State Responsibility under the ECT and other Investment Protection Treaties - Chapter 5 - Investment Arbitration and the Energy Charter Treaty

Karl-Heinz Böckstiegel is a Member of Law Faculty of University of Cologne as Professor Emeritus. Professor Böckstiegel is also the President of the International Law Association (ILA), and the German Association for International Law, and has practiced extensively as parties’ counsel, mediator, and as arbitrator and president of arbitration tribunals in many national and international arbitrations of the ICC, ICSID, NAFTA, AAA, UNCITRAL and others.

Professor Böckstiegel has authored twelve and edited thirty-three books. He has also authored over three hundred articles, especially on the protection of foreign investments, international commercial contracts, state contracts, international legal procedure in civil and commercial matters, expropriation and nationalization measures, international commercial arbitration, and other fields of international business law, as well as on liability in aviation, law of airports and air traffic control, commercial space activities, manned space flight, environmental protection in space, settlement of space law disputes, and other fields of air and space law.

Kaj Hobér, Partner, Mannheimer Swartling Advokatbyrå, Stockholm

Kaj Hobér is a partner in the law firm Mannheimer Swartling, Stockholm and Professor of East European Commercial Law at Uppsala University. He has been heavily involved in the legal aspects of doing business in Eastern Europe and the former Soviet Union for the last 25 years. His arbitration experience includes representing both Eastern and Western European, American and Russian parties as well as parties from developing countries in international arbitrations. He has also been involved in numerous oil and gas arbitrations, relating primarily to Northern Africa, the Middle East and the former Soviet Union. He has acted as counsel and arbitrator (including chairmanships) in more than 300 international arbitrations, including representation of the claimant in the first ECT award, as well as involvement in many other investment arbitrations. He is a member of the board of the Arbitration Institute of the Stockholm Chamber of Commerce, the International Arbitration Club (London) and a member of the ICC Institute of International Business and Law (corresponding member).

Anatoly Martynov, Director General of the Centre for Trade Policy and Law, Moscow

Anatoly Martynovhas worked in the Ministry of Foreign Trade of the USSR, and in the Ministry of Foreign Economic Relations of Russia where he headed the Legal and Treaty Department. Mr. Martynov participated in the elaboration of the drafts of international conventions, guides, and model laws within the framework of UNCITRAL, UN European Economic Commission, the Hague Conference on Private International Law, and UNIDROIT, as well as in the negotiations on the Energy Charter Treaty and on the Agreement on Partnership and Cooperation between Russia and European Communities. Currently, Mr. Martynov provides legal advice to the Russian delegation at the negotiations on Russia’s accession to the World Trade Organization.

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Investment Arbitration and the Energy Charter Treaty

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State Responsibility under the ECT and other Investment Protection Treaties

Karl-Heinz Böckstiegel, Kaj Hobér, and Anatoly S. Martynov

It was with great pleasure that I accepted the invitation to
participate in this conference. First of all, it is nice to be back in
beautiful Stockholm where I have had a number of meetings and
arbitrations over the years. Then, the Energy Charter Treaty
presents a new procedural and substantive framework for foreign
investment and related dispute settlement which is both of high
practical relevance and intellectually challenging.

The topic of our session at the Conference and of this chapter,
i.e. state responsibility regarding foreign investment, has been of
high practical relevance throughout the history of international
law and the subject of a great number of publications. Personally,
it has occupied me from my early days when I wrote my doctoral
dissertation in Geneva in 1961 and, already at that time, I had to
study the respective work of the International Law Commission. It
still occupies me today in my arbitrations, and I still have to take
into account what is now the Final Version of the ILC Draft
Articles.

For this short introduction, I am subject to two limitations:

First, it is obviously neither possible nor is it my function as
chairman to go into any details of our topic. Our Rapporteur and
our Commentators will do so on the basis of their wide
experience. All I plan to do is to present a few remarks putting it
into context which may be helpful for further discussion.

Second, as some know, I am presently involved as an arbitrator
in several pending disputes which deal with a number of aspects
of our topic. Therefore, at a time when challenges are easily
raised, I will have to skip personal views on such aspects in this
introduction.

However, let me at least try to put our discussion into the
relevant framework regarding the applicable sources of the law
for our topic:

Our primary source of law of concern today is the Energy
Charter Treaty ("ECT") itself. Indeed, I suggest we focus on the
aspects of state responsibility provided for in the ECT and
whether and to what extent they present either re-statements or
new rulings compared to other sources of international law.

But this exercise can only be done by referring to and using the
codification and implementation of other treaties, because Article
16 ECT provides that both prior and subsequent international
agreements entered into by two or more Contracting Parties shall
be taken into account insofar as they contain provisions more
favourable to the investor or investment.

This provision becomes relevant particularly for the by now
several thousand Bilateral Investment Treaties ("BITs"), and
similar bilateral instruments of international law containing
procedural or substantive provisions regarding foreign
investment.

Table of Contents:

Full Table of Contents from "Investment Arbitration and the Energy Charter Treaty" Foreword

Remarks by Judge Stephen Schwebel

Editor's Preface

List of Contributors

Chapter 1 -- Introduction to the Energy Charter Treaty (ECT)

Introduction
Dr. Hans Corell

Part 1 -- The Energy Charter Treaty: More Than a MIT
Graham Coop

Part 2 -- The Dispute Settlement Mechanisms of the Energy Charter Treaty
Laurent Gouiffès

Chapter 2 -- Investments and Investors Covered by the ECT and other Investment Protection Treaties

Introduction
Antonio R. Parra

Part 1 -- Investments and Investors Covered by the Energy Charter Treaty
Emmanuel Gaillard

Part 2 -- The Limits of Protection for Investments and Investors under the Energy Charter Treaty
Stephen Jagusch & Anthony Sinclair

Chapter 3 -- The Concept of Expropriation under the ECT and other Investment Protection Treaties

Introduction:
Sergei N. Lebedev

Part 1 -- Rapport: The Concept of Expropriation under the ECT and other Investment Protection Treaties
Christoph H. Schreuer

Part 2 -- Comments on the Rapport

I -- Indirect Expropriation and the Right of the Governments to Regulate Criteria to Articulate the Difference
Katia Yannaca-Small

II -- The Distinction Between Lawful and Unlawful Expropriation
Audley Sheppard

Chapter 4 -- The Relationship Between Contractual Claims and Claims under the ECT and other Investment Protection Treaties

Introduction: Treaty versus Contract Claims
Gabrielle Kaufmann-Kohler

Part 1 -- Contract Claims under the Energy Charter Treaty's Umbrella Clause: Original
Intentions versus Emerging Jurisprudence
Thomas W. Wälde

Part 2 -- Multiple Judicial Proceedings and the Energy Charter Treaty
Christer Söderlund

Chapter 5 -- State Responsibility under the ECT and other Investment Protection Treaties

Introduction: Applicable Law to State Responsibility under the Energy Charter Treaty and other Investment Protection Treaties
Karl-Heinz Böckstiegel

Part 1 -- State Responsibility and Investment Arbitration
Kaj Hobér

Part 2 -- State Responsibility under the Energy Charter Treaty and other Investment Protection Treaties
Anatoly S. Martynov

Chapter 6 -- Arbitration under the ECT and other Investment Protection Treaties

Introduction: Parallel Proceedings: The Issues and (Where Are?) the Solutions
Michael Polkinghorne

Part 1 -- Parallel Arbitration Tribunals and Awards
Bernardo M. Cremades

Part 2 -- The Nykomb Case in the Light of Recent ICSID Jurisprudence
Richard Happ

Appendix -- Awards Rendered under ECT

Appendix 1 -- Nykomb v. Latvia

1. Introduction

2. Jurisdiction

3. General background

4. The legal basis for the claims against
the Republic

5. Assessment of losses or damages

6. Allocation and allowability of costs

7. Arbitral award

Appendix 2 -- Petrobart v. Kyrgyzstan

I. The contract

II. Relevant facts

III. The Foreign Investment Law and proceedings regarding that law

IV. The Energy Charter Treaty

V. Proceedings

VI. Claims

VII. Grounds and arguments

VIII. Reasons

Appendix 3 -- Plama v. Bulgaria
(Decision on Jurisdiction)

I. Procedure

II. Background facts

III. The submissions of the parties on jurisdiction

IV. Examination of the parties’ submissions

V. The decision

Index

Appendix Topics on CD-ROM Include:

ECT and Related Instruments

SCC Rules

ICSID Rules

UNCITRAL Arbitration Rules