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ZIEMONS & RAESCHKE‑KESSLER RECHTSANWÄLTE BEIM BUNDESGERICHTSHOF. ZIEMONS & RAESCHKE‑KESSLER RECHTSANWÄLTE BEIM BUNDESGERICHTSHOF. The Influence of International Public Law on the En-forcement of Arbitral Awards Rendered under Invest-ment Treaties Prof. Hilmar Raeschke-Kessler.

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ZIEMONS & RAESCHKE‑KESSLER RECHTSANWÄLTE BEIM BUNDESGERICHTSHOF

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF


Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

The Influence of International Public Law on theEn-forcement of Arbitral Awards Rendered under Invest-ment TreatiesProf. Hilmar Raeschke-Kessler

Riga, 26 June 2014/2


Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

The case:

The Kingdom of T. had authorised a foreign Company to build a motorway between its capital and its national airport.

After two years of construction it revoked the licence and refused to pay the company for the work done.

The Company sued the Kingdom under the BIT between Germany and the Kingdom. The Arbitral Tribunal in its award ordered the Kingdom to pay to the Company € 35 mio. The Kingdom refused to pay.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

I. Basics:

1. Any action by a state is either the exercise of its sovereign rights

= acta jure imperii;

examples:

- law making,

- granting of a license to an investor,

- acts of expropriation;

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • 2. or

    • a commercial activity

    • = acta jure gestionis;

  • examples:

  • - the purchase of fighterplanes for the airforce,

  • - renting out of state owned property in a foreign

  • country for commercial purposes.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • 3. International public law:

  • a) Immunity of any state

    • - from jurisdiction of other states,

    • - from execution of judgements or awards by arbitral

    • tribunals by courts of other states into its property or

    • any of its assets within the other state.

    • (ICJ Reports 2012, p. 99 pp., Germany v. Italy)

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • b) General rule:

    • (1) no jurisdiction of other states on acta jure imperii

    • unless consented to,

    • (2) jurisdiction of other states on acta jure gestionis,

    • (3) no execution of judgements or awards in property / assets serving

    • acta jure imperii.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • c) Origin of the principles:

    • Customary international public law condensed to

    • UN-Convention of Jurisdictional Immunities of States and Their Propertyof 2004,

    • not yet in force but serves as“restatement”.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • 4. The purpose of multilateral investment treaties(ICSID) and of BITs:

    • Protection of foreign investors against expropriation without a fair compensation.

    • Expropriation = actus jure imperii;

    • obstacle of state immunity has to be overcome on jurisdiction and enforcement.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • II. Waiver of state immunity on jurisdiction

  • 1. Enforcement of an award requires its prior recognition by a state court;

    • → needed a waiver on jurisdiction.

    • Art. 7 UN-Convention:

    • “Express consent to exercise of jurisdiction

    • 1. A State cannot invoke immunity from jurisdiction in a proceeding beforea court of another State with regard to a matter or case if it has expressly consented to the exercise of jurisdiction by the court with regard to the matter

    • or case:

    • (a) by international agreement

    • …“

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

1. Bilateral investment treaties – BITs-establishjurisdiction of arbitral tribunals

for investment disputes between host states andinvestors.

So do multilateral treaties like the ICSID Convention of 1984.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

Art. 10 (2) German Model BIT 2009:

“If the dispute cannot be settled within six months of the date on which it was raised by oneof the parties to the dispute, it shall, at the request of the investor of the other ContractingState, be submitted to arbitration. The two Contracting States hereby declare that theyunreservedly and bindingly consent to the dispute being submitted to one of the followingdispute settlement mechanisms of the investor's choosing:”

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • 2. The choice of the investor:

    • (1) ICSID Arbitration,

    • if at least one of the states is a member of the ICSID-

    • Convention of 1965,

    • (2) ad hoc arbitration under theUNCITRAL-Rules,

    • (3) institutional arbitration under ICC-Rules, LCIA-Rules or

    • Stockholm-Rules.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • III. Enforcement of award in favor of investor

  • 1. Immunity of statesextends toenforcement of judgements or arbitral

  • awards.

    • Waiver of immunity to jurisdiction ≠ waiver of immunity ofenforcement.

    • Required:

    • specific waiver, expressed or implied, allowing enforcement.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

Art. 19 UN-Convention 2004:

“State immunity from post-judgment measures of constraint

No post-judgment measures of constraint, such as …execution, against property

of a State may be taken in connection with aproceeding before a court of another

State unless and except to the extent that:

(a) the State has expressly consented to the taking of such measuresas

indicated:

(i) by international agreement

(ii) by an arbitration agreement;”

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • 2. Waiver allowing enforcement of an award

  • a) Award renderedunder ICSID Convention:

  • Art. 54 ICSID Convention:

    • “(1) Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a finaljudgment of a court in that State. …“

  • Award ≙ final decision of state court.

  • No judicial review of award in recognition and enforcement proceedings by a

  • state court.

  • No review under Art. V NYC 1958.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • b) BIT-awards rendered under UNCITRAL-Rules:

  • Art. 32 II UNCITRAL-R. 1976 = Art. 34 II UNCITRAL-R. 2010:

    • 2. All awards shall be … final and binding on the parties. The parties shall carry out all awards without delay.

    • Enforcement possible without judicial review of award under Art. V NYC.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

UNCITRAL-Rules are for Commercial arbitration.

In commercial arbitration Art. 32 II 1976 = Art. 34 II 2010 do not exclude review under Art. V NYC.

By incorporating UNCITRAL-Rules into a BIT they participate in the internatio-nal public law character of the BIT.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

→ Interpretation according to the Vienna Convention on the Law of Treaties

1969.

Article 31 Vienna Convention:

“General rule of interpretation

1. A treaty shall be interpreted in good faith in accordance with the ordinary

meaning to be given to the terms of the treaty in their context and in the light

of its object and purpose.”

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • c) BIT-awards rendered under institutional rules like ICC-Rules:

  • Art. 34 (6) ICC-Rules 2012:

    • “Every Award shall be binding on the parties. By submitting the dispute to arbitration under these Rules, the parties undertake to carry out any Award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.”

    • → No review of award

    • (Cour de Cassation. civ. 1re, 6.7.2000 – CreightonLtd.,

    • US-Court of Appeals 5th Cir., 395 F.3d 229, Walker v. Republic of Congo(2004).

    • ≙ no. 26.9 LCIA Rules 1998.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

d) BIT-awards rendered in ad-hoc arbitration:

execution possible,

but at the request of the host statefull review of awardunder Art. V NYC, unless excluded in modern BITs:

Art. 10.3 German Model-BIT 2009:

“(3) … The award shall be enforced by the Contracting States as afinal and absolute ruling under domestic law.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

  • 3. State property available for execution of the award:

  • all objects serving for acta jure gestionis are suitable for execution

    • = property used for commercial-non official purposes,

    • (Swedish Supreme Court of 1.7.2011 – ö 170-10);

  • example: state owned building rented out to third parties unrelated to the

  • government,

  • disputed: bank accounts at a foreign national bank or commercial

  • bank.

Riga, 26 June 2014/2

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Ziemons raeschke kessler rechtsanw lte beim bundesgerichtshof

ZIEMONS&RAESCHKE‑KESSLER

RECHTSANWÄLTEBEIMBUNDESGERICHTSHOF

4. Objects not suitable for execution of the award:

all objects serving acta jure imperii;

example:

embassy building,

air traffic feesdue from airline to state

(BGH VII ZB 9/05, 4.10.2005).

Riga, 26 June 2014/2

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