Author

Mr Noah Rubins QC

Partner - Freshfields Bruckhaus Deringer

Author

Ms Annie Pan

Associate - Freshfields Bruckhaus Deringer

Editors
See all

Satisfaction

I. Notion of satisfaction

1.

Along with restitution and compensation, “satisfaction” is a form of reparation that a State may provide to remedy an injury caused by an internationally wrongful act for which it is responsible.1

II. Scope of application

2.

Pursuant to Article 37(1) of the ILC Articles on State Responsibility, a State is obliged to give satisfaction for such an injury “insofar as it cannot be made good by restitution or compensation.” Satisfaction is thus an “exceptional” remedy, as in most cases full reparation can be achieved by restitution and/or compensation.2

3.

Due to its exceptional character, satisfaction is an appropriate remedy only for “those injuries, not financially assessable, which amount to an affront”.3 Such “non-material” injuries are “frequently of a symbolic character, arising from the very fact of the breach of the obligation, irrespective of its material consequences”.4 Examples include insults to the symbols of a State, such as the national flag, violations of sovereignty or territorial integrity, attacks on ships or aircraft, ill-treatment of or deliberate attacks on heads of State, government, diplomatic, consular representatives or other protected persons and trespass on the premises of embassies or consulates or the residences of members of the mission.5

III. Forms and modalities

IV. Limits

5.

Article 37(3) of the ILC Articles requires that “[s]atisfaction shall not be out of proportion to the injury and may not take a form humiliating to the responsible State”.

V. Application in investor-State diputes

6.

Satisfaction has received relatively little attention in the investor-State context. Early commentators and tribunals doubted whether it was applicable at all outside the realm of State-State disputes.9

7.

Satisfaction appears first to have been considered in the investor-State context in Cementownia ‘Nowa Huta’ v Turkey and Europe Cement v Turkey. In these cases, Turkey was faced with a series of ECT claims brought by companies controlled by Turkish nationals based on fraudulent documents manufactured to create the impression that the assets at issue had been transferred to a Cypriot company before an alleged expropriation had taken place. Turkey sought formal declarations to this effect. In Cementownia, the tribunal upheld Turkey’s request, issuing a formal declaration that the claimant had filed a fraudulent claim.10 In Europe Cement, the tribunal held that the claim had been asserted on the basis of fraudulent documents and refused jurisdiction on that basis,11 but declined to make a specific declaration with respect to the claimant’s wrongdoing, noting that the reasoning in the award would in any event “provide […] a form of ‘satisfaction’” to Turkey.12

8.

Subsequent tribunals have also considered satisfaction as a potential remedy for injured investors. In Arif v Moldova, the tribunal was faced with an argument by Moldova that satisfaction in the form of a declaration of wrongfulness would be an appropriate remedy for the claimant’s denial of justice claim, but it did not go on to examine Moldova’s submission on the basis that the claim was not made out.13 In Quiborax v Bolivia, the claimants requested declarations that Bolivia had breached its obligations under the BIT and the ICSID Convention and its duty to arbitrate in good faith.14 The Quiborax tribunal observed that, while not all types of satisfaction were transposable to the investor-State context, the making of a declaratory judgment as a means of satisfaction was “a power inherent to the Tribunal’s mandate to resolve the dispute.”15 The Quiborax tribunal went on to examine the claimants’ requests for various declarations, but ultimately declined those claims on the merits.16

Bibliography

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