International Arbitration Law

It is extremely doubtful that arbitral tribunals sitting in a neutral venue will give effect to such restrictions when confronted to an existing arbitration agreement freely entered into, be it by commercial entities, state-owned entities or the states themselves (on the relevant case law, see, e.g., Fouchard, Gaillard, Goldman on “International Arbitration,” Kluwer, 1999, paragraphs 547 et seq.).

Denunciation of the Convention

Although all members of Alternativa Bolivariana para Las Américas y El Caribe, or ALBA, expressed their intention to denounce the ICSID Convention at the ALBA Fifth Summit in April 2007, Bolivia is, to date, the only country that has in fact taken such a step. In February 2008, the Venezuelan National Assembly urged the president to withdraw from the ICSID Convention, and in April 2008 the Procurador de la Répública of Nicaragua indicated that Nicaragua was also considering this step. Yet, to date, ICSID (or, the Centre) has received no communication in this respect other than the Bolivian denunciation, which became effective on Nov. 3, 2007.

A state that has denounced the convention ceases to be a Contracting Party to the Convention. Denunciation does not, however, affect that state’s rights and obligations created while the convention was in force. Indeed, Article 72 of the convention, in line with the customary rules of international law as codified in Article 70(1) of the Vienna Convention, provides that:

In cases where the investor has accepted the state’s prior consent before the receipt of the notice of denunciation by the Centre or within six months from its receipt – when the denunciation becomes effective – the state is still a party to the convention and thus the effectiveness of its obligations presumably raises little difficulty. It is in the other cases where the investor accepts the state’s consent after the denunciation has become effective that Article 72 becomes relevant. Under this provision, a state is bound by the obligations arising out of its consent to the jurisdiction of the Centre given before the notice of denunciation was received by the Convention’s depositary.

Because it specifically refers to “consent” by the state, as opposed to consent given by both parties to the arbitration, a state’s expression of consent to the Centre’s jurisdiction in an instrument such as a BIT should suffice for the purposes of Article 72 and that state’s obligation to arbitrate its dispute before ICSID (E. Gaillard, “The Denunciation of the ICSID Convention,” NYLJ, June 26, 2007).

Limitations

Another type of measure aimed at restricting the Centre’s jurisdiction is the one adopted by Ecuador last year. On Dec. 4, 2007, Ecuador notified to the Centre the types of disputes that it would not accept to be submitted to ICSID jurisdiction: