In addition to traditional threshold issues such as personal or subject-matter jurisdiction, tribunals in investor-State arbitration may also be tasked with determining the extent to which they should exercise jurisdiction over the claimant’s substantive case. For instance, a respondent State may argue that the investor’s claim does not relate to any obligation of the host State under the relevant legal instrument. In adjudicating such defences, tribunals apply a “prima facie test” of jurisdiction to the claimant’s case.
II. The applicable test
The test applied in investor-State arbitration originates from decisions of the Permanent Court of International Justice (PCIJ) and the International Court of Justice (ICJ),1 the most prominent of these being the 1996 Oil Platforms case. In determining whether the lawfulness of the United States’ actions against Iranian oil platforms was a dispute “as to the interpretation or application” of the applicable treaty, the ICJ considered that the relevant question was whether the alleged violations “do or do not fall within the provisions of the treaty”.2 In her Separate Opinion, Judge Higgins elaborated on the methodology to be used to determine this question, stating that the Court ought to “accept pro tem the facts as alleged by [the Applicant] to be true” and in that light, interpret the relevant treaty provisions to check if, on the basis of the applicant’s factual claims, there could occur a violation of one or more of them.3
III. Treaty practice
Several investment treaties concluded by the United States explicitly incorporate a similar “prima facie case” test, usually in conjunction with a provision allowing a respondent to seek a motion to dismiss a claim.4 These treaty provisions are applied in a manner that mirrors Judge Higgins’ articulation.5
IV. Application in investor-State arbitration
Notwithstanding the silence of the applicable legal instruments, the methodology laid down in Judge Higgins’ Separate Opinion often finds application in investor-State arbitration, especially when the jurisdictional and merits stages of the proceedings are bifurcated.6 While the test is formulated in various ways by different tribunals, there is no perceptible distinction between its application in ICSID7 and non-ICSID cases.8 A smaller number of arbitral awards have accepted and applied the Oil Platforms test with the caveat that the claimant’s characterisation of the facts is pro tempore controlling unless the same is vexatious or abusive.9
The consequence of the presumption inherent in Judge Higgins’ test is that the respondent State bears the burden to disprove the investor’s allegations.10 In the event that the respondent submits rebuttal evidence at the jurisdictional stage, tribunals may exercise a higher standard of review in determining their prima facie jurisdiction: that is, if from such evidence, the facts alleged by the claimants are shown to be false or insufficient to satisfy the prima facie test, jurisdiction would be denied.11
Notably, the prima facie test is not applied when the tribunal is considering objective issues of jurisdiction, such as whether there is a protected investment, as opposed to the more evidentiary issues pertaining to the conduct of a State.12
VI. The Fisheries Jurisdiction formulation
Sheppard, A., The Jurisdictional Threshold of a Prima-Facie Case, in Muchlinski, P., Ortino, F. and Schreuer, C., (eds.), The Oxford Handbook of International Investment Law, Oxford University Press, 2008, pp. 932-961.
Douglas, Z., The International Law of Investment Claims, Cambridge University Press, 2009.
Schreuer, C., The ICSID Convention: A Commentary, Cambridge, Cambridge University Press, 2001.
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