Public Law Studies Quarterly

Abuse of Process in Investment Arbitrations

Document Type : Article

Authors

Leila Razavi Toussi 1
Seyed Jamal Seyfi 2
Mohsen Mohebi 3

1 PhD in Public Law and International Law, Faculty of Law and Political Science, Islamic Azad University, Science and Research Branch, Tehran, Iran

2 Associate Prof., Department of Public International Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

3 Assistant Prof., Department of Law and Political Science, Islamic Azad University, Science and Research Branch, Tehran, Iran

https://doi.org/10.22059/jplsq.2021.319898.2713
Abstract
Due to the increase and development of international investment arbitrations, investors have abused procedural tactics to increase their chances of winning in these arbitration proceedings. This undermines the credibility of international arbitration as one of the effective means of resolving international disputes. Abuse of processes in investment arbitration takes place when an investor exercises his right in a way that is contrary to the aim and purpose of that right. It happens when chain companies and subsidiaries owned by a parent company or shareholders of a chain company with different nationalities seek the same relief against the host at different arbitral tribunals in parallel or simultaneous lawsuits. Therefore, the host state will face multiple claims from multiple investors and is required to pay multiple damages. The principle of abuse of process is an expression of the more general principle of good faith, a fundamental principle of international law, as well as investment law. So, ICSID tribunals will often invoke the principle of abuse of process in their cases.

Keywords

abuse of right
good faith
abuse of process
international investment law
ICSID arbitral tribunals

  1. English

    1. A) Books
    2. Douglas, Zachary (2009), “The International Law of Investment Claims”, Cambridge University Press.
    3. Giovanni Zarra (2017), “Parallel Proceedings in Investment Arbitration”, The Hague, the Netherlands, Eleven International Publishing.
    4. Wehland, Hanno (2013),“The Coordination of Multiple Proceedings in Investment Treaty Arbitration”, Oxford University Press.

     

    1. B) Articles
    2. De Brabandere, Eric (2012), ‘Good Faith’, ‘Abuse of Process’ and the Initiation of Investment Treaty Claims, 3 Journal of International Dispute Settlement 609.
    3. Emmanuel, Gaillard (2017), “ Abuse of Process in International Arbitration“, ICSID Review - Foreign Investment Law Journal, Vol. 32, Issue 1.
    4. Hervé, Ascensio (2014), “Abuse of Process in International Investment Arbitration,” Chinese Journal of International Law, Vol. 13, Issue 4.
    5. Jakob, Schwantiz (2018), “The Abuse of Rights Doctrine in the Context of Parallel Treaty Arbitration and Corporate Restructuring”, University of Amsterdam.
    6. John P. Gaffney (2010), “Abuse of Process in Investment Treaty Arbitration”, Journal of World Investment & Trade, Vol. 11 No. 4. 
    7. Kirtley, William Lawton (2009), “The Transfer of Treaty Claims and Treaty-Shopping in Investor-State Disputes”, Journal of World Investment & Trade, Vo. 10, No.3.
    8. Kolb, Robert (2006),”General principles of procedural law”. In: Zimmermann, Andreas, Tomuschat, Christian & Oellers-Frahm, Karin. The Statute of the International Court of Justice: a Commentary. Oxford: Oxford University Press.
    9. Lindsay, Gastrell, Paul-Jean Le Cannu (2015), “Procedural Requirements of ‘Denial-of-Benefits’ Clauses in Investment Treaties: A Review of Arbitral Decisions”, ICSID Review - Foreign Investment Law Journal, Vol. 30, Issue 1.
    10. Maja, Stanivukovic (2014), "Investment Arbitration: Effects of an Arbitral Award Rendered in a Related Contractual Dispute", TDM 4.
    11. Polonskaya, K, (2014), "Abuse of Rights: Should the Investor-State Tribunals Extend the Application of the Doctrine", LLM Graduate Thesis, University of Toronto: Faculty of Law.
    12. Rahim, Moloo (2011), “A Comment on the Clean Hands Doctrine in International Law“, Transnational Dispute Management, Vol. 8, Issue 1.
    13. Rodolf, Dolzer & Christophe Schreuer (2008), “Principles of International Investment Law”, Oxford University Press.
    14. Seifi, Jamal & Javadi, Kamal (2013), “The Consequences of the Clean Hands Concept in International Investment Arbitration“, Asian Yearbook of International Law, Vol.19. (printed 2017)
    15. Tomuschat, Christian & Oellers-Frahm, Karin (2006), “The Statute of the International Court of Justice: a Commentary”, Oxford, New York: Oxford University Press.
    16. Voon, Tania; Mitchell, Andrew & Munro, James (2015), Good Faith in Parallel Trade and Investment Disputes, Oxford University Press, UK.
    17. Zachary, Douglas (2014), "The Plea of Illegality in Investment Treaty Arbitration", ICSID Review, Vol. 29, No.1.

     

    1. C) Cases
    2. Ambatielos Rights of passage over Indian Territory , Barcelona Traction, Nicaragua , Border and TRansborder Armed Actions,
    3. Cementownia ‘Nowa Huta’ SA v Republic of Turkey, ICSID Case No ARB(AF)/06/2, Award ,17 September 2009.
    4. Cementownia ‘Nowa Huta’ SA v Republic of Turkey, ICSID Case No ARB(AF)/06/2, Award ,17 September 2009.
    5. CME Czech Rep. B.V. v. Czech Republic, UNCITRAL Rules, Partial Award of 13 September 2001.
    6. CME Czech Republic B.V. v. The Czech Republic, UNCITRAL, Final Award, 14 March 2003.
    7. CME v, Czech Republic, UNCITRAL, SCC Partial Award, 13 September 2001.
    8. Equatorial Guinea v.France, ICJ Case ,Judgment,11 December 2020
    9. Phoenix Action Ltd v Czech Republic, ICSID Case No ARB/06/5, Award ,15 April 2009.
    10. Rene´e Rose Levy and Gremcitel SA v Republic of Peru´, ICSID Case No ARB/11/17, Award ,9 January 2015.
    11. RSM Production Corporation v Grenada, ICSID Case No ARB/10/6, Award, 10 December 2010.
    12. RSM Production Corporation v. Saint Lucia, ICSID Case No. ARB/12/10,2012.
    13. TSA Spectrum de Argentina S.A. v. Argentine Republic, ICSID Case No. Arbitration /05/5, Award, 19 December 2008.

     

    1. D) Conventions /Documents
    2. International Law Association, Final Report on “Res Judicata and Arbitration, Berlin Conference ,2004.
    3. The Convention on the Settlement of Investment Disputes between States and Nationals of Other States - International Centre for Settlement of Investment Disputes (1965).

     

    References In Persian:

    1. A) Books
    2. Piran, Hossein (2010), The Law of International Investment, Tehran: Ganje Danesh (In Persian).

     

    1. B) Articles
    2. Moghaddam Abrishami, Ali; Zamami, Hamed & Zamami, Hamed (2019), The Role of Piercing the Corporate Veil doctrine in Determination of Foreign Investor's Nationality in ICSID Arbitration Procedure, Vol. 20, Issue 61, Summer 2019, pp. 93-120,The Quarterly Journal of Public Law, DOI ( 10.22054/QJPL.2017.21197.1497) (In Persian).
    3. Mohebi, Mohsen & Ziaee, Seyed Yaser (2012), “Extraterritorial Jurisdiction in International Law In Light of Piercing the Corporate Veil”, International Law Review An Academic Journal ,Vol. 29, Issue 47, Winter and Spring 2012, pp. 7-30, DOI (10.22066/CILAMAG.2012.16352) (In Persian).
    4. Momenirad, Ahmad & Ghasemzadeh, Majid (2015), “International Economic Crisis, States Anti-Crisis Emergency Measures and the Means of Settlement of International Investment Disputes arising from the Reform”, Public Law Studies Quarterly, Vol. 45, Issue 1, Serial Number 1, Spring 2015, pp. 149-165. DOI(10.22059/JPLSQ.2015.53727) (In Persian).
    5. Zamani S G, Darounparvar A. (2015), “Dynamism of “Investment” Concept in Light of ICSID Determining Jurisdiction Methodologies, Judicial Law Views,Vol. 20, No. 69 , pp.97-124 (In Persian).
Public Law Studies Quarterly
Volume 53, Issue 1
Spring 2023
Spring 2023
Pages 267-286

  • Receive Date 02 March 2021
  • Revise Date 24 May 2021
  • Accept Date 11 September 2022

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