Read PDF Consent in International Arbitration (Oxford International Arbitration Series)

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Oxford International Arbitration Series - Oxford University Press

Arbitration is consensual by nature and the arbitrators' jurisdiction derives exclusively from the parties' agreement to use arbitration as a means to resolve their disputes. The concept of consent in arbitration - especially as cases become more complex - is taking on increasing importance, and issues with regard to the parties' consent to arbitrate are the topic of many articles and discussions.

Oxford University Comparative Law Forum

Examining the notion, nature, and extent of consent in both commercial arbitration and investment arbitration, this book provides practitioners and academics with a thorough, case-related analysis of an issue which raises many questions. While considering the differences between consent under State legislation and treaties, it addresses important theoretical questions to offer practical solutions.

The book includes original arguments and puts forward new suggestions with regard to the changeable consensual character of arbitration. It also provides a particular focus on problems that frequently arise in practice of international arbitration, for example issues related to complex multiparty arbitration and to jurisdictional questions in investment arbitration.

The evolution of arbitration and its consensual nature 2. Capacity, restrictions, and limitations to consent to arbitration 3. The juridical nature of arbitration with particular regard to its consensual nature 4. The valid reaching of consent 6. Scope and interpretation of consent to arbitration 7. Consent to arbitration with a perceived reduced consensual character 8. Extension of consent to arbitration 9. Expression and reaching of consent The applicable law and interpretation of consent Consent and the jurisdiction The scope of consent in investment arbitration Conclusion.

It also usefully focuses on problems that frequently arise in the practice of international arbitration, in particular in complex multiparty arbitration and to jurisdictional questions in investment arbitration. Arbitration is an institution which is considered to have preceded courts and judicial settlement 56 and which must have existed since the dawn of commerce.

During this evolution the consensual character of arbitration has undergone a transformation. Arbitration had, therefore, a pure consensual character with a peace restoration function. This evolution brings a reduction in the pure consensual character of arbitration, but also a bigger acceptance of arbitration as a mechanism for the resolution of international disputes.

Indeed, the acceptance of and recourse to arbitration is often a necessary pre-condition for entry into the international marketplace. States cannot rely on their own law to invalidate an arbitration agreement they entered freely. In investment arbitration States express their consent in national investment laws and investment treaties to resolve disputes with foreign investors through the means of arbitration standing offers.

Besides, in the case of investment treaties, the contracting States to the treaties also reach an agreement to use arbitration as a dispute resolution mechanism. The structural perspective is closely linked with the evolution of arbitration. In the commercial field there is a growing complexity of cases and a great number of multiparty arbitrations.

In investment arbitration the relationship is between a State and a private investor; and the State regularly expresses its consent in a national investment law or an investment treaty. Moreover a further distinctiveness of investment treaty arbitration is that multiple parties are involved. The historical role of arbitration was that of an informal and bilateral dispute resolution process, particularly popular in linear bilateral commercial transactions, such as sale of goods and transport contracts.

In complex situations consent to arbitration is often expressed by conduct.

Indeed on the one hand there are different ways of expressing consent to arbitration by promise, by conduct and on the other hand there are different types of contract. An arbitration agreement does not necessarily need to be a synalagmatic contract. In investment arbitration the State regularly expresses its consent to arbitration in national investment laws or bilateral and multilateral investment treaties.

In the last two decades there has been an exponential growth in the number of investment treaties and investment disputes. An impressive number of investment laws, bilateral investment treaties BITs , 77 and multilateral investment treaties or instruments 78 implement a process which allows private complainants direct access to arbitration against a State and public authorities, irrespective of the existence of a contractual agreement to that effect.

The host State makes a unilateral standing offer consent to arbitrate in advance. For States this has represented an evolution from retrospective to prospective consent to arbitration in the international context. Indeed, several private foreign investors could be affected by the same measure taken by a host State. In fact, often it will only be the aggrieved investor that can bring a claim against the State. Arbitration agreements are contracts. However, contracts may be of different types. They can be bilateral and synalagmatic, bilateral but non-synalagmatic or unilateral.

Oxford International Arbitration Series - Oxford University Press

The same is true for arbitration agreements. In commercial arbitration the parties express their consent by promise offer and acceptance or by conduct. Regularly the arbitration agreement is a bilateral synalagmatic contract, in which both parties have expressed their consent by promise. This is particularly so when the parties adopt model arbitration agreements of arbitration institutions. Nevertheless, it is also possible to have bilateral contracts in which parties express their consent by conduct.

Yet not all arbitration agreements are bilateral synalygmatic contracts. Unilateral arbitration agreements are bilateral but non-synalagmatic contracts. Unilateral clauses are most often used where one party has a superior bargaining power, for instance in charter-parties in favour of owners of the vessel.

An agreement between the parties recording consent to arbitration may be reached through a compromissory clause in an investment agreement between the host State and the investor submitting future disputes arising from the investment operation to arbitration. The host State may offer consent to arbitration in general terms to foreign investors or to certain categories of foreign investors in its national legislation; such an offer, in order to perfect consent, has to be accepted by the foreign investor.

Unlike bilateral or multilateral treaties, the provisions contained in national investment protection laws generally extend to all foreign investors, as they may in effect contain an open offer to arbitrate disputes with foreign investors. The host State may also give its consent to investment arbitration under international treaties, whether bilateral or multilateral.

Andrea Marco Steingruber

The clauses contained in the BITs—known as unequivocal consent, automatic consent or advanced consent clauses—are characterised by containing an offer to arbitrate that is:. It has been observed that arbitral jurisdiction is no longer premised on the privity of contracts, ie on reciprocity of negotiated consent, as under this new concept reciprocity is renounced and replaced by a sort of compulsory jurisdiction against the host State. The treaty involves … a deliberate attempt to ensure for private investors the benefits and protection of consensual arbitration; … the agreement to arbitrate which results by following the treaty route is not itself a treaty.

It is an agreement between a private investor on the one side and the relevant state on the other. Multilateral investment treaties also contain offers by State parties to consent to arbitration. In commercial arbitration most arbitration agreements are broadly worded, and usually when parties agree to resolve any disputes between them by arbitration, they intend to resolve all disputes between them by this method unless a specific exception is made.

This is particularly the case when the parties choose model clauses.

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Oxford International Arbitration Series Calculation of Compensation and Damages in International Investment Law Consent in International Arbitration. Oxford International Arbitration Series. Provides an all-embracing discussion on consent in international arbitration (commercial arbitration and.

However, as consent is expressed by the parties before the disputes break out, there is at the same time a reduction in the pure consensual character of arbitration. While the scope in commercial arbitration is essentially defined by both disputing parties, the situation is different in investment arbitration. The offer may vary.

Consent in International Arbitration

On the other hand there is nothing which can prevent States circumscribing offers in a narrower way. Important issues may also arise with regard to counterclaims—however these will not be addressed in this article.

Limitations of the scope of consent are defined by the host State. Indeed, it is the offeror who sets the limitations. Or, in other words, the host State determines how far-reaching the offer is. References to ICSID provided for in national investment legislation typically relate to the application and interpretation of the piece of legislation in question. Although clauses contained in BITs are generally quite broad, there are BIT clauses offering consent to arbitration which do not refer to investment disputes in general terms but circumscribe the types of disputes that are submitted to arbitration.

These conditions are that:. The scope of consent to arbitration offered in national laws and investment treaties may vary. If the investor wishes to rely on a BIT, it must show that it has the nationality of one of the two contracting State parties to the BIT, or, in the case of a multilateral treaty, of one of the contracting State parties to the multilateral treaty. This is particularly true for the definition of the nationality of companies. In view of consent to arbitration related to jurisdiction ratione personae two aspects are of particular importance: In applying the nationality requirement under Article 25 of the ICSID Convention, the arbitral tribunal of Autopista v Venezuela —composed of arbitrators with a commercial law background—determined that when the investment treaty was silent, the parties to the investment agreement were free to define nationality as long as the definition was reasonable.

Recently in Abaclat and Others v Argentina the majority tribunal even departed from the Salini test. This fact has been borne out by the Report of the Executive Directors:.

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It will not be possible in the future to conduct any research on consent without referring to Steingruber's treatise. Capacity Restrictions and Limitations to Consent. Indeed, the agreement of all parties is also necessary for requests to consolidate two or more arbitrations pending under the CIETAC Arbitration Rules into a single arbitration. The juridical nature of arbitration with particular regard to its consensual nature 4. Do We Share a Common Vision? Justice in the EU Floris de Witte. An enlargement of jurisdiction can then also take place in relation to the requirements ratione materiae and temporis.

While consent of the parties is an essential prerequisite for the jurisdiction of the Centre, consent alone will not suffice to bring a dispute within its jurisdiction. In keeping with the purpose of the Convention, the jurisdiction of the Centre is further limited by reference to the nature of the dispute and the parties thereto.

Consent to arbitration can also be analyzed under the viewpoint of a tendency to enlarge the reach of jurisdiction. In commercial arbitration the question is mainly about the involvement in arbitration proceedings of third parties. In investment arbitration the enlargement perspective is related to the jurisdictional requirements, but an enlargement can also take place because of MFN clauses and umbrella clauses contained in investment treaties.

Generally, arbitral tribunals and the national courts of countries which follow an approach in favour of arbitration tend to enlarge the field of application of arbitration. On the one hand, it is generally accepted that a party may be introduced in arbitration through specific theories of contract law and general principles of corporate law, for instance agency, assignment, subrogation, third party beneficiaries and universal succession. Non-signatory theories —in particular the doctrine of arbitral estoppel and the doctrine of group of companies —have been developed and employed to facilitate deduction of consent to arbitrate implied by conduct.

Indeed the main purpose of non-signatory theories is:. In some cases non-signatory theories have gone as far as to suggest that mere awareness of the existence of an arbitration clause will be sufficient for a party to be bound by it. Consent to arbitration may also exist if a contract does not contain an arbitration clause but forms part of a contractual network which includes an arbitration agreement, as is the case where parties enter into a framework agreement, containing an arbitration clause, governing their future relationship within which they conclude a number of separate contracts.

Arbitration International - Trends and the Future of International Arbitration

In investment arbitration the enlargement perspective is related to the jurisdictional requirements. With regard to the jurisdiction ratione personae the ICSID Convention itself provides for an enlargement of jurisdiction under Article 25 2 b , which deals with the juridical persons that are incorporated in the host State but are controlled by nationals of another State.

An enlargement of jurisdiction can then also take place in relation to the requirements ratione materiae and temporis. Host States frequently require that investments be made through locally incorporated companies.

In a pyramid of control two aspects may be controversial:. Moreover there can be an area of conflict between economic reality and legal structure. In relation to jurisdiction ratione temporis the relevant date for determining whether the jurisdictional requirements are satisfied is the date of the institution of proceedings. Arbitral tribunals have from time to time made a distinction between contract claims and treaty claims or distinguished between divergences and disputes. Most arbitral tribunals have held that MFN clauses cannot prevail over the fundamental arbitration requirement, which is the reaching of mutual consent to arbitrate.

Moreover, not all investment treaties contain umbrella clauses. With regard to umbrella clauses much attention has been paid to the conflicting outcomes of the awards in SGS v Pakistan and SGS v Philippines. An MFN clause contained in an investment treaty will extend the better treatment granted to a third State or its nationals to a beneficiary of the treaty. The jurisprudence on MFN clauses is not as inconsistent as it might initially appear to be, especially when taking the following into account:.

However, more recently, there have been cases which departed from the aforementioned differentiation. Procedural needs may come into conflict with the consensual nature of arbitration, but parallel proceedings leading to conflicting arbitral awards should be avoided. Joinder of third parties or their intervention in the proceedings is well known in national courts. In national courts, for reasons of efficient administration of justice, procedural laws contain provisions allowing the joinder or intervention of third parties, irrespective of whether all parties concerned agree.

In situations where the arbitration rules provide for joinder and consolidation provisions, the disputing parties sometimes indirectly express their consent to arbitrate in cases of joinder and consolidation by adopting the arbitration rules. This is for instance the case for parties who choose the Swiss Rules of International Arbitration. Moreover, consolidation is also possible where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the ICC Court finds the arbitration agreements to be compatible.