An Uncharted Question of State Succession: Are New States Automatically Bound by The Bits Concluded by Predecessor States Before Independence?

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An Uncharted Question of State Succession: Are New States Automatically

Bound by the BITs Concluded by Predecessor States Before Independence?
Article in Journal of International Dispute Settlement · February 2014

DOI: 10.1093/jnlids/idu016
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Journal of International Dispute Settlement, 2015, 6, 74–96
doi: 10.1093/jnlids/idu016
Advance Access Publication Date: 14 December 2014
Article
An Uncharted Question of State

Succession: Are New States
Automatically Bound by the BITs
Concluded by Predecessor States
Before Independence?
Downloaded from http://jids.oxfordjournals.org/ by guest on July 2, 2015

Patrick Dumberry*
*Associate Professor, Faculty of Law (Civil Law Section), University of Ottawa, Canada. Email: patrick.dumberry@uottawa.ca
ABSTRACT
This article examines whether or not a new State is automatically bound by the BITs
that have been concluded by the predecessor State before independence. It criticizes
the different solutions adopted under the 1978 Vienna Convention for specific types
of State succession. In my view, bilateral treaties do not automatically continue to be
in force at the date of succession unless both the new State and the other State party
agree to such continuation. The present article examines 17 cases in the context of the
break-up of Czechoslovakia, Yugoslavia and the USSR. Specifically, the article critically
examines the reasoning of the majority of tribunals deciding cases in the context of the
dissolution of Czechoslovakia which have barely mentioned at all the relevant succes-
sion issues. This omission can, however, be explained by the fact that the respondent
State in these cases did not challenge the jurisdiction of the tribunal on this ground.
1. INT RO D UCTION
One of the most controversial issues in contemporary international law is whether
or not a new State is bound by the treaties to which the predecessor State was a
party before independence. The issue has long been the battleground for opposing
schools of thought. In a nutshell, supporters of the theory of tabula rasa (clean
slate) argue that a new State (the ‘successor’ State) does not succeed to the treaties
to which the predecessor State was a party. On the contrary, defendants of the the-
ory of continuity believe that the new State is automatically bound by such treaties.
The question has been the object of a codification effort by the International Law
C The Author 2014. Published by Oxford University Press.

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74
An Uncharted Question of State Succession 75
Commission (ILC) which adopted in 1978 the Vienna Convention on State

Succession to Treaties.1
While the issue of State succession to multilateral treaties has been the object of
numerous scholarly works since the end of the Cold War (including by the present
author2), not much research has been conducted regarding bilateral treaties.3 The
present article intends to investigate one specific aspect of this question: whether or
not a new State is automatically bound by the bilateral investment treaties for the
promotion and protection of investments (BITs) that have been concluded by the
predecessor State before independence.4 It should be highlighted at the outset that
this article will solely focus on State succession situations involving the creation of a
new State, such as dissolution of States and secession. We will therefore not examine
the recent case of Sanum v Laos5 involving a question of State succession to BITs in
the different context of a cession (or transfer) of territory not involving the creation

of a new State.6
To the best of the present author’s knowledge, no comprehensive study has ever
been conducted on the question of State succession to BITs. Such a gap in the litera-
ture is surprising considering the emergence of some 30 new States since the end of
the Cold War. Moreover, some of the predecessor States involved in these cases of
succession were parties to a number of BITs at the time of their break-up
(Czechoslovakia: 11; Yugoslavia: 5; USSR: 10). Recent events have also shown the
importance of the question today in the context of the secessions of Montenegro,
Kosovo and South Soudan where the predecessor States were also parties to a num-
ber of BITs before independence.7 It should be added that potential candidates for
secession (Scotland, Catalonia, Quebec, etc.) involve some of the world’s largest
economies that are currently parties to a significant number of BITs.8
1 According to the Vienna Convention on Succession of States in Respect of Treaties, signed on 23 August 1978
and entered into force on 6 November 1996, 1946 UNTS 3, in: 17 ILM, 1978, 1488 [hereinafter ‘Vienna
Convention’], State succession is defined as ‘the replacement of one State by another in the responsibility
for the international relations of territory’ (art 2(1)(b)).
2 P Dumberry & D Turp, “State Succession With Respect to Multilateral Treaties in the Context of
Secession: From the Principle of Tabula Rasa to the Emergence of a Presumption of Continuity of
Treaties” (2013) 13 Baltic YIL 27–65.
3 One recent study is: P Dumberry, “State Succession to Bilateral Treaties: A Few Observations on the
Incoherent and Unjustifiable Solution Adopted for Secession and Dissolution of States under the 1978
Vienna Convention”, (2014) 28 Leiden JIL 3–31.
4 The present article does not address the question of State succession to State contracts.
5 Sanum Investments Limited v Laos, UNCITRAL (PCA Case No 2013-13) Award on Jurisdiction, 13
December 2013.
6 In the context of a cession (or transfer) of territory from one existing State to another existing State no
new State is created and no State disappears. Recent examples include the transfer to China of the territo-
ries of Hong Kong (from the United Kingdom, 1997) and Macao (from Portugal, 1999).
7 On the question of South Soudan, see A Genest, ‘Sudan Bilateral Investment Treaties and South Sudan:
Musings on State Succession to Bilateral Treaties in the Wake of Yugoslavia’s Breakup’ (2014) TDM. On
Kosovo, see Tai-Heng Cheng, ‘State Succession and Commercial Obligations: Lessons from Kosovo’ in
Mahnoush Arsanjani and others (eds), Source Looking to the Future: Essays on International Law in Honor of
W. Michael Reisman (Nijhoff 2010) 675–703; Q Qerimi and S Krasniqi, ‘Theories and Practice of State
Succession to Bilateral Treaties: The Recent Experience of Kosovo’ (2013) 14(9) German L J 1359.
8 The number of BITs in force at the time of writing (March 2014) was respectively: United Kingdom: 92;
Canada: 28 and Spain: 70.
76 An Uncharted Question of State Succession
The absence of any research on the issue of State succession to BITs is all the
more peculiar given the fact that the issue has arisen in no less than 28 investor-State
arbitration cases. These cases typically involve the following factual pattern: a foreign
investor filing a claim to an arbitral tribunal against a new State after its independence
alleging that certain actions/omission were committed by that State in breach of a
BIT that had been entered by the predecessor State with another State (the ‘other
State party’) before the date of succession. In all these cases, one very basic jurisdic-
tional question was therefore whether or not the new State was bound by the obliga-
tions contained in a BIT which had been entered into by another State. Surprisingly
enough, this fundamental question was barely addressed at all by most tribunals in
their awards. This omission can, however, be explained by the fact that the respond-
ent States did not challenge the jurisdiction of tribunals on this ground.
The present article is structured in two chapters. The first Chapter examines the

different solutions which have been adopted under the Vienna Convention for spe-
cific types of State succession. I will argue that it is incoherent for the ILC to have
adopted, on the one hand, the solution of automatic continuity for bilateral treaties
in the context of secession and dissolution of States, while adopting, on the other
hand, the solution of tabula rasa for Newly Independent States. Moreover, it is
plainly unjustifiable to have adopted the principle of automatic continuity to bilateral
treaties (in the context of secession and dissolution of States) given the particular na-
ture of these instruments which are based on the voluntary consent of both States
concerned. In the present author’s view bilateral treaties (including BITs) do not
automatically continue to be in force at the date of succession unless both States con-
cerned explicitly (or tacitly) agree to such continuation. Chapter II will critically
examine how tribunals deciding investor-State arbitration cases have dealt with the
issue of State succession to BITs. We will examine 17 cases which arose in the con-
text of the break-up of Czechoslovakia, Yugoslavia and the USSR.
2 . A C R I T I C A L A N A L Y S IS O F TH E D I F F ER EN T SO LU T I O N S
A D O P T ED U ND E R T H E V I EN N A CO NV E NT IO N F O R S P E CI F I C TYPE S
OF STATE SUCCESSION
The Vienna Convention was adopted in 1978 and entered into force on 6 November
1996. As of March 2014, only 22 States had ratified the Convention. It should be noted
that Yugoslavia and Czechoslovakia were both parties to the Convention before their
break-up. Also, a number of new States in the context of the dissolution of these two
federations (Bosnia, Croatia, Macedonia, Montenegro, Serbia, Slovenia, Czech
Republic, Slovakia) and the break-up of the USSR (Moldova, Ukraine) have become
party to the Convention after their independence. Article 2 of the Convention defines
the term ‘treaty’ as including both bilateral and multilateral treaties. The Vienna
Convention gives effect to a fundamental distinction between ‘Newly Independent
States’ emerging from decolonization (Articles 16–30 of the Convention) and other
new States not emerging from decolonization (Articles 31 et seq).9
9 The present article will not examine the regime under the Convention for ‘Unification of States’ (arts
31–33) and cession of territory (art 15).
A. The Solution of Automatic Continuity was adopted for

Secession and Dissolution
A few words should first be said about what distinguishes these different types of
State succession. First, there are situations where the predecessor State ceases to exist
following an event affecting its territorial integrity leading to the creation of many
new States on its original territory. This is the case of ‘dissolution’ of a State. Second,
there are situations where the predecessor State continues to exist following an event
affecting its territorial integrity. This is the case of ‘secession’, where a new State
emerges from the break-up of an already existing State which nevertheless continues
its existence (as the ‘continuing’ State) after the loss of part of its territory. Cases of
secession must be distinguished from ‘Newly Independent States’, for which the
Vienna Convention adopted different rules because of their unique historical and
political characteristics in the context of decolonization.10 It is generally admitted

that the territory of a colony should not be considered as part of the territory of the
colonial State administrating it.11 In that sense, a Newly Independent State is a new
State which, however, cannot be said to have ‘seceded’ from the colonial power to
the extent that its territory was never formally part of it. It is generally recognized
that different rules of State succession should apply to these States in order for them
to freely exercise their right to self-determination and to break the vicious circle of
economic domination.12
For Newly Independent States, Article 16 provides the general rule applying to
both bilateral and multilateral treaties. Under this provision, the principle of tabula
rasa applies to them: they are therefore not automatically bound by the treaties
entered into by the predecessor (colonial) State with the other States. The new State
thus ‘begins its international life free of any general obligation to take over the trea-
ties of its predecessor’.13 Article 24 provides for the same solution specifically for bi-
lateral treaties.14 Article 34 of the Vienna Convention outlines the regime applicable
to both bilateral and multilateral treaties for cases of secession and dissolution of
States (outside the context of decolonization). It provides for the application of the
10 Vienna Convention, Article 2 defines a ‘Newly Independent State’ as being ‘a successor State the territory
of which immediately before the date of the succession of States was a dependent territory for the inter-
national relations of which the predecessor State was responsible’.
11 Declaration of Principles of International Law Concerning Friendly Relations and Co- Operation Among States
in Accordance with the Charter of the United Nations, adopted by UN General Assembly Re 2625 (XXV),
of 24 October 1970.
12 Y Makonnen, ‘State Succession in Africa: Selected Problems’ (1986–V) 200 RCADI, 130–31; M
Bedjaoui, ‘Problèmes récents de succession d’États dans les États nouveaux’ (1970–II) 130 RCADI,
468–69, 530; Z Meriboute, La codification de la succession d’États aux traités: décolonisation, sécession, unifi-
cation (PUF 1984) 29–30, 49, 56, 63.
13 Report of the International Law Commission on the Work of its Twenty-Sixth Session, 6 May to 26 July
1974 (A/9610/Rev.1, reproduced in: YILC, 1974, vol II (Part One), [hereinafter ILC Report, Twenty-
Sixth Session, 1974] at 236.
14 Yet, while Newly Independent States are not automatically bound by these bilateral treaties, the provision
further indicates that there is one circumstance under which the principle of continuity will apply: when
there is an agreement (express or tacit) to that effect between the two States.
principle of automatic continuity to treaties whereby the successor State is ipso facto
bound by treaties entered into by the predecessor State.15
B. This Solution is both Incoherent and Unjustifiable

It is striking to note that the solution adopted by the Convention for cases of seces-
sion and dissolution regarding bilateral treaties is the complete opposite to the one
prevailing for Newly Independent States. The present author has argued elsewhere
that the solution of automatic continuity adopted at Article 34 is simply incoherent
with the ILC’s position of tabula rasa adopted for Newly Independent States.16 It
should be recalled that the ILC adopted the principle of tabula rasa for Newly
Independent States in the different context of multilateral treaties specifically to pro-
tect their right to self-determination.17 But the ILC adopted the rule of tabula rasa in
the context of bilateral treaties for reasons entirely different. According to the ILC,

the rule of tabula rasa set out at Article 24 of the Vienna Convention for bilateral
treaties reflected the practice of Newly Independent States.18 This conclusion is sup-
ported by some writers19 who have in fact highlighted the customary nature of this
rule in the context of bilateral treaties.20 At the opposite end of the spectrum of
views on this matter, one author went so far as to argue that new States are in fact
bound by certain categories of bilateral treaties under an international law obliga-
tion.21 The International Law Association (ILA) also adopted a presumption in fa-
vour of the continuity of treaties in 1965.22 In any event, this debate surrounding the
customary nature of the tabula rasa rule under Article 24 is of limited relevance. This
is because the provision was adopted based on the particular nature of bilateral
treaties.
Thus, according to the ILC, ‘a difference does exist and should be made between
bilateral treaties and certain multilateral treaties in regard to a newly independent
State’s right to be a party to a treaty concluded by its predecessor’.23 A new State
does not have the right to become party to a bilateral treaty without the consent of
15 However, this rule of continuity bears two exceptions where the rule of tabula rasa applies: when the
implicated parties have specifically agreed for the application of the tabula rasa rule, and where the auto-
matic application of the bilateral treaty to the successor State would be ‘incompatible with the object and
purpose of the treaty or would radically change the conditions for its operation’.
16 Dumberry (n 3).
17 See, the discussion in: Makonnen (n 12) 129–31; Bedjaoui (n 12) 469, 490–93, 530.
18 ILC Report, Twenty-Sixth Session, 1974 (n 13) 211.
19 A Di Stefano, ‘Article 24’ in G Distephano and G Gaggioli (eds), Commentaire à la Convention de Vienne
sur la succession d’États en matière de traités, (2015), para 24; Meriboute (n 12) 78; PK Menon, ‘The
Newly Independent States and Succession in Respect of Treaties’ (1990) 18 Korean J Comp L 145; R
Szafarz, ‘Vienna Convention on Succession of States in Respect of Treaties: a General Analysis’
(1979–80) 10 Polish YB Int’l L, 97. For an earlier study supporting the principle of tabula rasa, see: AP
Lester, ‘State Succession to Treaties in the Commonwealth’ (1963) ICLQ 476–77, 506–07.
20 Di Stefano, ibid paras 14, 56, 76; R Szafarz, ‘Succession of States in Respect of Treaties in Contemporary
International Law’ (1983) 12 Polish YB Int’l L, 130.
21 KJ Keith, ‘Succession to Bilateral Treaties by Seceding States’ (1967) 61(2) AJIL, 545.
22 ILA, State Succession, Report of the Helsinki Conference, 52, 1966, London, 557–96; ILA, State Succession,
Report of the Buenos Aires Conference, 53, 1969, 589–633.
23 ILC Report, Twenty-Sixth Session, 1974 (n 13) at 212 (emphasis in the original). See also at 237.
the other party to the treaty.24 There exists no automatic continuity because ‘succes-
sion in respect of bilateral treaties has an essentially voluntary character, that is, on
the part not only of the newly independent State but also of the other interested
State’.25 The ILC thus explained that the ‘personal equation’ (ie ‘the identity of the
other contracting party’), necessarily plays a more dominant role in bilateral treaty
relations.26 Thus, ‘the very object of most bilateral treaties is to regulate the mutual
rights and obligations of the parties by reference essentially to their own particular
relations and interests’.27 As a result of this ‘personal equation’ of the two parties
involved in a bilateral relationship, ‘it is not possible automatically to infer from a
State’s previous acceptance of a bilateral treaty as applicable in respect of a territory
its willingness to do so after a succession in relation to a wholly new sovereign of the
territory’.28 In other words, from the mere fact that the ‘other State party’ (State A)
has entered into a treaty (the original treaty) with the predecessor State (State B) at

some point in time, it simply cannot be inferred in any way that State A would be
willing to later sign and ratify the exact same treaty with another State (State C, the
Newly Independent State). This is because treaty negotiation between different enti-
ties necessarily leads to different outcomes. In the example just mentioned, one
should assume that State A would want to negotiate a set of rights and obligations
with the new State (State C) different from those entered into previously with the
predecessor State (State B). This is simply because States B and C are not the same
entity. They have not only different sizes and population, but also different political
and economical powers; they also have different interests.
The ILC further provides another reason for applying the non-continuity rule in
the context of bilateral treaties.29 In the event that State A and State C (the Newly
Independent State) agree for the continuity of the original treaty, this agreement
must be considered as the basis of a new treaty.30 This treaty is legally a different in-
strument from the original treaty (between States A and B), even when they have the
exact same content.31 The same is true for the relationship between the predecessor
State and the Newly Independent State.32
It should be noted at this juncture that all relevant discussion regarding the rea-
sons why the principle of tabula rasa should apply to bilateral treaties took place only
in the ILC’s work regarding Newly Independent States. This peculiar feature can be
explained by the history of the drafting of the Convention. In the earlier stage of the
work of the ILC, the rule of tabula rasa was clearly meant to apply to all instances of
24 ibid at 238: ‘practice does not seem to support the existence of a unilateral right in a newly independent
State to consider a bilateral treaty as continuing in force with respect to its territory after independence re-
gardless of the wishes of the other party to the treaty.’ (emphasis in the original).
25 ibid at 239 (emphasis added).
26 ibid at 237.
27 ibid.
28 ibid.
29 ibid.
30 ibid.
31 ibid at 241.
32 See, arts 25 and 35 of the Convention.
State succession.33 It is only when the first draft Articles were adopted by the ILC in
1972 that it was decided to create a distinction between Newly Independent States
and other cases outside the context of decolonization.34 It is only then that a whole
series of provisions were introduced to deal specifically with Newly Independent
States.35 A rather curious thing then happened concerning the ILC’s reasoning as to
why the question of consent of all States concerned was so crucial to the continu-
ation of bilateral treaties. The above-mentioned reasons, which were featured in
Waldock’s Fourth Report under the general section ‘New States’,36 were simply
moved in the first provisional draft (of 1972) to the new section dealing exclusively
with Newly Independent States.37 Bizarrely, these comments were not reproduced in
the other new section of the draft concerning secession and dissolution. In fact, the
ILC barely mentioned bilateral treaties at all when discussing Article 34. It seems at
this stage that the ILC decided that the basic reasons explaining the importance of

consent were now only relevant in the context of Newly Independent States. The
ILC never explained why this was the case. This is a rather strange outcome con-
sidering the obvious fact that these comments were in fact applicable to all bilateral
treaties involving all instances of State succession. The work of the ILC is indeed
completely silent on why the principle of automatic continuity should apply to bilat-
eral treaties in cases of dissolution and secession. The only ILC discussion about
State practice deals with multilateral treaties.38 A careful reading of the ILC reports
suggests that it ultimately adopted Article 34 to apply for multilateral treaties, with-
out realizing that the same regime of continuity would incidentally also apply to
bilateral treaties.
In the present author’s view there are simply no logical reasons why the sound so-
lution of tabula rasa should be reserved only for Newly Independent States. Thus, if
the ILC is right in specifying that ‘succession in respect of bilateral treaties has an es-
sentially voluntary character’,39 this basic proposition should presumably apply to all
types of State succession, not only to Newly Independent States. It simply cannot be
that State A’s consent is essential when dealing with Newly Independent States and
33 Thus, in Waldock’s Third and Fourth Reports of 1970 and 1971 the general expression ‘new States’ was
used for all States. See, for instance, art 13 entitled ‘the position of new States in regard to bilateral trea-
ties’ in: Fourth Report on Succession in Respect of Treaties, prepared by the Special Rapporteur, Sir
Humphrey Waldock, A/CN.4/249, 24 June 1971, A/8410/Rev.1, in: YILC, 1971, vol II (Part One), at
145 [hereinafter ILC, Fourth Report on Succession in Respect of Treaties]; Third Report on Succession
in Respect of Treaties, prepared by the Special Rapporteur, Sir Humphrey Waldock, A/CN.4/224 and
Add.1, 22 April and 27 May 1970, A/8010/Rev.1, in: YILC, 1970, vol. II. See the discussion in: M
Craven, The Decolonization of International Law: State Succession and the Law of Treaties (2007) at
131–32.
34 Report of the International Law Commission on the work of its twenty-fourth session, 2 May–7 July 1972,
A/8710/Rev.1, in: YILC, 1972, vol II, at 227 [hereinafter ILC Report, Twenty-Fourth Session, 1972].
35 ibid at 250.
36 ILC, Fourth Report on Succession in Respect of Treaties (n 33) at 145–46.
37 ILC Report, Twenty-Fourth Session, 1972 (n 34) at 272–73.
38 For the ILC, an analysis of State practice in the specific context of dissolution of State supported the
adoption of the principle of continuity of multilateral treaties (ILC Report, Twenty-Sixth Session, 1974
(n 13) at 265). State practice in the context of secession, however, supported the rule of tabula rasa to
multilateral treaties (ILC Report, Twenty-Fourth Session, 1972 (n 34), at 296–97; ILC Report, Twenty-
Sixth Session, 1974 (n 13) at 265).
39 ILC Report, Twenty-Sixth Session, 1974 (n 13) at 239.
irrelevant outside the context of decolonization. Protecting the interests of the ‘other
State party’ to the original treaty in the context of Newly Independent States and not
in situations of secession and dissolution of States is unjustifiable. Simple common
sense therefore dictates that the rule of tabula rasa applies to cases of secession and
dissolution.
In sum, in my view there is no automatic continuity of bilateral treaties because of
the particular nature of these treaties.40 Any treaty continuation is ultimately the
result of the express (or tacit) agreement of both States.41 This is indeed the solution
favoured by scholars.42
C. This Solution is not Supported by State Practice

States have adopted a diverse practice regarding the question of succession to bilat-
eral treaties.43 As further discussed below, successor States in the context of the dis-

solutions of Czechoslovakia and Yugoslavia and the break-up of the USSR have
generally adopted a position in favour of continuity regarding bilateral treaties.44 It
may be that their position was influenced by the existence of the continuity ‘rule’ set
out at Article 34 of the Vienna Convention.45 As mentioned above, many of these
new States had become party to the Convention after their independence. Moreover,
two of them (Slovakia and the Czech Republic) had made declarations to the effect
that they would apply the Convention retroactively to their own succession. What is
clear is that the practice of other States in response to these claims of continuity has
been anything but coherent. While some States seem to have endorsed the principle
of the automatic succession to bilateral treaties, others have rejected it.46 Overall, the
general conclusion reached by the ILA about State practice is that ‘the fate of these
[bilateral] treaties is generally decided through negotiation between the successor
State and the other party, no matter the category of State succession involved’.47
40 Dumberry (n 3).
41 Another question examined in the context of secession and dissolution of States in Dumberry (n 3), is
whether or not a State can argue that the replacement of one State (the predecessor State) by another
one (the new State) as a party to the treaty ‘radically change the conditions for its operation’. In other
words, can a State claim the benefit of the rebus sic stantibus exception mentioned at Article 34(2)b of the
Vienna Convention to prevent the continuous application of a treaty?
42 See, for instance: M Shaw, International Law (CUP 2008) 967; Craven (n 33) 142; Menon (n 19)156;
Brigitte Stern, ‘La succession d’États’ (1996) 262 RCADI 315; Di Stefano (n 19) para 15; AG Pereira, La
succession d’États en matière de traités (Pedone 1969) 149; K Zemanek, ‘State Succession after
Decolonization’ (1965) 116 RCADI, 238; P Cahier, ‘Quelques aspects de la Convention de 1978 sur la
succession d’États en matière de traités’ in B Dutoit and E Grisel (eds), Mélanges Georges Perrin (Payot
1984) at 72; Meriboute (n 12) 74, MK Yasseen, ‘La Convention de Vienne sur la Succession d’États en
matière de Traités’ (1978) 24 AFDI 108.
43 International Law Association, Conclusions of the Committee on Aspects of the Law on State Succession,
Resolution no 3/2008, adopted at the 73rd Conference of the ILA, held in Rio de Janeiro, Brazil, 17–21
August 2008, at point no 6.
44 V Mikulka, ‘Article 34’ in G Distephano and G Gaggioli (n 19) paras 121, 124.
45 ibid para 102.
46 See, for instance, the United States taking the later position: PR Williams, ‘The Treaty Obligations of the
Successor States of the Former Soviet Union, Yugoslavia and Czechoslovakia: Do They Continue in
Force?’ (1994) 23 Denver J Int Law Pol 19.
47 ILA (n 43), at point no. 6. See also: ILA, Helsinki Conference 1996 - Rapport préliminaire sur la succes-
sion d’États en matière de traités, 1996, p. 690-691.
The ILA also noted that such negotiations about the fate of treaties took place based
on the existence of some kind of ‘presumption’ of continuity.48 Yet, the very fact that
such negotiation took place in most cases suggests that third States have generally
not accepted the principle of automatic succession.49 In sum, there seems to be lim-
ited practice supporting the principle of automatic continuity set out at Article 34.50
Clearly, no rule of customary international law has emerged on succession to bilat-
eral treaties.51
3 . A C R I T I C A L A N A L Y S I S OF C A S E LA W I N V O L V I N G I S S U E S O F
S T A T E S U CC E S SI O N TO BI T S
As mentioned before, the question of State succession to BITs has never been compre-
hensively addressed by writers. The present author’s own investigation (up-to-date as
of March 2014) has led to the discovery of no less than 28 cases involving this ques-

tion (including 11 cases about which very limited information is available).52 All cases
examined in the next sections have the following factual elements in common:
- The foreign investor filed a claim to the arbitral tribunal against a new State
after its independence (ie after the date of succession);53
- The foreign investor alleged that certain actions/omission were committed
by the new State after it became an independent State;
48 ILA, Rapport Final sur la Succession en matière de traités, New Delhi Conference 2002, Committee on
Aspects of The Law of State Succession, at p 18 (‘En ce qui concerne les traités bilatéraux, la pratique
générale est celle de discussions bilatérales plus ou moins formelles destinées à clarifier la situation. Un
examen attentif de la pratique semble cependant démontrer que ces discussions sont fondées sur l’idée
qu’il existe une règle de continuité des traités bilatéraux.’).
49 PM Eisemann, ‘Rapport du Directeur de la section de langue française du Centre’ in PM Eisemann and
M Koskenniemi (dir), State Succession: Codification Tested Against the Facts (Hague Academy of
International Law, Martinus Nijhoff Publ 2000) 53.
50 ibid 54–55; Stern (n 42) 315–16 (‘Les traités bilatéraux semblent ne jamais avoir été considérés comme
continuant automatiquement à s’appliquer’); ILA (n 48) 22 (‘Mais l’analyse des politiques menées par
des Etats tiers vis-à-vis des Etats successeurs, montre que la pratique de la négociation prévaut concernant
la succession en matière de traités. Même si la présomption de la continuité est la prémisse fondamentale
en matière de succession d’Etats - afin de sauvegarder la stabilité des relations internationales -, chaque
traité mérite une attention toute particulière puisque, dans chaque cas, des considérations politiques, idéo-
logiques, militaires, religieuses, éthiques, sociales, économiques, historiques spécifiques rentrent en jeu et
les Etats ne sauraient donc spolier une partie de leur souveraineté au nom d’un principe de succession
automatique universelle aux traités : la règle générale est donc la négociation des traités au cas par cas, sur
le fondement du principe de continuité, modulé par ses exceptions.’).
51 J Klabbers and others (eds), State Practice Regarding State Succession and Issues of Recognition (Brill 1999)
116.
52 A few words should be said about the methodology used in this article. The basic database used to find
cases was the website ‘Investment Treaty Arbitration’ (http://www.italaw.com/, last accessed in
December 2014). I have first made a preliminary list of all cases involving respondent States that have
been affected by any territorial changes since the end of the Cold War. Second, from that list were
excluded numerous cases involving allegation of breach of BITs entered into by the new States after inde-
pendence. For instance, I have excluded all cases involving breach of BITs that had been entered into by
Slovakia and the Czech Republic after their independence in 1993. This is because these cases do not in-
volve any matters of State succession.
53 As further explained below, the situation is different for cases involving the Russian Federation because it
is not a ‘new’ State, but rather the ‘continuing State’ of the USSR.
- Yet, the foreign investor alleged that these actions/omission were in breach
of a BIT that had been entered into by the predecessor State with another
State (the ‘other State party’) before the date of succession;
- In other words, the question is whether or not one State (the new State)
is bound by a treaty which was originally concluded by another State
(the predecessor State).
The following sections will examine separately the case law involving three
break-up situations: Czechoslovakia (section A), USSR (section B) and Yugoslavia
(section C).
A. The Dissolution of Czechoslovakia

As a result of the dissolution of Czechoslovakia on 1 January 1993 two new

States emerged as successor States: the Czech Republic and the Republic of
Slovakia.54 On the date of succession, Czechoslovakia was bound by some 2000 bi-
lateral treaties.55 It should also be noted that both States became party to the 1978
Vienna Convention in 1993 and explicitly declared (pursuant to Article 7(2)(3))
that they would apply the Convention retroactively to their own succession (which
occurred before the entry into force of the Convention). In accordance with Article
34 of the Convention, both new States adopted the general position of continuity re-
garding the bilateral treaties to which Czechoslovakia was a party before the date of
succession.56 The Czech Republic officially declared (in its Constitutional Law,57 its
‘Proclamation to all Parliaments and Nations of the World’,58 and in a letter sent to
the UN Secretary-General59) that it would respect all obligations arising from
Czechoslovakia’s multilateral and bilateral treaties. The same types of declarations
were made by Slovakia.60 The Czech Republic notified all contracting parties and
depositories of its automatic succession to these agreements.61
54 On 25 November 1992, the Czechoslovak Federal Assembly voted the Constitutional Act no 542/1992
(which came into force on 8 December 1992) indicating that the Federation would cease to exist on 31
December 1992.
55 ILA (n 48) 9.
56 ibid; Stern (n 42) 316; Vaclav Mikulka, ‘The Dissolution of Czechoslovakia and Succession in Respect to
Treaties’ in Mojmir Mrak (ed), Succession of States (Brill 1999) at 119; Klabbers (n 51) 110; Mikulka
(n 44) paras 122–24.
57 Constitutional Law No 4/1993, proclaimed by the Czech Republic’s National Council, 15 December
1992, see art 5.
58 Proclamation of the National Council of the Czech Republic to all Parliaments and Nations of the World, 17
December 1992, in: Council of Europe, Pilot Project on Documentation concerning State Practice relating to
State Succession and Recognition, Contribution by the Czech Republic, 4 April 1996, 2.
59 Letter dated 16 February 1993, received by the Secretary-General on 22 February 1993, referred to in:
ILA (n 48) (dealing only with multilateral treaties).
60 Declaration on the Sovereignty of the Slovak Republic, adopted by the Slovak National Council, 17 July
1992; Constitution of the Slovak Republic, adopted on 3 September 1992, art 153; Proclamation of the
National Council of the Slovak Republic to Parliaments and Peoples of the World, 3 December 1992; Letter
of 19 May 1993 to the UN Secretary-General, referred to in: ILA (n 43) 9.
61 The procedure was adopted under a resolution dated 24 February 1993. I am very grateful to Mr Tomáš
Fecák (Konečná and Zacha, Attorneys at Law) for having provided me with valuable information on this
topic. See also, the same position adopted by Slovakia: ILA (n 43) 12.
The position of other States has varied. A number of States seem to have ac-
cepted, as a matter of principle, the position of automatic succession adopted by
both new States.62 This is, for instance, the position adopted by Germany regarding
the Czech Republic.63 Yet, two remarks should be made here about such ‘automati-
city’. On the one hand, the Czech Republic specifically informed each State about its
intention to automatically succeed to these treaties. On the other hand, these States
have deemed it necessary to respond to such claim and to agree to be bound by these
treaties.64 The two features do not seem to support the position of automatic succes-
sion set out at Article 34 of the Convention whereby such notifications are unneces-
sary. It should be added that in some other instances the fate of these treaties was
the object of consultation and negotiation between the parties.65 While almost all of
these treaties have remained in force,66 the very fact that such negotiation took place
and that the continuation of bilateral treaties was agreed by the parties in exchanges

of diplomatic notes suggest that the principle of automatic succession was actually
not adopted by these States in their practice. For all of these reasons, it is surprising
that the Czech Republic’s own conclusion regarding such practice is that Article
34(1) of the Convention has ‘received a strong endorsement’.67 While it is true that
the parties seem to have been guided by a general presumption of continuity
whereby bilateral treaties should remain in force, they (generally) did not believe
that such continuation was automatic.68
In the following paragraphs, we will examine 12 cases involving claims against ei-
ther the Slovak Republic or the Czech Republic concerning allegations of breach of
BITs that had been entered by Czechoslovakia (the predecessor State) with other
States.69 It should be added that the present author has also identified at least 11
other cases involving relevant State succession questions related to Czechoslovakia’s
BITs, but about which very limited information is available.70 One important point
62 Klabbers and others (n 51) 112, 116. See also: the Report of the Czech Republic in: Klabbers and others,
ibid at 440 and 462–63 (providing a number of examples).
63 Report of the Czech Republic in: Klabbers and others, (n 51) at 462.
64 ibid, providing, inter alia, the examples of Germany (at 462), Israel, (at 447), Japan (at 447) and Korea
(at 449). See also, many examples referred to in the Report of Slovakia, in: Klabbers and others, (n 51)
at 508 ff.
65 ILA (n 48) 11; See also: the Report of the Czech Republic in: Klabbers and others (n 51) at 440–61
(providing many examples of such consultations).
66 ILA, ibid 11; Mikulka (n 44) para 124.
67 Report of the Czech Republic in: Klabbers and others (n 51) at 466.
68 Mikulka (n 44) para 124.
69 See, more generally, Tomáš Fecák, ‘Czech Experience with Bilateral Investment Treaties: Somewhat
Bitter Taste of Investment Protection’ (2011) 2 Czech YB of Public & Private Intl L 23.
70 Awards were not publically available at the time of writing (March 2014) for the following cases: Peter
Franz Vocklinghaus v Czech Republic (filed under the Germany–Czechoslovakia BIT); Binder v Czech
Republic, UNCITRAL (filed under the Germany–Czechoslovakia BIT); US Steel Global Holdings I BV v
Slovak Republic, UNCITRAL, PCA Case No 2013-6 (filed under the Netherlands–Czechoslovakia BIT);
European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL (filed under the
Austria–Czechoslovakia BIT); Invesmart v Czech Republic, UNCITRAL (filed under the
Netherlands–Czechoslovakia BIT); ECE Projektmanagement v Czech Republic, UNCITRAL (filed under
the Germany–Czechoslovakia BIT); InterTrade Holding GmbH v Czech Republic, UNCITRAL, PCA (filed
under the Germany–Czechoslovakia BIT); Konsortium Oeconomismus v Czech Republic (filed under the
Switzerland–Czechoslovakia BIT); Georg Nepolsky v Czech Republic, UNCITRAL (filed under the
to mention is that both the Czech Republic and Slovakia have not challenged the jur-
isdiction of arbitral tribunals over disputes arising from these BITs on the specific
ground that they were not bound by these instruments. This important fact certainly
explains in large part why tribunals have not paid much attention to State succession
issues. Yet, as further explained in the next paragraphs, tribunals’ general lack of rea-
soning on important State succession issues is regrettable. These awards can be div-
ided in three categories:
- Some tribunals have simply refrain from explaining why a new State could be
considered bound by obligations arising from a treaty entered into by another
State (Section i);
- Other tribunals have only offered the beginning of an explanation on the
issue (Section ii);

- Only a few tribunals have correctly addressed the State succession issues in
their awards (Section iii).
(i) The silence of some tribunals

Some tribunals have failed to address the fundamental question of how the Czech
Republic could be bound by obligations arising from a BIT concluded by
Czechoslovakia before independence. A good example is the case of Ronald S Lauder
v Czech Republic involving a claim filed in 1999 by a US investor, Mr Lauder, against
the Czech Republic for alleged violation of the 1991 United-States-Czechoslovakia
BIT.71 The award contains no reasoning whatsoever on the question of the Czech
Republic’s succession to this BIT. The tribunal simply assumed that the BIT was
binding on the Czech Republic upon its independence. One reason which may ex-
plain the tribunal’s silence on this question is certainly the fact that the respondent
did not raise any jurisdictional challenge on this point. In any event, the tribunal also
failed to explain how the United States had actually agreed to the continuation of
this BIT with the Czech Republic after the date of succession.72
Another example of a tribunal’s silence on relevant questions of State succession
is the 2010 case of Frontier Petroleum Services Ltd v Czech Republic,73 which involved
a claim by a Canadian company alleging breach by the Czech Republic of the 1990
Germany–Czechoslovakia BIT); European Media Ventures SA v Czech Republic, UNCITRAL (filed under
the Belgium/Luxembourg–Czechoslovakia BIT). A number of other relevant cases were pending, includ-
ing: EuroGas GmbH v Slovak Republic, UNCITRAL (filed under the Austria–Czechoslovakia BIT).
71 Ronald S Lauder v Czech Republic, UNCITRAL, Final Award, 3 September 2001, paras 2, 10.
72 Williams (n 46) 30, explaining that the United States conditioned the establishment of diplomatic rela-
tions with the Czech Republic upon commitments to fulfill the treaty and other obligations of the former
Czechoslovakia. The Czech Republic agreed to these terms. See, exchange of letters between US
President GW Bush and the Czech Republic Prime Minister V Klaus, 1 January 1993. Williams also ex-
plains (ibid at 40) that in June 1993, the Czech Ministry of Foreign Affairs notified the US Department
of State that a number of US–Czechoslovakia treaties would continue to be in force between the two
States. Williams does not refer to the US’s response to this letter. The website of the Office of the United
States Trade Representative simply indicates that ‘After the breakup of Czechoslovakia in 1993, this treaty
[i.e. the US-Czechoslovakia BIT] continued in effect for the successor states, the Czech Republic and
Slovakia.’
73 Frontier Petroleum Services Ltd v Czech Republic, UNCITRAL, Final Award, 12 November 2010.
Canada–Czechoslovakia BIT.74 It should be added that since then, in January 2012

Canada entered into in a BIT with the Czech Republic.75 Article 15 of the 2012 BIT
makes it clear that both Canada and the Czech Republic agreed for the continuation
of the Czechoslovakia–Canada BIT. Yet, it is unclear when precisely between 1993
(date of independence) and May 2009 (the date of signing of the new BIT) both
States had agreed for such continuation. This is typically an important question that
should have been addressed by the tribunal.
(ii) The limited reasoning of some tribunals

A number of tribunals have acknowledged the existence of a question of State succes-
sion, but have nonetheless failed to provide any comprehensive analysis of the issue.
A good illustration is the case of CME Czech Republic BV v Czech Republic involving
a Dutch company alleging that the Czech Republic committed a breach of the 1992

Netherlands–Czechoslovakia BIT.76 The reasoning of the tribunal on the question
of State succession is limited to one single sentence: ‘after the Czech and Slovak
Federal Republic ceased to exist on December 31, 1992, the Czech Republic suc-
ceeded to the rights and obligations of the Czech and Slovak Federal Republic under
the Treaty’.77
A number of other tribunals have been slightly more explicit. They have thus
briefly referred to the above-mentioned declaration of willingness of both new States
to succeed to Czechoslovakia’s international obligations. They also (very briefly) ex-
plained that as a result of such statements the new State was bound by obligations
arising from Czechoslovakia’s BITs. Yet, it is noteworthy that these tribunals have
nonetheless failed to explain that any continuation of a BIT requires the agreement
of the ‘other State party’ to the original treaty.
An illustration of this trend is the case of Eastern Sugar v Czech Republic, involving
a claim by a Dutch company against the Czech Republic under the 1992
Netherlands–Czechoslovakia BIT.78 The Czech Republic argued that as a result of
its recent accession to the EU, the BIT with the Netherlands was no longer applic-
able and that the tribunal therefore lacked jurisdiction over the dispute.79 The
Tribunal ultimately rejected this line of defence.80 One of the arguments mentioned
by the Tribunal was that ‘to this day, no notice of termination of the BIT was given
by either the Czech Republic or the Kingdom of the Netherlands’.81 But the
Tribunal does not explain how the BIT could still be in force between them; it sim-
ply stated that ‘the Czech Republic succeeded into [Czechoslovakia’s] international
74 ibid para 3.
75 Agreement Between Canada and the Czech Republic for the Promotion and Protection of Investments,
signed on 6 May 2009, and brought into force on 22 January 2012.
76 CME Czech Republic BV v Czech Republic, UNCITRAL, Partial Award, 13 September 2001.
77 ibid para 3. See also the same sentence in the Final Award, 14 March 2003, para 3.
78 Eastern Sugar BV (Netherlands) v The Czech Republic (SCC Case No 088/2004), Partial Award, 27 March
2007.
79 ibid para 97.
80 ibid paras 142 ff.
81 ibid para 153.
obligations, including those arising from the BIT’.82 This omission is surprising
considering that such evidence of consent by both States was readily available.83
The same defence argument was raised in the case of Eureko BV v Slovak Republic
involving a Dutch company alleging that Slovakia committed a breach of the 1992
Netherlands–Czechoslovakia BIT.84 Slovakia also argued that as a result of its acces-
sion to the EU in May 2004 the 1992 BIT has been terminated, and that, accordingly
the Tribunal lacked jurisdiction to hear the dispute.85 The Tribunal rejected the
‘Intra-EU jurisdictional objection’ advanced by the Respondent. Similarly to the
Eastern Sugar case, the Tribunal limited its comment on the question of Slovakia’s
succession to the 1992 BIT to this short and general passage: ‘The Slovak Republic
separated from the CSFR and became an independent State on 1 January 1993. It
succeeded to the CSFR-Netherlands BIT, as well as to the ECHR, as of the day of
its independence.’86 It is noteworthy that the award mentions the Netherlands’s pos-

ition as to whether or not Slovakia’s accession to the EU had terminated the BIT.87
The Netherlands argued that ‘the BIT was in force long before the Slovak Republic’s
accession to the European Union’ and had continued to be in force thereafter.88 The
other question as to when and how the Netherlands agreed to Slovakia’s continu-
ation of the BIT is not addressed by the Tribunal. This is regrettable since the infor-
mation was easily accessible.89
A number of other awards also contain the typical failure of tribunals to con-
cretely explain how the new State has succeeded to an older BIT upon its independ-
ence and how the other State party to the treaty reacted to such intent:
- Alps Finance v Slovakia (1991 Switzerland–Czechoslovakia BIT).90 Although

the Tribunal acknowledged that Slovakia was not a sovereign State when the
1991 BIT was concluded,91 it merely mention that following its independ-
ence Slovakia had ‘succeeded to the BIT as a legal successor of the previous
82 ibid para 5.
83 See, Exchange of Letters between the Netherlands and the Czech Republic regarding the continuation of
bilateral treaties, 8 and 9 December 1994, in: Tractatenblad Van Het Koninkrij der Nederlanden, Jaargang
1995 Nr 27 (available at https://zoek.officielebekendmakingen.nl/trb-1995-27.html) (also mentioned in:
ILA (n 48) 26). See the discussion in: Report of Slovakia, in: Klabbers and others (n 51) at 515–16.
84 Eureko BV v Slovak Republic, UNICTRAL (PCA Case No 2008-13) Award on Jurisdiction, Arbitrability
and Suspension, 26 October 2010. The name of the case was later changed to: Achmea BV v Slovak
Republic, UNCITRAL (PCA Case No 2008-13).
85 ibid para 9.
86 ibid para 48.
87 See, at ibid para 154 ff.
88 ibid para 156. See also at para 161.
89 Exchange of Letters between the Netherlands and the Slovak Republic regarding the continuation of bi-
lateral treaties, 9 December 1994, in: Tractatenblad Van Het Koninkrij der Nederlanden, Jaargang 1995
Nr. 27 (available at https://zoek.officielebekendmakingen.nl/trb-1995-27.html, in Slovak Republic’s offi-
cial Collection of Laws (zbierka zákonov), no 493/2005, 4721 (also mentioned in: ILA (n 48) 26). See
also in: Klabbers and others (n 51) at 285 ff.
90 Alps Finance and Trade AG v Slovak Republic, UNCITRAL, Award, 5 March 2011.
91 ibid para 1.
(united) Federal Republic’,92 without providing any further explanation. The

Tribunal did not mention the important fact that Slovakia and Switzerland
had in fact agreed to the continuation of the treaty.93
- HICEE v Slovakia (1992 Netherlands–Czechoslovakia BIT).94 In the award,
the Tribunal only briefly mentioned that ‘It is not in dispute that, after the
dissolution of the Czech and Slovak Federal Republic on 31 December 1992,
the Slovak Republic succeeded to the [BIT].’95
- Oostergetel & Laurentius v Slovakia (1992 Netherlands–Czechoslovakia
BIT).96 The Tribunal rejected Slovakia’s argument that the BIT had been ter-
minated upon its accession to the EU in 2004.97 The Tribunal’s only refer-
ence to the State succession issue is this brief passage: ‘On 1 January 1993
the Czech and Slovak Federal Republic separated into two separate sovereign
states. The Slovak Republic succeeded the former State’s international obliga-

tions, including those arising under the BIT.’98
- Nagel v Czech Republic (1992 UK–Czechoslovakia BIT).99 The Tribunal’s
only comment on succession is that the BIT ‘is binding on the Czech
Republic as one of the two successor States of Czechoslovakia’.100
(iii) A few tribunals have correctly addressed the issue

A more comprehensive approach to the issue of State succession was adopted by a
few tribunals. For instance, in the Saluka v Czech Republic case, involving a claim by
a Dutch company against the Czech Republic under the 1992 Netherlands–
Czechoslovakia BIT,101 the Tribunal explained the relevant State succession issue as
follows:
The Czech and Slovak Federal Republic was dissolved on 31 December 1992,
and its two constituent parts became independent States, as the Czech
Republic and the Slovak Republic. The Czech Republic confirmed to the
Kingdom of The Netherlands that, upon the separation of the Czech and
Slovak Federal Republic into two separate republics, the Treaty remained in
force between the Czech Republic and the Kingdom of The Netherlands.102
92 ibid.
93 Exchanges of Notes of 13 October and 25 November 1994 (available at the website of the Swiss
Ministry of Foreign Affairs: http://www.dfae.admin.ch/eda/fr/home/topics/intla/intrea/dbstv/data05/
e_99991005.html). See the discussion in: Report of Slovakia, in: Klabbers and others (n 51) at 520.
94 HICEE BV v Slovak Republic, UNCITRAL, (PCA Case No 2009-11), Partial Award, 23 May 2011.
95 ibid para 3, fn 2.
96 Jan Oostergetel and Theodora Laurentius v Slovak Republic, UNCITRAL, Decision on Jurisdiction, 30
April 2010.
97 ibid paras 41, 65 ff, 98.
98 ibid para 56.
99 William Nagel v Czech Republic (SCC Case No 049/2002) Award, 9 September 2003.
100 ibid para 266.
101 Saluka Investments BV v Czech Republic, UNCITRAL, Decision on Jurisdiction over the Czech Republic’s
Counterclaim, 7 May 2004.
102 ibid para 2.
A similar statement was made by the Tribunal in the Achmea case involving a
Dutch company (formally known as Eureko B.V.) alleging that Slovakia committed a
breach of the 1992 Netherlands–Czechoslovakia BIT:103
After the dissolution of the Czech and Slovak Federal Republic into the Czech
Republic and the Slovak Republic, the Slovak Republic confirmed in an
exchange of letters dated 9 December 1994 that the BIT remained in force
between the Slovak Republic and the Kingdom of the Netherlands.104
These passages are noteworthy for being one of the very few examples of an
award mentioning specifically how (and when) the new State had consented to the
continuation of the BIT. What is missing, however, is the other State party’s actual
response to such declaration. This last fundamental point was mentioned in only

one award: the Austrian Airlines case involving a claim by an Austrian company
against Slovakia under the 1991 Austria–Czechoslovakia BIT.105 The Tribunal first
noted that Slovakia did not exist as a sovereign State at the date the BIT entered
into force. The tribunal then specifically explained how such a BIT was now binding
on both the new State and Austria as a result of their explicit consent:
The applicability of the [BIT] by way of State succession was confirmed by an

exchange of diplomatic notes on 4 August and 25 November 1994 (and
entered into force on 1 January 1995).106
In conclusion, this survey of awards rendered by tribunals in the context of the

dissolution of Czechoslovakia shows that they have generally not sought to identify
the consent of the parties involved. Many of them have thus failed to explain how
(and when) the new State had succeeded to the older BITs entered into by
Czechoslovakia. All tribunals (except for one) have also failed to address the import-
ant question of how the other State party to the treaty had reacted to a such claim of
continuity. In my view, the main reason why they have failed to conduct such an en-
quiry is because respondent States did not challenge the jurisdiction of tribunals over
the dispute based on older Czechoslovakian BITs. In other words, tribunals did not
discuss State succession issues because they believed that they did not have to. In the
general conclusion section below, we will further examine whether there might be
other explanations for tribunals’ reluctance to address succession issues.
B. The Break-Up of the USSR

The break-up of the USSR was officially completed at the end of 1991 with the es-
tablishment of the ‘Commonwealth of Independent States’ (CIS).107 It was agreed
103 Achmea BV v Slovak Republic, UNCITRAL, (PCA Case No 2008-13 (Number 2)), Award on
Jurisdiction and Admissibility, 20 May 2014 (this case should not be confused with the Eureko BV case
mentioned above (n 84)).
104 ibid para 1, fn 1.
105 Austrian Airlines v Slovak Republic, UNCITRAL, Final Award, 9 October 2009.
106 ibid para 8.
107 The CIS was first formed by Russia, Belarus and Ukraine on the basis of the Minsk Agreement of 8
December 1991 (The Agreement Establishing the Commonwealth of Independent States, UN Doc A/46/
among the former Republics (with the exception of the three Baltic States108) that
Russia would be considered as the ‘continuator’ of the international legal personality
of the USSR in international organizations, including the United Nations.109 This
decision was largely accepted by other States.110
The legal qualification of the dismemberment of the USSR in 1991 is controver-
sial.111 It has been suggested by many writers that because Russia is the continuing
State of the USSR, all other former Republics (with the exception of the Baltic
States) seceded from the Union.112 The affirmation that Russia is the continuing
State of the USSR is clearly based on a legal fiction.113 Thus, the USSR did in fact
cease to exist in 1991 as a result of both the Declaration of Alma Ata and the Minsk
Agreement.114 Logically, Russia could not continue the existence of a State which
had ceased to exist;115 there is no ‘resurrection’ of States in international law.116 It
should follow, logically, that the break-up of the USSR is a case of State dissol-

ution.117 Yet, it may be that these statements were merely political and not meant to
result in the actual dissolution of the USSR.118 In any event, the fact remains that all
States concerned (including Russia itself) have viewed Russia as the continuing State
of the USSR. Thus, in their actual practice States have considered the break-up of the
771 (13 December 1991), (1992) 31 ILM, 138). As a result of the Declaration of Alma Ata, 21
December 1991, UN Doc A/46/60 (30 December 1991), (1992) 31 ILM, 147, the CIS was expanded
to other former Republics (except for Baltic States), with Georgia joining in October 1993.
108 The three Baltic States never became members of the CIS.
109 Declaration of Alma Ata, (n 107). See also: Decision by the Council of Heads of State of the Commonwealth
of Independent States, 21 December 1991, (1992) 31 ILM, 151; Letter of Russia’s President Yeltsin to
the UN Secretary-General, 24 December 1991, (1992) 31 ILM, 138.
110 See, Pieter Jan Kuyper, ‘The Community and State Succession in Respect of Treaties’, in D Curtin and
T Heukels (eds), Institutional Dynamics of European Integration, Essays in Honour of Henry G Schermers,
vol II (Martinus Nijhoff 1994) 633–35; Edwin D Williamson and John E Osborn, ‘A U.S. Perspective
on Treaty Succession and Related Issues in the Wake of the Break-up of the U.S.S.R. and Yugoslavia’
(1992–93) 33 Virginia J Int’l L 264–71; Lucinda Love, ‘International Agreement Obligations After the
Soviet Union’s Break-up: Current United States Practice and Its Consistency with International Law’
(1993) 26(2) Vanderbilt J Transnatl L 373; Konrad G Bühler, ‘State Succession, Identity/Continuity
and Membership in the United Nations’ in Eisemann and Koskenniemi (n 49) 258–63.
111 This question is examined in detail in I Ziemele, ‘Is the Distinction between State Continuity and State
Succession Reality or Fiction? The Russian Federation, the Federal Republic of Yugoslavia and
Germany’ (2001) 1 Baltic YIL 194.
112 W Czaplinski, ‘La continuité, l’identité et la succession d’États—évaluation de cas récents’ (1993) 26
RBDI, 388; Photini Pazartzis, La succession d’Etats aux traités multilatéraux à la lumière des mutations ter-
ritoriales récentes, (Pedone 2002) 55–56; Rein Mullerson, ‘Law and Politics in Succession of States:
International Law on Succession of States’ in Geneviève Burdeau and Brigitte Stern (eds), Dissolution,
continuation et succession en Europe de l’Est (Cedin-Paris I 1994) 19.
113 Eisemann (n 49) 40.
114 The preamble to the Minsk Agreement (n 107) clearly states that the USSR ‘as a subject of international
law and geopolitical reality no longer exists’. The Alma Ata Declaration (n 107) also mentions that ‘with
the establishment of the C.I.S., the U.S.S.R. ceases to exist’.
115 For this reason, a number of writers have argued that Russia is not the ‘continuator’ of the USSR but a
new State: R Rich, ‘Recognition of States: The Collapse of Yugoslavia and the Soviet Union’ (1993)
4(1) EJIL 45; YZ Blum, ‘Russia Takes over the Soviet Union’s Seat at the United Nations’ (1993) 3(2)
EJIL 357–59.
116 K Marek, Identitiy and Continuity of States in Public International Law (Droz 1968) 6.
117 Stern (n 42) 220–22.
118 M Shaw, ‘State Succession Revisited’ (1994) 5 Finnish YIL 49–50; J Crawford, The Creation of States in
International Law (2nd edn, OUP 2006) 677–78.
USSR as a series of ‘secessions’ by the former Soviet Republics (except for the three
Baltic States119).120
Under the Minsk Agreement and the Alma Ata Declaration, all successor States (ex-
cept for the three Baltic States) agreed to respect obligations arising from treaties
(both multilateral and bilateral) to which the USSR was a party.121 In spite of this
general statement of continuity, the practice of secessionist States with respect to
multilateral treaties has been anything but uniform.122 While some new States have
become parties to the multilateral treaties of the USSR by way of accession,123 others
have declared to be automatically bound by these treaties.124 Overall, this confusing
practice does not support the principle of ‘automatic’ succession to multilateral trea-
ties.125 The same conclusion can be reached regarding bilateral treaties.126 While the
former Republics have considered themselves bound by the bilateral treaties of the
USSR,127 the position of other States has varied. Some States took the view that the

new States were automatically bound by these treaties,128 while others have applied
the clean slate position.129 In any event, the continuation of treaties was in many in-
stances the object of negotiation between the parties.130 Such a diverse practice does
not support the principle of ‘automatic’ succession to bilateral treaties.131 As the con-
tinuing State, Russia has logically continued the bilateral treaties to which the USSR
was a party.132
The present author has found five relevant cases involving the Russian Federation
where a foreign investor based its claim under one of the 11 BITs to which the
USSR was a party before 1992. Under international law, Russia (as the continuing
State) remains bound by the treaties previously entered into by the predecessor
State (the USSR).133 This basic principle has been correctly identified and applied in
three awards. Yet, in the Renta 4 case, involving Spanish companies claiming against
119 L Mälksoo, Illegal Annexation and State Continuity: The Case of the Incorporation of the Baltic States by the
USSR (A Study of the Tension between Normativity and Power in International Law) (Martinus Nijhoff
2003) 255–56.
120 Ziemele (n 111) 194.
121 Agreement Establishing the Commonwealth of Independent States (n 107), art 22.
122 Pazartzis (n 112) 78.
123 A Zimmermann, ‘Secession and the Law of State Succession’ in MG Kohen (ed), Secession: International
Law Perspectives (CUP 2006) 215.
124 Pazartzis (n 112) 78–80.
125 ibid.
126 ILA (n 48) 15; Mikulka (n 44) para 116.
127 ILA, ibid.
128 See, the analysis of the position of several States in: H Hamant, Démembrement de l’URSS et problèmes
de succession d’États (Bruylant 2007) 237ff.
129 ibid 238. See the analysis in: Klabbers and others (n 51) 100–01, 114.
130 Hamant (n 128) 239; M Koskenniemi, ‘Report of the Director of Studies of the English-Speaking
Section of the Centre’ in Eisemann and Koskenniemi (n 49) 83–84.
131 T Langstrom, ‘The Dissolution of The Soviet Union in the Light of the 1978 Vienna Convention on
Succession of States in Respect of Treaties’ in Eisemann and Koskenniemi (n 49) 775.
132 ILA (n 48) 15.
133 Vienna Convention, art 35.
the Russian Federation alleging breach of the 1991 Spain–USSR BIT,134 the
Tribunal remained completely silent on the continuation issue.
The case of Mr Franz Sedelmayer v Russian Federation involved a German investor
submitting a request for arbitration based on the 1991 Germany–USSR BIT.135 The
Tribunal concluded that this treaty was binding on Russia based on the following
grounds:
The Treaty was signed by representatives of the Federal Republic of Germany

and the Soviet Union. In a note issued in the fall of 1992 to the heads of diplo-
matic missions in Moscow, the Ministry of Foreign Affairs of the Russian
Federation stated that the Russian Federation would continue to exercise the
rights and honour the obligations arising from international treaties signed by
the Soviet Union. Thus, the Treaty is binding for the Russian Federation.136

The same finding was made by the Tribunal in the case of RosInvestCo UK Ltd v
Russian Federation, involving allegations of breach of the 1991 United
Kingdom–USSR BIT.137 In its Award on Jurisdiction the Tribunal mentioned the
Claimant’s position on matters of succession:
It is common ground that the IPPA came into force on 3rd July 1991, pursuant
to an exchange of notes between the United Kingdom and the U.S.S.R. It is
also common ground that the Respondent was at all material times and re-
mains a state party to the IPPA as the U.S.S.R.’s successor under international
law, as confirmed by the letter dated 13th January 1992 from the Respondent’s
Ministry of Foreign Affairs to (inter alios) the United Kingdom’s Ambassador
in Moscow, and the joint declaration dated 30th January 1992 issued by the
United Kingdom and the Respondent.138
Since the respondent did not refute this description, the Tribunal did not specific-
ally examine Russia’s status as the continuator of the USSR; it only mentioned, in
passing, the emergence of the Russian Federation as the ‘legal continuation’ of the
USSR139 and the fact that both parties regarded the BIT as binding between
them.140
The issue of continuity also arose in the case of Vladimir Berschader and Moı̈se
Berschander v Russian Federation involving a claim by Belgian nationals under the 1992
134 Renta 4 SVSA, Ahorro Corporación Emergentes FI, Ahorro Corporación Eurofondo FI, Rovime Inversiones
SICAV SA, Quasar de Valors SICAV SA, Orgor de Valores SICAV SA, GBI 9000 SICAV SA v Russian
Federation (SCC No 24/2007), Award on Preliminary Objections, 20 March 2009, para 4.
135 Mr Franz Sedelmayer v Russian Federation, SCC, Award, 7 July 1998.
136 ibid at 17.
137 RosInvestCo UK Ltd v Russian Federation, (SCC Case No V079/2005), Award on Jurisdiction, 1 October
2007.
138 ibid para 31, quoting from Claimant’s First Memorial on Jurisdictional Issues. See also, Award, 12
September 2010, para 1, (‘Respondent the Russian Federation is under international law the successor
or “continuator” of the USSR’).
139 ibid para 37.
140 ibid para 42.
Belgium/Luxembourg-USSR.141 Russia did not contest being bound by the BIT.

Russia rejected, however, the investor’s use of the most-favored nation (MFN) clause
contained in the 1992 BIT to claim the benefit of more recent (post-Soviet) BITs
entered into by the Russian Federation. The arbitration clause of the 1992 BIT limited
the Tribunal’s jurisdiction only to disputes concerning the amount (or mode) of com-
pensation to be paid, and did not cover the other question of whether or not an act of
expropriation had actually occurred in the first place.142 The claimant wanted to use
the MFN clause in the BIT to take advantage of more favourable arbitration clauses
found in BITs signed by Russia in the late 1990s which cover disputes concerning the
occurrence of an act of expropriation. One of the arguments put forward by Russia to
reject this claim was that ‘reference to “the territory of the Soviet Union” in the
Protocol [to the Belgium/Luxembourg-U.S.S.R. BIT] means that the MFN clause may
only be applied in relation to BITs signed by the Soviet Union and not BITs signed by

the Russian Federation’.143 The Tribunal rejected Russia’s argument by simply men-
tioning that ‘the official position consistently adopted by the Respondent in interna-
tional affairs is that the Russian Federation is the legal successor to the Soviet
Union’.144 The Tribunal did not further discuss the status of Russia. While one can dis-
agree with the use of the term ‘legal successor’ rather than the more appropriate ex-
pression ‘continuing’ State, it remains that this is what the Tribunal meant to say.
The present author has only found one (currently pending) arbitration cases
involving a former Soviet Republic as respondent in circumstances involving allega-
tions of breach of a BIT entered into by the USSR before its break-up. World Wide
Minerals, a Canadian investor, recently filed a claim against Kazakhstan invoking a
breach of the 1991 Canada–USSR BIT. The question at the heart of this case will be
whether or not Kazakhstan is bound by this BIT.145
C. The Dissolution of Yugoslavia

As a result of the different declarations of independence by Croatia, Slovenia,
Macedonia and Bosnia and Herzegovina in 1991–92, what remained of the former
Socialist Federal Republic of Yugoslavia (SFRY) were the two former republics of
Serbia and Montenegro. In April 1992, both republics reorganized the old federation
in the form of the smaller two-member federation now called the ‘Federal Republic
of Yugoslavia’ (FRY). The new Constitution proclaimed it to be the ‘continuator’ of
the former SFRY.146 Other former Republics strongly opposed such claim by the
141 Vladimir Berschader and Moı̈se Berschander v Russian Federation, (SCC Case No 080/2004), Award, 21
April 2006.
142 ibid paras 151 ff.
143 ibid para 161, see also at para 66.
144 ibid para 161.
145 See, the story reported in: Iareporter, ‘After failure of claim under Kazakh statute, Canadian miner hopes
that USSR-Canada investment treaty permits arbitration with Kazakhstan’ 18 December 2013 (available
at http://www.iareporter.com/articles/20131218.).
146 Declaration on the Formation of the Federal Republic of Yugoslavia, joint session of the Yugoslavia
Assembly, the National Assembly of the Republic of Serbia and the Assembly of the Republic of
Montenegro, 27 April 1992, annexed to UN Doc S/23877 of 5 May 1992. See also Letter of the interim
Chargé d’Affaires at the Permanent Mission of Yugoslavia at the United Nations to the UN Secretary-
General, 6 May 1993, UN Doc A/46/915, 7 May 1992.
FRY.147 The majority of States,148 the UN Security Council and the UN General
Assembly,149 as well as the Badinter Commission150 refused to recognize the FRY
such status.151 As a result of the political changes which took place in 2000, the FRY
stopped claiming to be the continuator of the former SFRY and was admitted to the
United Nations as a new State.152 The break-up of the former SFRY should therefore
be analysed as a case of dissolution of State.
The present author has found only one relevant arbitration case in the context of
the dissolution of Yugoslavia.153 This is the case of Mytilineos Holdings SA v The
State Union of Serbia & Montenegro and Republic of Serbia.154 It involved a Greek
claimant starting arbitration proceedings in 2004 under the 1997 Agreement between
the Government of the Hellenic Republic and the Federal Government of the Federal
Republic of Yugoslavia. One important point to mention at the outset is the fact that
the FRY that signed the BIT in 1997 with Greece is the same State as the ‘State

Union of Serbia & Montenegro’ (hereinafter ‘Serbia-Montenegro’) as a result of a
2002 change of name and constitutional framework.155 This case is interesting for
two other reasons. First, the claimant commenced proceedings against two respond-
ents: The ‘State Union of Serbia & Montenegro’ and the ‘Republic of Serbia’.
Second, at the time when the award was rendered by the Tribunal in 2006
Montenegro had seceded from Serbia-Montenegro.
During the proceedings, Serbia-Montenegro objected to the fact that ‘Serbia’ was
listed as a second respondent by the Claimant.156 It should be recalled that at the
time (2004) the ‘State Union of Serbia and Montenegro’ (as the name suggests) was
a ‘union of States’ between two entities: Serbia and Montenegro.157 Serbia-
Montenegro argued that the ‘consent to arbitration contained in [the 1997 BIT]
does not cover Serbia’ and that it ‘only binds the Federal Republic of Yugoslavia
(Serbia and Montenegro)’ and that ‘Serbia cannot be a party to the arbitration’.158
The claimant explained that the ‘Republic of Serbia’ was added as a second respond-
ent because in the mean time during the proceedings Montenegro had become a
147 See inter alia, Letter of the Minister of Foreign Affairs of the Republic of Slovenia to the UN Secretary-
General, 27 May 1992, UN Doc A/47/234, S/24028, 28 May 1992.
148 This is, for instance, the case of the European Union: Déclaration du Conseil Européen concernant
l’ancienne Yougoslavie, 28 May 1992, UN Doc A/47/234, S/24028, Bull CE 6.1992.
149 UN Security Council Res 777 (1992), 19 September 1992; UN General Assembly Res 47/1 (1992), 19
September 1992.
150 Opinion no 10, 4 July 1992, in (1993) 92 ILR 206.
151 For an analysis of the different arguments used by all sides on the question of the FRY’s claim of con-
tinuity over the former SFRY, see JM Ortega Terol, ‘The Bursting of Yugoslavia: An Approach to
Practice Regarding State Succession’ in Eisemann and Koskenniemi (n 49) 892–900.
152 UN General Assembly Res 55/12, 1 November 2000.
153 A Dutch investor has apparently filed in 2011 a notice of dispute against Montenegro under the
Netherlands-Yugoslavia BIT: MNSS BV and Recupero Credito Acciaio NV v Montenegro, ICSID (Case No
ARB(AF)/12/8), story reported in Iareporter (http://www.iareporter.com/articles/20121210_3).
154 Mytilineos Holdings SA v State Union of Serbia & Montenegro and Republic of Serbia, UNCITRAL, Partial
Award on Jurisdiction, 8 September 2006, para 7.
155 Agreement on Principles of Relations Between Serbia and Montenegro within the Framework of a
Union of States, signed in Belgrade on 14 March 2002 (see in particular arts 1.2, 1.5 and 5.1).
156 Mytilineos Holdings, para 170.
157 Constitution of the State Union of Serbia and Montenegro, see art 2.
new independent State. A referendum on independence was held in Montenegro on

3 June 2006 and the National Assembly of Montenegro made a formal declaration of
independence.159 The independence of the new State was soon recognized by several
States, including by Serbia, and Montenegro was admitted to the United Nations in
June 2006.160 Thus, in its Post-Hearing Brief (dated 7 June 2006) the Claimant
noted that the ‘Republic of Serbia’ was ‘due to become legal successor to First
Respondent [Serbia-Montenegro] with full international legal personality following
the public referendum under Article 60 of the Constitutional Charter of First
Respondent that had then recently taken place’.161
In its award rendered in September 2006, the Tribunal noted that since the claim
has been filed ‘Montenegro, a constituent unit of the State Union of Serbia and
Montenegro, declared its independence’.162 The Tribunal added that this event was,
however, not problematic in the instant case: ‘While the Tribunal has not been re-

quested to rule on any ensuing State succession issues, it takes note that it appears
uncontroversial that the Republic of Serbia will continue the legal identity of the
State Union of Serbia and Montenegro on the international level.’163
The accession of Montenegro to independence is indeed a case of secession.
Since there was no doubt that the Republic of Serbia was the continuing State to the
‘State Union of Serbia and Montenegro’164 at the time when the award was rendered
in September 2006, the Tribunal was right to conclude that it had become unneces-
sary to add Serbia as a second respondent. In any event, the Tribunal decided to
examine its jurisdiction ratione personae over the two Respondents based on the
‘established principle that jurisdiction is to be determined in light of the situation as
it exists on the date the judicial proceedings are instituted’.165 The Tribunal con-
cluded that Serbia, as a constituent part of the Federal Republic of Yugoslavia, was
clearly not a ‘Contracting Party’ to the 1997 BIT and, as a result, could not act as re-
spondent in the instant arbitration proceedings.166 In its final award of September
2009, the Tribunal dismissed all claims against the respondent.167 Interestingly, the
respondent at this later phase of the proceedings was the ‘Republic of Serbia’
(the continuing State of the ‘State Union of Serbia & Montenegro’).168
159 Decision on Proclamation of Independence of the Republic of Montenegro, 3 June 2006.

160 UN SC Res 1691 (2006); GA Res A/60/264 (2006).
162 ibid para 158.
163 ibid.
164 See, Constitution of the State Union of Serbia and Montenegro, art 60(5); Letter of 3 June 2006 of the
President of the Republic of Serbia to the UN Secretary-General; Declaration of the National Assembly
of Serbia, 5 June 2006. This is also the conclusion reached by the ICJ in Application of the Convention on
the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia and
Montenegro), [2007] ICJ Rep 43, paras 67–77.
166 ibid paras 172–73, 175, 226.
167 The award is not publicly available, but the story is reported in: Iareporter, ‘In final UNCITRAL award,
door left open for Greek company to bring another BIT claim against Serbia’ 26 April 2013 (available
at: http://www.iareporter.com/articles/20130426_1).
168 Mytilineos Holdings has apparently filed a new claim in 2013 against the ‘Republic of Serbia’ invoking
violation of the same 1997 BIT. See, story in Iareporter, 10 December 2013, http://www.iareporter.
com/articles/20131210_4.
4 . C O NC L US IO N
The analysis of case law has shown that relevant issues of State succession to BITs
arose in a surprising number of investment cases. The few tribunals that have exam-
ined cases involving Russia have properly identified it as the continuing State of the
USSR and have rightly concluded that it remained bound by Soviet BITs. The
Mytilineos Holdings Tribunal has also properly addressed the complex issues of State
succession and continuity in the context of the dissolution of Yugoslavia, the trans-
formation of the FRY into the ‘State Union of Serbia & Montenegro’ and the even-
tual secession of Montenegro with Serbia being considered as the continuing State.
This situation contrasts with the vast majority of awards rendered by tribunals in the
context of the dissolution of Czechoslovakia which have barely mentioned at all the
relevant succession issues. Many of them have thus failed to explain how (and when)
the new State had succeeded to the older BIT signed by Czechoslovakia. Moreover,

all tribunals (except for one) have also failed to address the important question of
how the other State party to the treaty had reacted to such claim of continuity. This
silence is surprising considering that there is no automatic continuity of bilateral trea-
ties and that any such continuation results from the agreement of both States. The
most logical explanation for such lack of reasoning on relevant State succession
issues is that the respondent States did not dispute in any of these cases that they
were bound by Czechoslovakia’s BITs. In other words, tribunals did not examine
succession issues simply because they believe that they did not have to. In any event,
such a lack of reasoning on such basic State succession issues is disappointing.
There is another less probable explanation for tribunals’ general lack of reasoning
on succession issues. It may be that tribunals have not sought to identify the consent
of the parties involved for the continuation of BITs because they believed that such
consent was simply unnecessary. Any such reasoning would not be unsound in the
specific context of the dissolution of Czechoslovakia. Thus, both Slovakia and the
Czech Republic were party to the 1978 Vienna Convention whereby the solution of
automatic continuity applies to bilateral treaties and where any consent by the other
State party to the treaty is therefore not necessary. Moreover, both States explicitly
declared that they would apply the Convention retroactively to their own succession.
However logical such reasoning may be, it remains that the awards surveyed contain
no clue that this was indeed the approach adopted by tribunals. Importantly, none of
the awards even mention the 1978 Vienna Convention. In any event, it is difficult to
deduce anything from the limited reasoning of tribunals on succession issues.
Overall, these awards are neither clearly supporting the principle of continuity nor
the principle of tabula rasa.
ACKNOWLEDGEMENTS
This article reflects facts current as of April 2014. The author wishes to thank Mr
Alexandre Genest and Mrs Christine Côté for their assistance and suggestions on an
earlier draft.
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An Uncharted Question of State Succession: Are New States Automatically

Article in Journal of International Dispute Settlement · February 2014

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An Uncharted Question of State

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C The Author 2014. Published by Oxford University Press.

Commission (ILC) which adopted in 1978 the Vienna Convention on State

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A. The Solution of Automatic Continuity was adopted for

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B. This Solution is both Incoherent and Unjustifiable

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C. This Solution is not Supported by State Practice

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A. The Dissolution of Czechoslovakia

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(i) The silence of some tribunals

Canada–Czechoslovakia BIT.74 It should be added that since then, in January 2012

(ii) The limited reasoning of some tribunals

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- Alps Finance v Slovakia (1991 Switzerland–Czechoslovakia BIT).90 Although

(united) Federal Republic’,92 without providing any further explanation. The

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(iii) A few tribunals have correctly addressed the issue

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The applicability of the [BIT] by way of State succession was confirmed by an

In conclusion, this survey of awards rendered by tribunals in the context of the

B. The Break-Up of the USSR

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The Treaty was signed by representatives of the Federal Republic of Germany

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Belgium/Luxembourg-USSR.141 Russia did not contest being bound by the BIT.

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C. The Dissolution of Yugoslavia

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new independent State. A referendum on independence was held in Montenegro on

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159 Decision on Proclamation of Independence of the Republic of Montenegro, 3 June 2006.

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