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1. Introduction
1.1.3 ICSID-------------------------------------------Page 3
2. Analysis -------------------------------------------------------------------Page 7
3. Conclusion ----------------------------------------------------------------Page 9
4. Bibliography --------------------------------------------------------------Page 12
1
1. INTRODUCTION
Treaty conflict is a problem faced between domestic and other international or foreign laws.
The fragmentation of the international social world has attained legal significance especially as it
has been accompanied by the emergence of specialized and (relatively) autonomous rules or rule-
complexes, legal institutions and spheres of legal practice.1 Foreign investment has evolved to
harbor global economy for the facilitation of growth and development. To facilitate and encour-
age such investments, sovereign states have constructed an intricate web of treaties that guaran-
tees to its investors, legal rights and allowing investors to bring allegations alleging violations of
those rights against the state in arbitration proceedings.
Investor-state arbitration has erupted along with the growing amount of international investment
agreements (IITs), and in the moment and cost engaged in bringing the dispute to a final resolu-
tion, it has become similar to civil litigation.
The following trends show a surge in (BITs):
398
Total:
Total in force: 3132
Provisional measures help safeguard arbitral proceedings. They help prevent the derailment of
the arbitration proceedings, by allowing a party to secure its rights and avoid the aggravation of
the dispute pending its final resolution. While provisional measures are potentially very powerful
tools, their Achilles' heel lies in their enforcement.3
1
Andreas Fisher, Lescano and Günther Teubner, “Regime-Collisions the Vain Search for Legal Unity in the Frag-
mentation of Global Law” (2004) 25 Michigan Journal of International Law Pp. 999.
2
“International Investment Agreements Navigator | UNCTAD Investment Policy Hub” (Unctad.org,
2019) <https://investmentpolicy.unctad.org/international-investment-agreements> accessed Oc-
tober 2, 2019
3
“PROVISIONAL MEASURES IN INVESTMENT ARBITRATION: WADING THROUGH THE MURKY WA-
2
For many years, no broad international consensus emerged on the existing protection for foreign
investors as a result of differences of approaches between developed and developing States. As a
result of this perceived lack of established customary principles, States concluded thousands of
bilateral investment treaties in the 1990s for the promotion and the protection of investments
(BITs). The number of BITs is now so overwhelming for many years, no broad international
consensus emerged on the existing protection for foreign investors as a result of differences of
approaches between developed and developing States.
Bilateral investment Treaties (BITs) are agreements between two Countries (States) for the re-
ciprocal promotion and protection of investments in each other& territories by individuals and
companies situated in either State. Generally speaking, each government in a BIT is required to
ensure that investors from the other country are treated fairly and equitably and are not discrimi-
nated against. Governments also undertake not to directly expropriate or nationalize the foreign
investor’s investment. Where there is a breach of a BIT, an investor from one country may be
able to initiate arbitration directly against the other country’s government. The first BIT was
signed in 1959 between Germany and Pakistan, which came into force in 1962. Today there are
approximately 3,000 BITs in existence globally.
BITs involve the following clauses which are what makes it successful in protection of invest-
ments:
Treating foreign investors’ investments fairly and equitably, not nationalizing or expropriat-
ing investments from foreign investors, unless the measures taken are non-discriminatory, tak-
en in the public interest, and while observing due process, are taken against payment of
prompt, adequate, and fair compensation. Importantly, regulations substantially negatively af-
fecting the value of an investment can qualify as an expropriation for these purposes; Allowing
funds relating to investments to be freely transferred by foreign investors without delay, which
includes protection against foreign exchange restrictions.
The most distinguishing feature of these BITs, however, is the dispute settlement
mechanism empowering the investors of each party state to bring disputes
before a supranational arbitral tribunal.
Even though the sources of international law are not hierarchical, treaties gain some degree of
TERS OF ENFORCEMENT | Westlaw India” (Westlawindia.com, 2017) accessed September 14th, 2019
3
primacy among the sources of international law. Treaties serve different purposes. Some treaties
have far reaching political impacts such as peace settlements, alliances and nuclear testing bans.
Others though less political, involve relationships between governments or government agencies
and affect private parties. Most significantly, human rights conventions have sought to extend
protection to all persons against governmental abuse. A treaty is formed by the express consent
of its parties. A treaty’s text may permit some reservations, thus allowing a greater number of
States to enter into a treaty at the sacrifice of certain objectives and purposes of the treaty4.
States also follow different practices in internationalizing treaty norms that are incorporating
treaties within the state’s legal structure so that the provisions can be implemented by state au-
thorities.5 And “virtually every important thinker who influenced the founding generation
thought of treaty making as an executive function.”6
And the Supremacy Clause provides that “treaties,” like statutes, count as “the supreme law of
the land.”7 Some treaties “automatically have effect as domestic law”8 also known as the self-
executing treaties. The alternate to the self-executing treaties is the non-self-executing treaties;
“Constitute international law commitments,” but these treaties “do not by themselves function as
binding federal law”9
4
Id.
5
Id.
6
Gary Lawson & Guy Seidman, The Jeffersonian Treaty Clause, 2006 U. Ill. L. Rev. 1, 44 n.158. But cf. The Feder-
alist No. 75, at 449 (Alexander Hamilton) (Clinton Rossiter ed., 2003) (arguing that the treaty power was not neces-
sarily legislative or executive, because a treaty did not “prescribe rules for the regulation of the society” or require
“execution of the laws” — it was the power to enter into contracts with foreign nations).
7
U.S. Const. art. VI, cl. 2.
8
Medellín v. Texas, 552 U.S. 491, 504 (2008).
9
Id
4
internal affairs of other states and that foreigners were not entitled to better treatment than host
state nationals. Calvo’s theory was conceived against the background of gunboat diplomacy by
capital-exporting countries and other practices through which these countries imposed their
view of international law on foreign governments.
1.1.3 ICSID
BIT deviate from the traditional state-to-state diplomatic protection by providing investor-to-
state arbitration commonly by the International Centre for Settlement of Investment Disputes
(ICSID) or United Nations Commission on International Trade Law (UNCITRAL) tribunals.10
The convention on Settlement of Investment Disputes, between states and other nationals of
other states the ICSID Convention establishing the International Centre for Settlement of In-
vestment Disputes (ICSID). It was an innovative step towards international cooperation con-
cerning the role and protection of foreign investment but, the convention does not amount to
consent to arbitration. The process whereby consent to arbitration under the ICSID Convention,
is given by the host state and by the investor. Any form of arbitration, investment arbitration is
always based on an agreement. Consent to arbitration by the host state and the investor is an
indispensable requirement for a tribunal jurisdiction but, cannot by itself establish jurisdiction.
Both parties must have expressed their consent.
Consent can be provided in three ways:
First, a consent clause maybe included in the direct agreement between parties.
Second, consent to arbitration is a provision in the national legislation of the host state. Third,
to give consent to arbitration is through a treaty between the host state and the investor’s state
nationality.
Most BIT’s contain clause offering arbitration to nationals of one state party to the treaty
against another state party to the treaty. The same is employed a number of regional multilat-
eral treaties such as NAFTA and the national treaties must also be perfected by acceptance on
the part of the investor.
10
Ahmad Ali Ghouri, “Resolving Incompatibilities of Bilateral Investment Treaties of the EU Member States with
the EC Treaty: Individual and Collective Options” (2010) 16 European Law Journal 806.
11
R Bernhardt and Max Planck, “Permanent Court of Arbitration” (1997) 8 Encyclopedia of Public International
Law.
5
Julie M Grimes, 'Conflicts between EC Law and International Treaty Obligations: A Case
Study of the German Telecommunications Dispute' (1994) 35 Harv Int'l L J 535
This article explores the development of international law as an extension of General Interna-
tional law by trying to analyze the concepts of implementation, rights and obligation of state par-
ties, conflict with prior agreement, rights of third parties and other topics. The author explains
common interest and how international co-operation and acceptance of treaty obligations is re-
quired by all governments, even if the goal is idealistic. The author implores the resolution of the
German Telecommunications Dispute may have implications for legions of potential conflicts
among treaties. 'With this in mind, the United States should insist that its prior treaty rights not
be infringed by the establishment of special privileges among the EC Member States and that the
highest common denominator of preferential treatment provided for in previous agreements with
the Member States be upheld by the EC as a whole. Such a stance is compatible with supporting
the growth of the EC since it promotes the goals of both the EC and GATT in dismantling barri-
ers to free
trade around the globe.
Susan D Franck, 'Integrating Investment Treaty Conflict and Dispute Systems Design' (2007)
92 Minn L Rev 161
12
Julie M Grimes, 'Conflicts between EC Law and International Treaty Obligations: A Case Study of the German
Telecommunications Dispute' (1994) 35 Harv Int'l L J 535
6
This article investigates some implications of The Systems to Address Investment Conflict; His-
torical Antecedents on how the Previous Methods of Resolving Investment Treaty Conflict; And
the Current Framework for Resolving Investment Treaty Conflict, The author also questions and
challenges concepts to possible ways forward through three ways: A Multilateral Approach; A
Bilateral Approach; Or the hybrid approach is questioned.
1.5 METHODOLOGY
2 ANALYSIS
An initial problem is that there is no generally accepted definition of what constitutes a conflict
between treaties.13 Conflict in the strict sense occurs when a party to two treaties cannot simul-
taneously honor its obligations under both. A divergence between treaties, however, need not
always be a conflict.14
Example: State of India(X) forms a treaty (Treaty I) with the United States(Y) promising that Y
will have access to X's markets at terms no worse than any other state.
Some years later, State A becomes a party to the regional economic treaty with States J, K, L,
and M. The second treaty (Treaty II) requires of its member states to extend grant each other,
and only each other, the best terms of market access. The United States insists that India is re-
quired by Treaty I to give it the same terms of treatment extended to J, K, L, and M. Those
states argue that India, is required by Treaty II to deny The United States the terms of trade that
they have agreed upon.
Under a treaty made with the Hawaiian Islands in 1875, in consideration of reciprocal conces-
sions, sugar imported into the United States was exempt from the payment of duty. It was con-
tended that by virtue of this treaty sugar imported from Danish possessions should also be
admitted free of duty, but the court held that the provisions of the treaty with Denmark were
pledges that in the imposition of duties upon goods imported into one of the countries which
were the produce or manufacture of the other, there should not be any discrimination against
them in favour of goods of a similar character imported from any other country, and that while
they placed an obligation upon both countries to avoid hostile legislation, they were not intended
to prevent the special arrangements with other countries based upon a concession of special privi-
leges.
13
Pauwelyn J, Conflict of Norms in Public International Law: How WTO Law Relates to Other Rules of Interna-
tional Law (Cambridge University Press 2003)
14
Joost Pauwelyn, “Conflict of Norms in Public International Law”
<https://www.cambridge.org/core/books/conflict-of-norms-in-public-international-
law/D2AB790E1082AF2F3E5C4A1174D4A19B> accessed November 13, 2019.
8
The usage of the term what constitutes conflict is so tapering that it becomes restrictive in na-
ture. ILC Rapporteurs argues for a broader definition. Sir Humphrey Waldock focused on the
idea of conflict not being able to reconcile two treaties while Sir Hersch Lauterpacht, focused
on the term inconsistency with respect to conflict. The current methods employed for conflict
resolution have less to do with legal principles and more to do with power and politics. Thus,
the goals of many states involved in treaty-making-decreasing the politicization of international
relations and increasing rule-based decision making and conflict resolution-are actually under-
cut by their own efforts because treaty congestion leads to political bargaining, not principled
action.15
The International Law Commission recognized fragmentation in substantive and institutional
problems but, left the institutions to sort out the jurisdictional conflict that arose and only dealt
with the substantive by splitting the law to ‘highly specialized boxes’ which claimed relative
autonomy from each other and general law.
Fragmentation can have duel effects one maybe to create and expand the legal activity through
diversification and specialization while on the contrary leading to create conflicting rules and
principles and incompatibility. Fragmentation is a response to the needs of the pluralistic world
that were technical and functional and, allowing for diversity through expansion, of interna-
tional law
A few noteworthy of the may conclusions of the working group are:16
1. International law is a legal system: Its rules and principles (norms) are not a random
collection but have meaningful relationships and therefore have to be interpreted against the
backdrop of other norms. Supplementing the methods and means of interpretation and conflict
resolution has been derived from both domestic and comparative legal systems.
2. Relationship of Conflict: Any incompatibility with two valid existing norms, the
choice to be made, between them is dictated in the Vienna Convention of 1969.
3. The Vienna Convention on Law of Treaties: Where the treaty does not contain any ex-
press provisions, conflicts are dealt with through the applicable rules in the Vienna Convention
17
on the Law of Treaties (VCLT). Relationship of norms to be drawn analogously with or to
the Vienna Convention Article 31 to 33 which provides for the interpretation of treaties.
15
Christopher J Borgen, “Resolving Treaty Conflicts” (St. John’s Law Scholarship Repository, 2014)
<https://scholarship.law.stjohns.edu/faculty_publications/122/>.
16
Conclusions of the work of the Study Group on the Fragmentation of International Law: Difficulties arising from
the Diversification and Expansion of International Law 2006.
17
Article 27 regulates mixed conflicts between treaty and domestic law; Article 30 uses temporality as
the governing rule on the applicability of successive treaties having the same subject matter; Articles 53
and 64 determine the hierarchy between treaties and peremptory norms; Article 59 regulates the implied
termination of a treaty following the conclusion of another treaty on the same subject matter.
.
9
4. Settlement of dispute within and across regimes: Disputes between States involving a
conflict of treaty provisions should be normally resolved by negotiating between parties to the
relevant treaties. And any recourse must avail appropriate dispute settlement mechanisms and
incase of ‘regime specific mechanisms’ attention to be directed towards the means of settle-
ment chosen.
5. Hierarchical relations: Some fundamental or expressive that are elementary considera-
tions of humanity are non-derogable backed by the universal acceptance of its superiority.
The operation and the nature of obligation with respect to jus cogens and erga omnes with re-
gards to treaty obligations have been specified and have many supporting provisions like Arti-
cle 103 and Article 24 of the United Nation’s Charter; Article 53 of the Vienna Convention
6. The Principle of Harmonization: It is generally accepted principle that when several
norms bear on a single issue the interpretation to the possible extent give rise to a single set of
compatible obligations. As the International Court of Justice stated in the Right of Passage
case: it is a rule of interpretation that a text emanating from a Government must, in principle,
be interpreted as producing and intended to produce effects in accordance with existing law
and not in violation of it.18 The limits of the obligation rest squarely at the attempt to interpret,
and there is not in international law duty of harmonious interpretation.19
The Mox Plant Case (2001), which stated that: "the application of international law rules on
interpretation of treaties to identical or similar provisions of different treaties may not yield the
same results, having regard to, inter alia, differences in the respective contexts, objects and
purposes, subsequent practice of parties and travaux préparatoires"20
3 CONCLUSION
Paradoxically, while international law has undergone considerable growth, this has not been ac-
companied by an equally developing system of rules for dealing with conflicts and by the work
of international courts and tribunals applying conflict rules to the disputes.21
There also exists a class of customary international law, jus cogens, that has the peremptory force
and cannot be abrogated by domestic law or treaty. Jus cogens are generally deemed self-
executing. When domestic courts apply treaty law and other rights established by express accord,
18
Case concerning the Right of Passage over Indian Territory (Preliminary Objections) (Portugal v. India) I.C.J.
Reports 1957 p. 142.
19
Electrabel SA V The Republic of Hungary (2019) Case No ARB/07/19 Unctad.org (ICSID).
21
Alessandra Asteriti, “Conflict Clauses in International Investment Agreements” (Research Gate, 2019)
<https://www.researchgate.net/publication/295813610_Conflict_Clauses_in_International_Investment_Agreements
> accessed October 17, 2019.
10
they usually look to the language and legislative history of the norms involved to locate the in-
tent to enforce them locally. If such an intent exists, these agreements are regarded as self-
executing.22
22
“COMPILATION OF INTERNATIONAL NORMS AND STANDARDS RELATING TO DISABILITY”
(Un.org, 2019) <https://www.un.org/esa/socdev/enable/discom101.htm#12> accessed September 25, 2019
23
Stewart TP and Burr MM, “The WTO Panel Process: An Evaluation of the First Three Years” (1998) 32 The In-
ternational Lawyer 709 <https://www.jstor.org/stable/pdfplus/40707434>
24
ICSID Convention, art. 47; ICSID Arbitration Rules, r. 39 (2006).
25
Id.
26
Treaty Concerning the Reciprocal Encouragement and Protection of Investment, with Protocol, Dec. 3, 1985,
United States-Turkey, S. Treaty Doc. No. 99-19, 99th Cong., 2d Sess. (1986), reprinted in 25 I.L.M. 85-101 (1986)
[hereinafter United States-Turkey Treaty]
11
vestment Disputes (ICSID)27 for dispute resolution process between the host state
and the foreign investor. By concluding a BIT, the two states, in most cases, give
the required consent needed to establish ICSID jurisdiction in the event of a future
dispute.28
Investors must try and resolve the conflict through negotiations before invoking
compulsory arbitration that paves way to secure an award to the bidding parties.
This feature may be the reason that so few Latin American countries have signed
BITs, since international arbitration conflicts with the Calvo doctrine, an important
element in the legal systems of most countries in the region.29 A compulsory arbi-
tration provision creates the potential for an individual investor, with or without the
approval of its home government, to press a conflict that may ultimately have dip-
lomatic implications and may affect relations between the two countries con-
cerned.30
27
Convention of the Settlement or Investment Disputes Between States and Nationals from Other States, Mar. 18,
196
28
Agreement Concerning the Promotion and Protection of Investments, Mar. 1, 1982, Japan- Sri Lanka, reprinted in
21 I.L.M. 963 (1982) [hereinafter Japan-Sri Lanka Treaty
29
Stewart TP and Burr MM, “The WTO Panel Process: An Evaluation of the First Three Years” (1998) 32 The In-
ternational Lawyer 709 <https://www.jstor.org/stable/pdfplus/40707434>
30
Id
12
4. BIBLIOGRAPHY
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14
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Conclusions of the work of the Study Group on the Fragmentation of International Law: Diffi-
culties arising from the Diversification and Expansion of International Law 2006 2006