I. Definition and effect
According to the Guide to Practice on Reservations to Treaties, adopted by the International Law Commission in 2011, updating and completing the definition with elements contained in other international conventions on the law of treaties,1 a reservation is “a unilateral statement, however phrased or named, made by a State or an international organization when signing, ratifying, formally confirming, accepting, approving or acceding to a treaty or by a State when making a notification of succession to a treaty, whereby the State or organization purports to exclude or to modify the legal effect of certain provisions of the treaty in their application to that State or to that international organization”.2
The conditions for the validity of reservations and their legal effects are set out in the Vienna Convention on the Law of Treaties,3 and in more detail, in the Guide to Practice.4 In general, the effect of an established reservation is to exclude the application of certain provisions of the treaty or of the treaty itself in respect of certain measures, industries or situations.5 A measure falling within the scope of a reservation is not governed by the treaty and cannot be assessed against the standards set out in the treaty.6
Vienna Convention on the Law of Treaties (1969), adopted on 23 May 1969, Article 2.1.d; Vienna Convention on succession of States in respect of treaties (1978), adopted on 23 August 1978, Article 2.1.j; Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations (1986), adopted on 21 March 1986, Article 2.1.d.
ADF Group Inc. v. United States of America, ICSID Case No. ARB(AF)/00/1, Award, 9 January 2003, para 170; Mobil Investments Canada Inc. and Murphy Oil Corporation v. Government of Canada, ICSID Case No. ARB(AF)/07/4, Decision on Liability and on Principles of Quantum, 22 May 2012, para 241; RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on Jurisdiction, 6 June 2016, para. 85.
II. Reservations to bilateral (investment) treaties
The ILC Guide to Practice does not discuss reservations to bilateral treaties.7 Although the definition does not exclude reservations made to bilateral treaties, a “reservation” to a bilateral treaty is only a proposal to renegotiate or to amend the treaty in question. If such a reservation is accepted by the other State in question, it becomes an amendment to the treaty.8 Therefore, there is no notable practice in respect of reservations to bilateral investment treaties or in the relevant decisions of arbitral tribunals.
III. Reservations to multilateral investment treaties
Some multilateral investment treaties authorize specific reservations,9 others exclude reservations,10 and others remain silent on the question of reservations.11 In the last case, the customary international law principles concerning reservations to treaties, set out in the Vienna Convention and by the International Court of Justice,12 apply. Some tribunals have considered that the possibility provided for in multilateral investment instruments to opt out of certain obligations or of compulsory dispute resolution constitutes a reservation and need to be interpreted accordingly.13 Other tribunals were more reluctant to qualify this as a reservation in the sense of the 1969 Vienna Convention.14
Central America-Dominican Republic-United States Free Trade Agreement (DR-CAFTA), adopted on 5 August 2004, Article 22.4; The Energy Charter Treaty, adopted on 17 December 1994, Article 46. See also Charanne B.V. and Construction Investments S.A.R.L. v. Kingdom of Spain, SCC Case No. 062/2012, Award, 21 January 2016, para. 445; RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on Jurisdiction, 6 June 2016, para. 85; Cube Infrastructure Fund SICAV and others v. Kingdom of Spain, ICSID Case No. ARB/15/20, Decision on Jurisdiction, Liability and Partial Decision on Quantum, 19 February 2019, para. 148; Landesbank Baden-Württemberg and others v. Kingdom of Spain, ICSID Case No. ARB/15/45, Decision on the Intra-EU Jurisdictional Objection, 25 February 2019, para. 148; Eskosol S.p.A. in liquidazione v. Italian Republic, ICSID Case No. ARB/15/50, Decision on Termination Request and Intra-EU Objection, 7 May 2019, para. 225; Belenergia S.A. v. Italian Republic, ICSID Case No. ARB/15/40, Award, 6 August 2019, para. 337.
Electricite de France (EDF) International S.A. v. Republic of Hungary, Swiss Federal Supreme Court Decision on Set-Aside of Award, 6 October 2015, para. 22.214.171.124; MOL Hungarian Oil and Gas Company Plc v. Republic of Croatia, ICSID Case No. ARB/13/32, Decision on Respondent's Application under ICSID Arbitration Rule 41(5), 2 December 2014, para. 48; Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Decision on Jurisdiction, 8 February 2005, para. 140.
IV. Interpretation of reservations
A reservation is to be interpreted in accordance with the rules and principles of treaty interpretation,15 in good faith, taking into account the intention of the reserving State as expressed in the text of the reservation, as well as the object and purpose of the treaty and the circumstances in which the reservation was formulated.16 There is no general rule according to which a reservation is to be interpreted restrictively,17 although some tribunals have expressed the view that “exceptions” in a treaty are to be interpreted restrictively.18
Mobil Investments Canada Inc. and Murphy Oil Corporation v. Government of Canada, ICSID Case No. ARB(AF)/07/4, Decision on Liability and on Principles of Quantum, 22 May 2012, para. 254; Electricite de France (EDF) International S.A. v. Republic of Hungary, Swiss Federal Supreme Court Decision on Set-Aside of Award, 6 October 2015, para. 3.5.1; Guide to Practice on Reservations to Treaties, ILC Yearbook, 2011, vol. II, Part Three, Guideline 4.2.6.
V. Distinction between reservations and interpretative declarations
Reservations need to be distinguished from interpretative declarations that do not produce the same legal effect and are not submitted to the same conditions. The decisive criterion is the legal effect that a unilateral statement would have on the treaty.19 The label or the name of the declaration provides only an indication of the purported effect but is not in itself decisive.20 If a declaration purports to modify the treaty, it is a reservation.21 If it purports to clarify the interpretation of the treaty, it is an interpretative declaration.22
Aust, Anthony, “Reservations”, Modern Treaty Law and Practice, 3rd, New York, Cambridge University Press, 2013, pp. 114–144
Corten, Olivier and Klein, Pierre, eds., The Vienna Conventions on the Law of Treaties – A commentary, Oxford University Press, 2011, vol. 1, Articles 19‑23 (by Alain Pellet, Daniel Müller and William Shabas), pp. 405‑627.
Horn, Frank, Reservations and Interpretative Declarations to Multilateral Treaties, Amsterdam, Elsevier, 1988, 514 p.
Pellet, Alain, “The ILC Guide to Practice on Reservations to Treaties. A General Presentation by the Special Rapporteur”, New York University School of Law – Jean Monnet Working Paper Series 15/12; European Journal of International Law, vol. 24, 2013‑4, pp. 1061‑1097.
Ruda, José María, “Reservations to treaties”, Collected Courses of the Hague Academy of International Law, 1975-III, vol. 146, pp. 95–218