CHAPTER 10

THE FINAL AWARD IN

LOEWEN V. UNITED STATES

Dirk Pulkowski*

I. INTRODUCTION
In two recent complaints against the United States, Mondev v. United
States1 and Loewen v. United States,2 ICSID tribunals had to confront a sen-
sitive issue—the proper administration of justice in the domestic courts
of a North American Free Trade Agreement (NAFTA) party. While denial
of justice is a central component of the classic international law on the
protection of aliens, the two disputes were the first to raise a comparable
issue within the context of NAFTA. Under what conditions can investors
use NAFTA claims as vehicles for obtaining compensation for perceived
miscarriages of justice?

In the Loewen case, a Canadian investor alleged nationality-based,

race-based, and class-based discrimination in jury proceedings before a
Mississippi trial court. In the investor’s view, the “introduction of exten-
sive anti-Canadian and pro-American testimony and counsel comments”3
during the Mississippi trial amounted to a violation of the obligation of
national treatment pursuant to NAFTA Article 1102. More generally, the
“improper administration of civil and criminal justice as regards an
alien”4 constituted both a procedural and a substantive denial of justice

* Attorney, International trade and arbitration group, Sidley Austin LLP, Brussels.
Doctoral candidate in international law, Ludwig-Maximilians-Universität (München);
LL.M., Yale Law School (New Haven); Ass. jur. (München). Email: dirk.pulkowski@
aya.yale.edu.
1 Mondev Int’l Ltd. v. United States of America, ICSID Case No. ARB(AF)/99/2),

Award (Oct. 11, 2002), 42 I.L.M. 85 (2003), 6 ICSID REP. 192 (2004), 125 I.L.R. 110
(2004); see also the discussion in Chapter 2 of this volume.
2 The Loewen Group, Inc. and Raymond L. Loewen v. United States of America,

ICSID Case No. ARB(AF)/98/3, Award (June 26, 2003), 42 I.L.M. 811 (2003), 7 ICSID
REP. 442 (2005).
3 Notice of Claim, at ¶ 139 (Oct. 30, 1998), available at http://www.naftaclaims.com.
4 Id. at ¶ 156.

291
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in violation of the minimum standard of treatment pursuant to NAFTA

Article 1105. The outcome is a series of highly unusual decisions5—a deci-
sion on jurisdiction, a final award, and a supplementary decision—in
which the Loewen tribunal ultimately dismisses most of the claims on juris-
dictional grounds, while ostensibly dismissing one claim on the merits.

The decisions have stirred a lively controversy in the investment law

community, which has mainly focused on two issues. First, the tribunal
has been criticized for its extensive use of obiter dicta. While the detailed
discussion of the Mississippi trial over a hundred paragraphs is at the
core of the final award, the tribunal ultimately makes no holdings on the
substance of Loewen’s denial of justice claim. The emphatic condemna-
tion of the trial as “a miscarriage of justice amounting to a manifest injus-
tice as that expression is understood in international law”6 is a mere obiter
dictum.7 Second, serious doubts have been raised as to whether the tri-

5 Loewen Group, Inc. and Raymond L. Loewen v. United States, Case No.

ARB(AF)/98/3, Decision on Hearing of Respondent’s Objection to Competence and

Jurisdiction (Jan. 5, 2001) [hereinafter Decision on Jurisdiction]; Loewen Group, Inc.
and Raymond L. Loewen v. United States, Award (June 26, 2003) [hereinafter Final
Award]; Loewen Group, Inc. and Raymond L. Loewen v. United States, Decision on
Respondent’s Request for a Supplementary Decision (Sept. 6, 2004) [hereinafter
Supplementary Decision]. Other, purely procedural decisions are not discussed. All
awards are available at http://www.naftaclaims.com.
6 Final Award, supra note 5, at ¶ 54.
7 Generally, obiter dicta allow courts and tribunals to clarify the policies that ani-
mate a particular legal concept. Yet the Loewen tribunal retreats to the broad statement
that Loewen’s trial was flawed “by any standard of evaluation” (Final Award, supra note
5, at ¶ 119); it thus effectively sidesteps a conscious articulation of the particular stan-
dards of NAFTA and general international law. As Don Wallace put it, “the Loewen facts
. . . gave the Tribunal a chance to place some solid content in the words and to draw
lines. Regrettably, the Tribunal used the words, acknowledged the content, but shrunk
ultimately from drawing the lines.” D. Wallace, Fair and Equitable Treatment and Denial
of Justice: Loewen v. US and Chattin v. Mexico, in T. WEILER ED., INTERNATIONAL INVEST-
MENT LAW AND ARBITRATION: LEADING CASES FROM THE ICSID, NAFTA, BILATERAL
TREATIES AND CUSTOMARY INTERNATIONAL LAW ch. 18 (2005). Wallace’s (in my view, war-
ranted) skepticism stands in contrast to the more positive view expressed by R.D.
Ahdieh, Between Dialogue and Decree: International Review of National Courts, 79 N.Y.U. L.
REV. 2029, 2113 (2004): “The Final Award in Loewen might thus be conceived as an
outline of the proposed parameters of a denial of justice standard, specifically
designed to provoke reaction and response from—and hence a dialogue with—the
national courts of the United States, as well as Canada and Mexico. Further elabora-
tion in subsequent Chapter 11 litigation might be expected to follow. Initiation of the