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Docteur Natalia Chaeva

International Legal Counsel

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Consent to Arbitration

I. Definition

1.

Consent is the cornerstone of jurisdiction of international courts and tribunals,1 including investor-State arbitration tribunals2 (such as those established under the ICSID framework).3 Some investor-State tribunals set out consent as a condition of a so-called jurisdiction ratione voluntatis.4

II. Formal requirements

A. Written consent

2.

In ICSID arbitration, written consent is to be given by a State party to the ICSID Convention and a national of a State party to the Convention.5 There are however no technical requirements as to the way such consent is to be given.6

3.

Written consent under Article 25(1) of the ICSID Convention can be expressed by the State through its treaties, legislation or contracts and by the investor via its request for arbitration.7 See further Section V below.

4.

Some investment treaties such as the NAFTA and the ECT similarly provide that consent be in writing, without requiring any specific formulation.8

5.

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards requires that consent be in writing for an arbitral award to be enforceable,9 which now includes modern means of communication such as email.10 See further Validity of the arbitration agreement.

B. Requirements as to the parties' expression of consent

6.

Although consent can be manifested in numerous ways,11 many tribunals have outlined that the parties’ consent must be clear and unequivocal or unambiguous.12 Other tribunals have noted that the arbitration clause is not to be interpreted restrictively nor broadly.13

7.

Furthermore, consent to arbitration is to be freely given14 and should be interpreted in good faith.15

III. Burden and standard of proof

8.

The burden of establishing consent lies primarily with the claimant.16 See also Burden of proof, Section III.B.

9.

Consent may not be presumed17 but some tribunals have gone further requiring that the existence of consent should leave no doubt18 and consent be proven through “affirmative evidence.”19 However, few tribunals have considered that consent may as well be implicit.20

IV. Applicable law

10.

The determination of consent under Article 25(1) of the ICSID Convention in particular is governed by the said Convention and international law,21 but domestic law may play a useful role notably when the State’s consent is expressed through acts other than treaties.22

V. Basis of consent

A. Expression of the host State's consent to arbitration

11.

Consent to arbitration may result from a direct agreement to bring before an arbitral tribunal either future disputes arising from the investment operation (compromissory clause)23 or an existing dispute (compromis), although the latter option is rare in investor-State arbitration.24

12.

In addition to verifying their “special jurisdiction” based on these instruments, ICSID tribunals must also verify their “general jurisdiction” derived from the ICSID Convention.25 See further Section VII below.

13.

Most investment claims have been submitted on the basis of a host State’s offer to arbitrate which may occur in the following ways:26

  1. The host State may offer its consent to arbitration by way of its national legislation27 or other unilateral acts.28 Tribunals will consider whether the intention of the State to give its consent to arbitration is established.29 However, the host State may not invoke its internal laws to argue against consent.30
  2. The host State may also make a unilateral offer to arbitrate under an international treaty, either bilateral or multilateral,31 in respect to the investors that are nationals of other contracting State parties.32 Some treaties may explicitly provide that the State parties “irrevocably consent in advance.”33 With a few exceptions,34 the consent expressed in the treaty has been viewed as “self-sufficient” and constituting a “standing offer,” thus eliminating the need for a separate compromis.35 However, a supplementary act may be required when a State only gives a promise to consent36 or when the treaty’s dispute resolution provision is open-ended, providing no “unilateral possibility of choice.”37
  3. A clause contained in a contract concluded between the investor and the respondent State.38

B. Expression of the host State’s subdivisions and agencies’ consent to arbitration

14.

Articles 25(1) and 25(3) of the ICSID Convention extend jurisdiction to disputes between the “constituent subdivisions” and “agencies” of a contracting State and a national of another contracting State. “[M]unicipalities, local government bodies in unitary states, semi-autonomous dependencies, provinces or federated States in non-unitary States and the local government bodies […]” may be considered as subdivisions and agencies of the State.39

15.

The State’s subdivisions and agencies’ consent, and thus the ICSID tribunal’s jurisdiction over the dispute, is subject to designation by the State to the Centre40 and the State’s approval (or notification that such approval is not required).41 At least one tribunal has however held that the good faith conduct of the parties may override this requirement of designation.42

C. Expression of the investor's consent to arbitration

16.

Consent by the investor can be expressed in various ways.43 For instance:

  1. When a foreign investor accepts the State’s offer to arbitrate through the submission of an investment claim, by filing a notice of dispute,44 the arbitration agreement is perfectioned, unless the notice falls outside the scope of the State’s offer.45
  2. When the State’s offer to arbitrate is contained in national legislation, some authorities have posited that consent could be perfected by a mere filing of a licence application with the relevant State authorities or when the investment is successfully admitted in the host State in accordance with the law.46
17.

Counsel for the investor can express consent on the investor’s behalf but they need to be authorized to do so.47 No special form is required.48

18.

Furthermore, an investor’s hesitation regarding its right to have recourse to certain arbitral fora does not prevent consent from being perfected.49

VI. Timing of consent

19.

ICSID tribunals have generally held that consent must exist when the request for arbitration is filed.50 One tribunal has however controversially held that consent could be expressed anytime and even in the pleadings of the parties (forum prorogatum),51 to which one arbitrator and the subsequent ad hoc annulment Committee disagreed.52

20.

The timing of the investor’s consent plays an essential role in determining the tribunal’s jurisdiction in cases where the host State has denounced the ICSID Convention. See further Denunciation of ICSID Convention, Section III.

21.

Generally, the State’s offer to arbitrate may be withdrawn if it has not been accepted.53 However, once perfected, consent becomes irrevocable54 and cannot be unilaterally withdrawn,55 except under particular circumstances specific to the applicable investment agreement.56

VII. Scope of consent

22.

The scope of consent to arbitration is circumscribed by the host State’s offer and, in ICSID arbitration, by the jurisdiction of the Centre.57

A. Consent limited to certain disputes

23.

The host State’s offer to arbitrate may be limited to certain types of disputes.58

  1. Arbitration clauses may be quite broad as they refer to “all disputes concerning investments” or “any legal dispute concerning an investment”. In some treaty-based investor-State cases, such consent clauses have been considered as encompassing disputes that arise from a contract in connection with the investment,59 whereas in other cases the State’s consent has been considered to exist only over disputes which also constitute breaches of the applicable treaty.60 Some tribunals have held that limited consent contained in the treaty’s dispute resolution clause cannot be overridden by an umbrella clause.61 See further Umbrella clause.
  2. States may limit their consent to disputes relating to investments made in accordance with the host State’s laws.62 However, the host State may not challenge its consent on the basis that the investor did not fulfil the conditions set out in the BIT, when the host State’s own conduct made the fulfilment of these conditions impossible.63
  3. Consent to arbitration may also be limited to disputes concerning expropriation or the amount of compensation for expropriation.64 In presence of such arbitration clauses, investor-State tribunals may join the examination of expropriation to merits65 or use a prima facie expropriation case test to establish the State’s consent.66
  4. States may also exclude the submission of taxation disputes to the jurisdiction of the tribunal. See Taxes.
  5. Tribunals have taken care in applying most favoured nation clauses in the presence of limited consent to arbitration. See Most favoured nation clauses.67
  6. Whether additional consent is required by the State for mass claims is debated. See Mass claims, Section III.A.

24.

Within the ICSID framework, Article 25(4) of the ICSID Convention allows a contracting State to notify the Centre of the class or classes of disputes which it would or would not consider submitting to the jurisdiction of the Centre. Few tribunals have considered that this notification may affect consent68 while others have disagreed.69

B. Consent limited to certain parties

25.

The joinder of third parties to the proceedings and admission of third parties to hearings require the consent of the parties.70 However, tribunals may exercise discretion on certain procedural matters such as the admission of amicus curiae briefs depending on the applicable treaty and/or rules of arbitration.71 See further Joinder, Amicus curiae.

C. Consent limited to certain arbitral fora

26.

Dispute resolution clauses generally indicate the available fora before which investment claims may be brought (i.e. before national courts or an arbitration tribunal).72

  1. Investor-State tribunals must satisfy themselves that they are constituted under the auspices of the same arbitral institution as indicated in the arbitration clause.73
  2. An arbitration claim may be precluded by a fork in the road clause if the investor has previously submitted the same claim before a domestic tribunal.74

VIII. Procedural requirements prior to the State's consent

27.

Arbitration clauses may subject the possibility for the investor to institute arbitration proceedings upon satisfaction of several preliminary procedural requirements,75 which are usually as follows: waiting periods for amicable settlement (cooling-off periods) or submission of the dispute to local courts in the host State within a certain period of time, often between six to eighteen months. See further Exhaustion of local remedies, Cooling-off periods, Section IV.

  1. A number of investment tribunals have treated clauses regarding the attempt at amicable settlement clauses76 and local remedies rule77 as mandatory jurisdictional conditions pertaining to the State's consent to arbitration.
  2. Other tribunals have interpreted cooling-off period clauses as not being able to preclude their jurisdiction and have found that full compliance with such requirement would not have given a promising opportunity for a settlement.78
  3. Finally, other tribunals have considered that non-compliance with domestic remedies clauses does not lead to a lack of jurisdiction because such clauses relate to the admissibility of the claim.79 It has also been ruled that attempts to obtain effective redress from local courts would have been futile.80 

IX. Investor's consent to counterclaims

28.

Unless the applicable dispute resolution clause limits the access to arbitration to claims arising out of the host State’s obligations,81 the acceptance of the State’s offer to arbitrate by the investor does not exclude counterclaims.82 See further Counterclaims.

X. Consequences of the non-respect of the parties' consent

29.

The ICSID tribunal that goes beyond the scope of its jurisdiction given by the parties’ consent would be exceeding its powers. See further Grounds of annulment in ICSID awards, Excess of powers, Section III.A.

30.

Similarly, in non-ICSID arbitrations, a national court may set aside an award that goes beyond the scope of the submissions (see further Setting-aside of awards by domestic courts) or refuse to recognise or enforce the award on the basis that the arbitral tribunal exceeded the scope of consent to arbitration under Article V(1)(c) of the New York Convention (see further Matters not falling within the terms of the submission to arbitration).

Bibliography

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Amerasinghe, C.F., Jurisdiction of International Tribunals, 2002.

Blanchard, S., State Consent, Temporal Jurisdiction, and the Importation of Continuing Circumstances Analysis into International Investment Arbitration, Washington University Global Studies Law Review, 2011, pp. 419-476.

Broches, A., The Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Recueil des Cours de l’Académie de droit international (RCADI), 1972, pp. 331-410.

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