Trigger Letter

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.

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

Most treaties indicate that the notice of dispute should be in writing and addressed to the “other party,”¹⁰ without specifying the appropriate government department or agency to which the notice should be addressed.

To ensure that the State is informed and bound by the legal consequences of the trigger letter, the investor must determine in each case the appropriate addressee,¹¹ for which it may consider:

1. Customary international law: particularly, Article 7 of the Vienna Convention on the Law of Treaties which states that, by virtue of their functions, the Heads of State or of the Government and the Ministers of Foreign Affairs are deemed to bind the State, in respect of acts relating to the conclusion of a treaty; and, consular officials, in respect of acts relating to the text of a treaty between their State and the State to which they are accredited;¹²
2. National legislation: including, the constitution, laws relating to the organization of the State¹³ or investment laws, which may contain indications or exceptions regarding the State’s representatives.¹⁴
3. In practice, investors send their notice to: the head of State,¹⁵ the consular officials,¹⁶ the Minister of Trade,¹⁷ the agency responsible for managing foreign investments,¹⁸ the Minister of Justice / Deputy Attorney¹⁹ or other ministry responsible for foreign investments or investment disputes. If a specific State agency or person are not designated to receive the trigger letters, the investors usually address their letters to multiple State departments and agencies so that the State receives the notice and is bound by it.²⁰

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

Trigger letters are an important element of the parties’ consent to arbitration.²⁸ In this sense, a trigger letter may:

1. Limit the claim’s scope: some tribunals have declined jurisdiction over or found inadmissible claims not expressly mentioned in the trigger letters.²⁹ Others allow accidental/additional claims if the cooling-off period has or will elapse(d),³⁰ especially when they are related to the existing dispute and are added early enough in the proceedings giving the State the appropriate opportunity to investigate, discuss and respond.³¹
2. Mark the start of the cooling-off period:³² the tribunals have considered that the cooling-off period begins to run on the date of the notice, instead of the date of the breach,³³ or the date when the existence of the dispute becomes known to the respondent.³⁴
3. Identify the applicable BIT and future claimant: in one case, the claimant could not dispense with the notice requirement relying on the correspondence of its business partner, who attempted to negotiate a settlement of the dispute under a different treaty than the one invoked in the arbitration.³⁵ In the context of mass claims or multiple claimants, the trigger letter may not contain the full information about all claimants in the dispute,³⁶ however this view has been criticised.³⁷ See further Mass claims.
4. Mark the date at which the investor perfects its consent to arbitration: in the event of a standing offer of the State to arbitrate contained in the relevant legal instrument, a trigger letter may perfect the investor’s consent to arbitration.³⁸ Unless otherwise provided in the investment agreement, an investor’s choice to delay the initiation of the arbitration proceedings after having delivered the notice of intent cannot extinguish its consent.³⁹
5. Identify the forum for resolution of an international investment arbitration dispute.⁴⁰

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

Baltag, C., Not Hot Enough: Cooling-Off Periods and the Recent Developments under the Energy Charter Treaty, Indian Journal of Arbitration Law, 2017, pp. 190 – 196.

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.

Girsberger, D., and Voser, N., Chapter 5: Conditions of Admissibility, in International Arbitration: Comparative and Swiss Perspectives, 3rd ed., 2016, pp. 289 – 335.

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.

Pohl, J., et al., Dispute Settlement Provisions in International Investment Agreements: A Large Sample Survey, OECD Working Papers on International Investment 2012/02, 2012, p. 17.

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.

Turner, P.J., and Others, Investment Treaty Arbitration, Journal of International Arbitration, 2007, pp. 103 – 128.

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.

Woolaver, H., From Joining to Leaving: Domestic Law’s Role in the International Legal Validity of Treaty Withdrawal, European Journal of International Law, 2019, pp. 73– 104.