All of us had to start somewhere. A few famous people perhaps reading or perhaps declining the invitation to read this post started in this business, sort of, back in the early/mid ’80s in a case-for-the-ages about an aborted hotel venture near the Pyramids. (Your author was, back in the day, doing legal battle with the Ayatollah K, who took our clients’ condo complex in Teheran by force and made a nice living in the real estate business, for a time).
Anyway, more about the Pyramids case (Southern Pacific Properties (SPP) v. Arab Republic of Egypt, for you fussy types; Google it)… The ICSID branch of the case — there was also an ICC case, as a warm-up — was mired for several years in jurisdictional arm-wrestling. And one of the fascinating issues was whether Egypt, in its domestic legislation regarding foreign investment, had given the written consent to ICSID arbitration of that dispute as required by the ICSID Convention Art. 25(1). (If you thought Egypt’s prior ratification of the Convention was itself such consent, an automatic standing offer equivalent to what is given in many BITs, now you know differently…).
My reason for taking you back to the infancy of the jurisprudence on this domestic-legislation-as -ICSID -consent issue is, as you may have guessed, that the same issue has been addressed, in a quite fulsome and helpful way, in a very recent Award. (PNG Sustainable Development Program Ltd. v. Independent State of Papua New Guinea, ICSID Case No. ARB/13/33, Award dated May 5, 2015).
You can well imagine how the argument shaped up in the Pyramids case. Respondent trotted out a 30-something Leslie Gore (now of blessed memory), reprising her 1963 hit It’s My Sovereignty, And I’ll Yield If I Want To. Claimant’s counsel, then as now irrepressible gourmands, urged a favorite recipe on the Tribunal: take equal parts general principles of statutory interpretation and general principles of treaty interpretation, and a teaspoon of “effet utile” (about which more later), and stir until congealed. And this is roughly the formula the Pyramids Tribunal adopted, as it stated (as quoted by the New Guinea Tribunal on May 5, 2015): ” [I]n deciding whether in the circumstances of the present case Law No. 43 constitutes consent to the Centre’s jurisdiction, the Tribunal will apply general principles of statutory interpretation taking into consideration, where appropriate, relevant rules of treaty interpretation and principles of international law applicable to unilateral declarations.”
My job as Commentator is to spare you too much detail about what goes on in the kitchen — you could instead read the case(s) in extenso — and instead try to put something digestible before you on an attractive platter. So have in mind that the New Guinea Tribunal had to struggle with considerable conflicting jurisprudence on this rather undeveloped terrain about the role of a State’s unilateral (and usually legislative) declarations as evidence of written consent to ICSID arbitration (or, in parallel, as putative consent to the compulsory jurisdiction of the International Court of Justice). Is it mainly the State’s Party (per the Leslie Gore ballad)? — that is to say, is there more or less a presumption against construing the unilateral legislative act as consent to jurisdiction?, or is there a requirement of clear and unambiguous proof of consent, owing to the significant sacrifice of autonomy entailed in a State submitting to jurisdiction, on an issue of State liability, to an international tribunal? (“You would cry too if it happened to you….“). Or to the contrary should arbitral interpretation of the unilateral State declaration follow more or less the Vienna Convention principles for interpreting a treaty, because the State having already ratified the ICSID Convention is then legislating in a treaty context, and the subject matter of the legislation is the scope of the ICSID Convention obligations the State has agreed to undertake?
The New Guinea Tribunal’s Award will be remembered perhaps less for its outcome — the State’s objection was sustained and the case was dismissed — than for its painstaking development of an “objective and neutral ” methodology for approaching the question of how to interpret unilateral State declarations of putative consent to ICSID arbitration. Taking its cue from the Pyramids Tribunal’s reference to a “preponderance of the evidence” standard, and artfully providing extensive footnote references to the no-presumptions norm in the interpretation of treaties while acknowledging the non-treaty character of the State’s unilateral declaration, the Tribunal held that interpretation of the State’s declaration should proceed without any a priori weighting in favor of or against the possibility that the declaration is in fact a consent to ICSID jurisdiction. But, as if to acknowledge and counterbalance the natural gravitational pull of the State’s inevitable “It’s My Party” arguments, the Tribunal observed (para. 257): “It is at least equally true, however, that States should be presumed to desire the effective and just resolution of international investment disputes, in a manner that enhances the prospects for foreign investment and confidence in the rule of law. In the Tribunal’s view, these various considerations are best reflected in a neutral, objective approach toward jurisdictional objections, without preconceived preferences in one direction or the other, consistent with the substantial weight of authority on the issue.” And on the question of whether to apply “effet utile” (everything must mean something) the Tribunal while conceding that this principle was mainly developed in regard to interpretation of treaties, found ample reason to extend it to States’ unilateral declarations made within a treaty framework (para. 268): “Regardless of whether it applies to ‘pure’ unilateral declarations made by States under international law, the Tribunal is of the view that effet utile is one of the common principles of statutory construction that generally apply to the interpretation of such ‘hybrid’ provisions.“
Credit the New Guinea Tribunal with gently moving the needle towards the middle on the conceptual balance between Host State sovereignty and Host State interest in attracting foreign investment, and doing so even in a case where, on the language of the relevant State declaration, the State had the clearly better of the argument on the question of consent.
Perhaps this will enrich your re-reading, on July 4, 2015, of one of history’s most famous unilateral State declarations about sovereignty, which celebrates its 239th birthday with barbecues, baseball, and fireworks. Here in the USA, just for today, It’s Our Party. Join us!