Arbitration under the ECT and other Investment Protection Treaties - Chapter 6 - Investment Arbitration and the Energy Charter Treaty

Michael Polkinghorne has a broad range of experience in arbitration and litigation in the areas of energy, project finance, construction, infrastructure, telecoms and defense procurement. He has served as counsel and arbitrator in arbitrations conducted under most major institutional rules. While he has covered disputes arising in many different countries, his current practice concentrates on Eastern Europe and the CIS, as well as South and South East Asia, where he lived and worked in the late 1990s. He has significant expertise in the area of foreign direct investment, acting both for and against states. Mr. Polkinghorne also has a significant transactional practice, advising clients in the energy and infrastructure development fields. He has advised a number of petroleum clients on projects in South East Asia, the Russian Federation and North Africa, and has advised the governments of India, Yemen and Mozambique on energy-related matters.

Mr. Polkinghorne is presently a member of the Legal Advisory Task Force of the European Energy Charter Secretariat, which is currently preparing a new edition of the Model Intergovernmental and Host Government Agreements for Cross-Border Pipelines. Admitted to practice in both common law and civil law jurisdictions, Mr. Polkinghorne is presently the alternate Australian member of the ICC’s International Court of Arbitration, where he is also a member of their taskforce on reducing costs in complex arbitrations.

Bernardo M. Cremades, Senior Partner, B. Cremades y Asociados, Madrid

Bernardo Cremades is the Senior Partner of the law firm of B. Cremades y Asociados in Madrid. He is a Professor at the University of Madrid with the distinguished position of Catedrático in the Faculty of Law and the Faculty of Economics.

Professor Cremades is a member of the Madrid Bar and formerly of the Paris and Brussels Bars, specializing in international commercial and investment arbitration. He is President of the Spanish Court of Arbitration, President of the Global Center for Dispute Resolution Research, and a member of the International Council for Commercial Arbitration and the ICC Institute of World Business Law.

Professor Cremades has participated as an attorney, arbitrator or as President of the Arbitral Tribunals in more than 150 arbitral proceedings. He has recently been appointed as an arbitrator in a number of ICSID Investor-State arbitrations.

Richard Happ, Attorney, Luther Rechtsanwaltsgesellschaft mbH

Richard Happ is a lawyer in the dispute resolution department of Luther in Hamburg, Germany. Prior to joining the firm in 2001, he spent his legal clerkship (Referendariat) from 1998 to 2001 in Kiel, Hamburg, Speyer and at the Department of Legal Affairs of the Energy Charter Secretariat in Brussels. From 1996 to 1999, he was a research assistant (wiss. Mitarbeiter) at the Faculty of Law of the University of Kiel. Mr. Happ has published several papers on the topic of investment arbitration, in particular his doctoral thesis on State-Investor Arbitration under Article 26 ECT. He is adjunct lecturer (Lehrbeauftragter) for international commercial arbitration at the University of Kiel.

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Investment Arbitration and the Energy Charter Treaty

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Arbitration under the ECT and other Investment Protection Treaties

Michael Polkinghorne, Bernardo M. Cremades, and Richard Happ

As speaker on the last session of this fascinating conference, I
promise to remain mindful of the reflections of Lord Mancroft,
who once reflected that, "a speech is like a love affair; any fool can
start it, but to end it requires considerable skill…”

The problems posed by parallel proceedings are readily selfapparent;
the risk of inconsistent decisions, extra time and
expense, uncertainty and different places of arbitration with
different rules to name but a few. But the issues are at times
complex to state, let alone resolve.

When speaking of parallel proceedings, one has to consider a
myriad of scenarios. The "traditional" situation involves a dispute
being adjudicated under both contractual and treaty-based
mechanisms. This problem has, as most of us here today know,
done the rounds, and it is not my intention to revisit the Vivendi or
SGS decisions today. Suffice to say that the drafters of treaties,
through for example, requirements for the exhaustion of remedies
or fork in the road provisions - and tribunals have obviously been
mindful of the issue.

The problem, however, runs deeper and broader. The growing
awareness of the Energy Charter Treaty increases the chances of
simultaneous "public" arbitrations, such as under a BIT and the
ECT (the Plama dispute is, and the pending Yukos arbitration may
be, a case in point). Also, the CME case(s) against the Czech
Republic demonstrated the possibility of simultaneous BIT
arbitrations, where a treaty allows recourse in respect of indirect
investment through another (treaty) state. In that respect, one can
note from the CME decisions the potential for inconsistent results.

The analysis should of course start with a definition of the
problem we are trying to solve, before we can seriously embark
upon finding a solution. It is unlikely that a universal panacea
exists, and so we may be looking at different mechanisms for
different aspects of the one phenomenon.

Table of Contents:

Full Table of Contents from "Investment Arbitration and the Energy Charter Treaty" Foreword

Remarks by Judge Stephen Schwebel

Editor's Preface

List of Contributors

Chapter 1 -- Introduction to the Energy Charter Treaty (ECT)

Introduction
Dr. Hans Corell

Part 1 -- The Energy Charter Treaty: More Than a MIT
Graham Coop

Part 2 -- The Dispute Settlement Mechanisms of the Energy Charter Treaty
Laurent Gouiffès

Chapter 2 -- Investments and Investors Covered by the ECT and other Investment Protection Treaties

Introduction
Antonio R. Parra

Part 1 -- Investments and Investors Covered by the Energy Charter Treaty
Emmanuel Gaillard

Part 2 -- The Limits of Protection for Investments and Investors under the Energy Charter Treaty
Stephen Jagusch & Anthony Sinclair

Chapter 3 -- The Concept of Expropriation under the ECT and other Investment Protection Treaties

Introduction:
Sergei N. Lebedev

Part 1 -- Rapport: The Concept of Expropriation under the ECT and other Investment Protection Treaties
Christoph H. Schreuer

Part 2 -- Comments on the Rapport

I -- Indirect Expropriation and the Right of the Governments to Regulate Criteria to Articulate the Difference
Katia Yannaca-Small

II -- The Distinction Between Lawful and Unlawful Expropriation
Audley Sheppard

Chapter 4 -- The Relationship Between Contractual Claims and Claims under the ECT and other Investment Protection Treaties

Introduction: Treaty versus Contract Claims
Gabrielle Kaufmann-Kohler

Part 1 -- Contract Claims under the Energy Charter Treaty's Umbrella Clause: Original
Intentions versus Emerging Jurisprudence
Thomas W. Wälde

Part 2 -- Multiple Judicial Proceedings and the Energy Charter Treaty
Christer Söderlund

Chapter 5 -- State Responsibility under the ECT and other Investment Protection Treaties

Introduction: Applicable Law to State Responsibility under the Energy Charter Treaty and other Investment Protection Treaties
Karl-Heinz Böckstiegel

Part 1 -- State Responsibility and Investment Arbitration
Kaj Hobér

Part 2 -- State Responsibility under the Energy Charter Treaty and other Investment Protection Treaties
Anatoly S. Martynov

Chapter 6 -- Arbitration under the ECT and other Investment Protection Treaties

Introduction: Parallel Proceedings: The Issues and (Where Are?) the Solutions
Michael Polkinghorne

Part 1 -- Parallel Arbitration Tribunals and Awards
Bernardo M. Cremades

Part 2 -- The Nykomb Case in the Light of Recent ICSID Jurisprudence
Richard Happ

Appendix -- Awards Rendered under ECT

Appendix 1 -- Nykomb v. Latvia

1. Introduction

2. Jurisdiction

3. General background

4. The legal basis for the claims against
the Republic

5. Assessment of losses or damages

6. Allocation and allowability of costs

7. Arbitral award

Appendix 2 -- Petrobart v. Kyrgyzstan

I. The contract

II. Relevant facts

III. The Foreign Investment Law and proceedings regarding that law

IV. The Energy Charter Treaty

V. Proceedings

VI. Claims

VII. Grounds and arguments

VIII. Reasons

Appendix 3 -- Plama v. Bulgaria
(Decision on Jurisdiction)

I. Procedure

II. Background facts

III. The submissions of the parties on jurisdiction

IV. Examination of the parties’ submissions

V. The decision

Index

Appendix Topics on CD-ROM Include:

ECT and Related Instruments

SCC Rules

ICSID Rules

UNCITRAL Arbitration Rules