Author

Mr Zia Ullah Ranjah

Advocate Supreme Court of Pakistan - Jurist Panel Law Firm

Jurisdiction of Arbitral Tribunals

I. Jurisdiction in general

1.

The power of a court or judge to entertain an action, petition or other proceeding is called jurisdiction.1

2.

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, or in the provisions of investment treaties.4 In arbitration without privity, consent is one layer removed from particular investment transactions.5

3.

Whereas jurisdiction considerations typically look at the dispute as a whole, admissibility is concerned with particular claims.6

4.

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.7 

II. Competence of arbitral tribunals

5.

The arbitral tribunal’s power to determine its own jurisdiction is called competence-competence.8 

6.

There must be a legal dispute for the existence of the jurisdiction of an arbitral tribunal.9 Once the jurisdiction of a tribunal is established, the host State can raise counter claims against the investor for the breach of the obligations it may owe to the host State.10

III. Scope of jurisdiction

7.

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).

  1. Personal jurisdiction is limited to disputes ‘between a contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State’.11
  2. Territorial jurisdiction is a characteristic feature of ‘investment’12 as contemplated in Article 25 of the ICSID Convention.13
  3. Temporal jurisdiction must exist on the date when the proceedings are instituted.14 The only limitation on temporal jurisdiction in general international law is the entry into force of the substantive obligation on which the claim is based.15 The intertemporal rule requires that tribunals assess cases before them in light of contemporaneous law, binding on the host State at the time of alleged breach.16 Temporal reservations in the instrument of consent in investment arbitration dictate that tribunals have jurisdiction ratione temporis for the existing and future disputes, not retrospectively.17 
  4. As per Article 25 of the ICSID Convention, subject-matter jurisdiction vests in a tribunal out of ‘any legal dispute arising directly out of an investment’.18 For example, a contested criteria for ‘investment’ was considered by the Salini.19 In UNCITRAL arbitrations, however, the agreement of the parties is the sole determinant of the tribunal’s jurisdiction.20

8.

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 MFN clauses to import more favourable dispute resolution provisions from third-party Bilateral Investment Treaties (BITs).21

IV. Jurisdiction and admissibility: A 'twilight zone'

9.

Jurisdiction and admissibility are terms that are sometimes used interchangeably.22 Classifying a matter as relating to jurisdiction, or alternatively as relating to admissibility, may have serious consequences for the parties and their dispute.23 Examples of issues arising from such classification include:

  1. Procedural requisites, which may be characterized as a matter of either jurisdiction or admissibility.24
  2. Fork in the road clauses that potentially offer an investor a choice between a host State’s domestic courts and international arbitration, but not both.25
  3. The characterization of exhaustion of local remedies as a matter of admissibility.26 Exhausting local remedies requirement is not applicable to arbitrations under the Energy Charter Treaty (ECT) and the North American Free Trade Agreement (NAFTA).27

V. Concluding remarks

10.

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.

Bibliography

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