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Inherent Powers of Tribunals

I. Definition

1.

Inherent powers in investment arbitration are the powers “necessary to preserve jurisdiction, maintain the integrity of proceedings, and render an enforceable award… Inherent powers will by their nature only arise for use in limited circumstances. They are to be read narrowly and used proportionately and only so far as necessary to meet the exigencies of the particular situation.”1

II. Related Wiki Notes

III. Origin

3.

The doctrine of inherent powers was developed in the jurisprudence of the English common law centuries ago.2 As the concept of a substantive law independent from any particular sovereign developed, certain powers deriving from the royal prerogative were eventually recognized as inherent powers of the courts.

4.

At international law, inherent powers were introduced in the 1976 judgment of the International Court of Justice in The Nuclear Test case, where it was noted that

the Court possesses an inherent jurisdiction enabling it to take such action as may be required, on the one hand, to ensure that the exercise of its jurisdiction over the merits, if and when established, shall not be frustrated, and on the other, to provide for the orderly settlement of all matters in dispute, to ensure the observance of the “inherent limitations on the exercise of the judicial function” of the Court, and to “maintain its judicial character.”3

IV. Sources

5.

Because inherent powers are rarely set out explicitly in the Applicable Law, commentators have opined differently on the sources of these powers:

  1. some have distinguished these powers based on whether they were implied,4 discretionary, or truly inherent in the applicable instrument;5
  2. others have relied on the “general principles” found in the sources of international law under Article 38(1)(c) of the ICJ Statute;6 and
  3. still others have considered that the powers derive from the nature or function of international courts and tribunals.7

V. Limits

6.

Yet, inherent powers are implied from the grounds applicable to challenge arbitral awards, because these grounds establish a few mandatory, non-derogable powers and duties of tribunals.8 These grounds are found:

  1. for ICSID Convention arbitrations, in Article 52(1) of the ICSID Convention (see Enforcement and Recognition of ICSID awards and Grounds for annulment under the ICSID Arbitration Rules, notably Failure to state the reasons on which the award is based, Excess of powers and Serious departure from a fundamental rule of procedure);9 and
  2. for non-ICSID Convention arbitrations, in the applicable national arbitration laws applying Article V of the New York Convention,10 most of which are based on Article 34(2)(a-b) of the UNCITRAL Model Law (see Enforcement and Recognition of Non-ICSID Awards and Domestic courts).11

7.

Because challenge grounds are broadly worded and promote party autonomy, inherent powers are frequently implied in practice from the more specific instructions in

  1. the parties’ agreement; and
  2. the applicable Institutional Arbitration rules.12
8.

In other words, the applicable challenge grounds establish a handful of inherent powers that, while immutable, may be modified or supplemented by the more numerous express powers or inherent powers found in the parties’ agreement and the applicable arbitration rules.

VI. Methodology

9.

In a dispute, the tribunals must identify their inherent powers based on sequential analysis.13 

10.

The tribunals must analyse

  1. first, the parties’ agreement, which includes but is not limited to the Arbitration Clause;14
  2. then, the Institutional Arbitration rules; and
  3. finally, the challenge grounds.
11.

For each, the tribunals must rely

  1. first, on any express rules15 – for instance, those rules granting tribunals the powers to issue Provisional Measures (see Article 39(3) of the ICSID Arbitration Rules and Rule 47(4) of the ICSID Arbitration Rules (2022)16 Article 28 of the ICC Rules of Arbitration 2021,17 and Article 25.1 of the LCIA Arbitration Rules 2020);18
  2. then, on any discretionary rules – for instance, those rules granting tribunals the powers to determine the arbitral procedure (see Article 19 of the ICSID Arbitration Rules and Rule 27(1) of the ICSID Arbitration Rules (2022)19 Article 19 of the ICC Rules of Arbitration 2021,20 Article 17(1) of the UNCITRAL Rules of Arbitration 201321 and Articles 14.1(ii), 14.2 and 14.5 of the LCIA Arbitration Rules 2020);22
  3. next, on any implied rules – for instance, those rules granting tribunals the powers to ensure the equality of the parties (see Article 52(1)(d) of the ICSID Convention and Article V(1)(b) of the New York Convention); and
  4. finally, any general principles – for instance, those rules granting tribunals the power to determine their jurisdiction23 (see Competence-Competence at para. 11(a)).24

VII. Examples

12.

The first category concerns the powers pertaining to the judicial function of investment tribunals (when these powers are not determined by the applicable instruments, or when they exist alongside express powers regulating the same issue). They include

  1. the power to determine a tribunal’s jurisdiction (including refraining from exercising jurisdiction)25 pursuant to the doctrine of Competence-Competence;26
  2. the power to decide on the merits,27 such as the power to deal with any issues necessary to determine matters falling within a tribunal’s jurisdiction;28
  3. the power to ensure the equality of the parties;29
  4. the power to Admit and weigh Evidence;30 and
  5. the power to award remedies (see Damages, Reparation, Compensation standards, Valuation methods, Interest rates).31
13.

The second category concerns the powers to control the conduct of the proceedings.32 They include

  1. the power to protect a tribunal’s jurisdiction in cases where there is a risk of inconsistent decisions in parallel and duplicative proceedings instituted in other fora;33
  2. the power to decide on questions of arbitral procedure,34 such as
    1. the power to transfer the place of the hearing to carry out the material operations necessary for the continuation of the procedure;35
    2. the power to choose the Language of the Proceedings;36 and
    3. the power to decide on the publicity of proceedings, even proprio motu;37
  3. the power to streamline the procedures, such as
    1. the power to Consolidate38 and Join39 proceedings (which tribunals have sometimes refused to exercise);40
    2. the power to suspend/Stay Proceedings;41
  4.  the power to admit or decline amicus curiae submissions from third parties;42
  5. the power pertaining to the issuing of decisions, such as

    1. the power to reconsider a Decision43 (which tribunals have sometimes refused to exercise);44
    2. the power to Revise a decision45 (which tribunals have sometimes refused to exercise);46

    3. the power to resolve ambiguities in its awards;47

    4. the power to provide satisfaction by issuing declaratory judgments;48 and
    5.  the power to order measures concerning performance or injunction.49

14.

The third category concerns the powers aiming at preserving the integrity of the proceedings.50 They include

  1. the power to grant Provisional Measures,51 such as orders on Security for Costs;52
  2. the power to sanction procedural misconduct and abuses by a party,53 such as

    1. the power to dismiss jurisdiction over claims brought for improper reasons;54
    2.  the power to sanction failure to abide by tribunal-ordered disclosure;55

    3. the power to order that a party be granted access to the counsel of their choosing;56
    4. the power to order witness immunity from legal process;57
    5.  the power to refuse admitting new witness statements;58 and
    6. the power to impose fee awards;59
  3. the power to sanction procedural misconduct and abuses by a legal representative of a party, such as excluding representative from participating in the proceedings60 (which tribunals have sometimes refused to exercise);61
  4. the power to compel disclosure of the Third-Party Funders’ identities where a real risk of Conflict of Interests arises;62

  5. the power to investigate Corruption allegations;63 and
  6. the power of ICSID Annulment Committees to require that the state post a bond or otherwise provides a guarantee as a condition for stay of enforcement pending annulment proceedings.64

Bibliography

Bjorklund, A.K. and Brosseau J., Sources of Inherent Powers in International Adjudication, in Ferrari, F. and Rosenfeld, F. (eds.), Inherent Powers in International Arbitration, Juris, 2019 1.

Bollée, S., Les pouvoirs inhérents des arbitres internationaux, in Académie de Droit International de la Haye/Hague Academy of International Law (ed.), Collected Courses of The Hague Academy of International Law - Recueil des cours, Vol. 418, Brill.

Brown, C., Inherent Powers in International Adjudication, in Romano, C.P.R., Alter, K.J. and Shany, Y. (eds.), The Oxford Handbook of International Adjudication, Oxford University Press, 2013, p. 829.

International Law Association’s Committee on International Commercial Arbitration, Conference Report Johannesburg 2016 (as 2014 with recommendations), 77th Conference (Johannesburg, South Africa, 7 - 11 August 2016).

Lauterpacht, E., ‘Partial’ judgments and the inherent jurisdiction of the International Court of Justice, in Lowe, V. and Fitzmaurice M. (eds.), Fifty Years of the International Court of Justice: Essays in Honour of Sir Robert Jennings, Cambridge University Press, 1996, p. 465.

Paparinskis, M., Inherent Powers of ICSID Tribunals: Broad and Rightly So, in Laird, I.A. and Weiler, T.J. (eds.), Investment Treaty Arbitration and International Law, Vol. 5, JurisNet, 2012, p. 11.

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