act of 1999, Sec. 34(iv). The grounds for non-enforcement of arbitral awards under the New York Convention parallel the grounds for annulment under the UNCITRAL Model Law. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed at New York on 10 June 1958, entered into force on 7 June 1959, Arts. V(1)(b) and V(1)(d).
8 The grounds for annulment in the UNCITRAL Model Law mirror the grounds for non-recognition of arbitral awards under the New York Convention, Art. V. This reinforces the mandatory nature of the procedural rules referenced as failure to follow them may result in an unenforceable award, regardless of whether it is set-aside at the seat.
9 There are, of course, other mandatory norms normally imposed by the lex arbitri, such as whether a particular dispute is capable of being settled by arbitration in the first place, but those matters go beyond the scope of the law applicable to the procedure of the arbitration, and are thus not addressed here.
10 UNCITRAL Model Law, Art. 18. See also Swedish Arbitration Act 1999, Sec. 21; Singapore Arbitration Act 1994 (Revised 2002), Art. 18; English Arbitration Act 1996, Sec. 33(1)(a). The UNCITRAL Arbitration Rules similarly require that ‘the parties are treated with equality’ and that ‘each party is given a reasonable opportunity of presenting its case’. UNCITRAL Arbitration Rules, Art. 17(1). See also Pope & Talbot Inc. v. the Government of Canada, NAFTA, UNCITRAL Arbitration, Award of the Merits of Phase 2 (10 April 2001), para. 193. (Noting that the ‘ “overriding principle” found in Art. 15 of the UNCITRAL Arbitration Rules [Now Art. 17 of the revised Rules]’ is that ‘all Parties should be treated with equality’.); Frontier Petroleum Services Ltd. v. The Czech Republic, UNCITRAL Arbitration, Final Award (12 November 2010), para. 205. (‘Under Art. 15(1) of the UNCITRAL Rules [which is now Art. 17(1) of the 2010 revised Rules] the Tribunal enjoys a broad discretion to conduct the arbitration in such a manner as it considers appropriate, provided that the Parties are treated with equality and that at any stage of the proceedings each Party is given a full opportunity of presenting its case.’)
11 See also UNCITRAL Model Law, Arts. 24(2) and (3), which both relate to the parties’ ability to fully participate in the arbitral proceedings. (‘(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents. (3) All statements, documents or other information supplied to the arbitral tribunal by one party shall be communicated to the other party. Also any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.’) For examples of cases in which courts have annulled arbitration awards due to procedural defects, see Turkish Supreme Court 13th Civil Circuit, Decision, No. 8777/4493, 25 April 1991 (in which the Supreme Court decided that an arbitration agreement providing the right to appoint the arbitrator to only one party was null and void); Superior Court of Justice, Canada, CLOUT Case No. 391, 22 September 1999 (annulling an award where the tribunal deliberately concealed documents from the party, or failed to disclose evidence it obtained to one or both parties).
12 The ICSID Convention, like any treaty, must be interpreted in accordance with the rules of interpretation laid out in Art. 31 of the Vienna Convention on the Law of the Treaties. In interpreting Art. 52(1)(d), the ad hoc committee in Fraport v. Philippines explained that ‘a fundamental rule of procedure is intended to denote procedural rules which may properly be said to constitute “general principles of law”, insofar as such rules concern international arbitral procedure.’ Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Decision on the Application for Annulment of Fraport AG Frankfurt Airport Services Worldwide (23 December 2010), para. 187.
15 ICJ Statute, Art. 38(1)(c); Inceysa Vallisoletana, S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award (2 August 2006), para. 227. (Finding that general principles of law ‘have been understood as general rules on which there is international consensus to consider them as universal standards and rules of conduct that must always be applied and which, in the opinion of important commentators, are rules of law on which the legal systems of the States are based’.) See Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Cambridge, Cambridge University Press, 1953).
17 Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Decision on the Application for Annulment of Fraport AG Frankfurt Airport Services Worldwide (23 December 2010), para. 197.
18 ibid. para. 202. See also Wena Hotels v. Egypt, 56–7. (‘It is fundamental, as a matter of procedure, that each party is given the right to be heard before an independent and impartial tribunal. This includes the right to state its claim or its defence and to produce all arguments and evidence in support of it. This fundamental right has to be ensured on an equal level, in a way that allows each party to respond adequately to the arguments and evidence presented by the other … ’.); Amco v. Indonesia, ICSID Case No. ARB/81/1, Resubmitted Case, Decision on Annulment (3 December 1992) paras. 9.05–9.10. (Annulling the Decision on Rectification because the tribunal rendered its decision on the request of one of the parties without allowing the other party the opportunity to submit its observations); Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Procedural Order No. 2 (24 May 2006), para. 13. (‘It is indeed one of the most fundamental principles of international arbitration that the parties should be treated with equality.’)
19 Klockner v. Cameroon, ICSID Case No. ARB/81/2, Decision on Annulment (3 December 1992), para. 91. (‘Impartiality of an arbitrator is a fundamental and essential requirement. Any shortcoming in this regard, that is any sign of partiality, must be considered to constitute, within the meaning of Art. 52(1)(d), a “serious departure from a fundamental rule of procedure”.’)
20 ibid. para. 84. (‘[I]t is possible to hold that the requirement of deliberation among the arbitrators is a “basic rule of procedure.” It is also possible to hold that such deliberation must be real and not merely apparent.’)
23 See Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Argentine Republic, signed on 20 October 1992, entered into force on 1 October 1994, Art. 10(5). (Allowing an investor to submit a dispute to arbitration by ICSID or an ad hoc tribunal established under the UNCITRAL Arbitration Rules); ibid. Art. 24(3). (Allowing an investor to submit its claims to arbitration under the ICSID Convention, the ICSID Additional Facility, UNCITRAL Arbitration Rules, or ‘if the claimant and respondent agree, to any other arbitration institution or any other arbitration rules’.)
24 ICSID Convention, Regulation and Rules, as amended and effective 10 April 2006. The Institution Rules govern the preliminary proceedings between the filing of a request and the dispatch of the notice of registration. The procedures contained in the Institution Rules cannot be modified by the parties. The Administrative and Financial Regulations, which proscribe rules for such procedural issues as costs and means of communication, are also mandatory to the extent that the Arbitration Rules do not allow for modification of specific provisions. Schreuer, The ICSID Convention: A Commentary (2009), pp. 667, 685.
26 Rule 20 of the ICSID Arbitration Rules directs the president to seek the parties’ views on the following matters: ‘(a) the number of members of the Tribunal required to constitute a quorum at its sittings, (b) the language or languages to be used in the proceeding, (c) the number and sequence of the pleadings and the time limits within which they are to be filed, (d) the number of copies desired by each party of instruments filed by the other, (e) dispensing with the written or the oral procedure, (f) the manner in which the cost of the proceeding is to be apportioned, and (g) the manner in which the record of the hearings shall be kept.’
28 See Appendix 1— Draft Procedural Order No. 1 for a sample Procedural Order No. 1 in the investment arbitration context.
29 UNCITRAL Model Law, Art. 34(2)(a)(iv) (allowing for annulment where ‘the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law’. (emphasis added)).
31 ICSID Convention, Art. 44. See Churchill Mining and Planet Mining Pty Limited v. Indonesia, ICSID Case No. ARB/12/14 and 12/40, Procedural Order No. 8. (22 April 2014), para. 12. (‘Art. 44 of the ICSID Convention endows the tribunal with the discretionary power to decide any question of procedure not covered by the ICSID Convention, the ICSID Arbitration Rules, or an agreement of the Parties.’)
32 ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), with explanatory notes, ICSID/4/Rev.1, 1 January 1968, Introductory note D. See also Schreuer, The ICSID Convention: A Commentary (2nd edn, 2009), p. 880. (‘An ICSID tribunal’s power to close gaps in the rules of procedure is declaratory of the inherent power of any tribunal to resolve procedural questions in the event of lacunae.’)
36 Brown, A Common Law, 2007, p. 63, para. 38. (Referencing United Parcel Services of America Inc. v. Canada, NAFTA/UNCITRAL, Decision of the Tribunal on Petitions for Intervention and Participation as Amici Curiae (17 October 2001).) (The provision in the UNCITRAL Rules that confers the power on the tribunal to ‘conduct the arbitration in such a manner as it considers appropriate’ is ‘essential to the very process of dispute settlement by way of arbitration and might be though to be inherent even if not expressly stated’.)
37 Brown, A Common Law, 2007, p. 63. See also Donald Donovan, ‘Abaclat and others v. Argentine Republic as a Collective Claims Proceeding,’ 27 ICSID Review (2012), p. 261. (In discussing the Abaclat case, noting: ‘[o]n its own analysis, in devising rules to fill the gaps, the Tribunal will need to determine whether and to what extent each specific procedure genuinely fills a gap and, therefore, ensure that the procedure does not contravene any provision of the Convention or Rules.’)
38 See Aguas Provinciales de Santa Fe, SA, Suez, Sociedad General de Barcelona, SA v. Argentine Republic, ICSID Case No. ARB/03/17, Order on Amicus Curiae (17 March 2006), para. 7. (‘Although the Tribunal, as the Petition asserts, does have certain inherent powers with respect to arbitral procedure, it has no authority to exercise such power in opposition to a clear directive in the Arbitration Rules, which both Claimant and Respondent have agreed will govern the procedure in this case.’)
42 ibid. para. 519. See also Abaclat and Others v. Argentine Republic, ICSID Case No. ARB/07/5, Dissenting Opinion of Georges Abi-Saab (28 October 2011), para. 190. (Reaching the opposite conclusion that the silence in the ICSID framework with respect to collective proceedings could not be read as permitting collective actions. Rather, the
drafters were simply creating a framework for ad hoc international arbitration, within the parameters of ad hoc international arbitration as they knew them at that time, particularly its specific consensual basis for every case, as with all international adjudication. They were not establishing an open-ended standing court of general jurisdiction (juridiction de droit commun) covering all possible present and future disputes.
Thus, the Dissent concludes that ‘a mere acceptance to arbitrate does not cover collective mass claims actions … and that a special or secondary consent is needed for such collective actions’.)Other tribunals considering the question of collective proceedings have not directly relied on Art. 44. See Giovanni Alemanni and others v. the Argentine Republic, ICSID Case No. ARB/07/8, Decision on Jurisdiction and Admissibility (17 November 2014), para. 270. (We do not take a position on which approach is preferred in the context of collective proceedings, but merely rely on the Abaclat decision for the proposition that tribunal’s authority to devise procedural rules requires, in the first instance, an identification of a gap in the rules selected by the parties to apply to the arbitration.)
43 ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V., ConocoPhillips Gulf of Paria B.V. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30, Decision on Respondent’s Request for Reconsideration (10 March 2014), para. 23.
45 Abaclat, n 39, para. 523.
49 See Franz T. Schwarz and Christian W. Konrad, The Vienna Rules: A Commentary on International Arbitration in Austria (Netherlands, Kluwer Law International, 2009), p. 415. (‘Although it is difficult to assess how frequently the IBA Rules are actually adopted by parties, it is fair to say that they have had a considerable influence on the practice of taking evidence in international commercial arbitration.’) See also W. Miles and F.T. Schwarz, ‘Taking of Evidence in International Commercial Arbitration’ in International Comparative Legal Guide to International Arbitration 2004 (London, Global Legal Group, 2003).
53 See Caratube International Oil Company LLP & Mr. Devincci Salah Hourani v. Republic of Kazakhstan, ICSID Case No. ARB/13/13, Decision on the Proposal for Disqualification of Mr. Bruno Boesch (20 March 2014), para. 58. See also Mesa Power Group LLC v. Government of Canada, PCA Case No. 2012–17, Procedural Order No. 1 (21 November 2012), para. 3.2.
54 See National Grid PLC v. The Republic of Argentina, LCIA Case No. UN 7949, Decision on the Challenge to Mr. Judd Kessler (3 December 2007). (Referring to Argentina’s reliance on the IBA Rules of Ethics for International Arbitrators to support its argument that ‘partiality arises where the arbitrator “is prejudiced in relation to the subject-matter of the dispute” ’.)
55 See Mesa Power Group LLC v. Government of Canada, PCA Case No. 2012–17, Procedural Order No. 3 (28 March 2013), para. 19. See also Detroit International Bridge Company v. Government of Canada, UNCITRAL, PCA Case No. 2012–25, Canada’s Submission on Place of Arbitration (15 January 2013), para. 9.
56 See Glamis Gold Ltd. v. the United States of America, NAFTA, UNCITRAL Arbitration, Decision on Parties’ Requests for Production of Documents Withheld on Grounds of Privilege (17 November 2005), para. 18. (‘In their submissions on document production issues, both Parties cited the rules of the International Bar Association as a source of guidance for the Tribunal on production of documents. The Tribunal observes that those rules provide that documents requested should be “material” to the proceeding. The Tribunal in its previous decisions has adopted the requirement of materiality.’)
57 Wintershall Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14, Award, 1 194 (8 December 2008). (‘[S]tare decisis has no application to decisions of ICSID tribunals—each tribunal being constituted ad hoc to decide the dispute between the parties to the particular dispute.’)
58 Saipem S.p.A. v. People’s Republic of Bangladesh, ICSID Case No. ARB/ 05/7, Decision on Jurisdiction and Recommendation of Provisional Measures, 67 (21 March 2007). See also Gabrielle Kaufmann-Kohler, ‘Arbitral Precedent: Dream, Necessity or Excuse?’, 23 Arbitration International (2007), pp. 357, 374. (‘It may be debatable whether arbitrators have a legal obligation to follow precedents—probably not—but it seems well settled that they have a moral obligation to follow precedents so as to foster a normative environment that is predictable.’)
59 Permanent Court of Arbitration, Arbitration Rules, Art. 35(1)(a)(iv) (2012), available at <http://www.pca-cpa.org/showpage.asp?pag-id=1188>. Note that Art. 35(1)(a)(iv) seeks to identify the content of ‘international law’ for purposes of disputes involving only states.
61 See Methanex Corp. v. United States of America, NAFTA, UNCITRAL Arbitration, Final Award of the Tribunal on Jurisdiction and Merits (3 August 2005), Part IV, Ch. C, paras. 11–12 (discussing the treatment by other NAFTA tribunals of the Free Trade Commission’s interpretive note on NAFTA, Art. 1105). See also, ibid. para. 26. (Noting that, in attempting to establish custom, ‘[i]n his oral submissions at the main hearing, Counsel for Methanex cited only one case’.) As shown in an early empirical study of precedent in investment treaty arbitration conducted by one of the present authors, it is clear that investment tribunals are increasingly relying on prior awards. See Jeffery P. Commission, ‘Precedent in Investment Treaty Arbitration: A Citation Analysis of a Developing Jurisprudence’, 24 Journal of International Arbitration, no. 2 (2007), p. 129.
62 Brian D. King and Rahim Moloo, ‘International Arbitrators as Lawmakers’, 46 NYU Journal of International Law and Politics, no. 3 (2014), pp. 875, 897–907. The last of these factors—i.e., the reputation of the arbitrators—is only relevant in certain circumstances. For instance, a decision might be more compelling if arbitrators concur on the way to address a matter on which they have been known to disagree.
63 It is questionable if a tribunal would be required to adopt an agreement by the parties that imposed too large a burden on the tribunal. For instance, it might be considered unreasonable if the parties decided to impose on the tribunal too short a timeframe to render a particular decision.
64 The legitimacy of prior investment arbitration decisions is similarly derived (at least in part) from the need for three arbitrators—of which two arbitrators are often appointed by opposing parties—to reach a decision on a particular matter after an adversarial exchange by the parties on the merits of their respective positions. See Brian D. King and Rahim Moloo, ‘International Arbitrators as Lawmakers’, 46 NYU Journal of International Law and Politics, no. 3 (2014), pp. 875, 889–97.