NOTES AND COMMENTS

CONTRACT CLAIMS VS. TREATY CLAIMS: MAPPING CONFLICTS

BETWEEN ICSID DECISIONS ON MULTISOURCED INVESTMENT CLAIMS

By Yuval Shany*

Three recent cases decided under the auspices of the International Centre for Settlement
of Investment Disputes (ICSID)1 —Vivendi,2 SGS v. Pakistan,3 and SGS v. Philippines4— have
exposed some of the more difficult theoretical and practical uncertainties underlying mod-
ern international investment law. Specifically, the trilogy of cases reveals inconsistent
approaches by international arbitrators to delineating the relationship between the two prin-
cipal constituent elements of international investment law—private investment contracts
(which usually derive their validity from the domestic law of the host state) and international
investment agreements (in most cases, bilateral investment treaties or BITs). These differ-
ences are hardly academic in nature. To the contrary, there are significant discrepancies in
the operative parts of the three awards—that is, different holdings on whether ICSID arbitral
panels are competent to review contract claims, whether contractual obligations normally fall
within the scope of BIT protection, the effect that should be accorded to exclusive jurisdic-
tion clauses found in private investment contracts, and the implications of the pendency of
parallel proceedings before national and international dispute settlement procedures. Two
additional ICSID awards, rendered in the second half of 2004 ( Joy Mining 5 and Salini 6), do
little to resolve these difficult issues.
Thus, confusion now surrounds fundamental aspects of law and procedure governing
international investment disputes. If this uncertainty persists, then the long-term stability and
workability of international investment law might arguably be threatened.7 Since overlaps
between contract and treaty claims are expected to arise with increased frequency (as a result
of the ever-increasing scope of BIT coverage8 and the growing propensity of investors to

*
Hersch Lauterpacht Chair in Public International Law, Faculty of Law, The Hebrew University of Jerusalem;
and Visiting Researcher at the Pioneer Project, Amsterdam Center for International Law, University of Amsterdam
(2004). The author wishes to thank Dr. Moshe Hirsch for his useful comments.
1
The International Centre for Settlement of Investment Disputes was established pursuant to the 1965 Wash-
ington Convention. Convention on the Settlement of Investment Disputes Between States and Nationals of Other
States, Mar. 18, 1965, 17 UST 1270, 575 UNTS 159 [hereinafter ICSID Convention].
2
Compañı́a de Aquas del Aconquija, S.A. v. Argentina, Decision on Annulment, ICSID No. ARB/97/3, 41 ILM
1135, 1154 (2002) (ad hoc comm. July 3, 2002) [hereinafter Vivendi II ]. Unless another Web site is listed, the ICSID
decisions and awards discussed below are available online at ⬍http://www.worldbank.org/icsid/cases/cases.htm⬎.
3
SGS Société Générale de Surveillance S.A. v. Pakistan, Decision on Jurisdiction, ICSID No. ARB/01/13 (Aug.
6, 2003), 18 ICSID REV. 301 (2003), 42 ILM 1290 (2003) [hereinafter SGS v. Pakistan].
4
SGS Société Générale de Surveillance S.A. v. Philippines, Decision on Jurisdiction, ICSID No. ARB/02/6 ( Jan.
29, 2004) [hereinafter SGS v. Philippines].
5
Joy Mining Machinery Ltd. v. Egypt, ICSID No. ARB/03/11 (Aug. 6, 2004) [hereinafter Joy Mining].
6
Salini Costruttori S.p.A. v. Jordan, Decision on Jurisdiction, ICSID No. ARB/02/13 (Nov. 29, 2004) [hereinafter
Salini].
7
Cf. Kalypso Nicolaidis & Joyce L. Tong, Diversity or Cacophony? The Continuing Debate over New Sources of International
Law, 25 MICH. J. INT’L L. 1349, 1351 (2004) (identifying inefficiency, loss of predictability, and delegitimacy as risks
associated with the fragmentation of international law).
8
According to ICSID, by 1996 there were some 1100 BITs, and more than 70% of them were concluded after
1987. See List of Parties to Bilateral Investment Treaties, at ⬍http://www.worldbank.org/icsid/treaties/intro.htm⬎.

835
836 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

resort to ICSID and comparable investment protection procedures9), resolution of the rela-
tions between these two categories of claims is crucial to the world of investment law.
At a deeper level, the three ICSID cases raise important theoretical questions pertaining
to the makeup of international investment law. For example, the positions espoused by arbi-
trators and tribunals in the surveyed cases uncover competing visions of BITs as either “self-
contained” or more “open-textured” instruments that should be harmonized with other
investment-regulating norms (e.g., investment contracts). The methodology underlying
these positions thus alternates between disintegrative strategies, which dissociate specific
BITs from other potentially applicable norms of investment protection, and resort to more
integrative modalities of normative coexistence or coapplication.
Identifying these competing strategies can help us predict and assess specific interpretive
maneuvers that ICSID tribunals will employ. It can also aid in clarifying the policy implications
of alternative treaty interpretations for the systemic welfare of the treaty regime in question,
on the one hand, and the entire complex of multilayered investment protection norms, on
the other hand. Furthermore, analogous tensions between integrative and disintegrative
approaches to treaty interpretation can be identified in the work of other international dis-
pute settlement mechanisms operating in the context of specific treaty regimes outside inter-
national investment law. Hence, it may be argued that the specific debate taking place in the
surveyed ICSID cases on how BITs should be construed can be contextualized as part of a
wider debate on the methodology of construing international law instruments establishing
specific treaty regimes, and should be informed by that wider debate.
Part I of this Comment lays out the facts and holdings of the three principal ICSID cases
on the relations between contract and treaty claims, and also mentions other, more recent
ICSID awards touching upon these matters. Part II maps the legal questions raised by the
surveyed decisions and discusses the various integrationist and disintegrationist methodol-
ogies they employ to regulate the interplay between contract and treaty claims. Part III tries
to link the debate over the relations between contract and treaty claims to other debates tak-
ing place in the world of international investment law and in other areas of international law.
The concluding section offers some pragmatic tools—the principles of judicial comity and
abus de droit (abuse of right)— capable of alleviating some of the tensions between contract
and treaty claims without committing lawyers to a specific vision of their relations.

I. RECENT ICSID DECISIONS ON COMPETING CONTRACT AND TREATY CLAIMS

Several recent ICSID cases have underlined the growing difficulty of reconciling parallel
contract and treaty claims arising from the same investment dispute. Before we examine the
specific facts and holdings of the three most notable ICSID decisions on the matter, some
preliminary explanatory remarks regarding the two types of investment claims, as well as the
normative and procedural complexities that they entail, may be useful.
International investment transactions10 normally engage several bodies of norms that
introduce distinct substantive as well as procedural rights and obligations for the transacting
parties: First, the terms of most foreign investments are laid out in a contract (or a series of
contracts) between the foreign investor and a local party (often, a government agency),

A more recent note asserts that the number of BITs now exceeds 2000. José E. Alvarez, The Regulation of Foreign Direct
Investment: Introduction, 42 COLUM. J. TRANSNAT’L L. 1, 2 (2003).
9
Between 1972 and 2003, ICSID settled eighty-eight cases. Still, almost the same number of cases— eighty-five—is
currently pending before ICSID panels. This explosive increase is arguably indicative of the growing accessibility and
appeal of ICSID dispute settlement procedures.
10
The term “international investment” has been construed very broadly in international practice, as encompass-
ing a variety of cross-border transactions, involving transfer of money or effort from one state to the other, in
exchange for an asset, with the expectation of returns or profits obtained in the territory of the host state. See, e.g.,
North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.-U.S., Art. 1139, 107 Stat. 2066, 32 ILM 289, 605
(1993) [hereinafter NAFTA]; Joy Mining, supra note 5, para. 53; Tokios Tokelés v. Ukraine, Decision on Jurisdiction,
ICSID No. ARB/02/18, para. 75 (Apr. 29, 2004).
2005] NOTES AND COMMENTS 837

which typically introduces a host of private law rights and obligations. Second, foreign invest-
ments are also protected by the domestic laws of the host state. Such laws, which may include
specific provisions on the protection of foreign investments, usually apply to contract claims
at least as residual sources of law, and may fill normative gaps and inspire contract interpre-
tation. Third, many contemporary foreign investment transactions are also governed by inter-
state agreements—BITs or multilateral investment treaties that require the host state to
adhere to a more or less fixed set of international standards. These standards provide, inter
alia, for the prohibition of discrimination against and between foreign investors (i.e.,
“national treatment” and “most-favored-nation” clauses); fair and equitable treatment, and
full protection and security of foreign investments; guarantees for market value compensa-
tion in the event of expropriation; and the free transfer of investment returns or profits out
of the host country.11 Finally, general international law often introduces additional safe-
guards upon which parties to investment transactions can rely.12
Despite the conceptually discrete legal foundation of these sources, several normative and
procedural overlaps can occur: The substantive standards of conduct enumerated in the con-
tract or domestic law may be analogous to the substantive standards provided under inter-
national law. In particular, the domestic laws of some host states may incorporate interna-
tional law instruments (including BITs). At the same time, many BITs include “umbrella
clauses,” that is, clauses that require state parties to respect all obligations incurred with
respect to the covered investments.13 As will be explained below, the precise meaning of these
umbrella clauses—i.e., whether they encompass contractual obligations—is among the most
contentious aspects of the recent ICSID cases.
The complexity stemming from the multiplicity of legal sources that govern international
investment transactions—and their potential for conflict or overlap—is further compounded
by their sometimes incompatible dispute settlement provisions. While investment contracts
often refer contract claims to the exclusive jurisdiction of domestic courts or arbitral panels,
many international investment protection treaties include compromissory provisions that
entitle investors to bring treaty claims before international arbitration mechanisms such as
ICSID14 (normally, dispensing with the need to exhaust local remedies).15 In addition, a few
ICSID opinions have suggested that at least some formulations of the most-favored-nation
clause found in some BITs may enable investors to rely upon more favorable compromissory
clauses in other investment treaties, considerably extending the potential accessibility of
international arbitration to foreign investors.16

11
See, e.g., NAFTA, supra note 10, Arts. 1102–1110; Agreement for the Promotion and Protection of Investments,
May 16, 1997, Japan-H.K., Arts. 3–7, 36 ILM 1423 (1997); Agreement for the Promotion and Reciprocal Protection
of Investments, July 4, 1989, Fr.-USSR, Arts. 3–5, 29 ILM 320 (1990); 2004 U.S. Model Bilateral Investment Treaty,
Arts. 3– 6, available at ⬍http://www.ustr.gov⬎ [hereinafter U.S. Model BIT].
12
See, e.g., Universal Declaration of Human Rights, Art. 17(2), GA Res. 217A(III), UN Doc. A/810, at 71 (1948);
Francesco Francioni, Compensation for Nationalisation of Foreign Property: The Borderland Between Law and Equity, 24 INT’L
& COMP. L.Q. 255, 263 (1975).
13
See, e.g., Agreement for the Promotion and Protection of Investments, Apr. 14, 1994, India-UK, Art. 3(3), 34
ILM 935 (1995); Treaty Concerning the Encouragement and Reciprocal Protection of Investment, June 17, 1992,
Russ.-U.S., Art. 2(2)(c), 31 ILM 794 (1992).
14
See, e.g., NAFTA, supra note 10, Art. 1120; U.S. Model BIT, supra note 11, Art. 24(3). Some international instru-
ments allow the investor to choose between several dispute settlement alternatives, which typically include both
national and international judicial or arbitral procedures. See, e.g., Treaty Concerning the Encouragement and
Reciprocal Protection of Investment, July 2, 1997, Jordan-U.S., Art. IX, S. TREATY DOC. NO. 106-30, 36 ILM 1498
(1997); European Energy Charter, Dec. 12, 1994, Art. 26, 1994 O.J. (L 380) 24, 33 ILM 360 (1995). Finally, one
should also note that numerous aspects of investment disputes might fall under the compulsory jurisdiction of
domestic and international courts or tribunals (e.g., the ICJ in cases involving “optional clause” countries or those
brought on the basis of a general compromissory clause). See, e.g., Elettronica Sicula S.p.A. (ELSI) (U.S. v. Italy),
1989 ICJ REP.15 ( July 20) [hereinafter ELSI ]. This adds another potential avenue of jurisdictional competition
between different investment courts and tribunals.
15
See, e.g., ICSID Convention, supra note 1, Art. 26; NAFTA, supra note 10, Art. 1121(2)(b).
16
Maffezini v. Spain, Decision on Jurisdiction, ICSID No. ARB/97/7 ( Jan. 25, 2000), 16 ICSID REV. 212 (2001),
40 ILM 1129, 1138 (2001); see also Gas Natural SDG S.A. v. Argentina, Decision on Jurisdiction, ICSID No. ARB/
838 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

The applicability of multiple jurisdictional clauses presents a significant practical problem.

The combined effect of the normative overlap between investment claims brought under
national and international law, and the availability of several competent forums for their res-
olution, is that claimants may enjoy wide discretion in choosing how to present their claims
so as to bring them under the jurisdiction of the forum perceived most sympathetic to their
interests.17 Such a situation encourages forum shopping, which might detract from the pre-
dictability of international investment transactions.18 Worse still, the multiplicity of available
forums could lead to multiple proceedings—litigation of the same investment dispute or
related disputes involving the same parties before different judicial bodies. This state of
affairs not only might seriously inconvenience some of the litigating parties and unnecessarily
tax their material resources, but also could encourage conflicting judicial decisions, with all
the legal havoc that would ensue.19 The following survey of leading ICSID cases involving com-
peting contract and treaty claims demonstrates the nonhypothetical nature of the threats
posed by these complex scenarios.

The Vivendi Case

The proceedings in Vivendi arose from a dispute over the terms of a concession contract
between an Argentine corporation, Compañı́a de Aguas del Aconquija, S.A. (CAA)—which
was controlled at the relevant period by a French corporation, Compagnie Générale des Eaux
(CGE, and subsequently Vivendi Universal)— on the one hand, and the Argentine Province
of Tucumán, on the other hand. Under the 1995 investment contract, CAA was to operate
the province’s water and sewage systems. Significantly, Article 16(4) of the contract
referred future contractual disputes to the exclusive jurisdiction of Tucumán’s adminis-
trative tribunals.
Still, in late 1996, CAA and CGE chose to bring their case against Argentina not to the local
administrative tribunals but to ICSID. In doing so, they relied upon Article 8 of the 1991
Argentina-France BIT,20 which provides foreign investors with the choice of bringing inter-
national investment disputes before either national courts or international arbitration
(under ICSID or UNCITRAL auspices; this type of provision is sometimes referred to as a “fork
in the road” or electa una via provision).
In the ICSID proceedings, CAA and CGE raised two principal claims: (1) that various
branches of the provincial government (for whose conduct Argentina was internationally
responsible) were acting to destroy the concession contract (the Tucumán claim); and (2)
that the Argentine state had independently failed to protect the investment adequately, as
required by the BIT (the federal claim). Since the first claim invoked the parties’ contractual
obligations, the arbitral panel had to determine whether a foreign investor could bring a case
to ICSID on the basis of events governed by a contract containing an exclusive jurisdictional
clause.

03/10, paras. 30 –31 ( June 17, 2005), available at ⬍http://www.asil.org/pdfs/GasNat.v.Argentina.pdf⬎; Siemens

A.G. v. Argentina, Decision on Jurisdiction, ICSID No. ARB/02/8, para. 103 (Aug. 3, 2004); Técnicas Medioam-
bientales Tecmed, S.A. v. Mexico, ICSID No. ARB(AF)/00/2, para. 69 (May 29, 2003) (unofficial trans.) (citing
Maffezini with approval). The Maffezini holding, however, was criticized and distinguished in some subsequent ICSID
cases. Plama Consortium Ltd. v. Bulgaria, Decision on Jurisdiction, ICSID No. ARB/03/24, paras. 183–227 (Feb. 8,
2005); Salini, supra note 6, paras. 115–19.
17
According to ICSID’s decision in SGS v. Pakistan, the claimant is normally free to characterize his claims as either
national or international law claims. SGS v. Pakistan, supra note 3, 42 ILM at 1313, para. 145; see also Salini, supra
note 6, para. 136.
18
Still, some degree of forum shopping might be healthy, as it increases the likelihood that the parties will find
a proper and competent forum to adjudicate their dispute, and places competitive pressures on courts to improve
their procedures. For discussion, see YUVAL SHANY, THE COMPETING JURISDICTIONS OF INTERNATIONAL COURTS AND
TRIBUNALS 144 – 45 (2003).
19
See, e.g., id. at 80.
20
Agreement for the Promotion and Reciprocal Protection of Investments, July 3, 1991, Arg.-Fr., 1728 UNTS 298.
2005] NOTES AND COMMENTS 839

In its 2000 award, the ICSID arbitral tribunal rejected CAA and CGE’s claims, holding that
the Tucumán claim under the BIT was “crucially connected” with their contract claim.21 As
a result, the Tucumán claim, by virtue of the contractual compromissory clause, should have
been litigated before the local Tucumán courts. Recourse to ICSID would have been allowed
only if it were alleged that proceedings before local courts had failed to meet international
standards.22 At the same time, the tribunal held that it had not been proved that Argentina
had violated any of its independent obligations under the BIT with regard to this foreign
investment.23 Hence, it rejected the claimants’ federal claim as well.
The foreign investor challenged the validity of the award before an ad hoc ICSID annul-
ment committee. In 2002 the committee accepted the investor’s contention that the first-
in-time tribunal’s refusal to review the Tucumán claim under the BIT constituted an excess
of power, which entails nullification of the award. In reaching this conclusion, the committee
emphasized the independent existence of the contract and the treaty claims:
[W]hether there has been a breach of the BIT and whether there has been a breach of
contract are different questions. Each of these claims will be determined by reference
to its own proper or applicable law—in the case of the BIT, by international law; in the
case of the Concession Contract, by the proper law of the contract, in other words, the
law of Tucumán.24
As a result, the committee was of the view that Argentina “cannot rely on an exclusive juris-
diction clause in a contract to avoid the characterisation of its conduct as internationally
unlawful under a treaty.”25 Still, the decision left the door open for reliance on contractual
compromissory clauses in cases “where the essential basis of a claim brought before an inter-
national tribunal is a breach of contract.”26 Apparently, the committee believed that this
caveat was not applicable to the case at hand; hence, the tribunal should have addressed the
Tucumán claim under the BIT.

SGS v. Pakistan

The second case in the trilogy, SGS v. Pakistan, revealed an even more pronounced conflict
between contract and treaty claims, as it also involved multiple proceedings before national
and international adjudicatory bodies, together with a related battle of injunctions. The sub-
ject of the dispute was a 1994 contract between SGS, a Swiss corporation, and the government
of Pakistan, whose terms called for SGS to perform preshipment inspections of goods
imported to Pakistan from several countries and to recommend appropriate customs clas-
sifications. The compromissory clause stipulated that disputes over the contract were to be
exclusively arbitrated in Pakistan, under the Pakistani Arbitration Act.

21
Compañı́a de Aquas del Aconquija, S.A. v. Argentina, ICSID No. ARB/97/3, 40 ILM 426, 443, para. 78 (2001)
(Nov. 21, 2000) [hereinafter Vivendi I ].
22
Id., para. 80; cf. ELSI, 1989 ICJ REP. at 42– 43 (the exhaustion-of-local-remedies rule cannot be tacitly dispensed
with and it can block interstate claims that are bound up with the investment claims it covers).
23
Vivendi I, 40 ILM at 446, para. 92.
24
Vivendi II, supra note 2, 41 ILM at 1154, para. 96; cf. CMS Gas Transmission Co. v. Argentina, Decision on Juris-
diction, ICSID No. ARB/01/08, 42 ILM 788, 800 (2003) ( July 17, 2003), available at ⬍http://www.asil.org/ilib/cms-
argentina.pdf⬎.
25
Vivendi II, 41 ILM at 1156, para. 103.
26
Id. at 1155, para. 98 (emphasis added). The tribunal noted, however, that
where “the fundamental basis of the claim” is a treaty laying down an independent standard by which the con-
duct of the parties is to be judged, the existence of an exclusive jurisdiction clause in a contract between the
claimant and the respondent state or one of its subdivisions cannot operate as a bar to the application of the
treaty standard.
Id. at 1156, para. 101.
For other applications of the “essential basis” test, see Eureko BV v. Poland, Partial Award, paras. 112–13 (ad hoc
arb. trib. Aug. 19, 2005), available at ⬍http://www.eureko.net/press/eureko/archives/2005-09-05.asp⬎; Occidental
Exploration & Prod. Co. v. Ecuador, para. 57 (UNCITRAL July 1, 2004), available at ⬍http://www.asil.org/ilib/OEPC-
Ecuador.pdf ⬎ [hereinafter Occidental]; Joy Mining, supra note 5, paras. 90 –91; Siemens, supra note 16, para. 180.
840 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

In December 1996, Pakistan unilaterally terminated the contract and withheld payment
of some of the outstanding sums demanded by SGS. The investor consequently brought judi-
cial proceedings against Pakistan before the Swiss courts, which ultimately dismissed the case
by reason of Pakistan’s sovereign immunity.27 Then, in 2000, before the final decision of the
Swiss courts, Pakistan initiated arbitration proceedings in Pakistan pursuant to the contrac-
tual compromissory clause. Although SGS objected to the proceedings, it brought a coun-
terclaim against Pakistan (without prejudice to its jurisdictional objections) before the Paki-
stani arbitrator. Furthermore, SGS initiated another set of arbitral proceedings against
Pakistan on October 12, 2001, this time before an ICSID tribunal on the basis of the Pakistani-
Swiss BIT.28 Pakistan reacted by requesting and obtaining from its Supreme Court, on March
15, 2002, an injunction against SGS, barring continuation of the ICSID arbitral proceedings.
Shortly thereafter, SGS requested a parallel order against the Pakistani arbitration proceed-
ings from the ICSID arbitral tribunal, and on October 16, 2002, the tribunal recommended
that the proceedings in Pakistan be stayed.29 This preliminary jurisdictional skirmish was
eventually decided in favor of ICSID, and on November 12, 2002, the Pakistani arbitrator
decided to stay the domestic arbitral proceedings temporarily.
During the jurisdictional stage of the ICSID proceedings, Pakistan raised several objections
to the tribunal’s jurisdiction, arguing mainly that (1) the contractual compromissory clause
constituted an exclusive jurisdiction arrangement that barred ICSID from adjudicating the
dispute; (2) the essential basis of the ICSID proceedings was the contract claim (relying on
the caveat to ICSID jurisdiction introduced by the Vivendi tribunal), so that no separate treaty
claim existed; and (3) the ICSID tribunal should defer to the domestic proceedings by virtue
of the lis pendens rule. SGS retorted by pointing out the separate legal foundations of the
contract and treaty claims (notwithstanding their similar factual core). Thus, it claimed that
proceedings conducted on the basis of the contractual compromissory clause could not
deprive ICSID of jurisdiction over treaty claims.30 In addition, it maintained that in the event
of jurisdictional overlap between the two proceedings, international dispute settlement pro-
cedures should prevail over their domestic counterparts.
On August 6, 2003, the tribunal decided to reject Pakistan’s objections and accept juris-
diction over SGS’s treaty claims. In doing so, it reaffirmed the dicta of the Vivendi ad hoc
committee on the separate existence of contract and treaty claims.31 At the same time, the
tribunal refused to entertain any of SGS’s contract claims: It held that, notwithstanding its
open-ended text, the BIT compromissory clause (Article 9) was intended only to cover dis-
putes over application of BIT standards, whereas contract claims were governed by the con-
tractual compromissory clause.32 Similarly, it held that the BIT umbrella clause (Article 11)
could not be reasonably construed to encompass contract claims despite its broad lan-
guage.33 Consequently, the tribunal asserted exclusive jurisdiction over the treaty claims and

27
As it happened, the first-instance Swiss court dismissed the case on the basis of the contractual compromissory
clause. Still, the appeals of SGS were rejected on the basis of state immunity arguments.
28
Agreement on the Promotion and Reciprocal Protection of Investments, July 11, 1995, Pak.-Switz., Art. 9, quoted
in SGS v. Pakistan, supra note 3, 42 ILM at 1303, para. 80.
29
SGS v. Pakistan, supra note 3, Procedural Order No. 2 (Oct. 16, 2002). Some controversy surrounds the author-
ity of ICSID tribunals to issue binding and enforceable provisional measures. CHRISTOPH H. SCHREUER, THE ICSID
CONVENTION: A COMMENTARY 757– 62 (2001). Still, it may be argued that the comparable language used in Article
47 of the ICSID Convention and Article 41 of the ICJ Statute might render the ICJ’s LaGrand Judgment relevant
for the purpose of ICSID as well. LaGrand (Ger. v. U.S.), Merits, 2001 ICJ REP. 466, 506, para. 109 ( June 27).
30
It may be noted that SGS argued, and the ICSID tribunal accepted, that it would not be able to bring its treaty
claims in the context of the Pakistani proceedings. SGS v. Pakistan, 42 ILM at 1308, para. 119, & 1316, para. 154.
31
Id. at 1315–16, paras. 146 –55.
32
Id. at 1316 –18, paras. 156 – 62. Article 9 authorized ICSID to settle disputes “with respect to investments between
a Contracting Party and an investor of the other Contracting Party.” See note 28 supra.
33
SGS v. Pakistan, supra note 3, 42 ILM at 1319 –21, paras. 166 –74. Article 11 provides: “Either Contracting Party
shall constantly guarantee the observance of the commitments it has entered into with respect to the investments
of the investors of the other Contracting Party.” Id. at 1318, para. 163. However, the tribunal held that the expansive
construction advocated by SGS—incorporating within the BIT the fulfillment of contractual obligations—would
2005] NOTES AND COMMENTS 841

upheld the Pakistani arbitrator’s exclusive jurisdiction over the contract claims. Since the
tribunal regarded the two claims as separate, it denied the need to coordinate between the
national and international proceedings that were adjudicating the different claims.

SGS v. Philippines

The third case in the trilogy stems from circumstances generally comparable to those of
SGS v. Pakistan. However, the conclusions of the ICSID arbitral tribunal in SGS v. Philippines
were radically different from those of its predecessor. As a result, considerable uncertainty
now shrouds the law governing parallel contract and treaty claims.
This ICSID case grew out of a dispute over the implementation of another SGS preshipment
inspection contract, this time with the government of the Philippines. The original contract
was signed in 1991, although its terms were extended on several occasions until its final expi-
ration in 2000. Notably, the 1991 contract contained a compromissory clause referring dis-
putes to the exclusive jurisdiction of the local Philippine courts. Still, in 2002, SGS chose to
bring its dispute with the host government over the balance of payments due to it under the
expired contract before an ICSID tribunal on the basis of Article VIII of the Philippines-Swiss
BIT (the BIT compromissory clause).34 The tribunal was thus faced with jurisdictional issues
similar to the ones presented before the Vivendi and SGS v. Pakistan tribunals: it had to deter-
mine the scope of its jurisdiction in light of the contractual compromissory clause and BIT
provisions (which were generally similar in their content to the parallel Pakistani-Swiss BIT
provisions).
The Philippines objected to the tribunal’s jurisdiction on several grounds, its main argu-
ment being that SGS’s claim was purely contractual (hence satisfying the Vivendi “essential
basis” test). In consequence, pursuant to the contractual compromissory clause, the claim
should have been directed to the local Philippine courts (which, arguably, are better situated
to adjudicate contract claims).35 SGS responded by asserting the independent existence of
its treaty claims notwithstanding their contractual origins.36 Furthermore, it contended that
the BIT umbrella clause (Article X(2)) had the effect of elevating SGS’s contract claims to
the international plane.37 At the same time, SGS also argued that the BIT compromissory
clause should be broadly construed so as to authorize the ICSID tribunal to address contract,
as well as treaty, claims.38 Finally, SGS argued that even if there were a jurisdictional overlap
between national and international proceedings, the jurisdiction of ICSID tribunals should
supersede that of domestic courts.39
Unlike its SGS v. Pakistan counterpart, the SGS v. Philippines tribunal accepted the investor’s
broad construction of the umbrella clause as encompassing an obligation to fulfill contrac-
tual obligations.40 Such an interpretation was supported in the eyes of the tribunal by the
plain language of Article X(2) and the investment protection purpose of the BIT. Signifi-
cantly, the SGS v. Philippines tribunal explicitly rejected as “unconvincing” the interpretive
construction of the umbrella clause offered by the SGS v. Pakistan tribunal.41 Hence, it

result in the imposition of unreasonable procedural and substantive burdens on host states. The tribunal was not
willing to assume, without clearer textual guidance, that this was the meaning intended by the drafters.
34
Agreement on the Promotion and Reciprocal Protection of Investments, Mar. 31, 1997, Phil.-Switz., Art. VIII,
quoted in SGS v. Philippines, supra note 4, para. 34. Article VIII provides the investor with a choice between three
dispute settlement procedures: national courts, an ICSID tribunal, and an ad hoc UNCITRAL arbitral tribunal.
35
SGS v. Philippines, supra note 4, paras. 52–56, 73–75.
36
Id., paras. 64, 85.
37
Id., paras. 65, 86. Article X(2) provides: “Each Contracting Party shall observe any obligation it has assumed
with regard to specific investments in its territory by investors of the other Contracting Party.” Id., para. 34.
38
Id., paras. 66, 87. The chapeau to Article VIII covers disputes “with respect to investments between a Contracting
Party and an investor of the other Contracting Party.”
39
Id., para. 60.
40
Id., paras. 116 –28.
41
Id., paras. 125–26.
842 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

seemed to have attributed little weight to the minor differences between the texts of the two
umbrella clauses.42
Furthermore, the tribunal held that the BIT compromissory clause (Article VIII) was suf-
ficiently broad to encompass both contract and treaty claims.43 Since excluding contract claims
per se from the jurisdiction of ICSID would lead to unnecessary claim splitting and jurisdictional
uncertainties, the tribunal opined that a broad construction of the BIT compromissory clause
would be preferable. Here, too, the SGS v. Philippines tribunal explicitly rejected the conclusions
of the SGS v. Pakistan tribunal on the scope of the Swiss-Pakistani compromissory clause (which
contained virtually identical language to that of the Swiss-Philippine BIT).44
After asserting its broad jurisdiction over both contract and treaty claims, the tribunal
moved to address the effects of the contractual compromissory clause—a question it
regarded as one of admissibility.45 Here a split occurred between the tribunal’s members:
The majority held that a contractual compromissory clause constitutes lex specialis and over-
rides interstate jurisdictional arrangements.46 As a result, it ruled that the tribunal “should
not exercise its jurisdiction over a contractual claim when the parties have already agreed
on how such a claim is to be resolved, and have done so exclusively.”47 Given the strong links
between the contract claim and the treaty claim (whose independent existence it doubted),
the majority held that it would be “inappropriate and premature” to address the treaty
claim before the contract claim had been adjudicated by the contractually designated
courts.48 It therefore decided to stay the ICSID arbitral proceedings until the contract claim
was sorted out.49
The dissenting arbitrator, Antonio Crivellaro, maintained that the BIT compromissory
clause, being lex posteriori, was designed to expand the range of jurisdictional options that the
investor could seize in the event of a dispute.50 The BIT thus had transformed the contractual
compromissory clause and entitled investors to bring their contract claims before ICSID. In
addition, he criticized the majority’s refusal to address SGS’s treaty claims until the contract
claims were resolved.51 Hence, Professor Crivellaro took the view that staying the proceedings
was unnecessary and that the tribunal should instead review the merits of all claims presented
by SGS.

The Joy Mining and Salini Cases

Two recent cases, issued after the SGS v. Philippines decision, leave intact the diver-
gence in ICSID jurisprudence, given their distinctive circumstances and limited theoretical

42
Id., para. 121 (referring in passing to some textual differences between the two clauses). Compare Swiss-Pakistani
BIT, Art. 11, supra note 33, with Swiss-Philippine BIT, Art. X(2), supra note 37. The minor variations in the texts
of the two clauses hardly explain the radically divergent outcomes of the two cases.
43
SGS v. Philippines, supra note 4, paras. 130 –35. For a similar holding, see Salini Costruttori S.p.A. v. Morocco,
Decision on Jurisdiction, ICSID No. ARB/00/4, 6 ICSID Rep. 400 (2004), 42 ILM 609, 623 (2003) ( July 31, 2001).
44
SGS v. Philippines, supra note 4, para. 134. Both clauses invested the ICSID tribunal with jurisdiction over “dis-
putes with respect to investments.”
45
Id., para. 154.
46
Id., paras. 139 – 43. It might also have been argued that the contractual compromissory clause constituted a
valid choice of procedure on the part of the investor under Article VIII of the BIT.
47
Id., para. 155.
48
Id., paras. 162– 63.
49
Id., para. 175. The majority grounded its decision to stay proceedings in its general powers under the ICSID
Arbitration Rules and the Washington Convention to “make orders required for the conduct of the proceeding.”
Id., para. 173.
50
SGS v. Philippines, supra note 4, Declaration of Antonio Crivellaro, paras. 2–7. Professor Crivellaro opined that
differences in the identities of the parties to the BIT and the contract rendered the lex specialis principle inapplicable.
Still, the third-party rights conferred by the BIT upon SGS enabled it to invoke the lex posteriori argument. Id., paras.
9 –10. The lex posteriori argument, however, is problematic, given the renewal of the contract after the conclusion
of the BIT. Cf. Joost Pauwelyn, Bridging Fragmentation and Unity: International Law as a Universe of Inter-Connected Islands,
25 MICH. J. INT’L L. 903, 908 (2004) (the lex posteriori argument does not always work in international law).
51
SGS v. Philippines, Declaration of Prof. Crivellaro, supra note 50, para. 11.
2005] NOTES AND COMMENTS 843

discussion. In Joy Mining, an ICSID tribunal, presented with a BIT claim in the face of an
incompatible contractual clause on exclusive jurisdiction (ultimately referring contractual
disputes to UNCITRAL arbitration in Cairo), decided to reject the claim on other grounds,
primarily the noninvestment nature of the original transaction, which excluded the dispute
from the purview of both the BIT compromissory clause and ICSID’s constitutive treaty.52 Still,
the tribunal opined in obiter dicta that the dispute at hand, which involved the post-trans-
action release of bank guarantees, was purely contractual and did not fall under the scope
of the BIT. The tribunal adopted, to that end, SGS v. Pakistan’s restrictive view on the scope
of umbrella clauses.53 On that basis, it held that the contractual compromissory clause would
have overridden the BIT compromissory clause in any event.54
In Salini v. Jordan, a case involving similar circumstances to those discussed in SGS v. Phil-
ippines (a dispute over post-transaction outstanding debts), an ICSID panel once again upheld
the overriding nature of a contractual compromissory clause that provided for the exclusive
jurisdiction of domestic Jordanian courts over contract claims.55 The tribunal opined that
it was unnecessary in these circumstances to determine whether the BIT compromissory
clause, which provided the investor with a choice between national and ICSID proceedings,
also encompassed contract claims.56 Furthermore, it held that the narrow language of the
umbrella clause found in the Italian-Jordanian BIT distinguished it from the clause reviewed
in SGS v. Philippines.57 Thus, the tribunal held itself incompetent to address contract claims
but retained competence with respect to the investor’s few remaining treaty claims.58

II. CONTEXTUALIZING THE TENSIONS BETWEEN CONTRACT AND TREATY CLAIMS

Mapping the Differences

The surveyed contract claims versus treaty claims cases reveal major differences of opinion
between ICSID arbitrators over the role of BITs, the functions of ICSID tribunals, and the
relationship between national and international dispute settlement procedures.
Specifically, three issues remain unsettled:
(1) The scope of umbrella clauses. Whereas SGS v. Pakistan and Joy Mining applied, in
effect, an interpretive presumption against the incorporation of contract claims within
the substantive scope of protection offered by the respective BIT umbrella clauses, SGS
v. Philippines resorted to an alternative presumption and held that compliance with con-
tractual obligations (but not the very formulation of these obligations) may be governed
by the BIT’s umbrella clause.
(2) The jurisdiction of ICSID tribunals over contract claims. Whereas SGS v. Pakistan stands
for a restrictive reading of ICSID’s jurisdiction over non-BIT claims, SGS v. Philippines

52
Joy Mining, supra note 5, para. 63.
53
Id., paras. 77– 82 (adopting the dicta of the SGS v. Pakistan tribunal on the importance of the nonprominent
location of the umbrella clause in the BIT and on the illogicality of a construction transforming all contract claims
into treaty claims). Notably, the language of the umbrella clause in the UK-Egypt BIT addressed in Joy Mining is
virtually identical to that of the umbrella clause in the Swiss-Philippine BIT discussed in SGS v. Philippines. Agreement
for the Promotion and Protection of Investments, June 11, 1975, Egypt-UK, Art. 2(2), Cmnd. 6141, 14 ILM 1470,
1471 (1975) (“Each Contracting Party shall observe any obligation it may have entered into with regard to invest-
ments of nationals or companies of the other Contracting Party.”). Hence, again, the difference in outcome must
be explained in legal policy terms.
54
Joy Mining, supra note 5, paras. 89 –91.
55
Salini, supra note 6, paras. 93–96.
56
Id., paras. 97–101.
57
Id., paras. 126 –27. Indeed, Article 2(4) of the Italian-Jordanian BIT uses different language from that of the
comparable provisions in the umbrella clauses of the Swiss-Philippine and Swiss-Pakistani BITs. Agreement on the
Promotion and Protection of Investments, July 21, 1999, Italy-Jordan, Art. 2(4), quoted in id., para. 66 (“Each Con-
tracting Party shall create and maintain in its territory a legal framework apt to guarantee the investors the continuity
of legal treatment, including the compliance, in good faith, of all undertakings assumed with regard to each specific
investor.”). For the text of the provisions in the umbrella clauses of the Swiss-Philippine and Swiss-Pakistani BITs,
see supra notes 37 and 33, respectively.
58
Salini, supra note 6, para. 166.
844 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

embraced a broad reading of the relevant BIT compromissory clause in a way that
encompasses both contract and treaty claims.
(3) The division of labor between national and international proceedings. The Vivendi, SGS
v. Pakistan, and Salini decisions accepted the parallel pendency of contract and treaty
claims before national and international judicial forums. Nonetheless, the majority in
SGS v. Philippines decided to stay the arbitration proceedings with respect to the treaty
claim until the related contract claim was settled, thus opting for greater interforum
coordination.

Integrationist vs. Disintegrationist Methodologies

Arguably, these variations in outcome are hardly coincidental or circumstance dependent.

In particular, they cannot be attributed to the minor textual differences between the relevant
legal instruments—a point underscored by the explicit rejection by the SGS v. Philippines tri-
bunal of the legal analysis offered by its predecessor in SGS v. Pakistan (although, obviously,
such differences might come into play in some cases). Rather, these differences derive, to
my mind, from an ideological divide between international judges and arbitrators over how
best to address problems created by the multiplicity of legal sources and procedures impli-
cated in contemporary investment disputes. One approach, epitomized by the SGS v. Pakistan
decision, may be described as disintegrationist. This approach seeks to resolve tensions
between overlapping norms and procedures through rules of exclusion that draw lines of
separation between legal regimes and judicial proceedings. Thus, it supports the construc-
tion of BITs as self-contained instruments, providing a closed list of rights and obligations,
and entailing discrete dispute settlement procedures whose jurisdiction remains limited to
BIT claims. By emphasizing the conceptual differences between contract and treaty claims
stemming from their separate legal foundations,59 the disintegrationist position downplays
practical problems arising from normative conflicts and parallel judicial proceedings.
One may note the link between the disintegrationist approach, as applied to contract and
treaty claims, and legal dualism, which also utilizes rules of exclusion to separate national law
from international law. In fact, the proposition that national and international courts operate
on distinct legal levels facilitates the separation of contract from treaty claims,60 and negates
the conditions for jurisdictional competition.61 This obviates, in turn, the need to apply rules
that regulate jurisdictional competition, such as lis alibi pendens and res judicata, to judicial
proceedings taking place concurrently at the national and international levels.
By contrast, the SGS v. Philippines decision seems to stand for the diametric integrationist
methodology. This approach, which can be characterized as pragmatic or problem solving
in nature, seeks to harmonize overlapping norms and procedures. It acknowledges the effec-
tive relationships between contract and treaty claims, as well as the undesirability— even
impossibility at times— of addressing them separately. The integrationist approach thus sup-
ports a flexible or open-textured reading of BITs as encompassing a broad range of rights
and obligations (including obligations to respect contracts), and advocates expanding the
jurisdiction of ICSID tribunals in a way that would authorize them to resolve the entire gamut

59
See Azurix Corp. v. Mexico, Decision on Jurisdiction, No. ARB/01/12, 43 ILM 262, 277 (2004) (Dec. 28, 2003);
Loewen Group, Inc. v. United States, ICSID No. ARB(AF)/98/3, 42 ILM 811, 819, 833 (2003) ( June 26, 2003); Wena
Hotels Ltd v. Egypt, Annulment Proceeding, ICSID No. ARB/98/4, 41 ILM 933, 940 (2002) ( Jan. 28, 2002) (not
available on the ICSID Web site); cf. Eureko, supra note 26, paras. 112–13; Occidental, supra note 26, paras. 50 –52; CME
Czech Republic B.V. v. Czech Republic, Partial Award, para. 410 (UNCITRAL Sept. 13, 2001), available at ⬍http://
www2004.mfcr.cz/static/Arbitraz/en/PartialAward.pdf⬎; Anaconda-Iran, Inc. v. Iran, 13 Iran-U.S. Cl. Trib. Rep.
199, 224 (1988).
60
Cf. Certain German Interests in Polish Upper Silesia (Ger. v. Pol.), 1926 PCIJ (ser. A) No. 7, at 19 (“From the
standpoint of International Law and of the Court which is its organ, municipal laws are merely facts which express
the will and constitute the activities of States, in the same manner as do legal decisions or administrative measures.”).
61
Cf. Certain German Interests in Polish Upper Silesia (Ger. v. Pol.), Jurisdiction, 1925 PCIJ (ser. A) No. 6, at
20 (PCIJ and the mixed arbitral tribunals, as well as the Polish Civil Tribunal, “are not courts of the same character”).
2005] NOTES AND COMMENTS 845

of grievances relating to a specific investment. Thus, integrationism may be described as cog-

nizant of legal pluralism62—the reality in which natural and legal persons are subject to a
range of multisourced rights and obligations—and the possibility of jurisdictional competition
between national and international courts over related claims. In light of this perspective, it
is not surprising that the SGS v. Philippines tribunal was willing to exercise judicial comity—a
principle that alleviates jurisdictional competition—vis-à-vis the domestic Philippine courts.
I would offer two additional observations on the trilogy of ICSID cases at this stage: First,
even the SGS v. Philippines tribunal upheld the separate legal existence of contract and treaty
claims, viewing them as nonidentical in nature. Hence, in the eyes of all ICSID tribunals par-
allel contract and treaty claims do not meet the “same issues” standard of similarity between
competing claims that would mandate the introduction of strict jurisdictional rules regulat-
ing competition, such as lis alibi pendens and res judicata.63 Second, there are certain similar-
ities between the debate on the interplay between contract and treaty claims and discussions
on the effects of international investments instruments on the traditional doctrine of exhaus-
tion of local remedies. Whereas some tribunals have held that a presumption exists in favor
of the continued need to seize domestic courts first—thus facilitating some interforum coor-
dination64— other tribunals have tended to dispense with this requirement altogether,
emphasizing the self-contained nature of international investment dispute settlement pro-
cedures.65 Furthermore, it has been alleged that upholding a contractual clause referring
disputes to domestic courts might be analogous in its effects to reintroducing an exhaustion-
of-local-remedies rule into some investment protection regimes.66

III. IDENTIFYING COMPARABLE TENSIONS

Arguably, the differences of opinion over substantive law and jurisdictional overlap
revealed in the ICSID contract claim vs. treaty claim cases are not unique to investment dis-
putes involving competing claims under national and international law, and comparable ten-
sions might also arise in cases involving competing international investment claims. For exam-
ple, in Lauder/CME, two separate claims based on virtually identical facts were instituted
against the Czech Republic by Ronald Lauder, an American investor, and a Lauder-con-
trolled Dutch company.67 The first claim, brought on the basis of a Czech-U.S. BIT, was arbi-
trated by an UNCITRAL tribunal in London, while the second claim, brought on the basis
of a Dutch-Czech BIT, was arbitrated in parallel by an UNCITRAL tribunal in Stockholm.
Despite the close factual and legal links between the two claims, both tribunals embraced a
disintegrationist view of the ostensible normative and procedural overlaps: they asserted the
distinctive nature of their proceedings, relying on formal differences in the identities of the
claimants and the legal bases of the claims (which invoked two separate, though similarly

62
See Gunther Teubner, ‘Global Bukowina’: Legal Pluralism in the World Society, in GLOBAL LAW WITHOUT A STATE
3, 11–15 (Gunther Teubner ed., 1997); Gunther Teubner, Breaking Frames: The Global Interplay of Legal and Social
Systems, 45 AM. J. COMP. L. 149, 157 (1997); Klaus Günther, Legal Pluralism and the Universal Code of Legality:
Globalisation as a Problem of Legal Theory (2003), at ⬍http://www.law.nyu.edu/clppt/program2003/readings/
gunther.pdf⬎.
63
See SHANY, supra note 18, at 23–28.
64
See Loewen, supra note 59, 42 ILM at 837, paras. 160 – 62. According to the ICJ, too, waiver of the requirement
to exhaust local remedies cannot be presumed. ELSI, 1989 ICJ REP. at 42.
65
For example, the Iran-U.S. Claims Tribunal has construed the silence of the Algiers Declaration on the Set-
tlement of Claims on the matter as indicative of the absence of an exhaustion-of-local-remedies requirement. Amoco
Int’l Fin. Corp. v. Iran, 15 Iran-U.S. Cl. Trib. Rep. 189, 197 (1987); see also William S. Dodge, National Courts and
International Arbitration: Exhaustion of Remedies and Res Judicata Under Chapter Eleven of NAFTA, 23 HASTINGS INT’L &
COMP. L. REV. 357, 373–76 (2000).
66
See, e.g., Vivendi I, supra note 21, 40 ILM at 444, para. 81.
67
In addition, a third set of proceedings was initiated by a local firm, controlled by Lauder and CME, before the
domestic courts of the Czech Republic.
846 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

worded, BITs).68 They therefore allowed both sets of proceedings to go forward simulta-
neously, leading to two contradictory awards, rendered days apart, on the liability of the
Czech government under the respective BITs.69
Furthermore, one can perhaps identify analogous tensions between competing claims
brought on the basis of parallel international legal instruments in cases arising entirely out-
side the field of international investment law. Since international tribunals dealing with such
cases must also contend with parallel legal regimes and dispute settlement procedures, their
job might involve choices between disintegrationist and integrationist strategies of coordi-
nation, which resemble the choices made by the surveyed ICSID tribunals. Thus, although
the ICSID cases are normally characterized by a unique configuration of legal relations— e.g.,
the parallel coexistence of interstate and state-investor legal arrangements—and the avail-
ability of domestic forums, which might serve as a jurisdictional alternative to international
tribunals, some policy considerations underlying the choice of methodology might be similar
(e.g., promoting the welfare of a specific treaty regime or coordinating between the parties’
entire gamut of legal interests). In fact, the willingness of the SGS v. Philippines tribunal to
cite with approval a decision of an arbitral tribunal under the UN Convention on the Law
of the Sea (LOS Convention) in the MOX Plant case70—a prime example of a multifaceted
international dispute, involving multiple interstate proceedings, which is discussed imme-
diately below—may be indicative of the comparable nature of some interpretive challenges
that widely different international courts and tribunals face.
The MOX Plant litigation derived from Ireland’s objections to the approval and operation
by the United Kingdom of a mixed oxide (MOX) fuel-processing plant at Sellafield, England.
The objections were eventually formulated as legal claims based on a regional environmental
convention (the Convention for the Protection of the Marine Environment of the North-East
Atlantic, or OSPAR),71 the LOS Convention, European Union law,72 and English law.73 These
claims were then presented before a variety of international forums: an arbitration tribunal
under the OSPAR Convention, the International Tribunal for the Law of the Sea (ITLOS)
(request for provisional remedies), an LOS Convention arbitral tribunal, and the European
Court of Justice (ECJ) (cases brought or expected to be brought against Ireland and the
United Kingdom by the European Commission).74
The international proceedings directly brought by Ireland against the United Kingdom
relate specifically to our subject, as they reveal inconsistent integrationist and disintegrationist
choices analogous to the choices made by the surveyed ICSID tribunals. The OSPAR arbitra-
tion tribunal, which addressed Ireland’s request for access to environmental information,

68
See CME Czech Republic, supra note 59, para. 412 (“There is also no abuse of the Treaty regime by Mr. Lauder
in bringing virtually identical claims under two separate Treaties.”) (emphasis added). For a concise statement of the
two BIT claims, see id., para. 24; Lauder v. Czech Republic, para. 193 (UNCITRAL Sept. 3, 2001), available at ⬍http://
www2004.mfcr.cz/static/Arbitraz/en/FinalAward.pdf⬎.
69
Lauder, supra note 68; CME Czech Republic, supra note 59. The separate nature of the two proceedings was con-
firmed by the Swedish courts, which rejected a motion for annulment of the Stockholm award. Czech Republic v.
CME Czech Republic B.V., 42 ILM 919 (2003) (Svea Ct. App. May 15, 2003).
70
SGS v. Philippines, supra note 4, para. 171. The case it cited is MOX Plant (Ir. v. UK), Order No. 3, 42 ILM
1187, 1190 (2003) (Perm. Ct. Arb. June 24, 2003) [hereinafter LOS Convention MOX Plant Order].
71
Convention for the Protection of the Marine Environment of the North-East Atlantic, Sept. 22, 1992, 32 ILM
1069 (1992) [hereinafter OSPAR].
72
In particular, Directive 90/313/EEC on the Freedom of Access to Information on the Environment, 1990 O.J.
(L 158) 56, since repealed by Directive 2003/4/EC on Public Access to Environmental Information, 2003 O.J. (L
41) 26.
73
The claim in England relied in particular upon the Environmental Information Regulations (1992), SI 1992/
3240, 1999 ENVT’L L. REP. 447. On January 1, 2005, the 1992 regulations were replaced by Environmental Infor-
mation Regulations (2004), SI 2004/3391, available at ⬍http://www.opsi.gov.uk/si/si2004/draft/20040331.htm⬎.
74
Case C– 469/03, Commission v. Ireland, Notice of Action (Nov. 30, 2003), 2004 O.J. (C 7) 24 (the case is still
pending before the ECJ); Honor Mahony, UK Could Face Legal Action over Nuclear Site, EUOBSERVER.COM, Sept. 3,
2004, available in LEXIS, News Library, EU News File. Greenpeace brought another case against the British govern-
ment before the domestic English courts.
2005] NOTES AND COMMENTS 847

confirmed the separate existence of OSPAR and parallel EU law standards.75 Furthermore,
the tribunal held that its jurisdiction encompassed only claims under OSPAR and that it could
apply only OSPAR law, despite the reference in Article 32(6)(a) of the Convention—the
OSPAR compromissory clause—to the tribunal’s duty to decide disputes according to the
“rules of international law” and the OSPAR Convention.76 Consequently, it saw no impedi-
ment to the pursuit of multiple proceedings before OSPAR and non-OSPAR forums (on the
basis of non-OSPAR law).77
I believe that some parallels can be drawn between the OSPAR award and the SGS v. Paki-
stan decision: in both cases, the tribunal adopted a restrictive construction of its jurisdiction
and applicable law (notwithstanding the broad language used in some of the relevant
clauses), excluding, in effect, the parties’ ability to invoke parallel international instruments
that did not form part of the governing treaty regime; multiple proceedings were also not
viewed as a legal problem in both cases, given the conceptual differences between their under-
lying legal bases.
In advancing the self-contained characteristics of the OSPAR Convention, the OSPAR arbi-
tral tribunal relied upon an ITLOS decision issued pursuant to Ireland’s request for provi-
sional measures in the proceedings Ireland had initiated under the LOS Convention regard-
ing alleged deficiencies in the establishment and operation of the Sellafield plant.78 The
ITLOS decision rejected the UK objection to the jurisdiction of bodies set up under the LOS
Convention, an objection that invoked compromissory clauses contained in other interna-
tional instruments (i.e., OSPAR79 and the EC Treaty80), which the tribunal dismissed as irrel-
evant.81 In doing so, ITLOS employed a disintegrationist methodology, emphasizing the con-
ceptual separation between legal instruments belonging to distinct legal regimes:

[T]he dispute settlement procedures under the OSPAR Convention, the EC Treaty and
the Euratom Treaty deal with disputes concerning the interpretation or application of
those agreements, and not with disputes arising under the [LOS] Convention.

75
Access to Information Under Article 9 of the OSPAR Convention (Ir. v. UK), para. 142, available at ⬍http://
www.pca-cpa.org⬎ (Perm. Ct. Arb. July 2, 2003) [hereinafter OSPAR Award]; see Ted L. McDorman, Case Report:
Access to Information Under Article 9 of the OSPAR Convention (Ireland v. United Kingdom), in 98 AJIL 330 (2004).
In actuality, the tribunal displayed reluctance to utilize non-OSPAR sources, even as interpretive aids. See Yuval Shany,
The First MOX Plant Award: Coordinating Between Competing Environmental Regimes and Dispute Settlement Procedures, 17
LEIDEN J. INT’L L. 815, 822 (2004).
76
OSPAR Award, supra note 75, paras. 85, 143. But see id., Dissenting Opinion of Gavan Griffith, QC, para. 2. Inter-
estingly, the tribunal did not explicitly address the significance of the OSPAR jurisdictional clause. OSPAR, supra note
71, Art. 32(1) (“Any disputes between Contracting Parties relating to the interpretation or application of the Con-
vention, which cannot be settled otherwise by the Contracting Parties concerned, . . . shall at the request of any of
those Contracting Parties, be submitted to arbitration under the conditions laid down in this Article.”). For a dis-
cussion of the difference between jurisdiction and applicable law in the context of the WTO dispute settlement
mechanism, see JOOST PAUWELYN, CONFLICT OF NORMS IN PUBLIC INTERNATIONAL LAW: HOW WTO LAW RELATES
TO OTHER RULES OF INTERNATIONAL LAW (2003).
77
OSPAR Award, supra note 75, para. 143.
78
MOX Plant (Ir. v. UK), Provisional Measures Order, Case No. 10 (ITLOS Dec. 3, 2001), available at ⬍http://
www.itlos.org⬎ [hereinafter ITLOS MOX Plant]. The case was cited by the OSPAR tribunal in OSPAR Award, supra
note 75, para. 141.
79
OSPAR Art. 32(1), supra note 76.
80
TREATY ESTABLISHING THE EUROPEAN COMMUNITY, Mar. 25, 1957, 298 UNTS 11, as amended by TREATY OF NICE,
Feb. 26, 2001, 2001 O.J. (C 80) 1, consolidated version, Dec. 24, 2002, 2002 O.J. (C 325) 33, Art. 292 [hereinafter
EC TREATY] (“Member States undertake not to submit a dispute concerning the interpretation or application of
this Treaty to any method of settlement other than those provided for therein.”).
81
The United Nations Convention on the Law of the Sea provides that law of the sea disputes should be adju-
dicated, as a rule, by the ICJ, ITLOS, an arbitration tribunal, or a special arbitration tribunal. United Nations Con-
vention on the Law of the Sea, opened for signature Dec. 10, 1982, Art. 287, 1833 UNTS 397 [hereinafter LOS Con-
vention]. Still, Articles 281– 82 of the LOS Convention provide that the dispute settlement bodies operating under
the Convention retain only residual jurisdiction, which is subject to other arrangements entered into by the parties.
For discussion of the nature of these jurisdictional provisions, see SHANY, supra note 18, at 201– 08; Bernard H.
Oxman, Complementary Agreements and Compulsory Jurisdiction, 95 AJIL 277 (2001).
848 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

. . . [E]ven if the OSPAR Convention, the EC Treaty and the Euratom Treaty contain
rights or obligations similar to or identical with the rights or obligations set out in the
Convention, the rights and obligations under those agreements have a separate exis-
tence from those under the Convention.82

Still, a radically different approach was adopted by an arbitral tribunal in the next stage
of the LOS Convention MOX Plant proceedings: although the arbitral tribunal opined that
some provisions of the LOS Convention might not be regulated by parallel EU law provisions
(since EU law might incorporate only part of the LOS Convention’s provisions),83 it held that
“there is no certainty that any such provisions would in fact give rise to a self-contained and
distinct dispute capable of being resolved by the Tribunal.”84 That is, separate LOS Conven-
tion and EU claims may not exist.85 Since the EU claims were subject to the exclusive juris-
diction of the ECJ,86 the tribunal decided to stay proceedings over any remaining claims
under the LOS Convention until the ECJ proceedings were sorted out, citing considerations
of mutual respect, comity, propriety, and effectiveness.87
There seem to be significant points of similarity between this decision and the SGS v. Phil-
ippines decision: In both cases, the tribunal accepted the possibility of substantive overlaps
between separate legal proceedings notwithstanding the reliance upon different instru-
ments, and adopted a strategy to regulate jurisdictional competition, i.e., discretionary stay
of proceedings, designed to mitigate possible jurisdictional conflicts.

IV. CONCLUSION

Recent ICSID cases on the relations between contract and treaty claims have introduced
considerable confusion into the world of investment law. Consequently, it is less than clear
at present whether BITs typically cover contract-performance claims or, alternatively, autho-
rize international arbitration tribunals to review contract claims. The relations between juris-
dictional clauses governing contract and treaty claims and the judicial proceedings that they
entail are also uncertain.
To my mind, the conflicting jurisprudence of ICSID tribunals over these issues cannot be
attributed to the relatively minor textual differences between the BITs applicable to those
cases but, rather, to an ideological chasm between integrationist and disintegrationist
approaches to normative and procedural overlaps. While these conflicts seem particularly
conspicuous in the field of international investment law— given the almost inevitable mul-
tilayered makeup of investment protection instruments and the propensity of the parties

82
ITLOS MOX Plant, supra note 78, paras. 49 –50. Note, however, that jurisdictional decisions rendered in the
context of provisional measures requests are not final, and are subject to a rather flexible standard of prima facie
jurisdiction. LOS Convention, supra note 81, Art. 290(1). For a comparable decision on provisional measures, see
Southern Bluefin Tuna (Austl. v. Japan; N.Z. v. Japan), Provisional Measures Order, Case Nos. 3, 4, 38 ILM 1624,
1632 (1999) (ITLOS Aug. 27, 1999).
83
LOS Convention MOX Plant Order, supra note 70, 42 ILM at 1190, paras. 20 –22. For a discussion of the status
of the LOS Convention under EU law, see Robin Churchill & Joanne Scott, The MOX Plant Litigation: The First Half-
Life, 53 INT’L & COMP. L.Q. 643 (2004).
84
LOS Convention MOX Plant Order, 42 ILM at 1191, para. 26.
85
In contradistinction, the arbitral tribunal held that the LOS Convention and OSPAR claims are clearly separable.
Id. at 1189 –90, para. 19. For another example of an integrationist view that seeks to coordinate between the LOS
Convention and regional fisheries instruments, see Southern Bluefin Tuna (Austl. v. Japan; N.Z. v. Japan), Juris-
diction and Admissibility, 39 ILM 1359, 1388, para. 54 (2000) (LOS Convention arb. trib. Aug. 4, 2000) (“To find
that, in this case, there is a dispute actually arising under UNCLOS which is distinct from the dispute that arose
under the CCSBT would be artificial.”); see Barbara Kwiatkowska, Case Report: Southern Bluefin Tuna (Australia
and New Zealand v. Japan), Jurisdiction and Admissibility, in 95 AJIL 162 (2001).
86
EC TREATY Art. 292; see also TREATY ESTABLISHING THE EUROPEAN ATOMIC ENERGY COMMUNITY (EURATOM),
Mar. 25, 1957, Art. 193, 298 UNTS 167.
87
LOS Convention MOX Plant Order, 42 ILM at 1191, para. 29.
2005] NOTES AND COMMENTS 849

to bring their contract and treaty claims before both national and international dispute
settlement mechanisms—somewhat analogous conflicts might occur in other areas of
international law. In fact, contemporary debates over the “fragmentation of international
law”88 bring to light what might be described as comparable tensions between promotion
of the systemic features of general international law and the coherence of specific treaty
regimes. There, too, a choice emerges between the pragmatic need to reconcile multi-
sourced norms and competing procedures, and the doctrinal convenience of excluding
“external” norms, that is, norms originating outside the relevant treaty regime.89
This ideological choice involves difficult trade-offs. Striving for interregime integration and
harmony helps protect and promote the coherence and effectiveness of the entire array of
multifaceted investment protection norms. But, to sustain the long-term workability and
legitimacy of the overall “system,” integrationists might have to sacrifice the full attainment
of the goals of specific treaty regimes (e.g., BITs). At the same time, the disintegrationist
approach may be understood as expressing a preference for the optimal attainment of the
specific objectives of a particular regime over the indefinite objectives of the incoherent “sys-
tem” of investment protection norms. A strong, unified body of norms, applied by an effective
procedure (unencumbered by the need to apply unfamiliar norms and regulate its relation-
ships to parallel procedures), may thus be preferable to an unrealistically comprehensive
approach to international investment law.
This ideological choice also entails institutional repercussions. Even if we accept the prop-
osition that the coherence of international investment law has an important pragmatic value,
the question arises: Who should fix the problems associated with interregime normative and
jurisdictional overlaps, adjudicators or lawmakers? While integrationism encourages arbitra-
tors (or judges) to harmonize overlapping texts, disintegrationism might suggest that states,
international organizations, or parties to investment contracts are better situated to reconcile
normative and jurisdictional conflicts. Clearly, distinct theoretical and practical advantages
and disadvantages could be associated with each of these alternatives (e.g., the ability of adju-
dicators to resolve conflicts in real time, fears that adjudicators might exceed their mandate
and resort to judicial legislation, the superior capabilities of treaty makers to consider future
developments, etc.).
It is beyond the scope of this Comment to evaluate fully, and certainly to settle, the ideo-
logical dispute between the integrationist and disintegrationist camps, and their numerous
implications. However, I would propose that two general principles of law— comity and abus
de droit— could apply to all international judicial proceedings, including international invest-
ment law cases. These principles may assist in mitigating the tensions between competing
legal claims without requiring international judges or arbitrators to renounce their basic posi-
tions on the self-contained or open-textured nature of the governing treaty regime. In fact,
these principles can be viewed as “soft” integrationist tools that serve a pragmatic need for
coordination between different regimes without necessarily renouncing the primacy of the
governing regime’s objectives. Specifically, they could help ICSID tribunals to coordinate con-
tract and treaty claims, yet preserve their allegiance to the objectives of the ICSID Convention
and relevant BITs.
The principle of judicial comity, which some ICSID arbitrators regard as inherent in the
exercise of judicial powers,90 can authorize international courts to regulate their procedures

88
See, for example, the work of the ILC on the topic. International Law Commission, Report on the Work of
Its Fifty-sixth Session, ch. X, UN GAOR, 59th Sess., Supp. No. 10, at 281, UN Doc. A/59/10 (2004). See also a recent
special edition of a leading international law journal, which was dedicated to the topic. Symposium, Diversity or
Cacophony?: New Sources of Norms in International Law, 25 MICH. J. INT’L L. 845 (2004).
89
See generally Gerhard Hafner, Pros and Cons Ensuing from Fragmentation of International Law, 25 MICH. J. INT’L L.
849 (2004); see also Pauwelyn, supra note 50, at 904.
90
S. Pacific Props. (Middle East) v. Egypt, ICSID ARB/84/3, Decision on Jurisdiction, 3 ICSID Rep. 112, 129 (1995)
(Nov. 27, 1985); SGS v. Philippines, supra note 4, para. 171 (“[I]nternational tribunals have a certain flexibility in
850 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 99:835

in ways conducive to the consideration of parallel proceedings before national judicial bodies
or other international tribunals. Courts may thus stay their proceedings if they deem it to
be just and expedient so as to reduce the parties’ procedural burdens (e.g., the need to con-
duct two simultaneous litigations) or to facilitate coordination between multiple judicial deci-
sions. By relying upon the discretionary doctrine of comity, tribunals can evade determining
the precise nature of the relationships between the related proceedings and whether to apply
rigid rules governing jurisdictional competition (e.g., lis alibi pendens or res judicata). The deci-
sions to stay proceedings in SGS v. Philippines and the Convention MOX Plant arbitrations
until the conclusion of the parallel litigation seem to be compatible with this principle.
Furthermore, judicial comity may encourage courts to consider the factual and legal find-
ings of other courts that have addressed related matters, involving the same parties. The prin-
ciple thus encourages, but does not compel, interregime harmonization. The decisions in
SGS v. Philippines and the LOS Convention MOX Plant arbitrations, which envision reliance
upon the decisions of parallel procedures (the Philippine courts and the ECJ, respectively),
are consistent with this notion, too.91
Another useful standard may be abus de droit, a well-recognized principle of international
law92 that can enable courts to restrict bad faith maneuvering among overlapping jurisdic-
tions. Hence, for example, certain recourses to international arbitration in breach of a con-
tractual compromissory clause might be deemed illegitimate even if, formally speaking, the
international tribunal is competent to adjudicate the claim.93 I suggest that the allusion to

dealing with questions of competing forums.”). It is also possible to rely upon “general powers” provisions found
in the constitutive instruments of several international courts and tribunals. ICSID Convention, supra note 1, Art.
44; LOS Convention, supra note 81, Annex VII, Art. 5 (Arbitration Rules); Understanding on Rules and Procedures
Governing the Settlement of Disputes, Annex 2 to Marrakesh Agreement Establishing the World Trade Organi-
zation, Apr. 15, 1994, Art. 12.1, 33 ILM 1226 (1994); ICSID Rules of Procedure for Arbitration Proceedings, as
amended Sept. 29, 2002, Art. 19, available at ⬍http://www.worldbank.org/icsid/index.html⬎; see also SHANY, supra
note 18, at 260 – 66.
91
See Administration of Prince von Pless (Ger. v. Pol.), Preliminary Objection, 1933 PCIJ (ser. A/B) No. 52, at
16 (Feb. 4) (“[I]t will certainly be an advantage to the Court . . . to be acquainted with the final decisions of the
Supreme Polish Administrative Tribunal upon the appeals brought by the Prince von Pless and now pending before
that Tribunal; . . . the Court must therefore arrange its procedure so as to ensure that this will be possible.”).
92
See, e.g., Fisheries (UK v. Nor.), 1951 ICJ REP. 116, 142 (Dec. 18); Corfu Channel (UK v. Alb.), 1949 ICJ REP.
4, 46 (Dec. 15) (Alvarez, J., sep. op.); Oscar Chinn (UK/Belg.), 1934 PCIJ (ser. A/B) No. 63, at 86 (Dec. 12); Free
Zones of Upper Savoy and the District of Gex (Fr./Switz.), 1932 PCIJ (ser. A/B) No. 46, at 167 ( June 7); Certain
German Interests in Polish Upper Silesia, 1926 PCIJ (ser. A) No. 7, at 30 (May 25); Fur Seal Deal (Gr. Brit. v. U.S.),
1 JOHN BASSETT MOORE, HISTORY AND DIGEST OF THE INTERNATIONAL ARBITRATIONS TO WHICH THE UNITED STATES
HAS BEEN A PARTY 755, 889 –90 (1898); BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL
COURTS AND TRIBUNALS 121 (1987).
93
Compare ‘Camouco’ (Pan. v. Fr.), Prompt Release, Case No. 5, 39 ILM 666, 690 (2000) (ITLOS Feb. 7, 2000)
(Anderson, J., dissenting), stating:
It must be unprecedented for the same issue to be submitted in quick succession first to a national court of
appeal and then to an international tribunal, and for the issue to be actually pending before the two instances
at the same time. This situation is surely undesirable and not to be encouraged. It smacks of “forum hopping”
and hardly makes for the efficient administration of justice.
See also id. at 696 (Vukas, J., dissenting).
The prompt-release-of-vessels provisions of the LOS Convention, however, seem to encourage intervention by
ITLOS in domestic proceedings, as they introduce a strict time frame for resort to that tribunal and use language
suggestive of its authority to review domestic decisions. Article 292 of the LOS Convention, supra note 81, provides
in pertinent part:
1. Where the authorities of a State Party have detained a vessel flying the flag of another State Party and
it is alleged that the detaining State has not complied with the provisions of this Convention for the prompt
release of the vessel or its crew upon the posting of a reasonable bond or other financial security, the question
of release from detention may be submitted to any court or tribunal agreed upon by the parties or, failing such
agreement within 10 days from the time of detention, to a court or tribunal accepted by the detaining State
under article 287 or to the International Tribunal for the Law of the Sea, unless the parties otherwise agree.
....
3. The court or tribunal shall deal without delay with the application for release and shall deal only with
the question of release, without prejudice to the merits of any case before the appropriate domestic forum against the vessel,
its owner or its crew. (emphasis added)
2005] NOTES AND COMMENTS 851

admissibility in SGS v. Philippines as the proper framework for discussing the relevance of the
contractual compromissory clause can also be understood in this light.
Although these pragmatic jurisdiction-regulating principles cannot be viewed as panaceas
for the problems associated with international investment disputes presenting parallel con-
tract and treaty claims, they can serve to bypass some of the intractable ideological differences
that characterize these cases. Hence, they may constitute modest building blocks in future
attempts to bring order into the increasingly disorganized world of international investment
law and dispute settlement procedures.

Indeed, in a few prompt-release-of-vessels cases, the majority in ITLOS upheld its jurisdiction to address the claim
regardless of the state or outcome of the domestic proceedings. ‘Volga’ (Russ. v. Austl.), Prompt Release, Case No.
11, 42 ILM 159 (2003) (ITLOS Dec. 23, 2002); ‘Monte Confurco’ (Sey. v. Fr.), Prompt Release, Case No. 6 (ITLOS
Dec. 18, 2000), available at ⬍http://www.itlos.org⬎; ‘Camouco,’ supra; see also Bernard H. Oxman & Vincent P. Bantz,
Case Report: The “Camouco” (Panama v. France) ( Judgment), in 94 AJIL 713 (2000).