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Journal of Energy & Natural Resources Law Volume 25, 2007 - Issue 3: Energy Dispute Settlement
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Original Articles

Energy Charter Treaty: a Step towards Consistency in International Investment Arbitration?

Justin D'Agostino Justin D'Agostino, Partner, International Arbitration Group, Herbert Smith LLP, Exchange House, Primrose Street, LondonEC2A 2HS, United Kingdom (justin.d'[email protected]). Oliver Jones, Faculty of Law, University of Hong Kong, Pokfulam Road, Hong Kong, China ([email protected]); formerly Associate, International Arbitration Group, Herbert Smith LLP, London.
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Oliver Jones Justin D'Agostino, Partner, International Arbitration Group, Herbert Smith LLP, Exchange House, Primrose Street, LondonEC2A 2HS, United Kingdom (justin.d'[email protected]). Oliver Jones, Faculty of Law, University of Hong Kong, Pokfulam Road, Hong Kong, China ([email protected]); formerly Associate, International Arbitration Group, Herbert Smith LLP, London.
Pages 225-243 | Published online: 09 Jun 2015

  • The summary of the facts and procedural history is taken from Lauder v Czech Republic, UNCITRAL, 3 September 2001 (‘Lauder v Czech Republic’), paras 1–10, 43–152 and CME v Czech Republic, UNCITRAL, Partial Award, 13 September 2001 (‘CME v Czech Republic, Partial Award’), paras 1–29.
  • Lauder v Czech Republic, para 222.
  • Ibid paras 240, 244.
  • CME v Czech Republic, Partial Award, para 612.
  • Lauder v Czech Republic, para 201.
  • CME v Czech Republic, Partial Award, para 609.
  • Lauder v Czech Republic, para 293.
  • CME v Czech Republic, Partial Award, para 611.
  • Lauder v Czech Republic, Final Award, para 309; CME v Czech Republic, Partial Award, para 613.
  • CME v Czech Republic, Partial Award, para 625.
  • Czech Republic v CME, Svea Court of Appeal, 15 May 2003 (‘Czech Republic v CME, Svea Court of Appeal’).
  • CME v Czech Republic, UNCITRAL, Final Award, 14 March 2003 (‘CME v Czech Republic, Final Award’).
  • Jeremy Carver, quoted in Susan D Franck, ‘The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law Through Inconsistent Decisions’ (2005) 73 Fordham Law Review 1521 at 1559.
  • CME v Czech Republic, Final Award, paras 426–429. Compare Lauder v Czech Republic, Final Award, para 16.
  • CME v Czech Republic, Partial Award, para 412.
  • The summary of the facts and procedural history is taken from Occidental Exploration and Production Co v Republic of Ecuador, LCIA, Final Award, 1 July 2004 (‘OPEC v Ecuador, Final Award’), paras 7–36 and Encana Corporation v Republic of Ecuador, LCIA, Final Award, 3 February 2006 (‘Encana vEcuador, Final Award’), paras 1–106.
  • OPEC v Ecuador, Final Award, para 6.
  • Ibid para 157.
  • Encana v Ecuador, Final Award, para 1.
  • Ibid para 107.
  • OPEC v Ecuador, paras 80, 92.
  • Ibid para 77.
  • Ibid paras 163, 165.
  • Ibid paras 177, 179.
  • Ibid para 187.
  • Ibid paras 207, 211.
  • Note that the second Ecuador tribunal delivered a partial award, which is not presently material, two years before delivering its final award: Encana Corporation v Republic of Ecuador, Partial Award, 27 February 2004.
  • Encana v Ecuador, para 149.
  • Ibid paras 199–200.
  • Ibid para 197 n 136.
  • Ibid para 10.
  • Republic of Ecuador v Occidental Exploration and Production Co [2005] 2 Lloyd's Rep 240.
  • Republic of Ecuador v Occidental Exploration and Production Co [2006] QB 432.
  • See the analysis in Zachary Douglas, ‘Nothing if Not Critical for Investment Treaty Arbitration: Occidental, Eureko and Methanex’ (2006) 22 Arbitration International, at 28–37.
  • Ibid at 30.
  • Republic of Ecuador v Occidental Exploration and Production Co [2006] 1 Lloyd's Rep 773.
  • Ibid paras 99 n 49, 142 n 97, 147 n 99, 150 n 103, 158 n 111, 189, 197 n 136.
  • Ibid para 167 n 119.
  • Ibid para 189.
  • See the analysis in Christer Soderlund, ‘Lis Pendens, Res Judicata and the Issue of Parallel Judicial Proceedings’ (2005) 22 Journal of International Arbitration 301 at 318–320, 322.
  • CME v Czech Republic, Final Award, paras 432–436.
  • CME v Czech Republic, Final Award, para 431; CME v Czech Republic, Partial Award, paras 378–380.
  • See, for example, Petrobart v Krygyz Republic, Final Award, 29 March 2005, p 64.
  • Czech Republic v CME, Svea Court of Appeal, pp 95, 97–98.
  • Ibid p 95.
  • Ibid pp 96–97.
  • Ibid pp 97–98.
  • See, for example, Sun Life Assurance Company of Canada v Lincoln National Life Insurance Co [2005] 1 Lloyd's Rep 606 and Petrobart v Kyrgyz Republic, Final Award, 29 March 2005, pp 67–68.
  • CME v Czech Republic, Final Award, para 433 and authority cited there. See also Saluka Investments BV v Czech Republic, Partial Award, 17 March 2006, paras 294–301.
  • See, for example, Jones v Saudi Arabia [2006] 2 WLR 1424.
  • See, generally, Christian Oetiker, ‘The Principle of Lis Pendens in International Arbitration: The Swiss Decision in Fomento v. Colon’ (2002) 18 Arbitration International 137.
  • Ibid paras 167–175.
  • CME v Czech Republic, Final Award, para 431 and CME v Czech Republic, Partial Award, paras 378–380.
  • Czech Republic v CME, Svea Court of Appeal, pp 95–98.
  • [1982] 2 Lloyd's Rep 425.
  • Encana v Ecuador, paras 6, 10.
  • Lauder v Czech Republic, Final Award, para 178.
  • For a discussion of the meaning of this term and a comparison with the concept of joinder, see Martin Platte, ‘When Should an Arbitrator Join Cases?’ (2002) 18 Arbitration International 67 at 68.
  • Arbitration Act 1986, s 1046 (the Netherlands), discussed in Platte, above, at 73 n 51.
  • Ordinance 1996 (as amended 1997), Article 6B(1) (Hong Kong), discussed in Platte, above, at 74 n 54.
  • Franck, n 13 above. Professor Franck holds a resident position at the University of Nebraska.
  • Franck, n 13 above, at 1617–1625.
  • Norah Gallagher and Laurence Shore, ‘Bilateral Investment Treaties: Options and Drawbacks’ (2004) 7 International Arbitration Law Review 49 at 53.
  • See www.encharter.org. See also Doren Doeh, Sophie Nappert, Alexander Popov, ‘Russia and the Energy Charter Treaty: Common Interests or Irreconcilable Differences’ (2006) 7 International Energy Law and Taxation Review 189 at 189–190.
  • ECT Art 1(6). This provision was given a generous interpretation in Petrobart v Krygyz Republic.
  • ECT Arts 10 and 13.
  • ECT Arts 22 and 23. These provisions are discussed in James Loftis and Mark Beeley, ‘The Rise of Energy Charter Treaty Arbitration,’ European Arbitration Review 2007 (www.globalarbitrationreview.com) 7 at 8.
  • Note that the investor seems unable to avoid limitations in this part of the ECT by relying on the most favoured nation clause in Art 10(7) of the ECT: Plama Consortium Ltd v Republic of Bulgaria, Decision on Jurisdiction, 8 February 2005, paras 183–227 (‘Plama Consortium Ltd v Republic of Bulgaria’).
  • Ibid para 140.
  • Ibid para 141.
  • Ibid paras 185, 227. Interestingly, the tribunal adverted to Art 17 of the ECT: Ibid paras 146–179. This provision may entitle an ECT state to deny ECT protections to a legal entity from another ECT state, where that entity is controlled by persons from a third state that is not a party to the ECT. While the tribunal did not allow Art 17 to deprive it of jurisdiction, it did consider the provision to be relevant to the merits. It would, in effect, be a defence to claims that ECT protections had not been accorded. This may go some way to avoiding inconsistency in a situation such as the Czech Republic dispute, where a single person is or controls parallel claimants from different states. Art 17 would not, of course, bite where the parallel claimants are each from ECT states, which may be the more likely scenario.
  • AES Summit Generation Ltd. (UK subsidiary of US-based AES Corporation) v Hungary and Alstom Power Italia SpA v Mongolia.
  • Nykomb Synergetics Technology Holding AB v Republic of Latvia, Award, 12 December 2003 and Petrobart Ltd v Krgyzstan, Award, 29 March 2005.
  • Plama Consortium Ltd v Republic of Bulgaria; Yukos Universal Ltd v Russian Federation; Hulley Enterprises Ltd v Russian Federation; Veteran Petroleum Trust v Russian Federation; Ioannis Kardossopoulos v Georgia, Amto v Ukraine, Hrvatska Elektropriveda dd v Republic of Slovenia; Libananco Holdings Co Ltd (Cyprus) v Republic of Turkey, Azpetrol International Holdings BV v Republic of Azerbaijan’, Cementownia ‘Nowa Huta’ SA v Republic of Turkey; Europe Cement Investment and Trade SA v Republic of Turkey.
  • Hulley Enterprises Ltd v Russian Federation; Veteran Petroleum Trust v Russian Federation. See also arbitrations against the Republic of Turkey, above, n 74.
  • ECT, Arts 34, 36(1)(a).
  • ECT, Art 42(3)—(4).
  • See, for example, Fothergill v Monarch Airlines [1981] AC 251, para 284 (Lord Diplock), para 287 (Lord Fraser), para 294 (Lord Scarman); Re: H [1998] AC 72 at 87 (per Lord Browne Wilkinson) (Lord Jauncey, Lord Mustill, Lord Hoffmann and Lord Clyde agreeing); compare R v Secretary of State for the Home Department ex parte Adan [2001] 2 AC 477, para 518 (Lord Steyn); Air France v Valerie Hermien SAKS, 470 US 392 (1985) at 404 (the Court); Ministerfor Immigration, Multicultural and Indigenous Affairs v QAAH of2004 [2006] HCA 53 at para 34 (Gummow ACJ; Callinan, Heydon and CrennanJJ).
  • See above, n 75.
  • ECT, Art 35.

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