Author

Dr Niccolò Ridi

Lecturer - University of Liverpool

Precedent

I. Introduction

1.

The problem of precedent1 in international adjudication is one of contradictions. On the one hand, there is no rule of stare decisis in international adjudication in general;2 on the other hand, all international courts and tribunals routinely cite precedents—their own and those of their counterparts3—and investment tribunals are no exception.4

II. The problem in international law

2.

The solution to the riddle is generally found in Articles 38(1)(d) and 59 of the Statute of the International Court of Justice (ICJ), which are understood to serve as an authoritative statement of the sources of international law. Article 38 stipulates that the ICJ shall apply judicial decisions as ‘subsidiary means for the determination of rules of law’, whereas Article 59 clarifies that the decision has ‘no binding force except between the parties and in respect of that particular case’—a message reflected elsewhere, such as in Article 33(2) of the Statute of the International Tribunal for the Law of the Sea, or Article 1136(1) NAFTA.5

III. The problem in international investment law

3.

Investment tribunals, generally speaking, are directed to apply the law chosen by the parties, and fall-back options commonly include an obligation to apply international law. Article 38 is generally taken as the key catalogue, and thus as a justification of the application of previous decisions. Still, it is understood that such decisions have no binding force.6 Notably, unlike Article 38(1)(d) of the ICJ Statute—that potentially “mandates” the application of judicial decisions where relevant ones exist,—neither the ICSID Convention nor the Energy Charter Treaty (“ECT”), for instance, contain a similar provision. It should be recalled, however, that both the ECT and the ICSID Convention direct the tribunal to apply international law.7 In the latter case, it is well settled that the reference to international law is to be “understood in the sense given to it by Article 38(1) of the ICJ Statute”.8

IV. Practice of investment tribunals

4.

The lack of a rule of stare decisis, however well acknowledged,9 is not understood to prevent investment tribunals from relying on previous decisions wherever appropriate, and subject to the specificity of the treaty being litigated.10 (See also parallel proceedings) That is particularly the case where the parties adopt legal reasoning of the prior tribunals in their arguments.11 In certain instances, tribunals may draw inspiration from other areas of law and relevant treaties, including WTO and GATT.12 Some arbitrators, however, have gone further, claiming that ‘subject to compelling contrary grounds, [Tribunals have] a duty to adopt solutions established in a series of consistent cases.’13 Different justifications have been invoked for this use, including: the desirability of consistency; the appeal of a coordinated effort for the harmonious development of international investment law;14 15 the simple epistemic benefit granted by the previous treatment of a specific issue;16 and even the (questionable) equation between ‘subsidiary’ and ‘supplementary’ means, so that previous decisions would enter the range of elements to be considered in the interpretation of a treaty.17 Some tribunals maintain that a rebuttable presumption or an assumption exists that prior decisions would be followed.18 A number of tribunals, however, continue to maintain that they are free to disregard prior decisions and focus solely on the case before them,19 particularly where they disagree with the prior tribunals.20

5.

In general, arbitration tribunals appear to take previous decisions seriously, and frequently engage in the art of distinguishing previous decisions that may appear to constitute putative precedents, rather than simply disregard them.21 This behaviour, along with the repeated citations to precedent by (and before) tribunals, suggests that a de facto doctrine of precedent may be developing.

V. Potential problems

6.

Reliance on precedent in investment arbitration appears to be a feature of the regime. However, the abuse of precedent—that is, replacing the analysis of a the case with ready-made solutions—is potentially sanctionable through the remedy of annulment, on the grounds of manifest excess of power, a departure from a fundamental rule of procedure, and a failure to state reason.22 To date, no ad hoc committee has annulled an award for one such error, though it has been made it abundantly clear that the possibility cannot be discounted.23

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