Many thanks Bruno Hardy, counsel at Liedekerke, for reconnecting me with a case I had seen in passing and then lost track off. Bruno also reports on the issues here; there is also a mainstream media report and a more specialised report.
On 18 January the Lithuanian Supreme Court held that the France-Lithuania BIT is no obstacle to Lithuania seizing the Lithuanian courts of a claim that Veolia and consorts unlawfully took over control of heating businesses in a dozen Lithuanian municipalities in 1993-2003, and excessively profited from same. The claim was initially formulated as a counterclaim in ongoing ICSID proceedings (note there are also ongoing commercial arbitration proceedings relating to the case under Stockholm Chamber of Commerce rules) and is now pursued in the courts in ordinary, using Article 7(2)’s locus damni gateway.
The SC first of all rejected Veolia’s claim that the case should at the least be stayed until the ICSID ruling has been issued. For the SC, CJEU Achmea (which declared dispute settlement via ISDS in intra-EU BITs incompatible with EU law) implies that the arbitration procedure under the BIT has now lapsed (and this ab initio, hence making the later entry into force of the EU Member States’ BIT termination agreement irrelevant) meaning Lithuania not merely may but indeed it must drop its claims in the ISDS procedure.
From what I understand, the SC did not hold on whether A7(2) BIa is a possible gateway, focusing instead on the fate of Lithuania’s involvement in the ISDS procedure. In a perhaps unexpected ruling, as Bruno reports, the Vilnius Regional Court subsequently found that it lacked international jurisdiction seeing as in its (prima facie unconvincing) view the Lithuanian claim falls under acta iure imperii, hence cancelling out Brussels Ia, instead making the claim subject to residual Lithuanian private international law rules. These seem to direct the suit to France, the domicile of the defendant.
This is where there is a final twist in the tail. What I assume to be the reason for the court to find acta iure imperii (that the claim’s origin and DNA are actions taken by a state in its sovereign capacity) may well result in the French court refusing to entertain the claim as well (potentially leading to the need for a Lithuanian forum necessitatis). Indeed as Bruno points out, under the French SC Guatemala rule, French courts do not rule on cases necessarily involving the application of foreign public law (this echoes some of the issues in Skatteforvaltningen, currently under appeal). The 1975 Institute of International Law’s Resolution on same comes to mind.
The judgment shows very clearly the urgency for a proper debate on the relationship between EU law, the CJEU, ISDS and other forms of international dispute settlement. I fear the rather unnuanced CJEU statements in cases like Komstroy do little to resolve many of the underlying issues.
For background to this week’s SCOTUS ruling in Jesner v Arab Bank see my earlier posting. Bastian Brunk has early reflection here, with good summary of the Court’s majority (as well as dissenting) opinion.
Human rights litigation under ATS is not dead. Yet it is clear it is not going to be routine, either. I find the judgment not surprising. While one could certainly from a political point of view bemoan that ATS is not providing the avenue to hold corporate excess to account, SCOTUS have a point when
- they emphasise the foreign policy intentions of the ATS when it was originally drafted. Hence the need not to ignore the same foreign policy implications 2 centuries on. Hence also my stance on JASTA.
- they highlight the continuing de lega lata situation on corporate culpability under international law: the default position remains that corporations are not subjects of public international law. Yes there are hard-core exceptions – and these may be further developing. And yes, plenty over the past 20 years have tried to change that status quo. Finally the Court could have flagged more of those attempts that raise serious doubt over the position. However it is hardly the role of the US Supreme Court single-handedly to force the hand of the league of nations.
- separation of powers in the US, too, demands Congress intervene should it want the Statute’s causes of action to be broadened.
All in all a ruling very much in Montesquieu’s spirit. Students of public international law in particular should read the judgment with care: there is plenty in there to chew over.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.
I applied for funding 2 years back to have someone conduct a thorough review of recent development in State Immunity. Funding was not granted: quelle horeur!. Reviewers suggested there was no need to revisit an area where law and practice is settled: quelle erreur!
Needless to say both statutory and case-law developments have proven reviewers wrong since. I would still be happy by the way to supervise research in the area (happier still for someone to fund it).
Now, coming to the point: in 16-22.494 Congo v Commisimpex the French Supreme Court essentially held that the French Sapin II law applies retroactively. State assets employed iure imperii are only available for seizure following express and property-specific waiver. The Court’s decision does not reflect unisono developments in other States (neither indeed, I agree with Victor Aupetit), does it help France with regulatory competition in civil procedure: quite a few jurisdictions have taken a more relaxed and wide approach to contractual waiver of State immunity.
Update 13 October 2017: Oral hearing took place this week. See here for reporting in particular on Gorsuch J’s unexpected line of questioning.
Thank you, Ludo Veuchelen, for alerting me to Adam Liptak’s reporting on Jesner v Arab Bank, in which certiorari was granted by the United States Supreme Court early April. The case may finally have us hear SCOTUS’ view on the question which led to certiorari in Kiobel but was subsequently ignored by the Court: whether corporations can be culpable for violation of public international law. ‘May’ is probably the keyword in the previous sentence.
Update 18 January 2018 One thing to look out for is whether SCOTUS will refer to developments in ICSID /World Bank arbitration, particularly Urbaser v Argentina where the Panel noted at 1195
‘it can no longer be admitted that companies operating internationally are immune from
becoming subjects of international law. On the other hand, even though several initiatives undertaken at the international scene are seriously targeting corporations human rights conduct, they are not, on their own, sufficient to oblige corporations to put their policies in line with human rights law. The focus must be, therefore, on contextualizing a corporation’s specific activities as they relate to the human right at issue in order to determine whether any international law obligations attach to the non-State individual.’
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.
Update 3 May 2019 on 12 March 2019 the Brussels Court of Appeal replicated the High Court’s decision, and referred generally to the CJEU on the authority nay obligation of Member States to refuse to recognise awards of this kind.
I have written this blog post with in my mind a rather bibliographical purpose: having collated all sources I would rather like finding them all back again. In  EWHC 31 (Comm) Micula and others v Romania and the European Commission, the High Court effectively halted the enforcement of an ICSID award, pending a Court of Justice Ruling (in Case T-694/15) on the legality of an EC finding of State Aid. The Award arose out of the Romania-Sweden BIT and as such got caught up in the maelstrom (this could have been an intended pun however etymologically the word is Dutch, not Swedish) of discussions surrounding EU competencies in intra-EU Bilateral Investment Treaties (for background on that issue see here).
Not quite following the rabbit down the hole however nevertheless quite a wonderland of colliding legal regimes.
Update 9 July 2016: the panel sided with Uruguay on the merits, in a move which must boost those rejecting criticism that international trade law, including BITs, MITs and TTIP, deny States’ regulatory autonomy.
A very interesting debate in the PMI v Uruguay arbitration on plain packaging. The decision on jurisdiction (which was taken in July this year) rejected the notion that an ‘investment’ under a BIT looses such qualification as a result of, in effect, its negative externalities. Uruguay had argued that PMI’s interests in Uruguay do not constitute a protected investment since not only do they fail to make any contribution to the Country’s development, but they actively prevent and interfere with such development, due to the health impact of tobacco consumption.
The Panel, having to establish its subject-matter jurisdiction, gave the notion ‘investment’ a broad meaning, in the absence of express language to the contrary in the BIT concerned. With reference to ICSID precedent, the tribunal declined to make ex-post economic /financial evaluations determine its jurisdiction – all the more so since such business, economic, financial… ex post evaluation is subject to tit for tat data and figures.
The case will therefore continue on the merits. Interesting material.
Linguistic interpretation features regularly of course in Treaty interpretation, including in Bilateral Investment Treaties – BITs. Kilic Insaat Ithalat Ihracat Sanayi ve Ticaret Anonim Sirketi v. Turkmenistan (ICSID Case No. ARB/10/1) concerned the Turkey-Kyrgyzstan BIT, which is authentic in English and Russian – neither a Turkish nor Turkmen version had been signed.
The tribunal’s analysis of the object and purpose of the Treaty, with a view to determining the procedural requirements prior to submitting to ICSID and given the inconsistencies between the two authentic versions, is a good reminder of similar issues in the EU, on which I reported extensively in previous work (since that paper, the relevance of the issue in the EU has only increased).