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Sergey Ripinsky

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. Historical context.

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Sergey Ripinsky

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  1. INTERNATIONAL INVESTMENT AGREEMENTS AND INVESTOR-STATE ARBITRATIONLECTURE 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

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