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Pollack Colloquium Room, Furman Hall 900
245 Sullivan Street, New York, NY 10012
6:15 PM - 8:30 PM

This 2012-2013 academic year, the Institute for International Law and Justice will continue hosting the very successful NYU Investment Law Forum sessions.  The Forum is devoted to the rigorous and critical examination of the increasing jurisprudence that is emerging from investor-state arbitral tribunals, as well as the underlying legal norms, whether in bilateral investment treaties or bilateral or regional trade agreements, that these tribunals are applying. The tribunal awards in investor-state arbitration raise important thematic issues, such as canons of treaty interpretation, the nature of state responsibility including remedies, custom as a source of law, and "fragmentation"-the relationship of investment law to other international legal regimes, whether the WTO or environment or human rights. Through anchoring reflection on these and other fundamental themes in the case law and related legal developments, we seek to engage the relevant academic community but also practitioners, policymakers, and activists.

All sessions will be held in the Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012), one Monday evening each month through the semester (unless otherwise indicated). Hors d’Oeuvres and refreshments will be available before the presentations (6:00 PM).

For more information and to RSVP (we kindly ask you do so at least 5 days in advance to each presentation), write to: iiljstudent@exchange.law.nyu.edu.

Schedule of Sessions (subject to modification)

Spring 2013

January 28, 2013

1.5 CLE credits are available for this event.

Arbitrators v. Judges: The Latent Tension of Investor Arbitration Rises to the Surface

Chevron v. Ecuador presents a dramatic test of arbitral power over judges, in both theory and practice. Recent years have seen a spate of awards that dance around the same theme. This panel — featuring two of the world's leading arbitrators and two of the world's top arbitral counsel — will examine three controversial clashes of arbitral and judicial power against the backdrop of Chevron v. Ecuador.

Panelists:

Charles Brower, arbitrator in White v. India and Chevron v. Ecuador I, on the effective means clause as a potential check on domestic courts.

Antonio Crivellaro, counsel in Saipem v. Bangladesh, on the expropriation clause as a potential check on domestic courts.

Yves Fortier, arbitrator in ATA v. Jordan, on the existence of arbitral power to terminate court proceedings.

Robert Volterra, counsel in ATA v. Jordan, on the application of each doctrine to Chevron v. Ecuador II.

Discussants:

George Bermann and Anthea Roberts of Columbia Law School.

Moderators:

Robert Howse of NYU Law School and Michael D. Goldhaber of The American Lawyer.

 

Background Materials

Tribunal Orders Jordan to Halt Local Court Proceedings and Allow Commercial Arbitration of Dispute
By Luke Eric Peterson

An arbitral tribunal at the International Centre for Settlement of Disputes (ICSID) has declared that a Jordanian court unlawfully extinguished an arbitration clause contained in a construction contract when it annulled a commercial arbitration award arising from a dispute between a Turkish construction company and a (formerly) Jordanian controlled company, APC.

More striking, ICSID arbitrators ordered that ongoing court proceedings in Jordan be immediately and unconditionally terminated – a dramatic form of relief sure to be coveted by other foreign investors in their claims against governments. (See separate analysis article.)

The developments at ICSID come some seven years after the Turkish firm, ATA Construction, Industrial and Trading Company (ATA) prevailed in a commercial arbitration initiated by APC regarding liability for a collapsed dike, only to see the resulting award annulled by Jordan’s courts. In conjunction with the annulment of the award, the courts also held that the underlying contractual arbitration clause was extinguished by dint of a 2001 Jordanian arbitration law which provides for extinguishment in cases where an arbitral award is annulled.

Following the annulment of the arbitral award and extinguishment of the arbitration clause, the parties took different legal pathways.

The state-backed APC company turned to the Jordanian courts of first instance in an effort to hold ATA liable for damages. Meanwhile, ATA initiated ICSID arbitration, arguing that the actions of Jordan and its courts had breached protections owed under the Turkey-Jordan BIT.

In their May 18, 2010 award, the ICSID panel ruled that the 2001 Jordanian arbitration law – which mandates extinguishment of an arbitration clause in cases where an award is annulled - operated so as to retroactively deprive the investor of its right to commercial arbitration, thus violating the Turkey-Jordan bilateral investment treaty.**

As noted, the tribunal also ordered the termination of the domestic legal proceedings initiated by APC. Indeed, they added that there should be no possibility “to engage further judicial proceedings in Jordan or elsewhere on the substance of the dispute.”

Additionally, the panel ordered that ATA – the Turkish claimant – “is entitled to proceed to arbitration in relation to the Dike No. 19 dispute in accordance with the terms of the Arbitration Agreement set forth in the Contract of 2 May 1998”.

Timing of BIT’s entry into force nixed several other claims

While arbitrators ruled that it was unlawful for Jordan to extinguish the contract’s arbitration clause, they dismissed several other claims advanced by the Turkish investor.
Claims that Jordan had expropriated the arbitral award, and committed a denial of justice, were both rejected as a matter of (temporal) jurisdiction; the latter, was also frowned upon as a viable merits claim.

Of key consequence to several of these claims, the Turkey-Jordan BIT came into force only in January of 2006, yet many of the events which laid the groundwork for the investor’s claims of expropriation and denial of justice had arisen prior to this date.

While the Turkey-Jordan treaty does not expressly rule out the arbitration of “existing” disputes, arbitrators ruled that they could not interpret the treaty retroactively unless expressly bade to do so.

Thus, much hinged on whether the tribunal would view the annulment of the commercial arbitral award as a separate dispute – one which began sometime after the January 2006 operation of the BIT – or whether it was part and parcel with the original dispute which had given rise to commercial arbitration in 2000.

Ultimately, the ICSID tribunal held that the dispute over annulment of the award was “really indistinguishable from the original dispute and, hence, like its progenitor, arose prior to the entry into force of the Turkey-Jordan BIT”.

Similar considerations led to the tribunal declining jurisdiction over the denial of justice claim, observing that certain court rulings in Jordan may have occurred when the BIT was in force, but they were part of a dispute which had originated before the entry into force of the BIT

Award is terse on treaty violation

In their May 18, 2010 award, arbitrators in the ATA v. Jordan case held that the extinguishment of a contractual arbitration clause violated “both the letter and the spirit” of the BIT”.

However, the arbitrators did not discuss in detail which particular provisions were violated.

The closest the tribunal comes to pinning down the treaty breaches seems to come in a single sentence in the award which observes, first, that the treaty’s preamble nods to the importance of fair & equitable treatment in ensuring the  maintenance of a stable framework for investment and maximum effective utilization of economic resources, and, second, that the treaty’s MFN clause permits the importation of an actual fair & equitable treatment clause from the UK-Jordan BIT, as well as the importation of a “treatment no less favourable than that required by international law” clause from the Spain-Jordan BIT.

The tribunal does not parse these clauses further, or discuss previous awards where such provisions (or similar ones) were interpreted.

It is unclear whether the arbitrators saw no need for greater explication, or whether the generality of its holdings was an attempt to side-step disagreements amongst the tribunal on the detailed interpretation and ramifications of particular treaty obligations.

Jordan in breach of its New York Convention obligations?

The award devotes rather more attention to Jordan’s legal obligations under the New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards.

Indeed, the tribunal appeared convinced that Jordan was in breach of its obligations under Article II of the New York Convention – to respect ATA’s right to arbitration – although any formal finding of breach was presumably outside of the ICSID tribunal’s jurisdiction.

The tribunal’s view that Jordan was not in compliance with other (non investment treaty) obligations may be seized upon in future cases where one or the other litigant seeks to import discussion of a state’s adherence to a broader range of international law obligations.

(IAReporter readers may recall, for example, that in the U.P.S. v. Canada arbitration, the claimant had sought to hold Canada liable for investment treaty breaches which were said to stem from the country’s failure to adhere to other (non-investment treaty) obligations – in that case, international human rights and labour law obligations.)

Arbitrators in the ATA v. Jordan case are Mr. L. Yves Fortier (President), Prof. Michael Reisman (Jordan’s nominee), and Dr. Ahmed El-Kosheri (ATA’s nominee).* Counsel for ATA were the law firm of Latham & Watkins and the Akinci law firm. The law firm Covington & Burling represented Jordan.

Analysis: Tribunal's Ordering Domestic Courts to Terminate Case May Pique Interest of Ohter Claimants

By Luke Eric Peterson

Perhaps the most striking feature of the recent May 18, 2010 award in the ATA v. Jordan arbitration is the tribunal’s decision to order that domestic legal proceedings in Jordan be terminated.

The tribunal held that the ongoing proceedings should “be immediately and unconditionally terminated, with no possibility to engage further judicial proceedings in Jordan or elsewhere on the substance” of a dispute between the Turkish firm, ATA, and a partially-state-owned company APC.

This order is sure to be discussed and debated in other investment treaty arbitrations. As previously chronicled*, claimants in investment treaty arbitrations are growing increasingly creative as to the types of relief they seek from arbitral tribunals.

No longer are foreign investors merely seeking post-facto compensation for harms allegedly suffered; instead, some claimants have sought orders which would compel states to pursue certain courses of action.

For instance, in the pending Micula v. Romania arbitration at ICSID, a pair of claimants are seeking to turn back the clock by having arbitrators re-instate a series of investment incentives which the claimants allege to have been prematurely terminated. For its part, Romania contends that the country’s accession to the European Union (EU) obliged the government to discontinue certain forms of state-support which do not comply with the EU’s strict rules on so-called State-Aid.

Meanwhile, in the ongoing Chevron v. Ecuador arbitration, the claimant is seeking to be insulated from any unfavourable ruling in an ongoing Ecuadorian court battle over responsibility for environmental pollution in the Amazon basin.

In its September 2010 Notice of Arbitration, Chevron’s requests skewed heavily towards declarative relief and orders of performance. For instance, Chevron has asked arbitrators to order the Republic of Ecuador to advise its local courts that the US energy company bears no liability for environmental pollution in the Amazon region (and that Ecuador and its state oil company Petroecuador bear responsibility for further environmental remediation).

The developments in the ATA v. Jordan case at ICSID may be studied and debated in these and future arbitrations. While the arbitrators in the ATA v. Jordan case sit in many other investment treaty arbitrations, none serve as arbitrators in the Micula or Chevron cases where the demand for orders of specific performance are key demands.

(Editor’s Note: as discussed in a separate article below, arbitrators the pending Chevron v. Ecuador BIT arbitration have recently ruled on a request by Chevron for interim measures which would have ordered Ecuador to ensure that any forthcoming domestic court judgment would not become final until the conclusion of the over-arching investment treaty arbitration.)

Fall 2012

October 29, 2012

Guest Speaker:

“Boom, Bust or Business as Usual? Tracking Trends in Investment Disputes"

Discussants:

 

November 19, 2012

Lifting the Corporate Veil:  Investor Nationality and Denial of Benefits in Recent Investor-State Arbitral Awards

Guest Speakers:

Discussant:

Suggested Reading:

 

For 2010-2011 sessions, go to: NYU Investment Forum 2010-11

For 2009-10 sessions, go to: NYU Investment Forum 2009-10