The jurisdiction of arbitral tribunals may be based on investor-State consent,2 contained in an arbitration clause,3 in an investor-State contract, in investment codes of a host State,4 or in the provisions of investment treaties.5 In arbitration without privity, consent is one layer removed from particular investment transactions.6
Jurisdiction pertains to the competence of a tribunal to adjudicate a particular case, whereas questions as to applicable law are concerned with the rules the tribunal should apply.8
The arbitral tribunal’s power to determine its own jurisdiction is called competence-competence.9
Once jurisdiction exists, arbitral tribunals have the duty to exercise it.10 Exception to this duty can only arise out of clear language or for strong reasons.11 A tribunal refusing to exercise jurisdiction as conferred to it by the parties would be acting in excess of powers.12
Once the jurisdiction of a tribunal is established, the host State can raise counterclaims against the investor for the breach of the obligations it may owe to the host State.14
The jurisdiction of arbitral tribunals can be divided into four subjects: personal jurisdiction (ratione personae); territorial jurisdiction (ratione loci); temporal jurisdiction (ratione temporis); and subject-matter jurisdiction (ratione materiae):
Practitioners should also consider the impact on jurisdiction of overlapping agreements and resulting obligations. For example, no jurisprudence constante exists on whether investors can use Most favoured nation clauses to import more favourable dispute resolution provisions from third-party Bilateral Investment Treaties (BITs).25
The respondent will often challenge the jurisdiction of the tribunal based on one or more of the four main grounds cited above. Examples of specific grounds for jurisdictional objections include among others:26
Under Rule 41(1) of the ICSID Rules of arbitration, jurisdictional objections should be made “as early as possible”27 and no later than the deadline for the counter-memorial,28 unless the facts on which the objection is based are unknown to the parties at the time.29 Rule 26(3) provides that objections made after this time should be disregarded except in “special circumstances.”30 Tribunals have exercised discretion in applying this exception, weighing the seriousness of the allegations of the respondent31 or the delay in which the claimants’ ancillary claims were brought.32
Tribunals have drawn varied consequences from untimely objections. Some tribunals have considered that Rule 41(1) does not necessarily deprive the tribunal from its mandate to decide on every objection.33 Indeed, under Rule 41(2), the tribunal may, in compliance with Rule 41(1), consider jurisdictional objections ex officio34 even if it is not bound to do so.35
Other tribunals have held that by not objecting in a timely manner, the party had effectively waived its procedural right to object and was unable to raise objections at a later time in accordance with Rule 27 of the ICSID Arbitration Rules.36 However, a respondent’s statement that it does not intend to file objections to jurisdiction does not preclude it from raising objections at a later stage of the proceedings, subject to the time-limits fixed by the tribunal under Rule 26.37 Furthermore, objections made past the time-limits set by the Rules may be admissible if they are of the same legal nature as those already before the tribunal, even if the relied upon facts have evolved.38
The claimant bears the burden of proving the tribunal’s jurisdiction. This burden may be shifted to the respondent whenever it raises jurisdictional objections or affirmative defenses. See further Burden of proof, Section III.B.
Jurisdiction and admissibility are terms that are sometimes used interchangeably.43 Classifying a matter as relating to jurisdiction, or alternatively as relating to admissibility, may have serious consequences for the parties and their dispute.44 Examples of issues arising from such classification include:
This Note examines some important issues concerning jurisdiction of arbitral tribunals in international investment disputes including investor-State consent, competence of tribunals, personal, territorial, temporal, subject-matter jurisdiction, investment, MFN clauses, distinction between jurisdiction and admissibility, procedural requisites, and fork in the road clauses. In ICSID cases, the tribunal’s jurisdiction is determined under Article 25 of the ICSID Convention and the instrument of consent. Any determination of jurisdiction and admissibility will have important consequences for the parties.
Pérez-Aznar, F., The Use of Most-Favoured-Nation Clauses to Import Substantive Treaty Provisions in International Investment Agreements, Journal of International Economic Law, Vol. 20(4), 2017, pp. 777-805.
Rosenfeld, F., Arbitral Praeliminaria- Reflections on the Distinction between Admissibility and Jurisdiction after BG V. Argentina, Leiden Journal of International Law, Vol. 29(1), 2016, pp.137-153.
Hassan Sadeghi Moghadam, M. and Jafari Nedoushan, S., The Effect of “Fork in the Road” and on the Jurisdiction of Investment Treaty Arbitral Tribunal in Foreign Investment Disputes, Journal of Public Law Research, Vol. 17(49), 2016, pp. 37-56.
Habibzadeh, T . and Gholami, A., Foreign Investment Contract and Scope of Host State Commitments Arising from Treaty, Journal of Public Law Research, Vol. 18(51), 2016, pp. 81-109.
Fontanelli, F., Deference in International Courts and Tribunals-Standard of Review and Margin of Appreciation, European Journal of Risk Regulation, European Journal of Risk Regulation, 2016, Vol.7(1), pp. 230-233
Lee, J., Resolving Concerns of Treaty Shopping in International Investment Arbitration, Journal of International Dispute Settlement, 2015, Vol. 6(2), pp. 355-379.
Rigo Sureda, A., Investment Treaty Arbitration: Judging under Uncertainty, Cambridge University Press, 2012.
Đundić, P., Provisions on Waiting Periods in International Investment Protection Treaties and their Impact on the Jurisdcition of Arbitral Tribunals, Zbornik Radova: Pravni Fakultet u Novom Sadu, Vol. 46(2), 2012, pp. 355-374.
Blanchard, S., State Consent, Temporal Jurisdiction, and the Importance of Continuing Circumstances Analysis into International Investment Arbitration, Washington University Global Studies Law Review, Vol. 10, 2011, pp. 419-837.
Smith, S., Foster, D. et al., International Arbitration, The International Lawyer, Vol. 45(1), 2011, pp. 95-110.
Crawford J., Treaty and Contract in Investment Arbitration, Arbitration International, Vol. 24, 2008, pp. 351-374.
Friedland, P.D., Martínez, L. and Caron, D.D., The UNICTRAL Arbitration Rules: A Commentary, A.J.I.L., Vol. 101, 2007, pp. 519-941.
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