INTRODUCTION

Today's global economy is a product both of technological advances and of the liberalization of world trade. The philosophical foundations of globalization have been the freedom to trade, freedom to invest capital and freedom of establishment of business in foreign countries.

The lifeblood of the global economy is foreign direct investment. Globalization has seen a phenomenal increase in flows of foreign direct investment and also stimulated the development of legal mechanisms to protect foreign direct investment, and particularly investment treaties. A network of over two thousand Bilateral Investment Treaties has been created to define and protect the rights of foreign investors, supplemented by some ambitious multilateral instruments such as NAFTA and the Energy Charter Treaty. 1

A Bilateral Investment Treaty (BIT) is a treaty between two States establishing a legal framework for the treatment of investment flows between the two nations. It creates rights for investors of both States, which can be called 'treaty rights', while legal proceedings arising from these rights can be called 'treaty claims'. The parties to a treaty claim are an investor of one State Party (known as the investor's 'Home State') and the State where the particular investment was made (known as the 'Host State').

Foreign investment also usually involves contracts between the investor and entities within the Host State. These contracts might take the form of a[Page13:] concession contract with the State itself, or a territorial unit of the State, or might involve contracts with various state agencies. These contracts will also create rights (and obligations) for investors, which can be called 'contract rights' (which give rise to legal proceedings called 'contract claims'). The distinction between treaty rights and contract rights is fundamental to understanding recent developments in investor-State arbitrations and the modern regime of investment protection. Conceptually it is relatively simple but in complex disputes arising from a major foreign investment, maintaining the distinction between these two sources of rights can be problematic.

The ultimate forum for the resolution of an investment dispute depends on a series of choices made by the foreign investor. The first choice is the choice to pursue legal redress. In some investment disputes, the pursuit of legal redress might not be desirable (or not immediately desirable) as the investor seeks resolution of the dispute through direct negotiation, or political or diplomatic approaches. Once the decision has been taken by the investor to seek the enforcement of its legal rights, the next question is which rights should be enforced? Where there is a BIT between the investor's Home State and the Host State, the investor might pursue its treaty rights. A concession contract will create contract rights. There might also be other rights created by domestic legislation. This 'choice of rights' is a crucial decision for an investor in a foreign investment dispute.

If the investor chooses to pursue its treaty rights, then it faces further important choices. Firstly, it must select from the various rights conferred on investors by the BIT those rights which support its entitlement to relief against the Host State in the context of the facts of the particular dispute. Secondly, BITs have detailed dispute resolution clauses that prescribe a dispute resolution process requiring a choice of forum by the investor.

This paper is in three parts. The first part examines the choice of rights, and particularly the difference between treaty and contract rights. The second part considers the content of the treaty rights that normally appear in BITs. Part III examines the choice of forum for treaty claims, and considers the structure of a typical dispute resolution clause in a BIT.

PART I - TREATY AND CONTRACT CLAIMS

The choice of rights by the investor will determine the course of the investment dispute. Does the investor need to choose between treaty rights and contract[Page14:] rights, or can the investor pursue both types of rights simultaneously in the same forum, or simultaneously in separate forums? The strategic importance of this decision cannot be exaggerated. This decision requires a clear understanding of the distinction and differences between treaty and contract claims.

1. The distinction between treaty and contract claims

There are five criteria that serve to distinguish a treaty claim based on treaty rights, from a contract claim arising in the context of the same dispute. The first of these criteria is the unique criterion that always distinguishes a treaty claim from a contract claim. The other four criteria normally will distinguish a treaty claim from a contract claim, but not without the possibility of overlapping in particular cases:

The source of the right

The most fundamental distinction between a treaty claim and a contract claim is the source of the right on which the claim is based. The basis (or 'cause of action') of a treaty claim is a right established and defined in an investment treaty, while the basis of a contract claim is some right created and defined in a contract.

The source of the right is the unique distinguishing feature of a treaty claim without any possible overlap with a contract claim. A treaty right can never arise from a contract. 2

The content of the right

The content of treaty rights is normally quite distinct from that of contract rights. The most familiar treaty rights established by BITs are of a generic nature and defined by international law (i.e., the rights to national treatment, most-favoured-nation treatment, non-discriminatory treatment, fair and equal treatment, and compensation in the event of expropriation, as discussed in Part II below). In contrast, contract rights are normally specific to the investment and defined by the domestic law of the Host State.

However, it is possible for the content of treaty and contract rights to overlap. For example, an investor that enjoys a right to compensation for expropriation under a BIT might negotiate and receive an identical right in a concession contract with the Host State. In the event that the[Page15:] investment is expropriated, the investor would have the possibility of bringing both a treaty claim and a contract claim for breach of two identical rights. In such a case the treaty and contract claims would still be distinguished by the sources of the rights, but the content of the rights would be identical.

Similarly, the State Parties to a BIT might specifically agree to observe any contractual obligations that they may have with nationals of the other State Party. Depending on the wording of such clauses (known as 'umbrella clauses') the effect can be to replicate every contractual obligation in a concession contract between an investor and the Host State as a treaty obligation. Again, although the content of the treaty rights created by an umbrella clause will be identical to the contract rights, the sources of the rights remain distinct (in one case being the umbrella clause in the BIT, and in the other the concession contract itself). 3

The parties to the claim

The parties to a treaty claim are always an investor of the Home State (who can demonstrate his nationality in the terms defined in the BIT) and the Host State.

The State Party is the State itself, and not a Federal or regional unit, or any state entity or agency. 4 This is so even though the investor has had no direct contact with the State at a national level and complains, for example, of its treatment by a provincial state agency. However, where an investor makes a treaty claim based on an exercise of governmental authority at a lower level, then the investor must demonstrate that the State is responsible for this conduct in international law.

Accordingly, the doctrine of State responsibility, or which actions by internal organs of the State might be attributed to the State as a matter of public international law, is often an important element in the determination of a treaty claim. The principles of State responsibility have been the subject of long examination by the International Law Commission. 5 The Maffezini arbitration,6 which considered whether the actions of a regional state agency might be attributed to the Kingdom of Spain, is an excellent recent illustration of the operation of the doctrine of State responsibility at the jurisdiction and merits phases of an investor-State arbitration. [Page16:]

In contrast, the parties to a contract claim are the parties to the contract. If the foreign investor enters into a concession contract with the Host State, as in Lanco v. The Argentine Republic, discussed below, then the parties to a treaty claim will be identical to the parties to a contract claim. However, the investment might relate to the affairs of a region of a State, in which case the investors are likely to be dealing directly with regional authorities and might have a concession contract with these authorities (as, for example, in the Vivendi arbitration (Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic),7 where the investor had entered into a concession contract with the Province of Tucumán, a Federal unit in the Republic of Argentina). Other possibilities are that the investor has contractual relations with administrative agencies, or indeed only with private parties in the Host State.

Accordingly, the Host State is always a party to a treaty claim, but only a party to a contract claim when the Host State is in fact a party to a contract with the investor.

The applicable law

Another potential difference between a treaty claim and a contract claim is the applicable law. The applicable law under a BIT normally includes the provisions of the BIT itself, the domestic law of the Host State and '…the general principles of international law…'. 8 In contrast, concession contracts are normally subject to the domestic law of the Home State.

In practical terms, this difference primarily relates to the role of international law. The typical treaty rights have been the subject of considerable doctrine and jurisprudence in public international law, which will be considered by an arbitral tribunal in determining the dispute. In contrast, a contract claim is likely to be determined according to the Host State's law relating to administrative contracts.

The liability of the Host State

Finally, a successful treaty claim results in State responsibility in international law. A successful contract claim results in State responsibility under the rules of its domestic law. 9[Page17:]

However, it is possible for the nature of State liability under treaty and a contract to overlap. State liability for breach of contract in domestic law might lead to international responsibility where it is compounded by an exhaustion of domestic remedies and a denial of justice. The confusion in the Vivendi arbitration between State responsibility under the France-Argentina BIT and State responsibility arising from a denial of justice suggests that the character of State liability is not reliable as an exclusive guide to distinguish treaty and contract claims.

There is also school of thought that supports the view that the breach of a state contract by the State might in some circumstances create a direct international responsibility. 10

If we now return to the question posed at the outset of this section of whether treaty claims and contract claims present a choice for the investor, or whether they might be pursued simultaneously, the answer would appear to be that they might be pursued simultaneously, each in accordance with its applicable dispute resolution provisions. A BIT and a concession contract are two independent sources of rights and an investor might utilise them both. This line of argument is supported by the excellent description of the conceptual separation of treaty rights and contract rights of the ad hoc Committee in the Vivendi arbitration: 11

"95. As to the relation between breach of contract and breach of treaty in the present case, it must be stressed that Art.3 and 5 of the BIT do not relate directly to breach of a municipal contract. Rather, they set an independent standard. A state may breach a treaty without breaching a contract, and vice versa….

96…whether there has been a breach of the BIT and whether there has been a breach of the contract are different questions. Each of these claims will be determined by reference to its own proper or applicable law - in the case of the BIT by international law; in the case of the concession contract, by the proper law of the Contract…"

However, as the history of the Vivendi arbitration demonstrates, in practical terms contract and treaty rights are often intertwined in various ways so that an attempt to pursue them both simultaneously always involves risks (discussed below) that might jeopardise the treaty rights. In some cases the[Page18:] terms of a treaty will force the investor to choose between treaty and contract claims and, even if such a choice is not clearly demanded by the treaty, it will usually be prudent for an investor to confine its legal action to a single forum. 12

An investor faced with a choice between enforcement of treaty and contractual rights will normally choose the treaty rights, 13 initiate a treaty claim, and the prudent course is then to disregard or at least defer any contract claims. 14 However, and as the Vivendi arbitration again demonstrates, even a claimant determined to pursue treaty claims only might find that its treaty and contract rights stubbornly overlap, and that this circumstance creates confusion, complicates argument, and might even lead the Arbitral Tribunal into error. The overlap and apparent conflict between treaty and contract claims in terms of the content of the rights, the parties to the claims, the applicable law, and the liability of the Host State creates two distinct risks: Firstly, the risk of a duplication of proceedings, and consequently of inconsistent awards and judgements; and secondly, of confusion between treaty and contract claims, leading to unsound awards.

2. The risk of duplication of proceedings

The need to develop techniques to avoid a duplication of proceedings is likely to be a major challenge for investor-State arbitration in the near future. The problem is already anticipated by many investment treaties, which provide either that the Claimant must elect between pursuing a claim in domestic courts or international arbitration, or alternatively must waive claims in any other forum as a precondition to international arbitration. However, these two techniques of election and waiver have created further confusion by failing to clearly distinguish between treaty and contract claims.

The first type of provision, popularly known as a 'fork-in-the-road clause', is well illustrated by the final sentence of Art.8(2) of the France-Argentina BIT: 15

"1. Any dispute relating to investments, within the meaning of this agreement, between one of the Contracting Parties and an investor of the other Contracting Party, shall, as far as possible, be resolved through amicable consultations between both parties to the dispute. [Page19:]

2. If such dispute could not be solved within six months from thetime it was stated by any of the parties concerned, it shall be submitted, at the request of the investor:

- either to the national jurisdictions of the Contracting Party involved

in the dispute; - or to international arbitration… Once an investor has submitted the dispute either to the jurisdictions of the Contracting Party involved or to international arbitration, the choice of one or the other of these procedures shall be final."

An example of a waiver appears in Art.1121 of NAFTA:

"Art.1121: Conditions Precedent to Submission of a Claim to Arbitration

1. A disputing investor may submit a claim under Art.1116 to

arbitration only if: …

(b) the investor…waive[s its] right to initiate or continue before anyadministrative tribunal or court under the law of any Party, or other dispute settlement procedures, any proceedings with respect to the measure … that is alleged to be a breach …, except for proceedings for injunctive, declaratory or other extraordinary relief,…"

These provisions are ambiguous as to whether an investor must make the election, or waive domestic proceedings, in respect of all claims arising under the particular treaty, or all claims relating to the dispute regardless of their source. In other words, do these provisions merely require a choice of forum for treaty claims (and have no implications for contract claims), or do they require an immediate and irrevocable choice between treaty claims and contract claims? Art.8 of the France-Argentina BIT requires the investor to make the election between international arbitration and the domestic courts in 'any dispute relating to investments' which would seem to mean that an investor is prohibited from pursuing in separate forums treaty and contract claims arising from the same investment dispute. In respect of NAFTA this very issue was considered in Waste Management Inc v. United Mexican States16, where the Claimant argued that the waiver required by NAFTA did not apply to Mexican proceedings '…involving allegations that [Mexico] has violated duties imposed by other sources of law, including the municipal law of Mexico.' The arbitral tribunal rejected this argument, reasoning that[Page20:] "…when both legal actions have a legal basis derived from the same measures, they can no longer continue simultaneously in light of the imminent risk that the Claimant may obtain the double benefit in its claim for damages. This is precisely what NAFTA Art.1121 seeks to avoid." 17

Accordingly, it is impossible to generalise on whether a 'fork-in-the-road' clause or waiver forces an investor to elect between treaty and contract claims, because it would seem to depend on the exact wording of the treaty. A different but equally problematic technique adopted by some BITs (discussed in Part III-3 below) is to require prior recourse by the investor to domestic courts as a precondition to the right to international arbitration under the BIT, meaning that treaty rights might have to be pursued sequentially in two distinct forums. In light of these complications, the prudent course for the investor is not to jeopardise its treaty claims by pursing any proceedings in another forum, except where those proceedings are required by the BIT itself.

However, behind these practical complexities requiring prudence from the investor and close attention to the language of individual BITs, there is a more fundamental problem for investor-State arbitrations. BITs have created a new source of rights, and with them a risk of duplication of claims and double recovery by investors. It seems likely that investor-State arbitral tribunals will have to develop doctrines similar to lis pendens and forum non conveniens to confront this issue in the near future.

3. The confusion between treaty and contract claims

The risk of confusion between treaty and contract claims resulting in an unsound award is well illustrated by the Vivendi arbitration. 18 Here the claimants were French investors in Argentina, who commenced ICSID arbitration on the basis that Argentina was in breach of its obligations under Art.3 and Art.5 of the France-Argentine BIT (by which Argentina undertook to grant French investors 'fair and equitable treatment' according to the principles of international law, to provide 'protection and full security' to investments in accordance with the principle of fair and equitable treatment, and not to expropriate investments without prompt and adequate consideration). [Page21:]

The Claimants also had a concession contract with the Province of Tucumán. The France-Argentine BIT gave the investor the right to select ICSID arbitration for the resolution of investment disputes, while the concession contract referred contractual disputes to the Contentious-Administrative Tribunals of Tucumán.

The Claimants did not rely primarily on actions of the Republic of Argentina to prove breaches of Art.3 and 5 of the France-Argentina BIT, but on actions of the Province of Tucumán. This was not problematic from the perspective of State responsibility because in a Federal State all of the actions of a Federal unit are, as a matter of public international law, attributed to the State itself. 19 Further, the actions of the Province of Tucumán relied upon were closely related to the concession contract, including allegations of interference with the concession, reduction in the tariff earned under the concession, and abuses of regulatory authority by the Province of Tucumán. The determination of the treaty claims thus came to require an assessment of the conduct of the parties to the concession contract.

The Arbitral Tribunal decided, on the complex facts of this case, that decisions relating to disputes arising from the concession contract were, according to the dispute resolution provisions of the concession contract, within the exclusive jurisdiction of the Contentious Administrative Tribunals of Tucumán: 20

"77. …[The] actions of the Province of Tucumán on which the Claimants rely for their position attributing liability to the Argentine Republic are closely linked to the performance or non-performance of the parties under the concession contract. The Tribunal concludes, accordingly, that all of the issues relevant to the legal basis for these claims against [the Republic of Argentina] arose from disputes between Claimants and Tucumán concerning their performance and nonperformance under the concession contract…

79. Here it is clear that, given the nature of the dispute between Claimants and the Province of Tucumán, it is not possible for this Tribunal to determine which actions of the Province were taken in exercise of its sovereign authority and which in the exercise of its rights as a party to the concession contract considering, in particular, that much of the evidence presented in this case has involved detailed issues of performance and rates under the concession contract. To[Page22:] make such determinations, the Tribunal would have to undertake a detailed interpretation and application of the concession contract, a task left by the parties to that contract to the exclusive jurisdiction of the administrative courts of Tucumán."

However, the Arbitral Tribunal fell into error in this reasoning by confusing claims before it under the France-Argentina BIT, and possible claims under the concession contract. There were no contractual claims before the Arbitral Tribunal-only treaty claims that raised issues involving the interpretation of the concession contract-and so the effect of referring these issues to these Contentious Administrative Tribunals was to fail to decide these treaty claims.

This was recognised by the ad hoc Committee that considered the annulment application brought by the Claimant pursuant to the annulment procedure in Art.52 of the Washington Convention: 21

"102. In the Committee's view, it is not open to an ICSID tribunal having jurisdiction under a BIT in respect of a claim based upon a substantive provision of that BIT, to dismiss the claim on the ground that it could or should have been dealt with by a national court…

105. …[I]t is one thing to exercise contractual jurisdiction (arguably exclusively vested in the administrative tribunals of Tucumán by virtue of the concession contract) and another to take into account the terms of a contract in determining whether there has been a breach of a distinct standard of international law, such as that reflected in Art.3 of the BIT."

The Award of the Arbitral Tribunal was therefore infra petita in that it failed to decide whether the alleged actions by the Province of Tucumán amounted to a breach of the France-Argentina BIT. It was properly annulled by the ad hoc Committee under Art.52(1)(b) of the Washington Convention.

The Vivendi arbitration is an excellent illustration of the possible complexities of the relationship between treaty claims and contract claims. A treaty claim- defined by its source, subject matter, parties' applicable law, and the nature of the Host State liability-is conceptually separate from a contractual claim, and it is imperative that the parties involved in the arbitration of an investment dispute, and particularly the Arbitral Tribunal, maintain a clear focus on this concept throughout the arbitration. [Page23:]

PART II - THE CONTENT OF TREATY RIGHTS

An investor who chooses to pursue a treaty claim must demonstrate that there is an investment with the meaning of the BIT. The investor must also identify the treaty rights relied upon in support of the treaty claim. These matters are examined in this part of this paper.

1. The concept of investment

BITs provide a legal framework for the treatment of the investments, and therefore the definition of investment is of fundamental importance to the jurisdiction ratione materiae of an arbitral tribunal established pursuant to a BIT. An investment is also an element of the definition of the jurisdiction of the International Centre for the Settlement of Investment Dispute (ICSID). Art.25 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington Convention) 22 provides that the jurisdiction of the Center shall extend to '…any legal dispute arising directly out of an investment…' The Washington Convention gives no definition of investment but '…the Convention's drafting history leaves no doubt that, besides ordinary commercial transactions, Art.25 covers almost any area of economic activity…' 23

Almost all BITs contain a definition of investment. The standard BIT practice is to combine

(i) an illustrative list of assets specifically protected with

(ii) an open-ended definition of investment, including all categories of assets,rights and interests. The result is a very broad definition of investment where '…everything of economic value, virtually without limitation…' may be protected by the BIT, which ensures maximum flexibility in the BIT's application. 24

Notwithstanding the practice of broad open-ended definitions, there has emerged a certain consensus regarding the features of an investment for the purpose of investor-State arbitrations. An investment does not include nonrecurring transactions such as simple sales and purchases of goods, or short-term commercial credits. The following five characteristics of an investment have been identified and approved (in similar although not identical terms) by a number of commentators and in a recent Award: 25

An investment has a certain duration;

An investment involves a certain regularity of profit and return;

An investment typically involves an element of risk for both sides; [Page24:]

An investment normally involves a substantial commitment or contribution;

An investment should be significant for the Host State's development.

The meaning of 'investment', both within a particular BIT and for the purposes of Art.25 of the Washington Convention, was recently considered in the Award on Jurisdiction in Salini Costruttori S.p.A. and Italstrade S.p.A. v. The Kingdom of Morocco.26 In this case the Host State (the Kingdom of Morocco) held an 89% interest in Societé Nationale des Autoroutes du Maroc (ADM). In 1995 ADM had entered into a contract with two Italian companies, Salini Costruttori S.p.A. and Italstrade S.p.A, for the construction of a highway between Fez and Rabat. Subsequently, Salini commenced arbitration pursuant to the Italy-Morocco BIT, alleging that Morocco was in breach of its obligations under the BIT by reason of ADM's breaches of contract.

As a preliminary jurisdictional issue the Arbitral Tribunal considered whether the contract was an investment, both for the purposes of Art.1 of the Italy-Morocco BIT and also for Art.25 of the Washington Convention. Art.1(c) and (e) of the Italy-Morocco BIT included within the definition of investment '…any contractual rights having an economic value…' and '…any right of economic nature conferred by a law or contract…', subject to the qualification that rights of this nature '…must have been approved by the competent authority…' The Tribunal found that the contract had in fact been approved by competent authorities and was, therefore, an investment within the meaning of the BIT.

The Tribunal then had to consider whether a contract was an investment for the purposes of Art.25 of the Washington Convention, where there was no definition of this term. The Tribunal also held that the Claimant's contractual rights were an investment within the meaning of Art.25. The Tribunal reasoned that an investment implies '…contributions, a certain duration of the contract, and a participation in the risks of the transaction …[and] the contribution to the economic development of the host State.' 27 The Claimant had contributed to the highway construction project with know-how, technical equipment and qualified personnel. The Claimant had also obtained a loan and bank guarantees to finance the project execution. The project had a certain duration, and the Claimant had assumed risks. These risks included, for example, legal risks arising from the law relating to administrative contracts for public infrastructure (where ADM retained powers to terminate the contract or to impose amendments without any price adjustment), and possible legislative[Page25:] amendments by the Host State that might result in higher labour costs for the investor. In addition, the Tribunal considered that the construction of the highway at issue would enhance Morocco's public interest, and amounted to an infrastructure project which often falls within the faculty of a sovereign State. 28

2. The content of treaty rights

Investor-State arbitration differs fundamentally from traditional international commercial arbitration in that its basis lies in treaties between States (either multilateral or bilateral) rather than in private agreements. This treaty basis and the State party involvement mean that public international law has a prominent role in investor-State arbitrations.

The conventional position in international law is that treaties do not create direct rights and obligations for private individuals. 29 Nevertheless, public international law has increasingly recognised that the State Parties to some treaties-particularly treaties dealing with human rights or investment protection-intend to create rights for private parties against States, and effect has been given to this intention by recognising the 'procedural capacity' of individuals to enforce these rights by means of treaty claims against States. 30

The content and definition of treaty rights depend on the terms of the particular BIT that creates the rights. The form of BITs varies widely, reflecting the different priorities, approaches and bargaining positions of states. However, BITs are intended to facilitate investment, and therefore address issues of laws, policies or official action that might impede or endanger investment flows. Accordingly, issues of the admission of investments, treatment of investments, guarantees of the free transfer of funds and reparation of capital and profits, provision for compensation in the event of expropriation, and dispute resolution are invariably included in BITs. BITs might also include provisions relating to performance requirements, subrogation, transparency of national laws, and reserved sectors and activities. .31

There is, however, a core of generic treaty rights, well established and defined in international law, that in practice have formed the basis of treaty claims by investors against Host States. There is a rapidly growing arbitral jurisprudence relating to these treaty rights which is, however, beyond the scope of this article. [Page26:]

The core of treaty rights is the following:

The right to national treatment

Most BITs impose on the Host State the obligation to accord the foreign investor the same treatment as that enjoyed by its own nationals. This right protects foreign investors from special requirements that would result in a competitive disadvantage in comparison with national investors. 32

The right to most-favoured-nation treatment

This right guarantees investors of the Home State treatment no less favourable than that which the Host State accords to nationals of any other country. Again, this right protects an investor from special requirements and a competitive disadvantage, this time vis-à-vis foreign investors from other countries. 33

The right to non-discriminatory treatment

BITs often contain a prohibition on measures which discriminate against the foreign investor.

The right to fair and equitable treatment

The content of the right to fair and equitable treatment is a controversial question in investor-State arbitration at present. One view, recently supported by the NAFTA Free Trade Commission, is that fair and equitable treatment equates with the minimum standard of protection for aliens in customary international law. The alternative view is that fair and equitable treatment is an independent and self-contained standard. 34

The right to compensation for expropriation

BITs invariably include a right to compensation if the Host State expropriates the investment. The meaning of 'expropriation', and scope of this right to compensation, particularly in the context of the adverse effects on foreign investments of environmental or public health regulation, is another contentious issue in investor-State arbitrations today. 35

PART III - CHOICE OF FORUM: BIT DISPUTE RESOLUTION CLAUSES

A typical dispute resolution clause in an investment treaty involves four distinct steps between the recognition that a dispute has arisen, and the constitution of an arbitral tribunal: [Page27:]

1. The period of consultation and negotiation;

2. The waiting period;

3. The choice of forum;

4. The choice of arbitral institution or rules.

1. The period of consultation and negotiation

In the event of a dispute, bilateral investment treaties almost invariably direct the investor and the Host State to attempt to reach an amicable settlement. This requirement might direct the Parties to 'seek resolution through consultation and negotiation' or more generally direct that disputes '…should, if possible, be resolved amicably.' 36 The substantive content of this first step in dispute resolution might not be onerous, but the obligation is real, for an investor must at least notify the Host State of the grounds of the dispute in writing, and have a willingness to discuss and settle the dispute, before proceeding to arbitration or litigation.

In the arbitration in Salini Costruttori S.p.A. and Italstrade S.p.A. v. The Kingdom of Morocco the Host State argued that the Request to Arbitrate was premature (and therefore the Tribunal did not have jurisdiction) because the various documents relied upon by the Claimants as notification of the disputes were inadequate. In particular, the Kingdom of Morocco made a particularly sharp distinction between treaty and contract claims in arguing that the notification of the disputes made pursuant to the contract between the Claimants and ADM could not be attributed to the Kingdom of Morocco (notwithstanding that the President of ADM was also the Minister of Infrastructure). The Arbitral Tribunal refused to adopt a formalistic approach to the Treaty requirement of an attempt at amicable resolution, stating that an attempt to reach amicable settlement essentially involved two elements, '…the existence of grounds for complaint and the desire to resolve these matters out-of-court.' The attempt at settlement did not need to be comprehensive or detailed, and on the facts the various communications of the Claimants constituted a written request aimed at the amicable settlement of the dispute, referred to the same grounds of complaint as raised in the arbitration, and '…allowed or, at least, should have allowed the Kingdom of Morocco to become aware of the dispute and to take the necessary steps to enable the resolution of the dispute.' 37[Page28:]

2. The waiting period

The obligation to seek an amicable settlement is normally supported by a mandatory waiting period prior to commencing arbitration or litigation. This period can be used for settlement negotiation and/or the preparation for the arbitration or litigation. A period of three or six months is a common waiting period prior to the commencement of legal proceedings.

The consequences of a failure to comply with a mandatory consultation period have recently been considered by the arbitral tribunal in SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan. The tribunal stated that consultation periods are generally treated '…as directory and procedural rather than as mandatory and jurisdictional in nature. Compliance with such a requirement is, accordingly, not seen as amounting to a condition precedent for the vesting of jurisdiction.' 38

3. The choice of forum

The next step for the investor, if settlement negotiations have failed and the waiting period has expired, is the choice of forum. The choice of forum clause typically provides for three possible forms of dispute resolution:

1. The courts or administrative tribunals of the State Party;

2. International commercial arbitration;

3. Any applicable, previously agreed dispute settlement procedures.39

The investor normally has the right to elect the forum, and will almost invariably chose international arbitration. 40 However, the investor's choice of this forum is subject to two possible qualifications. Firstly, there is a requirement of prior recourse to domestic courts in some BITs. Secondly, there is the issue of whether the election of the investor is binding on the Host State, which in turn depends on the provisions of the BIT relating to State Party consent to arbitrate. These two important aspects of choice of forum will now be considered.

Prior recourse to domestic courts

Some BITs give preference to dispute resolution by domestic courts by deferring or placing conditions on the election of international arbitration. Before being able to exercise a right to arbitrate the investor might first have to seek to resolve the dispute in domestic courts, and allow those domestic courts a defined period, such as eighteen months, to resolve the dispute. [Page29:]

Art.X of the Spain-Argentina BIT contains such a clause. 41 Its meaning and effect was considered by the Arbitral Tribunal in Maffezini v. The Kingdom of Spain. 42 The Tribunal explained that, in including this clause in the BIT, Spain and Argentina "…wanted to give their respective courts the opportunity, within the specified period of eighteen months, to resolve the dispute, before it could be taken to international arbitration". Further 43

"…while it is true that the parties would be free to seek international arbitration after the expiration of the eighteen-month period, regardless of the outcome of the domestic court proceeding, they are likely to do so only if they were dissatisfied with the domestic court decision. Moreover, they would certainly not do so if they were convinced that the international tribunal would reach the same decision. In that sense the courts of the Contracting Parties are given an opportunity to vindicate the international obligations guaranteed in the BIT. Given the language of the treaty, this is a role which the Contracting Parties can be presumed to have wished to retain for their courts, albeit within a prescribed time limit."

Therefore, the requirement of prior recourse to domestic courts (associated particularly with early BITs executed by Argentina) 44 is intended to balance the investor protection of an enforceable right to arbitrate with the preference of States (derived from considerations of national sovereignty, and supported historically by the Calvo Doctrine) to resolve investment disputes in their domestic courts. There is no requirement of exhaustion of domestic remedies prior to an investor invoking international forms of protection, but there remains a weaker requirement of prior recourse to domestic remedies.

This decision in Maffezini vindicates the investor's enforceable right to arbitrate. The investor enjoys the security of knowing that if his preferred forum is international arbitration, then this choice will ultimately prevail, if the investor is dissatisfied with the progress or outcome of the prior recourse to domestic courts. 45

A requirement of prior recourse to domestic courts is not typical of BIT dispute resolution provisions. It is more usual to provide for a straightforward choice by the investor between domestic courts and international arbitration, with the choice of the investor being immediate and final. [Page30:]

State party consent to arbitrate

An investor-State arbitration pursuant to a BIT requires the consent to arbitrate of the State Party. This is because (i) as a matter of general principle, arbitration is based on the mutual consent of the parties to arbitrate; (ii) Art.25 of the Washington Convention specifically requires the Parties' consent in writing to the submission of their dispute to ICSID jurisdiction; (iii) the enforceability of awards under the New York Convention 1958 is premised on a valid arbitration agreement. What form then, is the form of the consent to arbitrate in an arbitration pursuant to a BIT?

The answer depends on the wording of the dispute resolution provisions of BITs, which vary considerably. However, from the perspective of the investor, dispute resolution clauses fall into two categories. Firstly, those BITs where the State parties expressly give a generic advance consent to arbitration in the BIT itself. Secondly, there are the BITs where the State Party expressly or impliedly reserves its consent, and therefore arbitration requires the express consent to arbitrate of both parties after the dispute has arisen. In the first category, the investor has a right to arbitrate; in the second category there is no right to arbitrate. 46

The first category of an express consent in the BIT itself is well illustrated by this clause, which has appeared in many BITs entered into by the United Kingdom: 47

"Each Contracting Party <b>hereby consents</b> to submit to the International Centre for the Settlement of Investment Disputes…any legal dispute arising between that Contracting Party and a national or company of the other Contracting Party concerning an investment of the latter in the territory of the former."

Similarly, Art.VII(2)(a), the United States-Zaire BIT provides:

"Each Party <b>hereby consents</b> to submit investment disputes to the

International Centre for the Settlement of Investment Disputes (Centre)

for settlement by conciliation or binding arbitration."

In such treaties, the consent to arbitrate of the State Parties is expressly given in advance. The advance consent of State Parties to arbitration does not bind an individual investor, and so an arbitration agreement still requires the consent of the investor, which is normally manifested by the making a request to arbitrate. 48[Page31:]

The juridical nature of the consent to arbitration was examined in the Preliminary Decision on Jurisdiction in Lanco International Inc v. The Argentine Republic. 49 This arbitration involved a claim by a US investor against Argentina under the Argentine-United States BIT.

Art.VII of the Argentine-United States BIT provided for a choice of forum by the investor, between the domestic tribunals of Argentina, arbitration, or any applicable, previously agreed dispute settlement procedures. The investor chose arbitration. There was also a concession contract between the Parties. The disputes resolution clause in the concession contract provided for the resolution of disputes in the Federal Contentious-Administrative Tribunals of Buenos Aires.

The Claimant investor relied on the consent to arbitrate by the State Parties

contained in Art.VII(4) of the BIT, which read:

"Each Party hereby consents to the submission of any investment

dispute for settlement by binding arbitration in accordance with the

choice [of the investor]."

Argentina argued that there was no consent in writing to arbitration for the purposes of Art.25(1) of the Washington Convention because the Parties had subsequently agreed to resolve disputes in the Contentious-Administrative Tribunals of Buenos Aires.

In the analysis of the Arbitral Tribunal, the consent to arbitrate in the BIT constituted an open offer to investors. This offer was accepted by the investor when it indicated in writing its selection of arbitration as the form to resolve disputes: 50

"…consent to ICSID arbitration by a State may come from a bilateral treaty. In this regard, the award in American Manufacturing and Trading, Inc. v. Republic of Zaire (SINZA Award) establishes…that consent for the purposes of Art.25(1) is understood to be given by the State party to the dispute in the bilateral investment treaty from the moment the State extends a generic invitation to all the investors who are nationals of the other Contracting State to submit the settlement of their possible disputes to ICSID jurisdiction. In contrast, the consent of the investor who is a national of the other Contracting State, must be given by the investor in writing, since the consent of the State is not binding on the investor. [Page32:]

Para.44 In the case before us the consent of the Argentine Republic

arises from the ARGENTINA-US Treaty, in which the Argentine

Republic has made a generic offer for submission to ICSID arbitration.

…

The written consent by the Argentine Republic is set forth in the ARGENTINA-US Treaty; as concerns the investor…such consent was set forth in its letter of September 17, 1997, and in the request for arbitration, which was filed with ICSID on October 1, 1997…"

The Lanco Award is significant for its explanation of the nature of the consent to arbitrate of a State Party contained in a BIT. The consent in the BIT is consent in writing by the State to arbitrate within the meaning of Art.25 of the ICSID convention. This consent is not withdrawn, or in any way negated by the subsequent execution of a concession contract between the State and a particular investor containing a dispute resolution clause. This aspect of the Award recognises and gives effect to the distinction between treaty and contract rights.

As regards the investor, this consent is an invitation or 'open offer' to arbitrate, which might be accepted whenever an investment dispute arises. 51 When an investor in writing elects arbitration of an investment dispute, the State's 'open offer' is thereby accepted, an arbitration agreement has been formed, and there is mutual consent in writing by both parties for the purposes of Art.25 of the Washington Convention.

The second category of BITs refers to arbitration in terms that expressly or by necessary implication defer consent or require an independent arbitration agreement between the investor and the State. Consider, for example, Art.9(1) of the Malaysian-Sweden BIT (emphasis added):

"In the event of a dispute arising between a national or a company of one Contracting Party and the other Contracting Party in connection with an investment in the territory of that other Contracting Party, it shall<b> upon the agreement by both parties to the dispute</b> be submitted for arbitration to the International Centre for Settlement of Investment Disputes established under the Washington Convention ..."

Such a clause is not a binding consent to arbitrate, so that in the event of a dispute arising arbitration is only possible if the investor and the State enter into separate agreement to arbitrate. Dolzer and Stevens refer to many examples[Page33:] of arbitration clauses that do not amount to a consent to arbitrate sufficient to establish jurisdiction for an ICSID tribunal. 52 Some urge or even require the State to give its consent to arbitration, but fall short of creating an enforceable right in the investor to arbitrate. The intention of such clauses appears to be to express a preference (and, in some cases, a very strong preference) for the arbitration of investment disputes, and to compel the Host State, if it wishes to avoid arbitration, to make a positive decision not to arbitrate by withholding its consent.

On this basis, these clauses seem designed simultaneously to vindicate a principle that arbitration is the proper means to resolve investment disputes, while preserving a sovereign independence in the State parties to deal with investment disputes on a case-by-case basis as they arise. Their underlying rationale is therefore almost identical to the prior recourse to domestic courts mechanism considered above, except that the prior recourse mechanism grants the investor a binding (though deferred and conditional) right to arbitrate, while a clause withholding consent creates no right to arbitrate. The balance is shifted in favour of the State, which has a privilege to arbitrate an investment dispute if the investor elects this option, but no duty to do so.

Nevertheless, it might be true, as Dolzer and Stevens suggest, that such clauses strengthen the investor's position politically, and would enable the investor Home State to more readily exert diplomatic pressure in favour of arbitration.

4. The choice of arbitral institution or rules

Once an investor has chosen arbitration as the forum to resolve an investment dispute, the question then arises as to whether the arbitration should be ad hoc or institutional and, if the latter, the choice of the administrating institution. There is considerable variety in BIT practice on this point, but BITs most commonly designate institutional arbitration with ICSID, which is not surprising as ICSID was established specifically to administer the arbitration of investment disputes between States and the nationals of another State. After ICSID arbitration, another common option is ad hoc arbitration under the UNCITRAL Arbitration Rules. The Court of Arbitration of the International Chamber of Commerce is also a nominated institution in many BITs. [Page34:]

In some BITs the investor has the power to choose the institution or applicable rules, in others the choice is made by agreement of the parties (with a specified alternative in the event that the parties fail to agree), and in some BITs (where the State party has the power to commence arbitration of an investment dispute) 53 the choice is made by the party that commences the arbitration. 54

CONCLUSION

This review of the relationship between treaty and contract claims in investment disputes, and the nature of choice of forum provisions, demonstrates the diversity and complexity of the procedural requirements of modern investment treaties. An investor requires a clear dispute resolution strategy for any investor-State dispute before initiating any proceedings or making any choice of forum.

Investment treaties have created a new source of rights directly enforceable by the investor, thereby increasing the security and encouraging flows of foreign direct investment. However, this new source of rights is generating novel jurisprudential questions, and in particular issues relating to the possible duplication of claims, proceedings and relief. [Page35:]

1
On globalization, the growth of the investment arbitration, and some of the tensions that have appeared as a result, see Bernardo M. Cremades and David J.A. Cairns, 'The Brave New World of Global Arbitration', 3 Journal of World Investment173-209 (2002).

2
However, it does seem theoretically possible (at least in monist legal systems) for a treaty to create a contract right by stipulating that all rights created by the treaty will form part of any contract between an investor and a State Party. However, there seems little practical justification for such a provision, as the objective of BITs is not to increase the contractual protection of investors, but to establish an independent treaty jurisdiction.

3
On umbrella clauses, see Dolzer and Stevens, Bilateral Investment Treaties,(The Hague, 1995) pp.81-82; Christoph Schreuer, 'Travelling the BIT Route-Of Waiting Periods, Umbrella Clauses and Forks in the Road',5 Journal of World Investment 231 (2004); and Stanimir A. Alexandrov, 'Breaches of Contract and Breaches of Treaty - The Jurisdiction of Treaty-based Arbitration Tribunals to Decide Breach of Contract Claims in SGS v. Pakistan and SGS v. Philippines', 5 Journal of World Investment 555 (2004). The effect of umbrella clauses has recently been considered in SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan (ICSID Case No. ARB/01/13, August 6, 2003),18 ICSID Review-Foreign Investment Law Journal 301 (2003), and SGS Société Générale de Surveillance S.A.v. Republic of the Philippines (Case No. ARB/02/6).

4
The BIT jurisdiction ratione personae should be distinguished in this respect from the general ICSID jurisdiction, which provides for arbitration of investment disputes between an investor and 'any constituent subdivision or agency of a Contracting State':see Art. 25(1) and 25(3) of the Washington Convention. This jurisdiction relates, not to treaty claims, but to contract claims arising from an investment agreement between the investor and the subdivision or agency of the Host State: see Christoph Schreuer, The ICSID Convention: ACommentary (Cambridge University Press, 2001) Art.25, Paras.142-164, and 608-621.

5
See James Crawford,The International Law Commission's Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge University Press, 2002).

6
Emilio Agustín Maffezini v. The Kingdom of Spain(ICSID Case No. ARB/97/7), Decision of the Tribunal on Objections to Jurisdiction dated January 25, 2000, 15 ICSID Review-Foreign Investment Law Journal 212 (2001); Award dated November 13, 2000, 16 ICSID Review-Foreign Investment Law Journal 248 (2001).

7
Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic (ICSID Case No. ARB/97/3), Award of the Tribunal of November 21, 2000, 40 ILM 426-453 (2001); Decision on Annulment of July 3, 2002, 41 ILM 1135-1162 (2002).

8
E.g. Art.X.5 of the Spain-Argentina BIT; Art.8.4 of the France-Argentina BIT.

9
It is true that the liability of the Host State might be viewed as a mere attribute of the source of the right; that is, a treaty claim results in State responsibility because the source of the right is a treaty, and the contract claim results in liability in domestic law because the source of the right is not a treaty. However, it seems preferable to consider the liability of the State as a distinct characteristic.

10
Ian Brownlie Q.C., Principles of Public International Law (Oxford University Press, 5th Edn.) at pp.551-553; R. J. Jennings, 'State Contracts in International Law', 37 British Yearbook 156-182 (1961).

11
Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment of July 3, 2002, 41 ILM 1135 (2002)at p.1154, Paras.95-96.

12
A clear exception to this general proposition in the text is a treaty claim pursuant to BITs that require prior recourse to domestic courts as a prerequisite to international arbitration. This requirement of prior recourse to domestic courts of some BITs is discussed in Part III(3)(a) below.

13
The reasons favouring treaty rights include the availability of a neutral forum (cf. the quotation from Maffezini v.The Kingdom of Spain, footnote 40 below), the definition of the investor's rights in international instruments and international law rather than domestic law, and the international enforceability of the award.

14
Of course, if there is an umbrella clause in the BIT, then any breach of contract might constitute a breach of the treaty and so form the basis of a treaty claim.

15
Acuerdo entre el Gobierno de La Republica Argentina y el Gobierno de La Republica Francesa Para la Promoción y la Protección Reciproca de las Inversiones, el 3 de Julio de 1991 (the quotation in the text is a translation; the authentic texts are in Spanish and French).

16
ICSID Case No. ARB (AF)/98/2, Arbitral Award dated June 2, 2000, reported in 15 ICSID Review-Foreign Investment Law Journal 214 (2000). On this decision see also Bernardo M. Cremades and David J.A. Cairns, 'The Brave New World of Global Arbitration', 3 Journal of World Investment 173-209 (2002) at pp.189-192; and Charles N. Brower and Jeremy K. Sharpe, 'Multiple and Conflicting International Arbitral Awards', 4 Journal of World Investment 211-222 (2003).

17
15 ICSID Review-Foreign Investment Law Journal 214 (2000) at pp.235-236.

18
Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic (ICSID Case No. ARB/97/3), Award of the Tribunal of November 21, 2000, 40 ILM 426-453 (2001); Decision on Annulment of July 3, 2002, 41 ILM 1135-1162 (2002).

19
James Crawford, The International Law Commission's Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge University Press, 2002) at pp.97-98, Art.4.

20
Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic (ICSID Case No. ARB/97/3), Award of the Tribunal of November 21, 2000, 40 ILM 426at pp.443-444 (2001).

21
Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic (ICSID Case No. ARB/97/3), Decision on Annulment of July 3, 2002, 41 ILM 1135at p.1156, Para.105 (2002).

22
Washington, March 18, 1965, 575 U.N.T.S. 159.

23
Christoph Schreuer, 'Commentary on the ICSID Convention',11 ICSID Review-Foreign Investment Law Journal 318 (1996) at pp.358-359 and 371.

24
See Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995) at pp.25-31; UNCTAD, UNCTAD Series on Issues in International Investment Agreements: Scope and Definition (United Nations, New York and Geneva 1999) at pp.18.

25
See Christoph Schreuer, The ICSID Convention: ACommentary (Cambridge University Press, 2001), Art.25, Paras.119-124; UNCTAD, 'Dispute Settlement: International Centre for the Settlement of Investment Disputes - 2.5 Requirements Rationae Materiae' (2003), available at www.unctad.org/en/docs/edmmisc232add4_en.pdf, Salini Costruttori S.p.A. and Italstrade S.p.A.v. The Kingdom of Morocco(ICSID Case No. ARB/00/4), 'Award on Jurisdiction' of July 23, 2001 (French original), 129 Journal du Droit International 196, (2002) Para.52 (citingEmmanuel Gaillard, Journal du Droit International (1999)at p.292).

26
ICSID Case No. ARB/00/4, Award on Jurisdiction of July 23, 2001, 129 Journal du Droit International 196 (2002), (French original); 42 International Legal Materials 606-624 (2003) (English translation with introductory note by E. Gaillard and Y. Banifatemi). The meaning of investment has also been recently considered in Mihaly International Corporation v. Democratic Socialist Republic of Sri Lanka(ICSID Case No. ARB/00/2), Award of March 15, 2002,17 ICSID Review-Foreign Investment Law Journal (2002) (Pre-investment and development expenditure in respect of a power plant project in Sri Lanka that did not proceed was not an investment within the meaning of Art.25); and Mondev International Ltd.v. United States of America(ICSID Case No. ARB (AF)/99/2), Award of October 11, 2002, 42 International Legal Materials 85 (2003), Paras.76-83 (interpretation of the definition of investment in NAFTA).

27
Salini Costruttori S.p.A. and Italstrade S.p.A. v. The Kingdom of Morocco, Award on Jurisdiction of July 23, 2001, Para.52.

28
Salini Costruttori S.p.A. and Italstrade S.p.A. v. The Kingdom of Morocco, Award on Jurisdiction of July 23, 2001, Paras.53-58.

29
Ian Brownlie Q.C., Principles of Public International Law (Oxford University Press, 5th Edn.) at pp.596-597, footnotes omitted ('Customary international law still maintains the rule that it is the State which has the capacity to present international claims, even though in many cases the claim is substantially that of a private person….As international society is ordered at present, the law operates primarily through the States, and the individual sees international law in many respects as an order concerned with the delegation or delimitation of competences').

30
On treaties conferring procedural capacity on individuals, see Ian Brownlie Q.C., Principles of Public International Law (Oxford University Press, 5th Edn.) at pp.587-598; see also James Crawford, The International Law Commission's Articles on State Responsibility: Introduction, Text and Commentaries (Cambridge University Press, 2002) at pp.209-210.

31
On the content of BIT rights generally, see Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995) Chapters 3 and 4. For the development and content of the United States model BIT text see Kenneth J. Vandevelde, 'U.S. Bilateral Investment Treaties: The Second Wave', 14 Michigan Journal of International Law 621-704 (1993).

32
On the national treatment right, see Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995) at pp.65-66.

33
See Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995) at pp.63-65; Maffezini v. The Kingdom of Spain, Decision of the Tribunal on Objections to Jurisdiction dated January 25, 2000, 15 ICSID Review-Foreign Investment Law Journal 212 (2001), Paras.38-64.

34
On the difficult question of the meaning of the right to fair and equitable treatment see Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995) at pp.58-60; J. C. Thomas, 'Reflections on Article 1105 of NAFTA: History, State Practice and the Influence of Commentators', 17 ICSID Review-Foreign Investment Law Journal 21-101 (2002); Nafta Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions, issued on July 31, 2001.

35
See Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995), Chapter 4; Bernardo M. Cremades and David J. A. Cairns, 'The Brave New World of Global Arbitration', 3 Journal of World Investment 173-209 (2002) at pp.192-197;George H. Aldrich, 'What Constitutes a Compensable Taking of Property? The Decisions of the Iran-United States Claims Tribunal', 88 American Journal of International Law 585-610(1994); Patrick Dumberry, 'Expropriation Under NAFTA Chapter 11 Investment Dispute Settlement Mechanism: Some Comments on the Latest Case Law', International Arbitration Law Review 96-104 (2001).

36
Art.7 of the Argentina-United States BIT, and Art. 8 (1) of the Italy-Morocco BIT, respectively.

37
ICSID Case No. ARB/00/4, Award on Jurisdiction of July 23, 2001, 129 Journal du Droit International 196 (2002) (French original); 42 International Legal Materials 606-624 (2003) (English translation), Paras.11-23 (quotations at Paras.20 and 21), considering Art.8 of the Italy-Morocco BIT. Cf. 'American Manufacturing & Tradingv.Republic of Zaire' (ICSID Case No. ARB/93/1), XXII Yearbook of Commercial Arbitration 60 (1997), where the Tribunal considered and accepted that there had in fact been '…incontestably serious negotiation attempts undertaken by [the investor]…'.

38
ICSID Case No. ARB/01/13, August 6, 2003,18 ICSID Review-Foreign Investment Law Journal 301 (2003) at pp.370 (reference omitted). For a review of the law relating to compliance with waiting periods, see Christoph Schreuer, 'Travelling the BIT Route Of Waiting Periods, Umbrella Clauses and Forks in the Road', 5 Journal of World Investment 231 (2004).

39
For example, Art.7.2(b) of the Argentine-U.S. BIT; Art.10 of the France-Argentina BIT.

40
Cf. Maffezini v. The Kingdom of Spain, Decision of the Tribunal on Objections to Jurisdiction dated January 25, 2000, 15 ICSID Review-Foreign Investment Law Journal 212 (2001), Para.55 ('Traders and investors, like their States of nationality, have traditionally felt that their rights and interests are better protected by recourse to international arbitration than by submission of disputes to domestic courts, while the host governments have traditionally felt that the protection of domestic courts to be preferred. The drafting history of the ICSID Convention provides ample evidence of the conflicting views of those favoring and those supporting policies akin to different versions of the Calvo Clause').

41
Art.X of the Spain-Argentina BIT reads as follows: 'Art.X: Settlement of Disputes Between a Contracting Party and an Investor of the other Contracting Party 1.Disputes which arise within the terms of this Agreement concerning an investment between an investor of one Contracting Party and the other Contracting Party shall, if possible, be settled amicably by the parties to the dispute.2.If the dispute cannot thus be settled within six months following the date on which the dispute has been raised by either party, it shall be submitted to the competent tribunal of the Contracting Party in whose territory the investment was made. 3.The dispute may be submitted to international arbitration in any of the following circumstances: (a) at the request of one of the parties to the dispute, if no decision has been rendered on the merits of the claim after the expiration of a period of eighteen months from the date on which the proceedings referred to in Para.2 of this Article have been initiated, or if such decision has been rendered, but the dispute between the parties continues; (b) if both parties to the dispute agree thereto. 4.In the cases foreseen in Para.3, the disputes between the parties shall be submitted, unless the parties otherwise agree, either to international arbitration under the March 18, 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States or to an ad hoc arbitral tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). If after a period of three months following the submission of the dispute to arbitration by either party, there is no agreement to one of the above alternative procedures, the dispute shall be submitted to arbitration under the March 18, 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, provided that both Contracting Parties have become parties to the said Convention. Otherwise, the dispute shall be submitted to the above mentioned ad hoc tribunal.'

42
Emilio Agustín Maffezini v. The Kingdom of Spain(ICSID Case No. ARB/97/7), 'Decision of the Tribunal on Objections to Jurisdiction' dated January 25, 2000, 15 ICSID Review-Foreign Investment Law Journal 212 (2001); 'Award' dated November 13, 2000, 16 ICSID Review-Foreign Investment Law Journal 248 (2001).

43
Maffezini v. The Kingdom of Spain, Decision of the Tribunal on Objections to Jurisdiction dated January 25, 2000, 15 ICSID Review-Foreign Investment Law Journal 212 (2001), Paras.24-37 (quotations at Paras.35 and 36).

44
On Argentine treaty practice in this respect see Maffezini v. The Kingdom of Spain, Decision of the Tribunal on Objections to Jurisdiction dated January 25, 2000, 15 ICSID Review-Foreign Investment Law Journal 212 (2001), Para.57. See also Dolzer and Stevens, Bilateral Investment Treaties (The Hague, 1995) pp.149-151, which refers to the Netherlands-Jamaica BIT and the Netherlands-Argentina BIT which both contain prior recourse to domestic courts provisions.

45
In Maffezini the Argentine investor in fact commenced arbitration against Spain without first seeking recourse in Spanish domestic courts in accordance with Art. X.2. The Arbitral Tribunal nevertheless found that it had jurisdiction over the dispute because Spain had entered into other BITs that did not require prior recourse to domestic courts before arbitration. These BITs were more favourable to the investor than the procedure in the Spain-Argentine BIT, and as the most-favoured-nation clause in the Spain-Argentine BIT applied to the dispute resolution provisions, an Argentine investor was able to commence proceedings against the Kingdom of Spain without first complying with the requirement of prior recourse to the domestic courts.

46
Cf. M. Sornarajah, The Settlement of Foreign Investment Disputes (The Hague, 2000), pp. 211-217 who distinguishes four types of dispute resolution clauses (referring to Aron Broches, 'Bilateral Investment Treaties and Arbitration of Investment Disputes' in J. Schulz and A. J. van den Berg (Edn.), The Art of Arbitration: Liber Amicorum Pieter Sanders (1982). The first three types of clause do not amount to consent to arbitrate and so give the investor no enforceable right to arbitrate (thus corresponding to the second category in the text) but have different implications in international law from the perspective of the Host State.

47
Emphasis added; see the Bilateral Investment Treaties entered into by the United Kingdom with Barbados, Nepal, Nigeria, Congo, Guyana and Nepal; and Dolzer and Stevens, Bilateral Investment Treaties(The Hague, 1995) at pp.131-136 and 147-150.

48
See 'American Manufacturing & Trading, Inc. Republic of Zaire' (ICSID Case No. ARB/93/1), Award of 21 February 1997, XXII Yearbook of Commercial Arbitration 60 (1997), Para.23 (interpreting the Zaire-United States BIT): 'It seems that upon reading this provision of the Treaty, it cannot be contended that consent of the parties to come before ICSID simply results from a pre-existing agreement by the United States and Zaire. It is therefore necessary to show that there has also been an agreement between the parties … In the present case, it happens that AMT [the Claimant investor] has opted for a proceeding before ICSID. AMT has expressed its choice without any equivocation; this willingness together with that of Zaire expressed in the Treaty(i.e., in Art.VII(2)(a), set out in the text), creates the consent necessary to validate the assumption of jurisdiction by the Centre.'

49
ICSID Case No. ARB/97/6 - Preliminary Decision on Jurisdiction, December 8, 1998; 40 ILM 457 (2001).

50
ICSID Case No. ARB/97/6 - Preliminary Decision on Jurisdiction, December 8, 1998; 40 ILM 457 (2001).

51
The relationship between conflicting dispute resolution clauses in a BIT and a Concession Contract has proved very troublesome for arbitral tribunals. It is important to recognise the distinction between treaty claims and contract claims. If the dispute resolution clause in a contract relates only to disputes arising from the contract, then on its face it has no application to a claim arising from a BIT. If, however, a contract contains a dispute resolution clause explicitly purporting to include disputes arising from an alleged breach of the BIT, then (at least from the construction of the US-Argentine BIT) this would be no more than a 'previously agreed dispute settlement procedure' and this BIT, at any rate, still preserves the forum selection right of the investor (between domestic courts, arbitration, and the agreed mechanism). The point is that a State Party cannot withdraw its open offer or general consent to arbitrate by agreement with a particular investor. It is also debatable the extent to which an investor can waive a BIT right to arbitrate before a dispute has actually arisen, even if a State party demanded a waiver as a precondition of an investment. The right of forum selection arguably continues until an investment dispute arises, at which time any election of forum is irrevocable. However, conclusions must be expressed with care because much depends on the provision of the particular BIT and contract at issue.

52
Dolzer and Stevens, Bilateral Investment Treaties(The Hague, 1995) at pp.132-134. See also M. Sornarajah, The Settlement of Foreign Investment Disputes (The Hague, 2000) pp.211-217; and David Williams, 'International Commercial Arbitration and Globalisation: Review and Recourse against Awards Rendered under Investment Treaties', Journal of World Investment 251-276 (2003)at pp.253-258 (considering whether the clumsily drafted Art.34 of the Agreement between New Zealand and Singapore on a Closer Economic Partnership amounts to an enforceable consent to arbitrate by the Contracting States).

53
For example, Art.X(3) Spain-Argentine BIT considered in the Maffezini arbitration.

54
On this issue generally see Dolzer and Stevens, Bilateral Investment Treaties(The Hague, 1995) at pp.147-156.