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international litigation blog

Investment Court System – Three Ways to Avoid State-Partiality by Judges

Since September 2015, the European Commission has been pushing forward a proposal for a new investment court system (ICS) aimed at addressing the numerous criticisms expressed about the existing investor-State dispute resolution (ISDS) mechanisms (see here, here and here for previous posts on this topic).

ISDS is a very sensitive topic since such disputes always place States in the position of respondents. Furthermore, they are seen by many as placing restrictions on a State’s right to sovereignty and right to regulate. In addition, the outcome of these disputes may profoundly impact the financial situation of a State. On top of those concerns, investor-State disputes are generally solved by recourse to international arbitration, a mechanism which is seen by many as lacking consistency, transparency and legitimacy.

In order to address those concerns, the key aspects of the proposal brought forward by the European Union are the following:

– The creation of a permanent investment court which would have exclusive jurisdiction to rule on investment claims and would therefore render forum-shopping and multiple parallel proceedings impossible;

– This permanent court would be composed of a First Instance Tribunal and an Appeal Tribunal;

– Judgements would be made by publicly appointed judges;

– Proceedings would be transparent and a right to intervene for all interested countries would be provided.

While I personally think that the ICS presents a step in the right direction, as it offers possible solutions to the main concerns raised about classical ISDS mechanisms, I do not think, nor pretend, that this proposal is free from any potential flaws.

Indeed, one of the main doubts expressed by many commentators against the ICS relates to the methodology for appointing judges to the First Instance Tribunal and to the Appeal Tribunal. For instance, in respect of the EU-Canada free trade agreement (CETA), it is currently contemplated that judges of the new investment court will be appointed by States and they should only serve a limited term of 5 years renewable once (Article 8.27 of the CETA).

If this appointment procedure is ever adopted, it will certainly not take long before the credibility, legitimacy, independence and neutrality of the whole system starts to be contested by the perception that the judges are biased in favour of States. It is indeed very likely that such a suspicion will quickly arise since those judges will be appointed (even if indirectly) by the States and because their term in office will be subject to re-appointment by those same States (meaning that the judges might be tempted to render decisions more favourable to States in order to be re-appointed).

While it remains to be seen whether the ICS will ever see the light of day, and if so under which form, I hereby suggest three possible alternatives/solutions in order to address the risk of State-partiality by judges.READ MORE

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Recent Developments in Investment Disputes: ICSID, The Energy Charter Treaty, Solar Industry and FSIA

Arbitration claims for breaches of the Energy Charter Treaty have emerged in the last couple of years, as certain countries have tried to reduce or place restrictions on financially favorable regulatory measures aimed at promoting renewable energy.

Two of those arbitration cases have recently come under the spotlight and I found that it would be interesting to provide you with a general description of those two cases.READ MORE

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International Litigation on Steroids: Citigroup Global Mkts., Inc. v. Fiorilla

Although the case below does not shed light on any new legal development, it is nevertheless an interesting story which offers a prime example of a plaintiff willing to use each and every possible trick in the context of international litigation and arbitration to (unsuccessfully) achieve his goal.READ MORE

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Hong Kong Court Sets High Standard for Crown Immunity Exception

On 8 June 2017, the Hong Kong Court of First Instance (the Court) ruled in TNB Fuel Services Sdn Bhd v. China National Coal Group Corporation that a Chinese state-owned enterprise was not entitled to rely on the doctrine of Crown immunity in proceedings relating to the enforcement of an arbitral award unless this company could demonstrate that it bears almost no independence and acts fully under the control of the Crown.READ MORE

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CJEU Rules on Mandatory Mediation before Court Proceedings in Consumers Claims

On 14 June 2017, the Court of Justice of the European Union (the CJEU) handed down a judgment interpreting, in light of Directive 2013/11/EU of 21 May 2013 on alternative dispute resolution for consumer disputes (Directive 2013/11/EU), the conditions under which mandatory out-of-court mediation should take place before a consumer can initiate court proceedings against a trader.READ MORE

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