The Use of “non-ICSID” Arbitration Rules in Investment Treaty Disputes : Domestic Courts, Commercial Arbitration Institutions and Arbitral Tribunal Jurisdiction

Abstract: This book studies how domestic courts and commercial arbitration institutions impact the scope of arbitral tribunal jurisdiction in investment treaty disputes. Arbitration clauses in investment treaties often provide investors with a choice between ICSID arbitration and rules originally drafted for commercial arbitration. Whereas the ICSID system is intended as a “self-contained” convention-based regime, arbitration outside of ICSID is more diverse, in that national courts and commercial arbitral institutions sometimes play a role in the decision-making. This text studies the practice of these actors.The book is structured in the following way. First, the historic background to the use of “non-ICSID” rules is introduced. This introductory chapter shows that while investment treaties concluded in the 1960s and 1970s referred almost exclusively to ICSID arbitration, references to other rules increased in the 1980s. Two possible explanations are given for this general move away from ICSID as the sole available forum for treaty-based investment arbitration: the demonstration effect of the Iran-United State Claims Tribunal’s use of the UNCITRAL Rules, and the discontent following the first few ICSID annulment decision in the mid-1980s.Then, based on a review of arbitral awards challenged on jurisdictional grounds, it is demonstrated how domestic courts have exhibited different approaches to matters such as standard of review and treaty interpretation.A further chapter reviews the experience of the two most used commercial arbitration institutions – the ICC and the SCC – which occasionally have made decisions that influence the scope of individual arbitral tribunals’ jurisdiction. This practice is central in many investment disputes, but has never been the subject of systematic study. During the administration of arbitrations, the institutions have, for example, designated the place of arbitration and scrutinized draft jurisdictional awards. Furthermore, the way that the commercial arbitration rules are drafted influence tribunal jurisdiction. In this respect, the clearest example is the introduction of emergency arbitration in treaty-based cases.The book concludes by putting the studied experience in a larger perspective against the back-drop of mounting concerns against inconsistent decision-making in investment arbitration. It is suggested that when contemplating the drafting of future investment treaties, drafters ought to be cognizant of the jurisdictional implications of arbitrating treaty-based cases under non-ICSID rules.