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By Charles Rae

An ICSID tribunal has unanimously rejected a claimant’s attempt to temporarily suspend a State-initiated criminal investigation involving two of its witnesses. In Italba Corporation v Uruguay[1] Italba Corporation (Italba) had applied to the tribunal for provisional measures enjoining Uruguay from proceeding with its investigation until after completion of the arbitration, arguing that the State’s conduct undermined the procedural integrity of the arbitral process.

Background

In the course of the arbitration, Italba filed witness statements by Dr Gustavo Alberelli and Mr Luis Herbón, an expert report and its exhibits. Shortly thereafter, an investigation was launched by the state prosecutor into allegations that some of the documents submitted by the claimant had been falsified and forged in contravention of the Uruguayan Penal Code. Mr Herbón was subsequently served with a notice to appear before a criminal court in Montevideo to give evidence, however neither he nor Dr Alberelli were charged or detained in connection with the investigation. Upon becoming aware of the notice, Italba requested that Uruguay terminate the criminal proceedings. After the State refused, Italba filed an application for provisional measures in the arbitration seeking to enjoin the investigation pending resolution of the arbitration.

By Catriona E. Paterson

On 20 January 2017, the English Commercial Court handed down an important judgment addressing the intersection of a State’s public international law obligations in investment treaty arbitration and its obligations under European Union law. In Micula & Ors v. Romania,[i] Mr Justice Blair stayed enforcement of an ICSID arbitration award on the basis that the court could not, under its EU law obligations, enforce an award in circumstances where the European Commission had prohibited Romania from making any payment under that award to the claimants, and a challenge to that decision was pending before the EU courts.

Background

The underlying dispute concerned the premature withdrawal by Romania of tax incentives introduced to attract investment into certain disadvantaged regions. The withdrawal of the incentives was done as part of Romania’s preparations for accession to the EU, on the basis that the incentives were deemed incompatible with EU rules on State aid. The Micula brothers and their associated companies (the Claimants) – who had invested heavily in Romania in reliance on the tax incentives – alleged that the scheme’s premature termination and other conduct of the State amounted to a breach of Romania’s obligation to treat investors fairly and equitably as required by the Sweden-Romania bilateral investment treaty. On 11 December 2013, an arbitral tribunal established in accordance with the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) agreed and awarded the Claimants in excess of Romanian Leu 750 million in damages and pre-award interest.[ii]

The EC has, from the outset, taken the view that the payment of damages to the Claimants would constitute new, unlawful State aid as a matter of EU law.[iii] Following the 2013 ICSID award in the Claimants’ favour, the EC issued an injunction obliging Romania to suspend any enforcement action. This was followed in March 2015 by a Final Decision of the EC which concluded that execution of the ICSID award, including payment of damages, would constitute new (unlawful) State aid.[iv] The Claimants have challenged that Decision in annulment proceedings before the General Court of the European Union (the GCEU). As at the date of this article, that challenge is pending.

By Jonathan Hew

Investor-state arbitrations frequently raise issues of public importance that parties other than those to proceedings, such as NGOs, may want to address. “Amicus briefs” afford them a limited opportunity to do so, as demonstrated in Infinito Gold v Costa Rica.[1]

Amicus briefs

Provisions on amicus briefs can be found in certain arbitral rules.[2]  One prominent example is Article 37(2) of the ICSID Arbitration Rules, which gives ICSID tribunals the discretion to admit an amicus brief.  In deciding whether to do so, a tribunal must consider, among other things, the extent to which:

  • the brief would assist the tribunal in determining a factual or legal issue related to the proceeding by bringing a perspective, knowledge or insight that is different from that of the disputing parties;
  • the brief would address a matter within the scope of the dispute;
  • the third party has a significant interest in the case.

The tribunal must also ensure that the amicus brief does not disrupt proceedings or unduly burden or unfairly prejudice a disputing party, and that disputing parties can make observations on the brief.