Originally from:
Between East and West: Essays in Honour of Ulf Franke- Hardcover
Between East and West: Essays in Honour of Ulf Franke - Electronic
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ICSID, UNCITRAL and SCC As Investment Fora
Hans Danelius*
I. INVESTMENT ARBITRATION
Arbitration between an investor and the State of investment is a
procedure with its own characteristics distinguishing it significantly from
ordinary commercial arbitration. While commercial arbitration is normally
based on a contract between the parties to the dispute, arbitration in
investment disputes is not founded on a private contract but on an
international treaty between two or more States (the Contracting States),
one of which is the Respondent in the arbitration. The legal ground on the
basis of which an individual investor is entitled to initiate arbitration
proceedings against a State before an international tribunal is the
Contracting States’ agreement in the relevant treaty that a dispute between
one of them and an investor of the other Contracting State (or one of the
other Contracting States in the case of a multilateral treaty) may be settled
by international arbitration. Consequently, the investment protection
treaty, although an inter-State treaty, contains an open offer of arbitration
addressed to all investors concerned, and any such investor may at any
time after the treaty has come into force accept this offer by initiating
arbitration proceedings against the State of investment.
However, the fact that the State’s obligations are laid down in an
international treaty and not in a contract has important legal
consequences. As an international agreement, a treaty is to be interpreted
and applied according to the norms of public international law, in
particular the Vienna Convention on the Law of Treaties from 1969 (the
Vienna Convention) which, in Articles 31-33, contains basic rules for
interpretation of treaties. In this respect, an investment dispute differs
from an ordinary commercial dispute in which the applicable law is, as a
rule, national—private or commercial—law.
Since an investment dispute is not based on an agreement between
the parties, no question will arise as to the common intent of the parties to
the dispute at the time when the applicable provisions were drafted and
adopted. Occasionally, a question might arise as to what the Contracting
States had in mind when drawing up certain provisions in the treaty, but
in international treaty law the common intent of the Contracting States, if
it can be established at all, is only given limited weight. According to
Article 32 of the Vienna Convention, the preparatory work of a treaty and
the circumstances of its conclusion are no more than supplementary means
of interpretation.
