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Denunciation, Termination and Survival: The Interplay of Treaty Law and

International Investment Law

Article · May 2016

DOI: 10.1093/icsidreview/siw010

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Andrew D. Mitchell Tania SL Voon

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 Denunciation, Termination and Survival:
The Interplay of Treaty Law and International Investment Law
Tania Voon1 and Andrew D Mitchell2

I Introduction ........................................................................................................................... 2
II Denunciation or Withdrawal from Multilateral or Plurilateral Treaties........................ 3
A Vienna Convention on the Law of Treaties ................................................................. 3
B NAFTA and TPP .......................................................................................................... 4
C ICSID Convention: Bolivia, Ecuador and Venezuela .................................................. 4
1 ICSID Convention: Articles 71 and 72 ......................................................... 4
2 Interpreting Articles 71 and 72: Venoklim v Venezuela ............................... 6
3 Additional Facility Rules: Rusuro Mining v Venezuela ............................... 8
4 Dual Nationals: Armas v Venezuela ............................................................. 8
D Energy Charter Treaty: Italy and the Russian Federation ............................................ 9
III Termination and Survival of Bilateral Treaties ............................................................... 12
A Expiry and Unilateral Termination: South Africa, Indonesia and Ecuador ............... 12
1 Treaty Provisions on Expiry and Unilateral Termination ........................... 12
2 Developments in Unilateral Termination .................................................... 13
B Mutual Termination: Australia; European Union ...................................................... 15
1 VCLT Article 59: Termination by Consent ................................................. 15
2 Mutual Termination under the TPP ............................................................. 16
3 Mutual Termination of intra-EU BITs......................................................... 17
4 Renegotiating BITs: Ping An v Belgium ..................................................... 18
C Survival Clauses: Czech Republic, Indonesia and Argentina .................................... 19
IV Conclusion ........................................................................................................................... 23

1
Professor, Melbourne Law School, The University of Melbourne, Australia. Email: tania.voon@unimelb.edu.au.
We gratefully acknowledge the generous financial support provided for this independent research by the Australian
Research Council pursuant to the Discovery Project scheme (project number DP130100838) and Future Fellowship
scheme (project ID FT130100416). We also thank Ana María Palacio Valencia for valuable research assistance in
relation to Spanish language materials. The opinions expressed here are our personal views as academics and are not
necessarily shared by any employer or other entity. Any errors or omissions are ours.
2
Professor, Melbourne Law School, The University of Melbourne, Australia. Email: a.mitchell@unimelb.edu.au.
 I INTRODUCTION
International investment law forms part of public international law,3 but is also influenced
heavily by other spheres including international commercial arbitration.4 The relationship
between investment law and the law of treaties, for example, is therefore often contested. As a
general matter, we note at the outset that treaty law, as largely contained in the Vienna
Convention on the Law of Treaties (VCLT),5 represents general international law (in some areas
amounting to customary international law). International investment agreements (IIAs) represent
a more specific law as between two (or more) countries. Accordingly, to the extent of any
inconsistency (and assuming no violation of a jus cogens (non-derogable) norm of international
law), IIAs prevail as lex specialis over the lex generalis of treaty law.6 However, due to
imprecision and unforeseeability in drafting, questions may arise as to the meaning of particular
IIA provisions and the point at which general provisions of treaty law take over.

One area in which the law of treaties intersects closely with IIAs is in their demise. In recent
years, questions arising under the law of treaties and public international law more generally
from the termination of IIAs have multiplied, as many IIAs have reached the point at which they
can be terminated by either party,7 and both individual States and groups of States have decided
to withdraw from particular bilateral or multilateral treaties in the investment field or replace
them with newer agreements. Developments have been rapid, given that in only 2010 the
esteemed Professor Salacuse found ‘no reported case of a country actually terminating an
investment treaty to which it had agreed.’8 Uncertainties consequently arising in this context
include the legality and effects of denunciation of the Convention on the Settlement of
Investment Disputes between States and Nationals of other States (ICSID Convention),9 the
impact of armed conflict on the continuation of IIAs,10 and the relevance of investor rights to
mutual termination by States of IIAs (as we have previously considered).11

In this article, we aim to explore some of the key aspects of the law of treaties as they relate to
the termination and expiry of IIAs. In part II, we consider the denunciation of or withdrawal
3
See, eg, José Enrique Alvarez, The Public International Law Regime Governing International Investment (Brill,
2011).
4
See, eg, Anthea Roberts, ‘Clash of Paradigms: Actors and Analogies Shaping the Investment Treaty System’
(2013) 107(1) American Journal of International Law 45.
5
Vienna Convention on the Law of Treaties, opened for signature 22 May 1969, 1155 UNTS 331 (entered into force
27 January 1980) (VCLT).
6
See Joost Pauwelyn, Conflict of Norms in Public International Law: How WTO Law Relates to other Rules of
International Law (Cambridge University Press, 2003) 391-392.
7
See, eg, UNCTAD, International Investment Policymaking in Transition: Challenges and Opportunities of Treaty
Renewal (IIA Issues Note No 4, June 2013).
8
Jeswald Salacuse, The Law of Investment Treaties (OUP 2010) 352.
9
Convention on the Settlement of Investment Disputes between States and Nationals of other States, concluded 18
March 1965, 575 UNTS 159 (entered into force 14 October 1966) (ICSID).
10
Josef Ostřanský, ‘The Termination and Suspension of Bilateral Investment Treaties due to an Armed Conflict’
(2015) 6 Journal of International Dispute Settlement 136, 139.
11
Tania Voon, Andrew Mitchell and James Munro, ‘Parting Ways: The Impact of Mutual Termination of
Investment Treaties on Investor Rights’ (2014) 29(2) ICSID Review 451.

Page 2 of 24
from multilateral or plurilateral treaties, focusing in particular on recent instances of
denunciation (for example by Venezuela) of the ICSID Convention. In part III, we consider the
termination of bilateral treaties, including by virtue of unilateral termination or mutual
termination, and the effect of ‘survival’ clauses. These clauses purport to continue the operation
of such treaties after their termination, contrary to the usual approach in treaty law, because of
the objective in such treaties of protecting investors from sudden negative changes in policy or
investment climate. These clauses can be particularly significant given the long-term nature of
many investments and the long and expensive period during which they may be established and
begin to generate profits. Again, we consider recent developments in this field, such as the
termination of IIAs by Indonesia and South Africa, and the replacement of older treaties with
newer versions, for example in the context of the European Union and the Trans-Pacific
Partnership.

Some of the most relevant parts of the law of treaties to this analysis appear in Articles 30, 54
and 59 of the VCLT, which relate to termination of a treaty by its terms or by consent (54), and
successive treaties on the same subject matter (30, 59). Other relevant VCLT provisions provide
legitimate grounds for termination in the absence of specific provision in the treaty itself. Yet the
meaning of both these provisions of treaty law and the provisions of IIAs concerning their
termination and survival is often unclear, leading to lengthy argument in investment treaty
arbitration as to jurisdiction in connection with the operation or application of terminated or
successive treaties, and the intended impact on existing investments and disputes. In view of the
kinds of disagreements that have arisen in caselaw to date, and with other relevant cases pending,
States must by now be aware of the need for the utmost clarity in crafting mutual terminations in
particular, so as to avoid dispute as to the relationship between new and old IIAs, and the
intended operation of survival clauses. This is particularly the case in the current context of
widespread recognition of the need for reform of the investment regime and the continuous
improvement of drafting of both Model BITs and negotiated agreements.

II DENUNCIATION OR WITHDRAWAL FROM MULTILATERAL OR PLURILATERAL TREATIES

A Vienna Convention on the Law of Treaties

Article 54(a) of the VCLT allows a party to a treaty to withdraw from the treaty ‘in conformity
with the provisions of the treaty’. In the absence of treaty terms providing for withdrawal from
the treaty, the following default terms apply pursuant to Article 56 of the VCLT:

1. A treaty which contains no provision regarding its termination and which does not provide for
denunciation or withdrawal is not subject to denunciation or withdrawal unless:

(a) it is established that the parties intended to admit the possibility of denunciation or
withdrawal; or

(b) a right of denunciation or withdrawal may be implied by the nature of the treaty.

Page 3 of 24
 2. A party shall give not less than twelve months’ notice of its intention to denounce or withdraw
from a treaty under paragraph 1.

Article 44(1) also makes clear that a right to denounce or withdraw from a treaty (whether under
the treaty terms pursuant to Article 54(a) or under the default terms in Article 56) ‘may be
exercised only with respect to the whole treaty unless the treaty otherwise provides or the parties
otherwise agree’.

B NAFTA and TPP

Most investment treaties with multiple parties contain specific provisions on withdrawal or
denunciation. Article 2205 of the North American Free Trade Agreement (NAFTA)12 (of which
Chapter 11 covers investment) provides:

A Party may withdraw from this Agreement six months after it provides written notice of withdrawal
to the other Parties. If a Party withdraws, the Agreement shall remain in force for the remaining
Parties.

Article 30.6 of the recently released agreed text of the 12-country Trans-Pacific Partnership
(TPP)13 similarly allows a TPP party to withdraw from the treaty with six months’ notice, unless
the parties agree on a different period.

More relevant to recent examples of denunciation of multilateral treaties are the ICSID
Convention and the Energy Charter Treaty.14

C ICSID Convention: Bolivia, Ecuador and Venezuela

1 ICSID Convention: Articles 71 and 72

Withdrawals from the ICSID Convention are governed by Article 71, which also requires a six
month notice period:

Any Contracting State may denounce this Convention by written notice to the depositary of this
Convention. The denunciation shall take effect six months after receipt of such notice.

Such a notice does not affect the State’s rights or obligations under the ICSID Convention
‘arising out of consent to the jurisdiction’ of the [International Centre for Settlement of
Investment Disputes (ICSID) given ‘before such notice was received by the depository’ (Article
72). Such rights and obligations would include the right to institute proceedings and the duty to

12
North American Free Trade Agreement, signed 17 December 1992 (entered into force 1 January 1994) (NAFTA).
13
Trans-Pacific Partnership, agreed text released 5 November 2015 (subject to legal review in English, Spanish and
French for accuracy, clarity and consistency; subject to authentication of English, Spanish and French versions)
(TPP).
14
The Energy Charter Treaty (Annex 1 to the Final Act of the European Energy Charter Conference), opened for
signature 17 December 1994, 2080 UNTS 100 (entered into force 16 April 1998) (Energy Charter Treaty).

Page 4 of 24
comply with an award.15 However, no additional ‘survival clause’ (of the type commonly found
in BITs as discussed further below) applies under the ICSID Convention to allow the convention
provisions to continue for a specified additional period following withdrawal. This distinction is
understandable, since the ICSID Convention provides primarily for procedural protections in the
form of a forum for ISDS rather than substantive investment protections as found in BITs.

Three contracting States have denounced the ICSID Convention by giving six months’ notice
pursuant to Article 71: Bolivia in 2007, Ecuador in 2009, and Venezuela in 2012.16 These
countries have all faced ICSID claims17 and have also unilaterally terminated BITs18 (an issue
discussed further below in relation to other countries). Uncertainty exists in both scholarly
debate19 and ongoing investment disputes20 about the implications of the survival-type clause in
Article 72 of the ICSID Convention, for example regarding whether a host State’s consent to
ICSID arbitration in an IIA constitutes a binding offer that cannot be withdrawn 21 despite

15
Christoph Schreuer, ‘Denunciation of the ICSID Convention and Consent to Arbitration’ in Michael Waibel et al
(eds), The Backlash against Investment Arbitration (Kluwer Law International, 2010) 352, 363.
16
ICSID, List of Contracting States and Other Signatories of the Convention (as of November 17, 2015) 4-5.
17
In relation to Bolivia, see, eg, Aguas del Tunari SA v Bolivia, ICSID Case No ARB/02/3:
<https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/02/3> (commenced and
settled before notice of denunciation); Quiborax SA v Bolivia, ICSID Case No ARB/06/2, Award (16 September
2015) (commenced before the notice of denunciation and concluded after the notice of denunciation). In relation to
Ecuador, see, eg, Perenco Ecuador Ltd v Ecuador, ICSID Case No ARB/08/6, Decision on Remaining Issues of
Jurisdiction and on Liability (12 September 2014) (commenced before notice of denunciation and still pending on
some issues eg quantum); Corporación Quiport SA v Ecuador, ICSID Case No ARB/09/23, Order Taking Notice of
the Discontinuance of the Proceeding (11 November 2011) (commenced within the six-month notice period for
denunciation and settled after the notice period). In relation to Venezuela, see below n 20.
18
Bolivia unilaterally terminated six BITs as of 2009/2012/2013: <http://investmentpolicyhub.unctad.org/IIA>.
Ecuador unilaterally denounced eight BITs that had already entered into force and 2 that had not yet entered into
force as of 2008/2010: <http://investmentpolicyhub.unctad.org/IIA>. Venezuela unilaterally terminated its BIT with
the Netherlands as of 1 November 2008: <http://investmentpolicyhub.unctad.org/IIA/country/228/treaty/2668>. See
also Rodrigo Polanco Lazo, ‘Is There a Life for Latin American Countries After Denouncing the ICSID
Convention?’ (January 2014) 11(1) Transnational Dispute Management (online); María José Luque Macías,
‘Current Approaches to the International Investment Regime in South America’ in Christoph Herrmann, Markus
Krajewski and Jörg Philipp Terhechte (eds), European Yearbook of International Economic Law 2014 (Springer,
2013) 285, 301-307.
19
See the review in B Woodring, ‘Denunciations Plus: Evaluating ICSID Withdrawals Bearing Additional New
ICSID Provisions’ (April 2015) Transnational Dispute Management (online) 5-14.
20
Many cases against Venezuela where these issues might be raised are still pending. See, eg, Saint-Gobain
Performance Plastics Europe v Venezuela, ICSID Case No ARB/12/13 (case registered 15 June 2012, within the six
month notice period following Venezuela’s notice of denunciation on 24 January 2012):
<https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/12/13>; Valores
Mundiales SL v Venezuela, ICSID Case No ARB/13/11 (case registered 6 June 2013, after the expiry of the notice
period): <https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/13/11>; Blue
Bank International & Trust (Barbados) Ltd v Venezuela (case registered 7 August 2012, after expiry of the notice
period): <https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/12/20>. See also
Luke Eric Peterson, ‘Venezuelan exit from ICSID raises questions both legal and financial’ (31 January 2012)
Investment Arbitration Reporter (online); Gisela Bolivar, ‘The Effect of Survival and Withdrawal Clauses in
Investment Treaties: Protection of Investments in Latin America’ in Leon Trakman and Nicola Ranieri (eds),
Regionalism in International Investment Law (OUP 2013) 162.
21
ICSID Convention, Article 25(1) ends: ‘When the parties have given their consent, no party may withdraw its
consent unilaterally.’

Page 5 of 24
denunciation of the ICSID Convention, or merely an offer that an investor may accept, and in the
latter case regarding when an investor may do so (eg before the notification or denunciation or
also within the subsequent six month period before the denunciation takes effect).

2 Interpreting Articles 71 and 72: Venoklim v Venezuela

In an award rendered in April 2015 in Venoklim v Venezuela, an ICSID tribunal rejected
Venezuela’s contention that an investor could not commence an ICSID arbitration in the six
month period following notice of denunciation, holding that such an interpretation would
effectively allow immediate denunciation, contrary to the notice period specified in Article 71 of
the ICSID Convention.22 Moreover, the tribunal held that the reference in Article 72 to ‘consent’
to arbitration under the ICSID Convention refers to the unilateral offer of consent to arbitration
by the host State, and not to such consent only once ‘perfected’ by acceptance by the investor.23
In that case, the investor filed the request for arbitration on 23 July 2012, at the very end of the
six month notice period.24 The tribunal also rejected Venezuela’s objection to jurisdiction on the
basis that the case was registered on 15 August 2012, being after the end of the notice period,
particularly as this is an administrative function that the investor has no control over. 25 (The case
was nevertheless dismissed on other jurisdictional grounds.)

Space constraints preclude a detailed examination of the significant debate over the time when an
investor may bring a claim against a State that has denounced the ICSID Convention. However,
in our view, the decision in Venoklim v Venezuela accords with both logic and general principles
of treaty interpretation. As the tribunal indicated, a determination that claims could not be
brought in the six month period following notice of denunciation (unless the investor had already
‘perfected’ the State’s consent by providing a general written acceptance, for example in a
generic letter to the host State rather than in connection with a specific dispute) would nullify the
provision of a six month notice period in Article 71 of the ICSID Convention, contrary to the
principle of effectiveness.26 The purpose of allowing such a period would seem to be precisely to
allow investors to bring claims before the denunciation takes effect.

Similarly, the purpose of Article 72 of the ICSID Convention seems to be to make clear that a
host State cannot escape liability by denouncing the ICSID Convention and thereby withdrawing
from an ongoing proceeding commenced before the denunciation takes effect. That reading
accords with the general approach under the law of treaties, as set out in Article 70 of the VCLT,
whereby (subject to contrary treaty terms or contrary agreement by the parties) the termination of
a treaty ‘does not affect any right, obligation or legal situation of the parties created through the

22
Venoklim Holding BV v Venezuela, ICSID Case No ARB/12/22, Award (3 April 2015) [62]-[63] (Venoklim v
Venezuela).
23
Venoklim v Venezuela, [65].
24
Venoklim v Venezuela, [8].
25
Venoklim v Venezuela, [75]-[80].
26
See, eg, Hersch Lauterpacht, ‘Restrictive Interpretation and the Principle of Effectiveness in the Interpretation of
Treaties’ (1949) 26 British Year Book of International Law 48.

Page 6 of 24
execution of the treaty prior to its termination’,27 meaning (in the case of a multilateral treaty)
prior to the date on which a denunciation takes effect.28

Professor Schreuer’s maintains that an offer by a host State in a treaty or legislation to engage in
arbitration under the ICSID Convention becomes binding only when accepted by an investor.29
We have previously endorsed that view, suggesting that an investor does so by commencing an
arbitral claim in respect of a specific dispute.30 Nevertheless, unlike Professor Schreuer, we see
no obstacle to an investor accepting such an offer within the six month notice period.

Conversely, we would agree that beyond the six month notice period the provision for ICSID
arbitration in an IIA would be insufficient to overcome a prior denunciation of the ICSID
Convention. In other words, after a State’s denunciation of the ICSID Convention has taken
effect (six months following the notice of denunciation), investors can no longer bring ICSID
claims against that State.31 A contrary interpretation would undermine the denunciation and fail
to give effect to Article 71 of the ICSID Convention, contrary to the general position set out in
Article 71(a) of the VCLT:

Unless the treaty otherwise provides or the parties otherwise agree, the termination of a treaty [or the
denunciation of a multilateral treaty]32 under its provisions or in accordance with the present
Convention:

(a) Releases the parties from any obligation further to perform the treaty.

Denunciation of the ICSID Convention may in some cases openor place greater emphasis
onalternative avenues of arbitration to investors pursuant to the terms of particular IIAs of the
denouncing State, for example under the ICSID Additional Facility – Arbitration Rules33 and the
Arbitration Rules of the United Nations Commission on International Trade Law
(UNCITRAL).34 For example, two of Venezuela’s BITs designate the ICSID Convention as the
sole forum for ISDS outside domestic courts.35 Venezuela’s denunciation of the ICSID
Convention therefore precludes ISDS under those BITs. However, other Venezuelan BITs allow
resort to ISDS pursuant to the ICSID Convention, the Additional Facility Rules, or the
UNCITRAL Arbitration Rules, generally in that order and subject to the non-availability of the

27
VCLT art 70(1)(b).
28
VCLT art 70(2).
29
Schreuer (n 15) 360. See the further discussion in Voon et al (n 11) 456-457.
30
See the further discussion of Schreuer’s approach and alternative interpretations in T Voon et al (n 11) 456-457.
31
See the discussion of post-denunciation claims in UNCTAD, Denunciation of the ICSID Convention and BITS:
Impact on InvestorState Claims (IIA Issues Note No 2, December 2010).
32
VCLT art 70(2).
33
Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the
International Centre for Settlement of Investment Disputes (Additional Facility Rules) sch C.
34
UNCITRAL Arbitration Rules as revised in 2010, with new article 1, paragraph 4, as adopted in 2013: General
Assembly Resolution 68/109 (16 December 2013).
35
Sergey Ripinsky, ‘Venezuela’s Withdrawal From ICSID: What it Does and Does Not Achieve’ (13 April 2012)
Investment Treaty News (online). See, eg, Agreement between Chile and Venezuela for the Reciprocal Promotion
and Protection of Investments, signed 2 April 1993 (entered into force 25 May 1995) art 8(2).

Page 7 of 24
preceding options. Thus, ISDS may continue under those other BITs notwithstanding the
removal of the ICSID Convention avenue, as demonstrated by the following two examples.

3 Additional Facility Rules: Rusuro Mining v Venezuela

After Venezuela’s notice of denunciation but perhaps just within the subsequent six month
period, a case was brought under the Additional Facility Rules36 (which provide an ISDS forum
for disputes falling outside the jurisdiction of the ICSID Convention, for example because either
the host State or the home State of the investor is not a party to the ICSID Convention).37 The
case, Rusoro Mining v Venezuela, was brought under the CanadaVenezuela BIT,38 which
allows an investor to bring a dispute under: (i) the ICSID Convention; or (ii) if either Canada or
Venezuela is not a party to the ICSID Convention, the Additional Facility Rules; or (iii) if those
avenues are not available then the UNCITRAL Arbitration Rules (Article XII:4).

The use of the Additional Facility Rules could be seen as a way of avoiding jurisdictional
questions concerning the effect and timing of the denunciation and the operation of the survival-
type clause in Article 72 of the ICSID Convention. However, such questions would presumably
still need to be answered, as the Additional Facility Rules are available under Article 2(a) for
‘the settlement of legal disputes arising directly out of an investment which are not within the
jurisdiction of the Centre because either the State party to the dispute or the State whose national
is a party to the dispute is not a Contracting State’. Thus, if an investment dispute is brought
under Article 2(a) of the Additional Facility Rules, the tribunal would still need to establish that
it had jurisdiction by examining whether the host and home State were party to the ICSID
Convention. In the six month period following notice of denunciation, the denouncing State
would still be a party to the ICSID Convention and therefore the Additional Facility Rules would
be unavailable for an investment dispute pursuant to Article 2(a) (except for an investor whose
home State was not a party).

4 Dual Nationals: Armas v Venezuela

The SpainVenezuela BIT39 contains essentially the same provisions as the CanadaVenezuela
BIT regarding the availability of ISDS under the ICSID Convention, the Additional Facility
Rules, or the UNCITRAL Arbitration Rules (Article XI:2-3). By notice of arbitration dated 9
October 2012 (after expiry of Venezuela’s notice period for denunciation of the ICSID
Convention), claimants Armas and Gruber commenced an action against Venezuela under the

36
Rusoro Mining Ltd v Venezuela, ICSID Case No ARB(ARF)/12/5 (registered 1 August 2012):
<https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB(AF)/12/5>.
37
Additional Facility Rules, art 2(a).
38
Agreement between Canada and Venezuela for the Promotion and Protection of Investments, signed 1 July 1996
(entered into force 28 January 1998).
39
Agreement between Spain and Venezuela for the Reciprocal Promotion and Protection of Investments, signed 2
November 1995 (entered into force 10 September 1997).

Page 8 of 24
UNCITRAL Rules.40 Venezuela argued that the tribunal lacked jurisdiction rationae personae
because of the claimants’ dual SpanishVenezuelan nationality, relying on (inter alia) Article
25(2)(a) of the ICSID Convention,41 which excludes host State nationals from the definition of
nationals of another contracting State for the purpose of commencing a dispute under that treaty.
The tribunal accepted jurisdiction,42 pointing out that the claim was brought under the
UNCITRAL Arbitration Rules and that Article 25(2)(a) was therefore inapplicable.43 The
tribunal also noted that the SpainVenezuela BIT did not exclude nationals of both contracting
states from the definition of investor (Article I:1(a)), in contrast to some of Venezuela’s other
BITs.44 This case therefore highlights an additional (probably unexpected) route for investment
treaty claims notwithstanding Venezuela’s denunciation of the ICSID Convention.

D Energy Charter Treaty: Italy and the Russian Federation

The provisions of the Energy Charter Treaty on withdrawal are closer to those typically found in
BITs (as opposed to the ICSID Convention provisions), including an initial period of the treaty
being in force (albeit only five years) and a subsequent one year notice period for withdrawal,
followed by a 20 year sunset or survival period:

ARTICLE 47

WITHDRAWAL

(1) At any time after five years from the date on which this Treaty has entered into force for a
Contracting Party, that Contracting Party may give written notification to the Depositary of its
withdrawal from the Treaty.

(2) Any such withdrawal shall take effect upon the expiry of one year after the date of the receipt of
the notification by the Depositary, or on such later date as may be specified in the notification of
withdrawal.

(3) The provisions of this Treaty shall continue to apply to Investments made in the Area of a
Contracting Party by Investors of other Contracting Parties or in the Area of other Contracting Parties
by Investors of that Contracting Party as of the date when that Contracting Party’s withdrawal from
the Treaty takes effect for a period of 20 years from such date. …

Italy withdrew from the Energy Charter Treaty by notice given on 31 December 2014, with
effect from 1 January 2016, pursuant to Article 47(2) (and therefore subject to the 20 year
survival period under Article 47(3)).45 Italy is facing claims under the Energy Charter Treaty

40
Armas v Venezuela, Permanent Court of Arbitration Case No 2013-3, UNCITRAL Rules, Decision on Jurisdiction
(14 December 2014) (Armas v Venezuela).
41
Armas v Venezuela, [87]-[88].
42
Armas v Venezuela, [196], [218], [219]. See also Clovis Trevino and Luke Eric Peterson, ‘UNCITRAL Tribunal
allows dual-national to sue Venezuela; surprise development highlights unintended consequence of recent ICSID
denunciation’ (10 February 2015) Investment Arbitration Reporter (online); Ripinsky (n 35).
43
Armas v Venezuela, [191], [193].
44
Armas v Venezuela, [180].
45
See <http://www.energycharter.org/who-we-are/members-observers/countries/italy/>.

Page 9 of 24
(including two brought during the notice period and one before the notice was issued),46 although
it cited membership fees as its reason for withdrawing. 47 Italy was the first contracting party to
withdraw from that treaty (while the European Union remains a party).48 However, Russia had
earlier withdrawn its provisional application of the treaty as a signatory.

Like Australia, Belarus, and Norway, Russia signed without ratifying the Energy Charter
Treaty.49 Belarus applies the Energy Charter Treaty provisionally pending its entry into force,50
pursuant to Article 45(1) (‘Each signatory agrees to apply this Treaty provisionally pending its
entry into force for such signatory … to the extent that such provisional application is not
inconsistent with its constitution, laws or regulations’), while Australia51 and Norway52 apply
provisionally only Part VII (Structure and Institutions). In 2009, Russia gave notice of intention
not to ratify the Energy Charter Treaty, pursuant to Article 45(3)(a),53 which provides:

Any signatory may terminate its provisional application of this Treaty by written notification to the
Depository of its intention not to become a Contracting Party to the Treaty. Termination of provisional
application for any signatory shall take effect upon the expiration of 60 days from the date on which
such signatory’s written notification is received by the Depository.

Nevertheless, a form of survival clause also operates in relation to the termination of provisional
application of the Energy Charter Treaty, pursuant to Article 45(3)(b):

In the event that a signatory terminates provisional application under subparagraph (a), the obligation
of the signatory under paragraph (1) to apply Parts III [Investment Promotion and Protection] and V
[Dispute Settlement] with respect to any Investments made in its Area during such provisional
application by Investors of other signatories shall nevertheless remain in effect with respect to those
Investments for twenty years following the effective date of termination …

Accordingly, Russia’s investment protection obligations and dispute settlement obligations

(including pursuant to the Energy Charter Treaty’s ISDS mechanism) continue for some time
with respect to investments made before Russia’s termination of provisional application of the
treaty. The issues of provisional application and survival have proven significant in relation to a

46
See, eg, Belenergia SA v Italy, ICSID Case No ARB/14/40 (case registered 22 September 2015); Silver Ridge
Power BV v Italy, ICSID Case No ARB/15/37 (case registered 11 August 2015); Greentech Energy Systems v Italy,
Stockholm Chamber of Commerce (case registered 7 July 2015); Blusun SA v Italy, ICSID Case No ARB/14/03
(case registered 21 February 2014). See also Luke Eric Peterson, ‘Italy follows Russia in withdrawing from Energy
Charter Treaty, but for surprising reason’ (17 April 2015) Investment Arbitration Reporter (online).
47
Luke Eric Peterson, ‘Italy follows Russia in withdrawing from Energy Charter Treaty, but for surprising reason’
(17 April 2015) Investment Arbitration Reporter (online).
48
Luke Eric Peterson, ‘Italy follows Russia in withdrawing from Energy Charter Treaty, but for surprising reason’
(17 April 2015) Investment Arbitration Reporter (online).
49
See <http://www.energycharter.org/process/energy-charter-treaty-1994/energy-charter-treaty/>
(Signatories/Contracting Parties to the Energy Charter Treaty).
50
See <http://www.energycharter.org/who-we-are/members-observers/countries/belarus/>.
51
See <http://www.energycharter.org/who-we-are/members-observers/countries/australia/>.
52
See <http://www.energycharter.org/who-we-are/members-observers/countries/norway>.
53
See <http://www.energycharter.org/who-we-are/members-observers/countries/russian-federation/>. See also Irina
Pominova, ‘Risks and Benefits for the Russian Federation from Participating in the Energy Charter: A
Comprehensive Analysis’, Occasional Paper (Energy Charter Secretariat, Knowledge Centre, 2014).

Page 10 of 24
recent major award against Russia under the Energy Charter Treaty (Yukos),54 which Russia is
disputing on various grounds, including that the treaty applied only on a provisional basis.55 The
tribunal found that, pursuant to Article 45(1) of the Energy Charter Treaty, Russia must be
understood as applying provisionally the entire treaty ‘unless the principle of provisional
application itself were inconsistent “with its constitution, laws or regulations”’56 (even though
Russia did not need to make a declaration or otherwise give advance notice to the other parties of
such inconsistency).57 In the absence of significant resistance from Russia, the tribunal found no
inconsistency between provisional application and Russian law, noting also that as a result of the
survival clause such provisional application would continue until 19 October 2029.58

The VCLT and general international law on treaties may appear to have a relatively limited
impact on the possibility and effect of denunciation of multilateral and plurilateral investment
treaties, because those treaties tend to include specific provisions on denunciation or withdrawal.
However, the survival-type clauses in both the ICSID Convention and the Energy Charter Treaty
demonstrate the uncertainties involved in interpreting and applying the treaty provisions on
denunciation or withdrawal. Broader international law rules and principles may play a role in
resolving these uncertainties in ongoing and future disputes. Relevant concepts may include, for
example, estoppel, abuse of rights, pacta sunt servanda, harmonious interpretation of treaties
(sometimes characterised as the principle of ‘systemic integration’ in connection with VCLT
Article 31(3)(c)),59 judicial comity, and the principle of effectiveness. The specific VCLT rules
on denunciation, withdrawal and related matters may also need careful scrutiny depending on the
particular text of the treaty in question and the factual circumstances of the dispute.

54
Yukos Universal Ltd (Isle of Man) v Russian Federation, Permanent Court of Arbitration Case No AA 227, Final
Award (18 July 2014) (Yukos v Russia) [1888(f)-(h)]. See also Jarrod Hepburn, ‘Investigation: As Yukos
enforcement grabs headlines, Russia has faced at least 10 new treaty arbitrations since 2012, with others threatened’
(14 July 2015) Investment Arbitration Reporter (online), referring to three other undisclosed Energy Charter Treaty
claims against Russia in the Permanent Court of Arbitration. See also Luke Eric Peterson, ‘Russia disputes round-
up: updates on status of 11 known investment treaty claims’ (19 January 2016) Investment Arbitration Reporter
(online).
55
See Hulley Enterprises Ltd, Yukos Universal Ltd, and Veteran Petroleum Ltd v Russian Federation: Respondent’s
Motion to Deny Confirmation of Arbitration Awards pursuant to New York Convention, Case No 1:14-cv-01996-
ABJ, United States District Court, District of Columbia (filed 20 October 2015) 11; Jarrod Hepburn, ‘Battling $50
Billion Yukos awards on two fronts, Russia focuses on claimants’ alleged fraud and linguistic analysis of tribunal
assistant’s alleged role in drafting awards’ (3 November 2015) Investment Arbitration Reporter (online).
56
Yukos v Russia [301].
57
Yukos v Russia [283].
58
Yukos v Russia [339].
59
See, eg, Campbell McLachlan, ‘The Principle of Systemic Integration and Article 31(3)(c) of the Vienna
Convention’ (2005) 54 International and Comparative Law Quarterly 279.

Page 11 of 24
 III TERMINATION AND SURVIVAL OF BILATERAL TREATIES

A Expiry and Unilateral Termination: South Africa, Indonesia and Ecuador

1 Treaty Provisions on Expiry and Unilateral Termination

Article 54(a) of the VCLT allows for not only denunciation of or withdrawal from a multilateral
treaty pursuant to the terms of the treaty, but also termination of a bilateral treaty pursuant to its
terms. IIAs do not generally provide for their automatic expiry or termination after a given
period. Rather, they allow for their indefinite continuation subject to unilateral termination (ie
notice of termination by one party). For example, the 2012 United States Model Bilateral
Investment Treaty (US Model BIT) states:

This Treaty shall enter into force thirty days after the date the Parties exchange instruments of
ratification. It shall remain in force for a period of ten years and shall continue in force thereafter
unless terminated in accordance with paragraph 2.60

IIAs typically allow a party to terminate the treaty after the expiry of a specified period (or at any
time), without reasons but subject to a notice period. For example, under the US Model BIT:

A Party may terminate this Treaty at the end of the initial ten-year period or at any time thereafter by
giving one year’s written notice to the other Party.61

The 2008 German Model Bilateral Investment Treaty (Germany Model BIT) contains a similar
provision.62 The 2014 Canadian Model Agreement for the Promotion and Protection of
Investments (Canada Model IPPA) provides for the agreement to ‘remain in force unless a Party
notifies the other Party in writing of its intention to terminate it’, which can be done at any time
subject to a notice period of one year.63 Provisions similar to these terms in model agreements
are typical of a wide range of IIAs currently in force.64

In contrast to the default position of allowing the treaty to continue, the Model Text for the
Indian Bilateral Investment Treaty revised and released at the end of 201565 (India Model BIT)
provides for the treaty to lapse after ten years unless the parties agree in writing to renew it.66

60
US Model BIT, art 22.1 (emphasis added).
61
US Model BIT, art 22.2 (emphasis added).
62
German Model BIT, art 13.2. See also 2007 Colombian Model Bilateral Agreement for the Promotion and
Protection of Investments (Colombia Model BIT) art XIII:2.
63
Canada Model IPPA, art 42.4.
64
See, eg, Agreement between the Czech Republic and Mauritius for the Promotion and Reciprocal Protection of
Investments (signed 5 April 1999, entered into force 27 April 2000) art 13.3; Agreement between the United
Kingdom and Mexico for the Promotion and Reciprocal Protection of Investments (signed 12 May 2006, entered
into force 25 July 2007) art 27; Agreement among Japan, the Republic of Korea, and China for the Promotion,
Facilitation and Protection of Investment (signed 13 May 2012, entered into force 17 May 2014) art 27.5. See also
Jeswald Salacuse, The Law of Investment Treaties (OUP 2010) 351-352.
65
See Joel Dahlquist and Luke Eric Peterson, ‘In final version of its new model investment treaty, India dials back
ambition of earlier proposals – but still favors some big changes’ (3 January 2016) Investment Arbitration Reporter
(online).
66
India Model BIT, art 38.2.

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The draft India Model BIT67 allowed a party to terminate the treaty unilaterally subject to a
notice period of six months, but in the final version this period was extended to the more usual
12 months.68 Norway’s 2015 draft Model Agreement for the Promotion and Protection of
Investments (Norway Model IPPA) does not provide for automatic expiry but does allow
unilateral termination at any time, to take effect on the first day of the very next month after
notification.69

India’s development of a new model BIT stems from a period of critical review of its BIT
program. The government commenced this period of review in 2013, in large part due to the
increased number of challenges it has faced under investor-State dispute settlement (ISDS),70
including for example in the successful claim White Industries v India.71 India may also have
been influenced to adopt a new approach to BITs by the conduct of other States, such as South
Africa72 and Indonesia.

2 Developments in Unilateral Termination

In mid-2009, the South African Department of Trade and Industry issued a draft ‘policy review
document’ containing sharp critiques of both the content of the country’s BITs and the omission
of risk assessments prior to concluding them, and indicating the conduct of a review of the
overarching BIT program, particularly in view of ISDS claims.73 Despite conclusion of one new
BIT in that year, South Africa was reported to have issued ‘a broader moratorium on negotiation
of new BITs’.74 In 2012, South Africa gave notice to Belgium of its decision to terminate South
Africa’s BIT with the Belgo-Luxembourg Economic Union by unilateral notice, subsequent to
the expiry of the initial period of the treaty’s life, and subject to the survival clause (of the type
discussed further below).75 South Africa continued to unilaterally terminate BITs: with

67
See Luke Eric Peterson, ‘India invites comments on draft model investment treaty; text offers radical departure,
and calls to mind Norway’s past efforts at revision’ (24 March 2015) Investment Arbitration Reporter (online).
68
India Model BIT, art 38.2.
69
Norway Model IPPA, art 34.1.
70
Press Information Bureau (Government of India), Ministry of Commerce & Industry: Bilateral Investment
Treaties, Press Release 95593 (6 May 2013) <http://pib.nic.in/newsite/erelease.aspx?relid=95593>; Prabhash
Ranjan, ‘India and Bilateral Investment TreatiesA Changing Landscape’ (2014) 29(2) ICSID Review 419, 421,
443.
71
White Industries Australia Ltd v India, UNCITRAL Rules, Final Award (30 November 2011).
72
Prabhash Ranjan, ‘India and Bilateral Investment TreatiesA Changing Landscape’ (2014) 29(2) ICSID Review
419, 440 (referring to Ministry of Commerce (India), International Investment Agreements between India and Other
Countries (2011)).
73
Luke Eric Peterson, ‘South African Government releases draft paper reviewing its BIT program, and calling for
major revisions to approach’ (17 July 2009) Investment Arbitration Reporter (online); Department of Trade and
Industry, South Africa, General Notice: Notice 961 of 2009 (7 July 2009)
<http://www.gov.za/sites/www.gov.za/files/32386_961.pdf> (attaching Executive Summary of Government Position
Paper: Bilateral Investment Treaty Policy Framework Review (June 2009)).
74
Luke Eric Peterson, ‘Discontinuance of bilateral investment treaty claim leave some questions unresolved for
South Africa; future shape of BIT program still up in the air’ (28 August 2010) Investment Arbitration Reporter
(online).
75
Luke Eric Peterson, ‘South Africa pushes phase-out of early bilateral investment treaties after at least two separate
brushes with investor-state arbitration’ (23 September 2012) Investment Arbitration Reporter (online).

Page 13 of 24
Luxembourg, Switzerland, Spain (2013); Denmark, United Kingdom, France, Australia and
Germany (2014).76 South Africa also notified most other BIT partners of its intention to
terminate each treaty as its expiry approached.77 South Africa’s current approach is to terminate
BITs as they become ready for termination following the expiry of the initial period, and to
replace the ISDS system with additional domestic protections for investors.78

Indonesia announced in 2014 its intention to terminate its more than 60 BITs including ISDS
mechanisms.79 This decision, similarly to that of India, followed on from continuing ISDS claims
against Indonesia, including twin disputes brought by a UK mining company and its Australian
subsidiary.80 In late 2015, reports emerged that Indonesia had indeed formally notified ‘more
than 20 treaty partners that the government will terminate unilaterally BITs with those
partners’,81 with nine treaties already terminated with effect from various dates in 2014/2015 and
eleven more set to lapse in 2016/2018.82 These terminations follow the general pattern of being
effected by notice from Indonesia to the treaty partner following the expiry of the initial period
of force provided for in each treaty.83 An additional termination arose by mutual agreement
between Indonesia and Argentina, as discussed further below in connection with survival
clauses.

These developments in South Africa and Indonesia in particular provide examples of significant
host State dissatisfaction with the investment treaty system and, more specifically, ISDS. They
show a growing willingness of some States to dissociate from the investment regime in response
to unwelcome ISDS claims and awards. These moves nevertheless accord with the terms of the
relevant BITs and, therefore, with Article 54(a) of the VCLT, creating perhaps more political and

76
UNCTAD, Investment Policy Hub, <http://investmentpolicyhub.unctad.org/IIA>.
77
EC Schlemmer, ‘An Overview of South Africa’s Bilateral Investment Treaties and Investment Policy’ (2016)
ICSID Review (forthcoming – advance access online) 23.
78
Ibid; Department of Trade and Industry, South Africa, ‘Notice 733 of 2015: Notice of Introduction of a Bill into
Parliament – Promotion and Protection of Investment Bill’ (22 July 2015) 601 Government Gazette 39009
<https://www.thedti.gov.za/gazzettes/Promotion_Protection_Investment_Notice.pdf>.
79
Ben Bland and Shawn Donnan, ‘Indonesia to terminate more than 60 bilateral investment treaties’ (26 March
2014) Financial Times (online). See also Netherlands Embassy in Jakarta, Indonesia, Termination Bilateral
Investment Treaty <http://indonesia.nlembassy.org/organization/departments/economic-affairs/termination-bilateral-
investment-treaty.html>; Luke Eric Peterson, ‘As Indonesia Reconsiders its Investment Treaties, Arbitrators Don’t
Want to Slow Down Mining Case by Separating Liability and Damages Phases’ (28 April 2014) Investment
Arbitration Reporter (online).
80
Churchill Mining Plc v Indonesia, ICSID Case No Arb/12/14 and 12/40, Decision on Jurisdiction (24 February
2014); Planet Mining Pty Ltd v Indonesia, ICSID Case No Arb/12/14 and 12/40, Decision on Jurisdiction (24
February 2014). On the jurisdictional decision in the latter case, see Luke Nottage, ‘Do Many of Australia's Bilateral
Treaties Really Not Provide Full Advance Consent to Investor-State Arbitration? Analysis of Planet Mining v
Indonesia and Regional Implications’ (2015) 12(1) Transnational Dispute Management (online). See also, eg, Al-
Warraq v Indonesia, UNCITRAL Rules, Final Award (15 December 2014).
81
Luke Eric Peterson, Indonesia Ramps up Termination of BITs – and Kills Survival Clause in One Such Treaty –
But Faces New $600 Mil. Claim from Indian Mining Investor (20 November 2015) Investment Arbitration Reporter
(online).
82
Ibid.
83
See UNCTAD, Investment Policy Hub, <http://investmentpolicyhub.unctad.org/IIA>, showing terminated status
of nine of Indonesia’s BITs by unilateral denunciation with effect from 2014/2015.

Page 14 of 24
economic concerns than legal difficulties. However, future disputes arising during the period
after termination may reveal legal uncertainties in relation to the interpretation and application of
the survival clause of the relevant treaty, which clause cannot be unilaterally extinguished by the
State terminating the treaty.

However, some unilateral terminations of BITs by other countries have not necessarily accorded
with the relevant treaty terms. For example, when Ecuador unilaterally terminated its BIT with
Finland, the treaty had not yet continued for the initial ten year period required by the treaty
before unilateral termination.84 Article 14(1) of that treaty provides that it:

shall remain in force for a period of ten years. Unless official notice of termination is given twelve
months before the expiry of its period of validity, this Agreement shall be tacitly extended on the same
terms for further periods of ten years.

The treaty entered into force on 16 December 2001 and was terminated by way of unilateral
denunciation as of 9 December 2010.85 As the termination appears contrary to Article 14(1) of
the BIT, in order to comply with treaty law it would have had to be based on some other grounds
for termination recognised under international law, such as material breach (VCLT Article 60),
impossibility of performance (VCLT Article 61), or fundamental change of circumstances
(VCLT Article 62). A fundamental change of circumstances could be a feasible basis for
termination, given that Ecuador justified its decision as necessary to comply with constitutional
requirements that had changed since the conclusion of the BIT.86

B Mutual Termination: Australia; European Union

1 VCLT Article 59: Termination by Consent

IIAs typically do not provide explicitly for mutual termination. However, pursuant to Article
54(b) of the VCLT, which reflects the customary international law position,87 a treaty may be
terminated ‘at any time by consent of all the parties after consultation with the other contracting
States’. That provision appears to cover explicit mutual termination. Under Article 59(1) of the

84
Above (n 18).
85
See <http://investmentpolicyhub.unctad.org/IIA/country/61/treaty/1320>; Registro Oficial No 345 (21 December
2010) 576 Denuncíase y por tanto declárase terminado el Convenio entre la República del Ecuador y la República
de Finlandia sobre la Promoción y Protección de Inversiones, suscrito el 18 de abril del 2001
<http://decretos.cege.gob.ec/decretos/decretos.aspx?id=2009>. See also Registro Oficial No 355 (5 January 2011)
591 <http://decretos.cege.gob.ec/decretos/decretos.aspx?id=2009>.
86
See above (n 85); Macías (n 18) 304, referring to Asamblea Nacional de la República del Ecuador, Comisión
Especializada Permanente No 5 de Soberanía, Integración, Relaciones Internacionales y Seguridad Integral, Informe
de la Comisión
sobre el ‘Convenio entre el Gobierno de la República del Ecuador y el Gobierno de la Repúblicade Finlandia sobre
la Promoción y Protección de las Inversiones’, [3.2]:
<documentacion.asambleanacional.gob.ec/alfresco/d/d/workspace/SpacesStore/9521beb0-e7f9-4398-bbdd-
7ab6acfa7083/Informe%252...>. See also Constitutional Court Decision: Dictamen N 26-10-DTI-CC.
87
Anthony Aust, Modern Treaty Law and Practice (2nd edn, CUP 2007) 292.

Page 15 of 24
VCLT, a treaty may also be deemed to be terminated as a result of the conclusion of a
subsequent treaty by the same parties on the same subject:

A treaty shall be considered as terminated if all the parties to it conclude a later treaty relating to the
same subject-matter and:

(a) it appears from the later treaty or is otherwise established that the parties intended that the matter
should be governed by that treaty; or

(b) the provisions of the later treaty are so far incompatible with those of the earlier one that the two
treaties are not capable of being applied at the same time. 88

This provision can be seen as allowing for implicit mutual termination.

2 Mutual Termination under the TPP

The TPP provides an example of both explicit mutual termination and termination as a result of
conclusion of a later treaty. Pursuant to side letters exchanged between Australia and other TPP
countries, Australia has agreed not to apply the ISDS mechanism in the TPP as between
Australia and New Zealand,89 and to terminate BITs with Mexico, Peru and Vietnam in due
course following the entry into force of the TPP. The AustraliaMexico BIT90 is to terminate
upon entry into force of the TPP, while the parties have also agreed to modify the survival clause
of the BIT to reduce the survival period from ten91 to three years (a scenario discussed further
below in relation to other examples), limiting ISDS claims to those brought that additional three
year period as well.92 The AustraliaPeru BIT93 is similarly to terminate upon entry into force of
the TPP, while the survival period has been reduced from 1594 to five years, but with ISDS
claims allowed for only three years following termination.95 Finally, the AustraliaVietnam
BIT96 will also terminate upon entry into force of the TPP. As with Australia’s BIT with

88
VCLT, art 59(1).
89
Exchange of letters between Andrew Robb, Minister for Trade and Investment (Australia) and Tim Groser,
Minister for Trade (New Zealand) (6 November 2015).
90
Agreement between Mexico and Australia on the Promotion and Reciprocal Protection of Investments (with
Protocol), signed 23 August 2005 (entered into force 21 July 2007).
91
Article 24(3).
92
Exchange of letters between Andrew Robb, Minister for Trade and Investment (Australia) and Ildefonso Guajardo
Villarreal, Minister of Economy (Mexico) (6 November 2015).
93
Agreement between Australia and the Republic of Peru on the Promotion and Protection of Investments, and
Protocol, signed 7 December 1995 (entered into force 2 February 1997).
94
Article 16(3).
95
Exchange of letters between Andrew Robb, Minister for Trade and Investment (Australia) and Ana María Sánchez
de Ríos, Minister of Foreign Affairs (Peru) (6 November 2015).
96
Agreement between Australia and Vietnam on the Reciprocal Promotion and Protection of Investments, signed 5
March 1991 (entered into force 11 September 1991).

Page 16 of 24
Vietnam, the survival period of the original AustraliaVietnam BIT has been reduced from 1597
to five years, and ISDS claims may be brought within only the first three of those years.98

Other TPP countries have not used this opportunity to terminate existing BITs or IIAs, which
may create some uncertainties in relation to the coverage of those existing agreements. Under
Article 9.20(2)(b) of the TPP, an ISDS claim cannot be brought under the TPP unless the
claimant waives ‘any right to initiate or continue before any court or administrative tribunal under
the law of a Party, or any other dispute settlement procedures, any proceeding with respect to any
measure alleged to constitute a breach’ under the TPP ISDS procedure. This choice of forum clause
is intended to prevent forum-shopping, overlapping disputes and conflicting results. A tribunal
hearing an ISDS claim pursuant to the TPP investment chapter is likely to enforce the clause,
preventing (for example) a claim that has been brought under NAFTA chapter 11 from proceeding
under the TPP investment chapter as well. However, the parties also express their intention in Article
1.1 of the TPP that this new treaty coexist with existing international agreements, which would
include, for example, the World Trade Organization (‘WTO’) agreements. A WTO Panel or the
WTO Appellate Body might decline to enforce the TPP choice of forum clause (as suggested by
various pronouncements of the Appellate Body),99 thereby allowing disputes to proceed over
essentially the same subject matter under both the TPP ISDS mechanism and the WTO dispute
settlement system.

3 Mutual Termination of intra-EU BITs

In another sphere, the EU has been encouraging mutual termination of intra-EU BITs on the
basis that such protections are not needed as between EU Member States.100 The EU has even
commenced infringement proceedings to request Austria, the Netherlands, Romania, Slovakia
and Sweden) to terminate their intra-EU BITs:

[S]uch ‘extra’ reassurances should not be necessary, as all Member States are subject to the same EU
rules in the single market, including those on cross-border investments (in particular the freedom of
establishment and the free movement of capital). All EU investors also benefit from the same
protection thanks to EU rules (e.g. non-discrimination on grounds of nationality). By contrast, intra-
EU BITs confer rights on a bilateral basis to investors from some Member States only: in accordance
with consistent case law from the European Court of Justice, such discrimination based on nationality
is incompatible with EU law. …

97
Article 15(3).
98
Exchange of letters between Andrew Robb, Minister for Trade and Investment (Australia) and Vu Huy Hoang,
Minister of Trade and Industry (Vietnam) (6 November 2015).
99
See, eg, Appellate Body, Mexico – Taxes on Soft Drinks, [54]; Appellate Body, Peru – Agricultural Products,
[5.112].
100
European Commission, Commission asks Member States to terminate their intra-EU bilateral investment
treaties, Press Release (18 June 2015). See also Jarrod Hepburn and Luke Eric Peterson, ‘Stage is set for
infringement proceedings over intra-EU BITs, as informal process between European Commission and three
member-states fail to resolve EC’s concerns’ (2 June 2015) Investment Arbitration Reporter (online).

Page 17 of 24
 These BITs are out of date inside a single market of 28 countries. … [I]ntra-EU BITs fragment the
single market by conferring rights to some EU investors on a bilateral basis. Their provisions overlap
and conflict with EU single market law on cross-border investments.101

While some EU Member States have taken different views as to the necessity and desirability of
terminating such BITs (for example, on the basis that EU law does not provide everything
contained in the BITs),102 three Member States have proceeded with termination: the Czech
Republic, Italy, and Ireland. Below we discuss termination of intra-EU BITs by the Czech
Republic, as well as the possibility of implicit termination of an intra-EU BIT by virtue of
accession to the EU, pursuant to Article 59(1) of the VCLT.103 Italy has been described as a
‘model citizen’104 in terminating all its intra-EU BITs105 (generally by consent).106 Ireland has
also terminated by consent its only intra-EU BIT, with the Czech Republic.107 The resistance of
other countries to the EU’s demands for termination may lead to further disputes under both EU
law and international investment law.

4 Renegotiating BITs: Ping An v Belgium

Another recent case highlights the kinds of debates that can arise in relation to the treaty law
implications for investors when one BIT is replaced with another. In Ping An v Belgium, a
jurisdictional dispute arose in relation to two successive treaties:108 the BITs concluded between
China and BelgiumLuxembourg in 1986109 and 2005.110 The ‘Claimants said that they were
bringing the claim pursuant to the 1986 BIT as regards the substantive obligations and pursuant
to the 2009 BIT as regards the procedural remedy’,111 apparently because the earlier BIT allowed

101
European Commission (n 100).
102
See Joel Dahlquist, ‘INVESTIGATION: EU member-states table differing responses in face of Commission’s
infringement proceedings related to intra-EU BITs’ (9 February 2016) Investment Arbitration Reporter (online).
103
See also European American Investment Bank AG (Austria) v Slovak Republic, Permanent Court of Arbitration
Case No 2010-17, UNCITRAL Rules, Award on Jurisdiction (22 October 2012) [210].
104
Jarrod Hepburn and Luke Eric Peterson, ‘Italy is the EU’s model citizen, when it comes to following European
Commission demands to terminate intra-EU investment treaties’ (2 June 2015) Investment Arbitration Reporter
(online).
105
<http://investmentpolicyhub.unctad.org/IIA> (search for Italy BITs in force with EU party reveals no results).
106
Italy’s BIT with Croatia is listed as having been unilaterally denounced as of 11 June 2013:
<http://investmentpolicyhub.unctad.org/IIA/treaty/1079>. The other terminations of intra-EU BITs are listed as ‘by
consent’ in this database.
107
<http://investmentpolicyhub.unctad.org/IIA>.
108
See generally Qing Ren, ‘Case Comment: Ping An v Belgium: Temporal Jurisdiction of Successive BITs’ (2016)
ICSID Review (advance access version published 11 January 2016); S Green Martínez, ‘Case Comment: Ping An
Life Insurance Company of China, Limited and Ping An Insurance (Group) Company of China, Limited v Kingdom
of Belgium - A Jurisdictional Black Hole Between Two BITs?’ (December 2015) Transnational Dispute
Management (online).
109
Agreement between the Belgian-Luxembourg Economic Union and China on the Reciprocal Promotion and
Protection of Investments, signed 4 June 1984 (entered into force 5 October 1986, terminated as of 1 December
2009) (BelgiumChina BIT 1986).
110
Agreement between the Belgian-Luxembourg Economic Union and China on the Promotion and Reciprocal
Protection of Investments, signed 6 June 2005 (entered into force 1 December 2009) (BelgiumChina BIT 2005).
111
Ping An Life Insurance Company of China, Limited v Belgium, ICSID Case No Arb/12/29, Award (30 April
2015) (Ping An v China) [131].

Page 18 of 24
ICSID arbitration only for a narrow range of disputes including as to the amount of
compensation for expropriation.112 However, the tribunal accepted Belgium’s objection to
jurisdiction ratione temporis,113 finding:

nothing in the wording of the 2009 BIT to justify … that the more extensive remedies under the 2009
BIT would be available to pre-existing disputes that had been notified under the 1986 BIT but not yet
subject to arbitral or judicial process.114

The tribunal nevertheless noted with regret, without determining the matter, that the claimants
might have valid claims with ‘no effective remedy’:115 ‘there is a real risk that disputes arising
prior to the 2009 BIT but not the subject of judicial or arbitral process might fall into some
“black hole” or “arbitration gap” between the two BITs.’116 Although disputed by the claimants,
one possibility for plugging such a hole would be the ten year survival clause in the 1986 BIT, 117
which might continue to allow claims under it.118

C Survival Clauses: Czech Republic, Indonesia and Argentina

Survival clauses in BITs extend the treaty’s protection of investments to a specified period after
termination. For example, under the US Model BIT:

For ten years from the date of termination, all other Articles shall continue to apply to covered
investments established or acquired prior to the date of termination, except insofar as those Articles
extend to the establishment or acquisition of covered investments. 119

Under the Canada Model IPPA120 and the Norway Model IPPA121 the survival period is 15 years;
under the German Model BIT it is 20 years;122 and under the India Model BIT it is only five
years.123 Some but not all IIAs in the form of preferential trade agreements containing
investment provisions also include a survival clause.124

We have previously explained our view that the parties to an IIA may as a general matter
override a survival clause, so that it has no effect, by agreeing to extinguish it at the same time as

112
Ping An v China [204], referring to: BelgiumChina BIT 1986, art 10 and protocol, art 6; BelgiumChina BIT
2005, art 8.
113
Ping An v China, [233].
114
Ping An v China, [231].
115
Ping An v China, [232].
116
Ping An v China, [207].
117
BelgiumChina BIT 1986, art 14(4).
118
Ping An v China, [209].
119
US Model BIT, art 22.3 (emphasis added). See also Colombia Model BIT art XIII:3.
120
Canada Model IPPA, art 42.4.
121
Norway Model IPPA, art 34.2.
122
German Model BIT, art 13.2.
123
India Model BIT, art 38.3.
124
UNCTAD, Denunciation of the ICSID Convention and BITS: Impact on InvestorState Claims (IIA Issues Note
No 2, December 2010) n 15.

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they agree to terminate the treaty.125 The underlying justification for this view is that an IIA is a
treaty entered between States parties and depends on their continuing consent for its operation,
notwithstanding the benefits that investors may obtain under the treaty. (For similar reasons, we
consider that the States parties to an IIA could terminate the IIA by mutual consent even within
the initial period of entry into force, agreeing to abrogate any provision in the treaty requiring
such a period before allowing notice of unilateral termination. Furthermore, Titi suggests, giving
even more weight to the current intentions of the negotiating States parties, that if the parties
terminate a treaty by consent and replace it with a new treaty, the survival clause in the original
treaty is automatically extinguished without the need for an express agreement to that effect.)126
Two relatively recent examples of State practice, as discussed belowcoupled with other
examples we have detailed elsewhere127show that at least some States ascribe to this view.

First, the Czech Republic has arranged for mutual termination of seven BITs with other EU
member States,128 on the basis that such BITs are no longer necessary, as discussed above. In
four or five of these instances (with Slovenia, Denmark, Malta, Estonia, and possibly Italy), the
agreement to terminate the treaty is reported to have been accompanied by a simultaneous
agreement to modify the survival clause to preclude its further application.129 (Also in some
instances of mutual termination, the parties appear to have agreed to terminate the treaty before
the expiry of the initial period of entry into force.)130 For example, Article 16 of the Czech
RepublicDenmark BIT131 provides:

(1) This Agreement shall remain in force for a period of ten years and shall continue in force
thereafter unless, after the expiry of the initial period of ten years, either Contracting Party notifies in
writing the other Contracting Party of its intention to terminate this Agreement. The notice of
termination shall become effective one year after it has been received by the other Contracting Party.

(2) In respect of investments made prior to the date when the notice of termination of this Agreement
becomes effective, the provisions of Articles 1 to 10 shall remain in forc[e] for a further period of ten
years from that date.

125
See Voon et al (n 11). Cf James Harrison, ‘The Life and Death of BITs: Legal Issues Concerning Survival
Clauses and the Termination of Investment Treaties’ (2012) 13 Journal of World Investment & Trade 928, 942-947.
126
Catharine Titi, ‘Most-Favoured-Nation Treatment, Survival Clauses and Reform of International Investment
Law’ (Working Paper, 26 November 2015) 15 <http://ssrn.com/abstract=2723342>.
127
Voon et al (n 11) 467-468.
128
Slovakia (as of 1 May 2004), Italy (30 April 2009), Slovenia (10 June 2009), Denmark (18 November 2009),
Malta (30 September 2010), Estonia (20 February 2011), Ireland (1 December 2011):
<http://investmentpolicyhub.unctad.org/IIA>.
129
Luke Eric Peterson, ‘Czech Republic terminates investment treaties in such a way as to cast doubt on residual
legal protection for existing investments’ (1 February 2011) Investment Arbitration Reporter (online); Hepburn and
Peterson (n 100).
130
For example, the Agreement between the Czech Republic and Malta for the Promotion and Reciprocal Protection
of Investments, signed 9 April 2002 (entered into force 9 July 2003) was terminated by consent with effect from 30
September 2010: <http://investmentpolicyhub.unctad.org/IIA/treaty/1205>. However, Article 12(2) had provided
that the treaty would be in force for ten years and thereafter could be unilaterally terminated by either party upon
giving 12 months’ notice.
131
Agreement between the Czech and Slovak Federal Republic and Denmark for the Promotion and Reciprocal
Protection of Investments, signed 6 March 1991 (entered into force 19 September 1992).

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Articles 1 to 10 of that treaty cover matters such as definitions; substantive protections such as
fair and equitable treatment, expropriation and non-discrimination; and both State-State and
investor-State dispute settlement (in the latter case, pursuant to the ICSID Convention or the
UNCITRAL Rules).

On one view, the survival clause in Article 16(2) should be interpreted in the context of its
position next to Article 16(1), such that the ‘notice of termination’ referred to in Article 16(2) is
properly understood as signifying the unilateral notice of termination permitted under Article
16(1).132 In that case, no amendment of Article 16(2) is necessary to prevent the survival of any
provisions following mutual termination. However, to remove uncertainty and debate, States
may prefer to indicate expressly their agreement to reduce or eliminate any survival period, as
they are entitled to do pursuant to the law of treaties,133 and as the Czech Republic and Denmark
apparently did.134

As foreshadowed above, the ArgentinaIndonesia BIT135 provides a second, more recent,

instance in which the parties are reported to have agreed to terminate the treaty while at the same
time extinguishing the survival clause.136 Article 13 follows the same format as the Czech
RepublicDenmark BIT, providing for an initial period of entry into force of ten years, after
which either party may unilaterally terminate the agreement by giving 12 months’ notice to the
other part (Article 13(1)). For investments made before the termination takes effect, Articles 1 to
12 remain in force for an additional ten years (Article 13(2)). Articles 1 to 12 of the
ArgentinaIndonesia BIT cover matters including substantive investment protection (eg fair and
equitable treatment, expropriation, and non-discrimination) and dispute settlement (both State-
State and investor-State, under either the ICSID Convention or the UNCITRAL Rules).

Interestingly, the four reported cases of termination and extinguishment by the Czech Republic
occurred (in 2009-2010) following at least two decisions in which tribunals rejected arguments
by the Czech Republic that an intra-EU BIT had been terminated by implicit agreement as a
result of the Czech Republic’s accession to the EU (on 1 May 2004), such that (according to the
Czech Republic) each tribunal lacked jurisdiction to determine claims under the BIT.

In March 2007, the tribunal in Eastern Sugar BV (Netherlands) v Czech Republic noted that
neither the BIT between the Czech Republic and the Netherlands 137 nor the Czech Republic’s
terms of accession to the EU expressly terminated the BIT;138 nor had either party to the BIT
132
Ibid.
133
See the analysis in Voon et al (n 11) 466-468.
134
Peterson (n 129).
135
Agreement between Argentina and Indonesia on the Promotion and Protection of Investments, signed 23 April
1997 (entered into force 1 March 2001).
136
Peterson (n 81).
137
Agreement on Encouragement and Reciprocal Protection of Investments between the Netherlands and the Czech
and Slovak Federal Republic, signed 29 April 1991 (entered into force 1 October 1992).
138
Eastern Sugar BV (Netherlands) v Czech Republic, Stockholm Chamber of Commerce Case No 088/2004, Partial
Award (27 March 2007) (Eastern Sugar v Czech Republic) [147]-[148].

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given notice of its termination.139 The tribunal rejected the argument by the Czech Republic that
the EU treaty superseded the BIT as a later treaty on the same subject matter in accordance with
Article 59 of the VCLT.140 The tribunal also rejected the contention by the Czech Republic that
its accession to the EU also implicitly terminated the survival clause in Article 13(3) of the
BIT.141 Finally, the tribunal pointed out that the dispute arose before the accession of the Czech
Republic to the EU and therefore would have been unaffected in any event by a consequential
termination of the BIT, in accordance with Article 70(1) of the VCLT. 142 The tribunal therefore
accepted jurisdiction.143

A few months later, in June 2007, the tribunal in Binder v Czech Republic reached a similar
conclusion on similar grounds, noting the absence of substantive conflict between EU law 144 and
the BIT between the Czech Republic and Germany,145 the existence of a 15-year survival clause
in Article 13(3) of the BIT, and the fact that the alleged BIT violations occurred before the
accession of the Czech Republic to the EU.146

The issue of whether measures should be envisaged to terminate intra-EU BITs as not being well
adapted to internal co-operation within the EU has given rise to some debate within the EU but has not
been finally settled even as a policy matter to this date. 147

The tribunal rejected the requests of the Czech Republic to declare that the tribunal lacked
jurisdiction to hear the claims and to stay the proceedings or request a preliminary ruling from
the European Court of Justice.148

The various circumstances of these two disputes render unsurprising the tribunals’ acceptance of
jurisdiction under the relevant BIT: in particular, the fact that the termination of both the BIT and
the survival clause was not explicitly agreed by the parties; that the alleged termination took
place in any event after the commencement of the dispute; and that EU law and policy on the
issue of continuing intra-EU BITs were unresolved. Future disputes may shed light on the
validity of the purported extinguishment of the survival clause of a BIT by express mutual
agreement, alongside an express agreement to terminate the BIT. As noted above, in our view
both actions are consistent with both the law of treaties and international investment law.

139
Eastern Sugar v Czech Republic, [153].
140
Eastern Sugar v Czech Republic, [159], [167], [168].
141
Eastern Sugar v Czech Republic, [174].
142
Eastern Sugar v Czech Republic, [176]-[177]. See also above (n 27) and corresponding text.
143
Eastern Sugar v Czech Republic, [181].
144
Binder v Czech Republic, Ad Hoc Arbitration, UNCITRAL Rules, Award on Jurisdiction (6 June 2007) [63],
[66].
145
Agreement between the Czech and Slovak Federal Republic and Germany on the Promotion and Reciprocal
Protection of Investments, signed 2 October 1990 (entered into force 2 August 1992).
146
Binder v Czech Republic, Ad Hoc Arbitration, UNCITRAL Rules, Award on Jurisdiction (6 June 2007) [62].
147
Binder v Czech Republic, Ad Hoc Arbitration, UNCITRAL Rules, Award on Jurisdiction (6 June 2007) [64].
148
Binder v Czech Republic, Ad Hoc Arbitration, UNCITRAL Rules, Award on Jurisdiction (6 June 2007) [81].
Subsequent domestic proceedings regarding attempts to set aside the jurisdictional award are explained in Binder v
Czech Republic, Ad Hoc Arbitration, UNCITRAL Rules, Final Award (15 July 2011) [16]-[29].

Page 22 of 24
 IV CONCLUSION
Developments in recent years in relation to termination and withdrawal from investment
agreements including BITs and the ICSID Convention raise a number of issues involving the
intersection between treaty law and international investment law. Several of these issues remain
unresolved and may be clarified in ongoing or future disputes. One aspect of both multilateral
and bilateral investment agreements that complicates their termination and interaction is the
sunset or survival clause. As noted at the outset, such clauses were introduced precisely because
of the long-term nature of foreign investments and the need for extended periods of certainty.
Yet these clauses make it harder for States to extract themselves from particular investment
obligations or the investment regime more generally, particularly when ongoing or threatened
investment claims provide the impetus for termination or withdrawal. In that scenario, the initial
notice period for denunciation, termination or withdrawal, and then the subsequent survival
period for BITs, are both likely to attract even more claims by aggrieved investors.

New treaties in new trade and investment fora, such as the TPP and ongoing negotiations
towards ‘new generation’ agreements, provide opportunities to modernise existing treaties
without unilateral termination or renegotiation of outdated provisions. As an alternative to the
absolutist and isolationist approach of denouncing the ICSID Convention or engaging in
systemic unilateral terminations of BITs, parties to such treaties may agree to terminate older-
style treaties upon the entry into force of newer treaties. Although such an approach does not
eliminate uncertainty and debate as to the impact on existing investments and ongoing or future
disputes, it is likely to minimise such complications. Upon mutual termination, whether or not
replacing the terminated treaty with a new treaty, States must be careful to make clear their
intentions in respect of matters such as the operation of the survival clause in the terminated
treaty, the treatment of disputes that have already commenced, and the treatment of future
disputes regarding existing or future investors or investments. Detailed, explicit wording on such
matters may significantly alleviate confusion and conflict as to the meaning and impact of the
termination.

The importance of increased clarity in drafting both treaty provisions on termination and
subsequent agreements or notifications regarding termination is enhanced by the increasingly
complicated web of BITs, IIAs and other trade agreements. Moreover, the potential for
increasing numbers of disputes and consequential drains on resources is enhanced by growing
concerns among developed and developing countries alike as to the legitimacy and long-term
sustainability of the investment regime, and in particular the system of investment treaty
arbitration. As States grapple with the correct balance between sovereign regulatory autonomy
and investor protections in their Model BITs and negotiated agreements, modifying earlier
approaches and renegotiating or terminating treaties to give effect to more modern strategies, the
‘tail’ of older treaties may be long and arduous if not properly incorporated into the program of
revision. With survival clauses for periods of up to 20 years, old-style treaties may continue to
have a lasting impact for decades to come, whether they are unilaterally terminated, allowed to

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 expire (as is possible in some cases), or mutually terminated without reference to the effect on
the survival clause.

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