The North American Free Trade Agreement (NAFTA) contains a variety of provisions encouraging or requiring the use of arbitration to resolve disputes. For example, Chapter 20 provides for arbitration of disputes between or among the Contracting States. Chapter 14 provides for arbitration of certain kinds of financial services disputes, and Article 2022 encourages the use of arbitration to resolve NAFTA-related disputes among private parties. But the most interesting arbitration provisions in NAFTA are in Chapter 11; they provide for the arbitration of investment disputes between a Contracting State and a private investor located in another Contracting State.
The first half of 2001 has seen particularly interesting rulings concerning three Chapter 11 cases. One is a ruling by the tribunal on its jurisdiction to hear a novel Chapter 11 claim, another is a court ruling enforcing a Chapter 11 arbitral award, and the third is a tribunal ruling on its power to accept friend-of-the-court briefs from interested third parties. All three potentially precedent-setting rulings are discussed below.
II. Chapter 11 Basics
A claimant under Chapter 11 may seek to recover for injuries caused by acts of a Contracting State or its sub-units that are tantamount to “expropriation” or otherwise violate provisions in Chapter 11 that deal with investments. There is no need for an arbitration agreement between the investor and the state because the states have agreed to arbitration (and implicitly waived their sovereign immunity) in Article 1122 of NAFTA.