Whether Multilateral Investment Court Awards Could Be Enforced Using the ICSID Convention, the New York Convention and/or an Alternative Method

Summary of Issue Statements and Brief Answers

 

(The full memo can be found here) *

 

1. Would a multilateral investment court’s (MIC) awards be enforceable using the International Centre for the Settlement of Investment Disputes (ICSID) Convention?

 

Brief Answer: No, under the current ICSID Convention MIC awards would not be enforceable. However, MIC awards could be enforceable if the ICSID Convention were modified.

 

2. Could a MIC convention modify inter se the ICSID Convention to render MIC awards enforceable as ICSID awards between the modifying parties?

 

Brief Answer: Yes, a MIC convention could modify inter se the ICSID Convention and render MIC awards enforceable as ICSID awards between the modifying parties. However, the EU would not be able to modify the ICSID Convention inter se because it is not an ICSID Convention party.

 

3. Will the Comprehensive Economic and Trade Agreement (CETA) create such an inter se modification between Canada and the European Union (EU)?

 

Brief Answer: No, CETA would not create an inter se modification between Canada and the EU. However, it would create an inter se modification between Canada and EU Member States through CETA Article 8.41(6).

 

4. What is the effect of CETA deeming its awards valid under the ICSID Convention?

 

Brief Answer: CETA deeming its awards valid under the ICSID Convention will, at best, only bind Canada and EU Member States. It would not bind the EU because the EU is not an ICSID Convention party. Third party states would also not be bound by this provision because the Vienna Convention on the Law of Treaties (VCLT) Article 34 prevents treaties from creating obligations on third party states.

 

5. Would such an inter se agreement make MIC awards enforceable as ICSID awards in third party states that are party to the ICSID Convention?

 

Brief Answer: No, VCLT Article 34 prevents an inter se agreement from obliging third party states to treat MIC awards as ICSID awards.

 

6. If not, what kind of amendment would the ICSID Convention require to make MIC awards enforceable in third party states that are party to the ICSID Convention?

 

Brief Answer: The ICSID Convention would need to be amended to provide that: (1) ICSID state parties will enforce MIC awards even though ICSID Convention Article 53 prohibits appeals or other remedies except for what the Convention provides, and (2) MIC awards are exempt from annulment under ICSID Convention Article 52. The ICSID Convention would also need to be amended to allow the EU to become a contracting party so that MIC awards could be enforced where an award is rendered against the EU.

 

7. Would MIC awards be susceptible to annulment under the ICSID Convention?

 

Brief Answer: If MIC awards qualified as ICSID awards, they would not be susceptible to annulment in MIC convention state parties. However, in all other ICSID state parties, ICSID Convention Article 52’s annulment grounds would still apply. Therefore, MIC awards would be susceptible to annulment in all other ICSID state parties.

 

8. What impact would implementing the EU’s Trans-Atlantic Trade and Investment Partnership (TTIP) proposal to make MIC final awards not subject to annulment have?

 

Brief Answer: At best, the TTIP proposal, like CETA, would be an inter se modification between EU Member States and the United States. Thus, if the EU’s TTIP proposal to make MIC awards not subject to annulment were implemented, at best, this would only bind EU Member States and the United States. Importantly, this would not bind the EU because the EU is not a party to the ICSID Convention. VCLT Article 34 would prevent third party states from being bound by any TTIP provision.

 

9. Assuming MIC awards qualify as ICSID awards, can MIC awards be exempted from the ICSID Convention’s annulment grounds without modifying the ICSID Convention?

 

Brief Answer: No, even if MIC awards qualified as ICSID awards (which they likely do not), they would be subject to ICSID Convention Article 52’s annulment grounds. As a result, only modifying the ICSID Convention inter se or amending the ICSID Convention would result in MIC being exempt from annulment.

 

10. Would MIC awards be enforceable using the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)?

 

Brief Answer: Yes, MIC awards would likely be enforceable using the New York Convention. MIC awards would likely meet all of the elements for a foreign arbitral award, and would also be commercial awards.

 

11. Would MIC awards be enforceable using the New York Convention in states party to the MIC convention?

 

Brief Answer: Yes, MIC awards would likely be enforceable using the New York Convention in states party to the MIC convention.

 

12. Would MIC awards be enforceable using the New York Convention in states not party to the MIC agreement?

 

Brief Answer: Yes, MIC awards would likely be enforceable using the New York Convention in states not party to the MIC convention.

 

13. What conditions would MIC awards have to satisfy to be enforceable using the New York Convention in New York Convention state parties?

 

Brief Answer: To be enforceable under the New York Convention, MIC awards must be foreign arbitral awards. Depending on the jurisdiction, they may also have to be commercial awards and made in the territory of another New York Convention state party.

 

14. What is the effect of the CETA deeming its awards valid under the New York Convention?

 

Brief Answer: CETA deeming its awards valid under the New York Convention is an inter se modification that only binds treaty parties. VCLT Article 34 provides that it will not bind third parties. However, in this case, CETA awards are likely to qualify as enforceable awards under the New York Convention regardless.

 

15. Would MIC awards be susceptible to being set aside under the New York Convention?

 

Brief Answer: No, it is unlikely that MIC awards will be set aside. United Nations Commission on International Trade Law (UNCITRAL) Model Law Article 34 gives limited grounds for which awards can be set aside. Setting aside a MIC award for non-arbitrability is unlikely, although this is an unclear standard. Setting aside a MIC award on public policy grounds is also unlikely because these are narrowly construed.

 

16. What impact would implementing the European Union’s (EU) TTIP proposal to make MIC final awards not subject to annulment, being set aside or other remedies?

 

Brief Answer: Such a provision would likely prevent MIC state parties’ courts from setting aside or refusing to enforce MIC awards. This provision would not affect third parties.

 

17. What alternative arrangements would make MIC awards enforceable?

 

Brief Answer: MIC awards could be made enforceable through the MIC having its own enforcement regime. The challenge to this solution is it may take several decades for the MIC to become as popular as the ICSID or New York Convention (if indeed it ever achieves that degree of reach).

 

The full memo can be found here

 

* Image Credit: https://www.themoneypages.com/investments/investors-turning-debt-investment-amidst-brexit-uncertainty/

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