Perspectives of Amici Curiae in ICSID arbitration

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Perspectives of Amici Curiae in ICSID arbitration

Grabchak G.V.

Postgraduate Student at the Department of International Law Yaroslav Mudriy National Law University Kharkiv, Ukraine

Amici Curiae institute is one of the most ancient procedural institutes in dispute resolution system. It originates from Roman times. Amici is called to support the court to decide dispute properly and to provide it with some useful information. However, Amici Curiae institute has undergone great changes throughout its evolution. Today it is commonly used by international and domestic courts. We make no secret that Amici Curiae is used deliberately, abusing the institution by the parties of the dispute. The party in such way tries to persuade the court to the desired result. Moreover, such intentions are disguised as a public interest.

Despite that Amici Curiae is a common feature in international courts, for investment arbitration it is a relatively new phenomenon. The first case where the Amici submission was accepted, was the Methanex case, which was considered in 2001. It should be noted that investment disputes have a mixed nature. Simply speaking, here the interests of a big business are in constant struggle with government policy of the host State. It's not difficult to guess that the public interest is one of topics of the discussion in almost all disputes. The most famous investment dispute settlement platform is International centre for settlement of investment disputes (ICSID). From the Methanex case (which was considered according to UNCITRAL arbitration rules 1976) ICSID has got circa 50 Amici submissions. Unfortunately, not all cases were public, therefore we cannot investigate the issue in full. However, from the published decisions we can see, that in spite of importance of proper implication of Amici submission, we don't have transparent rules of the Amici participation in ICSID, as well as predictability at the issue. The conclusion of Amici issue remains entirely discretionary by an arbitration tribunal, and the decision depends solely on the internal preferences of the arbitrators.

The amendment process of ICSID Rules was finished in 2022 by the new redactions of ICSID Rules. Unfortunately, the new redaction has decided all Amici participation issues only in part. This article proposes to examine the chosen by us arbitral practice and find out the crucial issues of Amici Curiae participation in ICSID.

Key words: ICSID, Amici Curiae, ICSID amendments process, ICSID Arbitration Rules, investment arbitration, arbitral tribunal.

amici curiae procedural institutes courts decide dispute

ПЕРСПЕКТИВИ AMICI CURIAE В АРБІТРАЖІ МЦВІС

Грабчак Г.В.

аспірант кафедри міжнародного права

Національний юридичний університет імені Ярослава Мудрого, Харків, Україна

Інститут Amici Curiae є одним з найдавніших інститутів у системі вирішення спорів. Він бере свій початок з римських часів. Amici покликаний допомогти суду вирішити спір належним чином, та надати суду деяку корисну інформацію. Однак, інститут Amici Curiae пройшов крізь значні зміні протягом свого розвитку. Сьогодні він широко застосовується міжнародними та національними судами. Не є секретом, що Amici Curiae використовується сторонами навмисно, зловживаючи цим інститутом. Сторона спору в такий спосіб намагається схилити суд до бажаного результату. Більше того, такі наміри маскуються під публічним інтересом.

Не дивлячись на те, що Amici Curiae є звичайною особливістю в міжнародних судах, це є відносно новим явищем для інвестиційного арбітражу. Першою справою, де було прийнято пояснення Amici, була справа Methanex, яка була розглянута у 2001 році. Необхідно зазначити, що інвестиційні спори мають змішану природу. Кажучи просто, тут інтереси великого бізнесу знаходяться в постійній боротьби з політикою уряду держави, на території якої здійснено інвестиції. Не складно здогадатися, що публічний інтерес є однією з тем для дискусії майже у кожному спорі.

Найвідомішою платформою для вирішення інвестиційних спорів є Міжнародний центр з врегулювання інвестиційних спорів (МЦВІС). Після справи Methanex (яка була розглянута відповідно до арбітражних правил ЮНСІТРАЛ в редакції 1976 року), МЦВІС отримав приблизно 50 пояснень від Amici. На жаль, не всі справи є в публічному доступі, а тому ми не можем дослідити їх всі. Однак, з опублікованих рішень ми можемо побачити, що не дивлячись на важливість правильного застосування пояснень Amici, ми не маємо прозорих правил участі Amici у МЦВІС. Вирішення питання щодо участі Amici у спорі залишається в повній дискреції арбітражного трибуналу, та рішення залежить виключно від внутрішніх уподобань арбітрів.

Процес внесення поправок у Правила МЦВІС закінчився у 2022 році шляхом прийняття нової редакції Правил МЦВІС. На жаль, нова редакція лише частково вирішила проблеми участі Amici. У цій статті пропонується дослідити обрану нами арбітражну практику та знайти ключові проблеми участі Amici Curiae у спорах, що розглядаються МЦВІС.

Ключові слова: МЦВІС, Amici Curiae, процес внесення правок в правила МЦВІС, арбітражні правила МЦВІС, інвестиційний арбітраж, арбітражний трибунал.

Problem Statement. Conceptually Amici Curiae is called to support the court to decide dispute properly and to provide it with some useful information. However, the party of the dispute sometimes tries to persuade the court to the desired result. Moreover, such intentions are disguised as a public interest. On the one hand, the abuse of rights by the party is obvious. On the other hand, the arbitral tribunals are over-protective of non-intervention in the dispute. In such procedural cases the strong regulation and criteria are required. Unfortunately, the resent ICSID amendment process hasn't provide such regulation and criteria.

Analysis of recent studies and publications. Procedural regulation of ICSID Rules generally and Amici Curiae particularly remains as yet unexplored in the Ukrainian science of international law.

Amici Curiae was studied by Douglas Z., Crema L., Bartholomeusz, L., Mohan S. Chandra, Choudhury B., Mistelis L., Gerlich O. and many other. However, no one of the above-mentioned scholars examined how to make arbitration rules for proper Amici involvement in the dispute. All of them discussed only consequences. For instance, Mr. Gervich investigated the EU attempts to participate as Amici, but he has not provided any formula which would differentiate the Amici submission and direct intervention in the dispute.

Purpose and objectives of the studies. The purpose of the article is to identify key issues of Amici participation in ICSID. The objectives are as follows: analysis and synthesis of current legal approaches to the Amici participation, interpretation of ICSID Rules and finding of disadvantages of ICSID Rules 2022.

Statement of a parent material. International public law doesn't have any exact concept of “Amici Curiae” [1, p. 93]. Generally, it is translated from Latin as “friend of the court” [2, p. 211]. From the practical prospective Amici Curiae allows the third non-disputing parties to address courts and arbitration tribunal for providing any different and useful information regarding the dispute. Procedurally this information is accumulated in a written submission. However, it is not officially limited to such [1].

Amici Curiae originates from Roman times [3, p. 352]. Amici Curiae are now broadly accepted by many foreign jurisdictional authorities such as European Court of Hyman Rights [4, rule 44], the Word Trade Organization Dispute Settlement Body [5, article 10] and International Tribunal for the Law of the Sea [6, article 31-32]. Despite Amici Curiae broad acceptation, the practice of acceptation of such submissions in investment disputes is an innovation. The first investment arbitration case where Amici brief was submitted, is a Methanex Corporation v USA case [7]. It was settled by an ad hoc tribunal according to the UNCITRAL Rules 1976.

However, in spite of acceptance of Amici application in Methanex, tribunals established according to Washington Convention were initially hesitant to accept Amici Curiae¹ engagement in the dispute. In the Aguas del Tunari v Republic of Bolivia case the arbitral tribunal denied the Amici participation because of parties' unwillingness to accept the submission. The arbitral tribunal argued that the investment arbitration has a consensual nature and the decision fully depends on the parties readiness to accept [8, p. 814]. This decision was reasonably criticized [9, p. 211]. Mainly because of a prevailing nature of a party autonomy principle, which is typical for commercial disputes, but not for investment disputes, Procedurally Amici Curiae is called as the non-disputing party. However, for the clarification of true meaning I will call them Amici during the text of this article. Author's mark. where the public issues and State interest is a reason for discussion.

As a result, in the next case Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A v Argentine Republic the arbitral tribunal took a different position and accepted the Amici submission [10]. Ultimately this case triggered the newly-created ICSID Rule 37 in 2006 [11]. This Rule expressly permits Amici participation and establishes criteria for the acceptance of the submission.

It should be noted that the differentiation between commercial and investment arbitration is needed. While the commercial arbitration touches the private commercial interests of business, in investment arbitration the public interest at stake, mostly because a State is a party of dispute and it's actions are challenged. A State is a public authority which is responsible for the prosperity of its citizens; such prosperity in its turn may be jeopardized by an investment which raises the public interest like important public services, environment, government functioning and other. Considering the mentioned above Amici Curiae could potentially support the public interest and positively influence on the outcome of the dispute settlement. After all it must be taken into account that the enforcement of every award is financed from the State budget (aka by taxpayers). For all these reasons the Amici Curiae participation is more that justifiable.

The article will then analyze the disputes in which the Amici submissions have been filed, the reasons for which such submissions have been accepted or rejected respectively, and the impact of the submissions on the outcome of the dispute.

The first case which I want to discuss, is a Biwater Gauff v Tanzania case. It should be mentioned that it was the first case (at least from cases where awards and other procedural documents have been published) after the previously mentioned creation of a new ICSID Rule 37. The main discussions took place around the contract of water and sewerage services providing concluded between the government and foreign investor. According to the investor, he faced with several difficulties during the project realization, which ultimately finished with the breakdown of the contract, deportation of investor employees and arrest of investor assets in the host State. In this case the arbitral tribunal has got several Amici submissions inter alia from five non-governmental organizations.

The compilated Amici submission from these non-governmental organizations argued that investors in the water sphere have a grosser level of responsibility in comparison with other sectors because the water sphere has a big and direct impact on the basic human right to clean water. According to submission the investors own acts led to the good faith termination of the contract by the government; the government during the contract termination has taken care on the citizens and prevented the human rights breach [12].

The arbitral tribunal decided the case in favor of the State. The award in this case has several references to the Amici submission. Assessing the Amici arguments, the tribunal noted: “[the] arbitral Tribunal has found the Amici S observations useful. Their submissions have informed the analysis of claims set out below, and where relevant, specific points arising from the Amici's submissions are returned to in that context.” [13, p. 70]. Looking ahead, I want to note that the impact of Amici submission on the case result was the biggest from all analyzed by me cases in this Article and in total.

The second case where the Amici submission was accepted was Philip Morris v. Uruguay case. In this case the investor - one of the most famous tobacco companies all over the world, challenged the host State measures to reduce smoking promoting and tobacco consumption.

The tribunal has got two Amici submissions from WHO World Health Organization. Web-site: https://unfounda- tion.org/blog/post/75-years-of-who-the-world-health-assembly- considers-whats-next-for-the-globalhealthagency/?gclid=Cj0K- CQjw_O2lBhCFARIsAB0E8BuADE1ZcDKrw-Gk-QwzOBfc- G0rlc3-9rzoAvEi_Gqx9ZKK2NV26QaAqIBEALw_wcB and PAHO Pan American Health Organization. Web-site: https:// www.paho.org/en. Thus, one of the features of this case is that both Amici were intergovernmental organizations, but not non-governmental, as it usually happens. The WHO submission was based on the analysis of risks of tobacco consumption and the influence of tobacco advertisement as well as relevant legislation and various international instruments of regulation of tobacco sphere. However, as mentioned Mr. McGrady, “as an independent brief, it did not take a position on how the dispute should be resolved and did not make legal arguments about interpretation of the BIT” [14]. The PAHO submission directly examined the host State measures and argued in favor of the State.

As in previous case, the arbitral tribunal made several references to both Amici submissions [15]. As some commentators noted, “the appreciable impact of the submissions might be attributed partly to the identities of the amici and their functions under international law”. However, there were other thoughts - the arbitral tribunal was happy to use the Amici submissions because any of both has not proposed it's own view on the dispute conclusion [14]. From our point of view both positions are relevant. Furthermore, tobacco (as well as water sphere) directly concerns the society interests and health. To our mind, it is also a strong argument in favor of acceptation of the submissions.

A special part of my research was a number of cases, where the EU represented by the European Commission (hereinafter - EC) filed the submission as the Amici Curiae.

The first case where EC filed the Amici submission was AES Summit Generation Ltd and others v. Republic of Hungary case. In such way EC tried to challenge the jurisdiction of the arbitral tribunal, alleging that issues concerned in the case related to EU law application and the EU Court has exclusive jurisdiction to decide the dispute. However, the arbitral tribunal rejected all jurisdiction objections because no party has challenged the jurisdiction of the arbitral tribunal [16].

Like in the above-mentioned case, EC tried to challenge jurisdiction in the Electrabel, S.A. v. Republic of Hungary case. However, the result was the same as in AES case [17, p. 52]. In the final award the arbitral tribunal extensively cited the EC submission, indicating that the submission directly influenced on the dispute outcome [17]. This is most likely because EC arguments were not the same, as arguments of the parties.

Some observers mentioned that in both cases EC tried to be “more than a friend” of the arbitral tribunal. It was argued that EC deviated from Amici functions and tried to intervene in the dispute as a third party. According to Ms. Gervich, the main difference between Amici participation and third-party intervention that the Amici doesn't have any personal legal interest in the outcome of the dispute. And the third- party intervention, in contrary, defends it's personal interests in the proceedings [18, p. 253-269].

Considering that EC truly tried to defend the EU jurisdiction and all arguments were, in one way or another, that such questions of law should be considered exclusively by the EU court, I agree with Ms. Gervich. Ultimately, the so called Achmea judgment [20] may be considered as a result of jurisdictional struggle between ICSID and EU.

Of course, we cannot avoid the Vivendi v. Argentina case. As we mentioned before, Amici submissions in ICSID were firstly accepted in this case. Vivendi v. Argentina case concerned the water and sewerage spheres. The host State implied several measures which directly impacted on the investors business. As in the above mentioned Biwater Gauff v. Tanzania case the host State terminated the concession agreement with the investor [20].

Five non-governmental organizations filed joint Amici submission. In a nutshell, the submission was based on the human rights to water, life and health, what was unsurprisingly. For instance, it argued that water tariff fixation during the economic crisis in the host State was the protection of citizens right to water [20].

As a result, the claim of the investor was partially satisfied by the arbitral tribunal. What was interesting, despite the tribunal accepted the Amici submission and Amici participation on the oral hearing (however, without possibility to comment or plead before the tribunal), the award was ultimately silent about the Amici arguments. Ms. Levine noted that it was a tribunals gesture of good will to accept the Amici submission after the unfortunate experience in the Aguas del Tunari v Republic of Bolivia case [21, p. 212]. From our prospective it's unsurprising because the Amici arguments in Vivendi case were almost fully reflected the Respondent State position, which was assessed in the award. Therefore, the analysis and application of Amici arguments was too much for the arbitral tribunal.

Certainly, in ICSID were a couple of cases where the arbitral tribunals declined the Amici submission.

In denying the request, the arbitral tribunal in the Apotex v USA case mentioned that the Amici application has not met the criteria of the Amici participation according to ICSID Rules 2006. In a nutshell, the argumentation was based on the next theses: (i) Amici submission will be of no use to the arbitral tribunal; (ii) Amici doesn't have any interest in the case; (iii) Amici has not identified any “public interest” [22, p. 10]. This case was concluded in favor of the host State in full. It should be noted, that despite the fact of rejection of the Amici submission, the arbitral tribunal has done it in the transparent manner by dropping the special tribunal order, which is ultimately public.

In contrast to previous case, the arbitral tribunal in the Caratube v. Kazakhstan case rejected the Amici participation in non-transparent and non-public manner without any details or grounds of rejection [23]. This case demonstrates that the discretion to accept or not to accept the Amici participation is ultimately up to the tribunal. The arbitral tribunal is not obliged to ground the denial of Amici participation. Such a lack of legal certainty should be considered in the ICSID Rules amendment process, which took part in 2017-2022.

After the Aguas del Tunari case the ICSID Secretariat has taken measures for codification of Amici participation in ICSID Rule 37(1) [11]. However, simple direct recognition of the right of Amici to participate is not enough. All analyzed cases in this article demonstrate lack of legal predictability and transparency during Amici participation consideration.

The ICSID Secretariat started the ICSID Rules amendments process in 2016 [24]. One of the goals of amendment process was to make ICSID disputes resolution more transparent. In August 2017 the ICSID Secretariat dropped the first draft of new ICSID Rules and after 6 rounds of negotiations new ICSID Rules 2022 were created [25].

During the amendment process I was hoping that the updated text of Amici participation Rules will among other things clarify the conditions and requirements for Amici participation.

However, if we compare ICSID Rule 37(1) 2006 and ICSID Rule 40 2022, we see that only several changes were included. For instance, the ICSID Rule 40 reflects on the conflict of interest (including financial). Also, ICSID Rule 40(2)(b) obliges the tribunal to consider whether the Amici submission brings any other prospective of the dispute, which is different from the parties' arguments. What is also important, ICSID Rule 40(5) provides that the arbitral tribunal shall issue a reasoned decision during 30 days from the last submission on the matter. It means that the decision of the tribunal whether to participate or not has a strong term and should be grounded as well.

Nevertheless, no reference to the public interest, as well as some other revolutionary requirements to the Amici were not included. Only practice will show whether the above-mentioned amendments have the useful impact of the proceedings. However, in our opinion, these amendments hasn't codified true requirements of Amici participation as the common principles demand and the future of the Amici participation continues to be shrouded in mystery.

Conclusions. Tribunals need to be mindful of accepting Amici submission. In doing so, the arbitral tribunals should be attentive and transparent. Thus, the ICSID Rules 2022 might reflect both issues and demand from the tribunals to argue in details the denial to participate, rather then simply accept the participation as a matter of “good faith”. Furthermore, the arbitral tribunal should consider, whether the Amici submission will have the good influence on the public interest as well as provide the tribunal not simply other from the parties' arguments, but show the dispute picture impartially and objectively.

Moreover, there should be a double-check is this not the intervention in the dispute. Only such way will help keep the role of the `friend of the court', but not a sympathizer of the host State, big business or some other organization.

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