Arbitrating Investment Disputes - Chapter 30
Francisco Orrego Vicuña is Professor of Law at the Law School and the Institute of International Studies of the University of Chile. He has presided over numerous international arbitration tribunals in investment and commercial matters and has also served as party-appointed arbitrator. An arbitrator included in the ICSID Chairman’s list, he has also been appointed to tribunals by the ICC Court of International Arbitration and the London Court of International Arbitration. He has also participated in arbitrations under UNCITRAL Rules and the American Arbitration Association. He is also a Judge and former President of the World Bank Administrative Tribunal and is a Judge ad-hoc at the International Tribunal for the Law of the Sea. He has recently ended his period as Vice President of the London Court of International Arbitration and serves as a member of the International Council of Commercial Arbitrators.
Investment arbitration has become one of the central features of contemporary legal practice for counsel, government officials and arbitrators. It has also meant the development of specialized institutions, such as ICSID, or the growing utilization for the settlement of investment disputes of other arbitration institutions, such as the LCIA, the ICC and the Stockholm Centre, just as it has meant an increasing utilization of UNCITRAL rules in this context.
This contribution has been organized not so much on the procedural aspects of such arbitration, which are in many respects similar to those of any other arbitration and are very competently explained in other sections of this book. It will rather look at a number of issues concerning jurisdiction which need to be considered by counsel in respect of many disputes that are likely to end in some form of international arbitration or indeed at the time they are brought to arbitration.
II. A SHARED PRIVILEGE
It is many times thought that arbitrating investment disputes is the privilege of capital exporting countries, particularly in connection with investment in Eastern Europe or the developing world. This view, however, sometimes overlooks the fact that developing countries, including to this effect China, have not only signed numerous bilateral investment treaties but have done so both with developed countries and among themselves. Not few arbitration proceedings have been initiated by companies and individuals from developing countries against other developing countries, as well as against developed countries. Bilateral investment treaties, on the other hand, are just a part of the broad legal framework governing investments, which is also supplemented by various multilateral treaties dealing wholly or in part with investments and sometimes having only developing countries as parties to them, as is the case of the MERCOSUR Protocols, the ASEAN Investment Agreement or some Free Trade Agreements.
Another question that is important to note is that investment arbitration is not purely an alternative open to investors. It is also open to states. Under the ICSID Convention or other arbitration arrangements not only an investor can bring a State to court but also a host State can initiate proceedings against an investor, provided a written consent to arbitration has been given by both, as is often the case under direct investment agreements and occasionally under investment contracts. States have seldom used this alternative and it seems that awareness about its existence is not widespread. There is also of course the possibility of counterclaims in a proceeding initiated by an investor.