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Author

Ms Niamh Leinwather

Principal Associate in International Arbitration - Freshfields Bruckhaus Deringer

Author

Ms Stuti Gadodia

Associate - Freshfields Bruckhaus Deringer

Editors
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Proportionality in Provisional Measures

I. Definition

1.

Proportionality, along with (i) necessity (or imminent danger of serious prejudice), (ii) urgency, (iii) prima facie jurisdiction, and (iv) the prima facie existence of the right sought to be protected, is recognised as one of the conditions that need to be satisfied before a tribunal grants an order in support of provisional measures.1 

II. Legal basis of the criterion

2.

Neither the ICSID Convention nor the ICSID Rules explicitly refer to proportionality as a requirement for granting provisional measures. However, in the past tribunals have nonetheless taken proportionality into account. For instance, in Saipem v Bangladesh the tribunal acknowledged the broad discretion enjoyed by a tribunal under Article 47 of the ICSID Convention when faced with an application for provisional measures. In that case, the tribunal recommended that provisional measures should not be granted lightly and a tribunal “should weigh the parties’ divergent interests in the light of all the circumstances of the case.”2

3.

Further, the recently proposed amendments to the ICSID Arbitration Rules do contain a requirement for a tribunal to consider “the effect that the [provisional] measures may have on each party.”3 Proportionality, as a condition to grant provisional measures, is also found in the UNCITRAL Arbitration Rules4 and the UNCITRAL Model Law.5

III. Interplay with other criteria

4.

Investor-State tribunals do not always assess proportionality as an independent requirement for granting provisional measures. Several tribunals have assessed proportionality as part of the requirement of necessity.6

5.

Proportionality is also “closely linked”7 to the requirement of urgency. In PNG Resources v Papua New Guinea the tribunal took into account, inter alia, “the balance of injuries that would be suffered by both parties if provisional measures are (or are not) ordered” while considering the urgency of the measures sought.8 

IV. Tribunals' analysis of the requirements of proportionality

6.

A tribunal will generally refrain from granting an order in support of provisional measures which “impose such undue burdens on the other party as to outweigh, in a balance of equities, the justification for granting them.”9 When applying the proportionality test, also known as the test of balance of (in)convenience10 or reasonableness,11 the tribunal will balance the harm caused to the requesting party (in the event the provisional measures are refused) and to the other side (in the event the provisional measures are granted).12

7.

A tribunal will also take into account the relative importance of the respective rights and interests affected, the existence of exceptional circumstances, the good faith of the parties and the specificity of the requests.13

8.

In relation to applications seeking a stay or discontinuation of criminal proceedings instituted by the home State against the investor, tribunals have sought to balance the sovereign right of the State to prosecute criminal conduct on its territory against the investor’s ability to “adequately put their cases and participate in the arbitration.”14

9.

When deciding an application for security on costs, a proportionality analysis is particularly critical where the resulting harm to a party would constitute a potential impingement on that party’s ability to pursue its claim or defences, or otherwise impede its access to justice.15 

Bibliography

Schreuer, C.H., The ICSID Convention: A Commentary, 2001. 

Yesilirmak, A., Chapter 5, Arbitral Provisional Measures, in Provisional Measures in International Commercial Arbitration, International Arbitration Law Library, Vol. 12, Kluwer Law International 2005, pp. 159-236.

Bismuth, R., Anatomy of the Law and Practice of Interim Protective Measures in International Investment Arbitration, Arbitration International, 2009, pp. 773-821.

Malintoppi, L., Provisional Measures in Measures in Recent ICSID Proceedings What Parties Requests and What Tribunals Order, in Binder, C. and Others (eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer, 2009, pp. 157-184.

Keller, M. and Wendler, C., Is there a Common Approach to Provisional Measures? – An Overview of ICSID Case Law, in Risse, J., Pickrahn, F. et al. (eds.), SchiedsVZ | German Arbitration Journal, 2011, Vol. 9, Issue 4, pp. 183-194. 

Luttrell S., ICSID provisional measures ‘in the round’, Arbitration International, 2015, 31, 393–412.

Kaufmann-Kohler, G. and Others, Interim Relief in Investment Treaty Arbitration, in Yannaca-Small, K. (ed.), Arbitration Under International Investment Agreements: A Guide to the Key Issues, 2nd ed., 2018, pp. 633-678.

Goldberg, D. and Others, 2019 Empirical Study: Provisional Measures in Investor State Arbitration, BIICL/White & Case, 2019.

Le Bars, B., Interim Measures in International Arbitration, E-Pública, 2019.

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