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Ms Paula Henin

Associate - White & Case LLP

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Right to Maintain the Status quo

I. Introduction

1.

Applicants seeking provisional measures of protection in investor-State arbitration have invoked different categories of rights, which they argue must be protected by way of a tribunal order during the pendency of the arbitration. Among the rights frequently invoked by applicants is the right to maintain the status quo ante, a corollary of which is the right to the non-aggravation of the dispute before the tribunal.

2.

Arbitral tribunals generally recognize the right to maintain the status quo as a self-standing procedural right, the protection of which may justify granting provisional measures, provided all other conditions for such relief are met.1 

3.

While this general principle is uncontroversial, its application in specific cases calls for nuances and a close examination of the relevant facts. This Note maps out some key considerations in this respect. Part II explains how, when examining a request for provisional measures grounded in the right to maintain the status quo, tribunals have taken care to define the factual and legal circumstances that constitute the relevant status quo, and to determine how the request relates to that status quo. Part III describes relevant considerations that tribunals have discussed when seeking to satisfy themselves that an applicant has established all prerequisites for interim relief in this context.

II. Defining the status quo and its relation to the provisional measures sought

4.

When analysing applications for provisional measure based on the right to maintain the status quo, arbitral tribunals generally assess whether the situation sought to be preserved truly is the status quo ante of the dispute before them.

5.

First, they determine whether the legal and factual circumstances said to constitute the status quo ante bear a relation to the dispute in arbitration. As the tribunal in Ipek v. Turkey stated: 

The rights to be preserved must relate to the requesting party’s ability to have its claims and requests for relief in the arbitration fairly considered and decided by the arbitral tribunal and for any arbitral decision which grants to the Claimant the relief it seeks to be effective and able to be carried out. Thus, the rights to be preserved by provisional measures are circumscribed by the requesting party’s claims and requests for relief. They may be general rights, such as the rights to due process or the right not to have the dispute aggravated, but those general rights must be related to the specific disputes in the arbitration, which, in turn, are defined by the Claimant’s claims and requests for relief to date.2

6.

Second, arbitral tribunals ensure that the provisional measures requested, if granted, would not have the effect of improving the applicant’s position, rather than maintaining the status quo ante during the pendency of the arbitration. For example, tribunals have rejected applications for interim relief where granting them would have constituted a prejudgment of issues forming part of the merits of the case, or would have in effect awarded to a party the final relief it sought in the arbitration.3 

7.

These issues arise, for example, in the context of a claimant investor’s request for an arbitral order enjoining the respondent State (or related parties) from instituting or continuing to pursue domestic court proceedings in its jurisdiction until the conclusion of the arbitration. Tribunals have generally considered the following factors in determining whether the right to maintain the status quo can appropriately form the basis for such interim relief:

  1. the timing of relevant domestic proceedings, and in particular whether they were already pending at the time of the request for arbitration;4
  2. the parties to the relevant domestic proceedings, and their relationship to the parties in the arbitration;5
  3. whether the subject-matter of the domestic proceedings has any relation to the dispute before the tribunal;6 
  4. whether there are any indications that the domestic proceedings (in particular, in the case of criminal proceedings) were initiated as a reaction to, or even as retaliation against, the commencement of the arbitration;7
  5. whether there is evidence that the domestic proceedings are being orchestrated by the respondent State in order to improperly obtain evidence for use in the arbitration;8 and
  6. whether the domestic proceedings threaten to interfere unduly with the "parties’ ability to present their positions in the arbitration, or the tribunal’s ability to fashion meaningful relief at the close of the case"9 (which overlaps with the analysis that applies where the right to protect the integrity of the arbitration is invoked as the basis for seeking provisional measures).10

III. Assessing the necessity, urgency (and proportionality) of the provisional measures sought

8.

Once the tribunal has determined that what the applicant is seeking to maintain truly is the status quo ante of the dispute, the tribunal will examine whether the measures sought are both must satisfy itself that the other prerequisites for provisional measures are fulfilled, i.e., that the tribunal has prima facie jurisdiction, that the measures sought are both necessary and urgent to prevent substantial/irreparable harm, and (according to some tribunals) that they are proportionate, having regard to their nature, scope and duration. See further Provisional measures.

9.

As stated by past tribunals, requests for provisional measures should “generally be narrow and specific, so that a tribunal, and the party defending the request for provisional measures, are able to clearly identify the measures, and ensure compliance therewith.”11 Requests that are too broad do not allow the tribunal “to assess the risk of serious harm that could materialize absent the [t]ribunal’s order, or to establish whether there is necessity and urgency for such an order in light of that risk.”12

10.

Some tribunals have opined that, when the measures sought are intended to protect against the aggravation of the dispute during the proceedings, the urgency requirement is fulfilled by definition.13 In a few cases, tribunals have also granted urgent requests for temporary restraining orders to maintain the status quo while the parties are given an opportunity to submit their observations on an application for provisional measures, pending the tribunal's decision on the merits of such application.14 

11.

This is not to say that arbitral tribunals order interim relief lightly, however. On the contrary, in assessing urgencynecessity and, where applicable, proportionality, of the measures sought, tribunals have often emphasized the exceptional character of provisional measures, especially where the relief sought would involve the tribunal interfering with criminal processes in the respondent State.15 Thus, the mere fact of initiating a treaty claim does not grant a claimant investor “a sweeping right to freeze all circumstances as they then exist (perhaps for a period of years), even where such an overall standstill is otherwise not required to preserve [their] rights to present [their] case and obtain meaningful relief.”16 According to the tribunal in Nova Group Investments v. Romania: 

The mere fact of lesser impacts – i.e., that circumstances on the ground in the host State continue to evolve during the course of the [arbitration], possibly increasing the harm about which the investor complains – is not ipso facto a violation of the parties’ rights.  While the Tribunal understands the desire to avoid “moving target” events in the interests of an orderly proceeding, that desire alone is not sufficient to justify the recommendation of measures to prevent any and all alteration of the status quo or any and all increase in injury to the investor. The contrary proposition […] would be an invitation to tribunals to overstep the bounds set by Article 47, through an overbroad extension of the doctrines of status quo and non-aggravation. It would take the grant of provisional measures beyond the realm of exceptional circumstances noted above.17

12.

Thus, the case law points to an important conceptual distinction. On the one hand, the right of all parties to maintain the status quo of a dispute may form the basis for interim relief, but only in exceptional circumstances that fulfil all the conditions for the grant of provisional measures. On the other hand, the parties’ general duty to act in good faith, and to refrain from taking any action that may aggravate the dispute or affect the integrity of the arbitration, applies continuously during the proceedings, even where the circumstances do not warrant granting interim measures.18 While this Note has focused on the former, the latter should not be overlooked.

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