A trigger letter, or a notice of intent or dispute, is a letter sent by the investor to the host State to officially notify it of the existence of a treaty dispute and of the intent to initiate arbitration if the dispute is not settled amicably within the waiting / cooling-off period provided for in a given treaty or other relevant legal instrument.1
Apart from serving as notice of dispute, a trigger letter initiates the treaty’s waiting period. Almost 90%2 of treaties contain such periods (usually three3 or six months4) to allow the parties to negotiate a settlement of the dispute before the arbitration.5 See further Cooling-off periods.
B. General treaty practice
Depending on the treaty language, the conveyance of a trigger letter may or may not be seen as a mandatory prerequisite to arbitration. Some treaties provide an express requirement of a written notification,6 while others seem to contain an implied requirement of a notification7 or are simply silent on the issue.8 The stricter and more explicit the language of the treaty, the likelier it is that the requirements of the trigger letter would be interpreted as a prerequisite to arbitration.9
II. Formal requirements
Treaties are typically (but not always)21 silent as to the substantial requirements of trigger letters. Arbitral tribunals have noted that trigger letters should include sufficient information to notify the respondent of the dispute.22 Trigger letters tend to contain: the claimant’s identity, an allegation of a treaty breach,23 information in connection to the investment24 and the claim’s legal/factual background.25
One tribunal refused to ascribe to the correspondence of a claimant the value of a “notice” where such correspondence contained no reference to the arbitral forum (ICSID).26 Another tribunal found that a request for mediation containing detailed information as to the investor’s claims suffices to trigger an arbitration against the respondent State.27
A. Effects of compliance
Trigger letters are an important element of the parties’ consent to arbitration.28 In this sense, a trigger letter may:
B. Effects of non-compliance
Failure to provide a notice of dispute may entail varying consequences depending on the language of the relevant legal instrument. Some tribunals have considered that, when the investment treaty with an arbitration clause contains an express/implied requirement of notice, the non-compliance may affect the tribunal’s jurisdiction41 or the claims’ admissibility.42 Other tribunals have decided that the non-compliance, although reprehensible, may be justified by the futility of the negotiations43 and procedural economy.44 Nevertheless, trigger letters and cooling-off periods are commonly seen as mere procedural requirements that would not impact the tribunal’s jurisdiction.45
In the NAFTA context in particular, the arguably ambiguous notice of intent requirement contained in Article 1119 has led to some jurisprudential debate. Some tribunals have considered that its non-compliance deprives the tribunal of its jurisdiction since consent to arbitration would be lacking,46 while others have disagreed.47 The USMCA replacing the NAFTA seems to settle this question by providing an express provision that the non-compliance of the trigger letter requirement will deprive the tribunal of its jurisdiction.48
Born, G., Chapter 18: Investor-State and State-to-State Arbitration, in Born, G., International Arbitration: Law and Practice, 2nd ed., 2015, pp. 417 – 449.
Born, G., Chapter 5: Formation, Validity and Legality of International Arbitration Agreements, in Born, G., International Commercial Arbitration, 2nd ed., 2014, pp. 636 – 942.
Born, G., Chapter 5: Interpretation of International Arbitration Agreement, in Born, G., International Arbitration: Cases and Materials, 2nd ed., 2015, pp. 517 – 550.
Born, G., Chapter 7: International Arbitration Agreements and Competence-Competence, in Born, G., International Commercial Arbitration, 2nd ed., 2014, pp. 1046 – 1252.
Born, G., Chapter 4: Formation and Validity of International Arbitration Agreements, in Born, G., International Arbitration: Cases and Materials, 2nd ed., 2015, pp. 335 – 516.
Manciaux, S., The Representation of States before ICSID Tribunals, Journal of International Dispute Settlement, 2011, pp. 87-86.
Newcombe, A. and Paradell, L., Chapter 1 - Historical Development of Investment Treaty Law, in Newcombe, A. and Paradell, L., Law and Practice of Investment Treaties: Standards of Treatment, 2009, pp. 1 – 74.
Reed, L., and Others, Guide to ICSID Arbitration, Journal of International Arbitration, 2010, pp. 53-21.
Taton, X., and Croisant, G., Judicial Protection of Investors in the European Union: The Remedies Offered by Investment Arbitration, the European Convention on Human Rights and EU Law, Indian Journal of Arbitration Law, 2018, pp. 61 – 145.
Wehland, H., Chapter 8: Jurisdiction and Admissibility in Proceedings under the ICSID Convention and the ICSID Additional Facility Rules, in Baltag, C., ICSID Convention after 50 Years: Unsettled Issues, 2016, pp. 227 – 248.
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