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Docteur Michail Dekastros

Associate in International Arbitration - Sidley Austin LLP

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Necessity under Provisional Measures

The views expressed in this article are exclusively those of the author and do not necessarily reflect those of Sidley Austin LLP and its partners. This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

I. Definition

1.

A central tenet of any interim measures analysis conducted before international courts and tribunals is necessity, i.e., whether the actions of a party “are capable of causing or of threating irreparable prejudice to the rights invoked”.1

2.

The International Court of Justice (ICJ) has adopted a relatively high threshold in its jurisprudence for determining whether it is “necessary” in a particular case to grant a request for provisional measures.2 The approach of the ICJ is that there must be “irreparable” harm or prejudice that will be caused to the rights of the parties, before the Court will decide that a provisional measure is “necessary”.3 

3.

Investment tribunals have drawn from the jurisprudence of the ICJ when applying the standard, but have often diverged in their analysis.

II. The standard

4.

Certain investment tribunals have applied an “irreparable harm” standard, in line with the approach developed by the ICJ.4 However, the application of an “irreparable harm” standard in the context of investment arbitration has been perceived as problematic. The overwhelming majority of claimants do not request restitution as a primary remedy but only compensation. As such, the application of such standard would make difficult a claim of interim protection for rights arising from the subject matter of the claim. Indeed, any further breach of those rights would ipso facto invite additional damages and thus not be “irreparable”.

5.

Possibly for this reason, investment tribunals have recently appeared to step away from the narrow standard of irreparability, preferring instead a standard of “significant” harm.5 On this standard, if a party would suffer substantial prejudice absent interim measures, then the interim measures are “necessary” and the substantial harm requirement is satisfied.6 Other tribunals have concluded that the standards of “irreparable” and “significant harm” are functionally equivalent.7

6.

Nonetheless, practitioners should remain aware that investment tribunals may be more inclined to deny interim relief on the basis that monetary damages will adequately compensate the applicant in the event that the matter is decided finally in their favour.

7.

The requirement of “irreparable” or “significant” harm may be abandoned in extreme cases, namely where (a) the investment in question remains a going concern despite the allegedly wrongful intervention of the State, and (b) on the basis of that continued intervention, there is a substantial risk that the investment will be destroyed or dissipated in its entirety.8 

8.

In any event, substantial harm may exist even if the party would still have recourse to a claim for damages.9 As the Paushok tribunal recognized, “the possibility of monetary compensation does not necessarily eliminate the possible need for interim measures”.10 Similarly in Behring v. Iran, the Iran-U.S. Claims Tribunal noted that the scope of harm that satisfies the necessity test “arguably is broader than the Anglo-American law concept of irreparable injury,” which “requires a showing that the injury complained of is not remediable by an award of damages”.11

III. The standard as applied to the interim protection of procedural rights

9.

As discussed above, tribunals have confirmed that harm is “irreparable” where it cannot be remedied by an award of damages.12 Investment tribunals have repeatedly confirmed that where the procedural integrity of the arbitral proceedings is threatened,13 or the status quo between the parties risks being altered by the aggravation or extension of the dispute,14 the existence of such harm is axiomatic.

10.

In particular, harm caused to the integrity of the arbitral proceedings, “particularly with respect to a party’s access to evidence or the integrity of evidence produced”, cannot be remedied by an award of damages.15

IV. An overlap between necessity and urgency

11.

Urgency and necessity are generally accepted as two separate requirements for the grant of provisional measures.16 However, due their intrinsic link to the element of harm/prejudice, there is a considerable overlap in how tribunals articulate and apply these two notions.17

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