Proof and the Burden of Proof in International Investment Law (European Yearbook of International Economic Law, 24) 303096342X, 9783030963422

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EYIEL Monographs Studies in European and International Economic Law 24

Giulio Alvaro Cortesi

Proof and the Burden of Proof in International Investment Law

European Yearbook of International Economic Law

EYIEL Monographs - Studies in European and International Economic Law Volume 24

Series Editors Marc Bungenberg, Saarbrücken, Germany Christoph Herrmann, Passau, Germany Markus Krajewski, Erlangen, Germany Jörg Philipp Terhechte, Lüneburg, Germany Andreas R. Ziegler, Lausanne, Switzerland

EYIEL Monographs is a subseries of the European Yearbook of International Economic Law (EYIEL). It contains scholarly works in the fields of European and international economic law, in particular WTO law, international investment law, international monetary law, law of regional economic integration, external trade law of the EU and EU internal market law. The series does not include edited volumes. EYIEL Monographs are peer-reviewed by the series editors and external reviewers.

More information about this series at https://link.springer.com/bookseries/8165

Giulio Alvaro Cortesi

Proof and the Burden of Proof in International Investment Law

Giulio Alvaro Cortesi Paris, France

ISSN 2364-8392 ISSN 2364-8406 (electronic) European Yearbook of International Economic Law ISSN 2524-6658 ISSN 2524-6666 (electronic) EYIEL Monographs - Studies in European and International Economic Law ISBN 978-3-030-96342-2 ISBN 978-3-030-96343-9 (eBook) https://doi.org/10.1007/978-3-030-96343-9 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgements

This work would never have been possible without the intellectual and material support of my family and my friends. I would like to express my gratitude to all of them, particularly to my best friends Alexa, Giulia, Kristin and the Parisian family. I have also a thought for my parents and my relatives.

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Contents

1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Research Questions and Methodology . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .

1 5 9 11

2

The Burden of Proof and Its Exceptions . . . . . . . . . . . . . . . . . . . . . . 2.1 The Origins and Definition of the Principle of onus probandi incumbit actori: Between Common and Civil Legal Tradition . . . . 2.2 Identifying the Party Bearing the Burden of Proof . . . . . . . . . . . . . 2.3 Onus probandi incumbit eius quid dicit: A First Conclusion . . . . . . 2.4 Exceptions to the Application of the Rule of onus probandi incumbit eius quid dicit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Burden of Proof and Default of a Party . . . . . . . . . . . . . . . 2.4.2 Notorious Facts and Factual Investigations by the Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.3 Iura novit curia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.4 Burden of Proof Concerning Jurisdictional Issues . . . . . . . . 2.4.5 Burden of Proof and the Issue of Bifurcation of the Arbitration Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 The Exceptions to the Rule onus probandi incumbit eius quid dicit: Some Practical and Theoretical Conclusions . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

3

Presumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 General Notions Concerning Presumptions . . . . . . . . . . . . . . . . . 3.2 Specific Presumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Presumption That States Respect the Law in General and International Law in Particular (omnia rite esse acta praesumuntur) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 The Responsibility of the State Is Not to be Presumed . . . 3.2.3 Presumption of Nationality (of Natural Persons) . . . . . . . 3.3 Presumptions: A Preliminary Conclusion . . . . . . . . . . . . . . . . . .

15 18 27 28 28 36 39 49 60 72 73

. . .

77 77 79

. . . .

80 82 93 98 vii

viii

Contents

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5

The Admissibility of Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 The General Principle of Freedom of Admission of Evidence by an International Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Limits of the General Principle of Free Appreciation of Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 The Limit of Relevance . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 The Limit of Materiality . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.3 General Limitations on Admissibility: A First Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Admissibility in the Strict Sense . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Inadmissibility of Evidence Obtained Through Violation of International Law, State Secrets, or Professional Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 ICJ Guidance on the Issue of Settlement Privilege . . . . . . 4.3.3 Evidence Produced After the Expiry of the Time Limit Set by the Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.4 False Evidence and New Evidence Discovered After the Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Admissibility of Evidence: The ICJ Guidance: A Preliminary Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Taking of Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 The Applicable Legal Framework for the Taking of Evidence . . . 5.1.1 Equalities of Parties Before International Investment Tribunals: The Institute of International Law Resolution 2019 and the IBA Rules Amendment of 2020 . . . . . . . . . 5.1.2 The Relevance of Good Faith and the Possible Guiding Role of ICJ and WTO Case Law . . . . . . . . . . . . 5.2 Documentary Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Document Production and Legal Privileges . . . . . . . . . . . 5.2.2 The Consequence of Non-Production of Documents: Adverse Inference in ICSID Practice . . . . . . . . . . . . . . . . 5.3 Testimonial Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Testimonial Evidence of a Fact . . . . . . . . . . . . . . . . . . . . 5.3.2 Factual Testimony and de relato Testimony (Hearsay Evidence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.3 Reluctant Witnesses and the Search for Evidence Abroad . 5.3.4 Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 The Gathering of Documental and Testimonial Evidence: A Preliminary Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99

. 101 . 102 . 106 . 106 . 110 . 111 . 112

. 113 . 119 . 120 . 121 . 133 . 134 . 137 . 138

. 138 . 141 . 143 . 146 . 151 . 153 . 153 . 160 . 164 . 167 . 170 . 171

Contents

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7

8

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Evaluation of Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 The Principle of Free Appreciation of Evidence . . . . . . . . . . . . . 6.2 Limitations of the Principle of Free Appreciation and Legal Presumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Maxims of Experience in Evidence Evaluation . . . . . . . . . . . . . . 6.3.1 Source of Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Evaluation of Press Articles and Reports . . . . . . . . . . . . . 6.3.3 Evaluation of Affidavits of Non-appearing Witnesses . . . . 6.3.4 Method of Evidence Taking . . . . . . . . . . . . . . . . . . . . . . 6.4 Evaluation of Evidence: A Preliminary Conclusion . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 173 . 174 . . . . . . . .

176 177 177 183 185 187 189 190

The Standard of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Standard of Proof: General Features . . . . . . . . . . . . . . . . . . . . . . 7.1.1 Preponderance of Evidence . . . . . . . . . . . . . . . . . . . . . . 7.1.2 Proof in a Convincing Manner . . . . . . . . . . . . . . . . . . . . 7.1.3 Proof Beyond a Reasonable Doubt . . . . . . . . . . . . . . . . . 7.2 Variation of the Standard of Proof Depending on Particular Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Variation of the Standard of Proof Depending on the Stages of the Proceedings . . . . . . . . . . . . . . . . . . . 7.2.2 Variation of the Standard of Proof Depending on Judicial Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.3 Variation of the Standard of Proof Depending on the Content of the Breached Rule . . . . . . . . . . . . . . . . 7.2.4 Variation of the Standard of Proof Depending on the Difficulty for a Party to Gather the Necessary Evidence . . 7.2.5 The Standard of Proof Concerning Damages . . . . . . . . . . 7.3 Standard of Proof: A Preliminary Conclusion . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

193 194 195 196 197

. 197 . 197 . 202 . 204 . . . .

206 208 210 211

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217

Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I.C.J. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P.C.I.J. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ICSID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . WTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

219 219 222 222 227 228 228

Cases Decided by Other International Tribunals . . . . . . . . . . . . . . . . . . 231 National Tribunals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

Chapter 1

Introduction

The aim of the present work is to examine the system of evidence in international arbitration in the field of international investment law. To better clarify the scope and the field of enquiry of the present book, a good starting point is the definition of the title. Beginning from the expression ‘proof’ the Black’s Law Dictionary identifies three main definitions of this word: 1) The establishment or refutation of an alleged fact by evidence; the persuasive effect of evidence in the mind of a fact-finder. 2) Evidence that determines the judgment of a court. 3) An attested document that constitute legal evidence.1

All these three definitions will be utilised in the book, because within the different chapters the meaning that will be allocated to the word ‘proof’ may vary. In the whole book, however the word proof will generally define all the aspects related to the facts in contraposition of pure legal issues. In conclusion the word proof will be defined in positive terms as ‘the issue concerning facts in the arbitral procedure’ and in negative terms as ‘all the issues that do not concern purely legal substantial or procedural issues’. The locution ‘burden of proof’ or ‘onus probandi’ refers to ‘a party’s duty to prove a disputed assertion or charge; a proposition regarding which of the two contending litigants loses when there is no evidence on a question or when the answer is simply too difficult to find’.2 Although the expression burden of proof will be further defined in the first chapter, because during history has been utilised in different senses, it is possible, from now on to use it to better identify the inherent logic of the title of the book, which will describe the legal regime of evidence not in passive way, but always

1 2

Garner (2009), p. 1409. Garner (2009), p. 236.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_1

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1 Introduction

through a dynamic approach, clarifying how the application of a certain legal rule may impact on the outcome of the case. In other words, the regime of the law of evidence will not be described solely from the theoretical point of view, but through the analysis of the case law, each rule that will be identified concerning presumptions, the admissibility of evidence, the taking of evidence, the evaluation of evidence and the standard of proof, will be examined having in mind how will impact the burden of proof and, consequently the outcome of the case. This empirical approach will show that, broadly speaking, each rule of evidence and the law of evidence as a system is not neutral as far as the outcome of each case is concerned. Quite on the contrary, certain theoretical choices, such as for example the importance allocated to ICJ precedents in the shaping of the law of evidence of a hybrid system as it is investment arbitration may have important consequences at the practical level. The last part of the title that need to be define is ‘in international investment law’, which is the field of enquiry of the present book. Defining international investment law, it is rather a hard task. The reasons of this difficulties are several, starting from the fact that international investment law lies at the corner between international public law and international private law going to the relative novelty of this legal system. Legal scholarship, however, greatly contributed to define this hybrid subfield of international economic law. A good starting point can be the definition of the Max Planck Encyclopaedia of Public international law. According to this source: International investment law covers the promotion of foreign investments and their protection against the host State. Attracting foreign investment by establishing a favourable investment climate is now recognised as a cornerstone of economic development. The main sources of international investment law are bilateral investment treaties and, rising in number, preferential trade agreements or treaties for specific sectors with an investment protection regime like the Energy Charter Treaty. By establishing standards for legal stability, predictability of State action and due process, particularly in the context of fair and equitable treatment, international investment law has a repercussion on the legal system of the host State, enhancing the rule of law. [. . .].3

The main dispute settlement mechanism in the field of international investment law is international investment arbitration,4 which, in the last decades has experimented a steady growth. Consequently, from a theoretical and a practical point of view it is urgent that each aspect of the law regulating each aspect of this dispute settlement system is clearly studied, but also consistently systematized. While undoubtedly crucial to the outcome of any case, the procedural rules regarding evidence are so rarely discussed that they have been evocatively described as ‘the Antarctica of international law’.5 3

Herdegen (2011), p. 779. Herdegen (2011), p. 786. 5 Feller (1935), p. VII: “The realm of the procedure of International tribunals is the Antarctica of International law. A few explorers have skirted about its shores; others surveyed portions of it with more or less thoroughness. Not until its little territory has been conquered region by region will it be 4

1 Introduction

3

Nevertheless, the rules regarding evidence often represent the procedural counterpart to underlying substantive interests. This means that a thorough study of the norms regulating the production of evidence before international jurisdictions will reveal the core values applied in international trials. It is therefore necessary to investigate the topic, giving specific consideration to the general principles applied in this field because although those principles are sometimes condensed in ephemeral literal data, their conceptual form is the constant element to which jurisprudence refers. The primary reason for this reference is that international jurisdictions, especially those based on international arbitration agreements, are not bound by national regulations regarding the field of evidence,6 especially the admissibility,7 taking,8 and evaluation9 of evidence. This lack of restriction by national laws, allows international judicial bodies to have wide discretion10 and therefore significant power regarding the applicable rules concerning evidence and related issues. This view of the administration of justice by international arbitration institutions can also be found in the jurisprudence of tribunals operating in the field of investment. The most representative of these arbitral institutions is the International Centre

possible for future scholars to draw a complete and revealing map of the entire continent”. On this subject, see also Kazazi (1996), p. 20. 6 Poudret and Besson (2002), pp. 581–582: “[L’arbitre] n’est pas évidement tenu de suivre les règles de procédure applicable en matière de preuves devant les juridictions étatiques du siège. [. . .] en l’absence de convention des parties lui permet ainsi de déterminer librement [. . .] les principes d’administration de la preuve”. Sandifer (1975), p. 180: “The basic principle upon which international tribunals proceed has been well stated by Mérignac in a passage quoted by Umpire Gutierrez-Otero’s opinion in the Franqui Case before The Spanish Venezuelan Mixed Claim commission of 1903: ‘Then the Arbitral tribunal remains free to employ, for enlightening itself, all the kinds of evidence that it deems necessary; and It will not be bound, in this regard, by any restriction that are encountered in municipal law, especially with respect to the administration of testimonial proof’”. See also, Alexander (1895), p. 269. 7 Rosenne (1965), pp. 556–557: “[T]he restriction upon admissibility of evidence sometimes encountered in municipal procedure [. . .] have no place in international adjudication, where the relevance of facts and the value of evidence tending to establish facts are left to the entire appreciation of the Court”. Von Mehren and Salomon (2003), p. 285: “Usually the applicable ‘rule’ in an international arbitration is that the tribunal has broad discretion to determine what evidence it should hear. The tribunal admits most or all of the evidence offered by the parties and then determines what weight, if any, should be given to particular pieces of evidence”. Elkind (1984), p. 95: “Eisman quotes from the Mavromatis Palestine Concession Case to the effect that, in exercising international jurisdiction the Court is not bound to attach the same importance to matters of form as in municipal law” (PCIJ, Ser. A, No. 2, p. 12, at p. 34). 8 Sandifer (1971), p. 456. 9 Cheng (1953), p. 303; Niyungeko (2005), p. 322; Amerasinghe (2005), p. 187. 10 Böckstiegel (2001), p. 1. These variations, of course, are also due to the mandate and practice of International arbitrators to use their discretion in shaping the procedure to find tailor-made solutions considered the most effective for the particular case before them”. See also, Schreuer et al. (2009), p. 643, para. 11.

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1 Introduction

for Settlement of Investment Disputes (ICSID),11 which is the specialised jurisdiction in disputes between states and private investors. Thus, the jurisprudence of the arbitration panels that decide cases in this field constitutes a reference and model that can be employed as an instrument with which to analyse law on the matter of evidence. This is possible because as mentioned above, the provisions of the ICSID convention,12 the ICSID Rules of Procedure for Arbitration Proceedings (which are annexed to the ICSID convention and which concern procedural matter), and ICSID jurisprudence have confirmed that the tribunal is independent of national law and the various national traditions.13 In particular, when deciding controversial issues concerning evidence, arbitration tribunals have frequently referred to their own powers, whether implicit or explicit, to make decisions about procedural issues.14 Of course, arbitral tribunals must make prudent use of these prerogatives to prevent this wide discretion degenerating into arbitrariness. The risk of an incorrect exercise of powers by the ICSID tribunals, as well as the lack of specific provisions in the ICSID convention and in the legal instrument to which the parties have subscribed and on which the tribunal’s jurisdiction is based, makes necessary an appropriate method to fill the gaps in the regulations applicable to each case. As can be inferred from the title of this book, the reconstruction process is not limited to elements of ICSID jurisprudence or non-ICSID arbitral awards in the field of investments. Instead, these elements are compared with the conclusions of other international jurisdictions to identify how international judges in different fields have dealt with the same problems, clarifying the role of guidance of the International Court of Justice (ICJ) that emerges through a comparative reading of the ICJ, ICSID case law, and non-ICSID investment arbitral decisions, with a particular focus on those emanating from the Permanent Court of Arbitration (PCA)15 that have not yet been extensively examined. This comparative activity is not the sole prerogative of scholars. On the contrary, it is well known that given the incompleteness of the texts of international 11 Von Mehren and Salomon (2003), p. 290: “Arbitration rules grant the arbitrator broad discretion regarding the admission of evidence. For example, International Centre for Settlement of Investment Disputes (ICSID) Rule 34(1) provides that the tribunal ‘shall be the judge of the admissibility of any evidence adduced and its probative value’”. 12 Art. 44, ICSID Convention 1965, opened for signature by States on March 18, 1965 and entered into force on October 14, 1966. 13 Art. 33, ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules) in (1986) Berkeley Journal of International Law, Volume 4, Issue 2 Fall Article 15, p. 29. 14 See, for example, Tidewater Inc. v. The Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5 Procedural Order No 1 on Production of Documents, 29 March 2011, pp. 6–7, para.14. 15 Indlekofer (2013), p. 102 ‘The Radio Corporation of America v. China Arbitration, as well as the similar Radio Orient Arbitration, set an important precedent for the PCA’s future role within international arbitration and reflect the change in the organization purpose. In these cases the PCA broadened its original mandate of pure inter-state arbitration to include mixed arbitration controversies by administering for the first time cases in which one of the disputing parties was not a state but a private entity”.

1.1 Literature Review

5

conventions, judges often resort to the comparative method. This is particularly evident when arbitrators interpreting the provisions of their constitutive instruments make use of the conclusions reached by other international tribunals, adapting them to the case they must decide. An analysis of this jurisprudential activity of identification and adaptation allows the isolation of the constants—the fundamental principles to which tribunals deem it necessary to conform—and at the same time the appreciation of the distinctive characteristics of each jurisdiction in the adaptation process. This comparative approach is extended to World Trade Organization (WTO) case law in the paragraphs where the fact that the WTO remains a state-to-state dispute settlement system does not alter the purpose of a comparison, such as, for example in the paragraph dedicated to the principle iura novit curia or the one related to burden of proof concerning jurisdictional issues. A more cautious approach is applied concerning presumptions, such as that utilised by WTO panels according to which the statements emanating from a sovereign entity are presumed to be true that may affect, in a mixed dispute settlement system such as investment arbitration, the principle of equality between the parties. The aim of a such large comparison is to show at a theoretical level that at least with regard to certain general principles, a unitary body of procedural law is emerging in the realm of international law under the guidance of the ICJ. The study of this practice—so-called judicial cross-fertilisation16—will ultimately allow not only the identification of the most important principles in the system of evidence in international law but also the observation of the never-ending process of redefining those principles due to the continuous reshaping of the rules in this field by agents of international law.

1.1

Literature Review

As mentioned in the introduction, evidence in international arbitration is an underexplored area.17 This was even more true in 2014 when I began to write my thesis at the University of Geneva. At that time, the foremost book on evidence in international law was that by Dr Mojtaba Kazazi18 published in 1996. Today, the situation is somewhat improved. In 2018, Oxford University Press published a very important book written by Frédéric Gilles Sourgens, Kabir Duggal, and Ian A. Laird19 titled Evidence in International Investment Arbitration. The research undertaken by these three eminent authors was monumental, and since their field

16

Brown (2009), p. 36. Sourgens et al. (2018), p. vii: “One topic is notorious by its absence – evidence”. 18 Kazazi (1996). 19 Sourgens et al. (2018). 17

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1 Introduction

of enquiry is clearly similar to my own, certain remarks on the differences between the two must be made. While the fields of enquiry are similar, they are not the same, and the scopes of the respective works are substantially different. To explain this difference in simple terms, I begin by exploring differences between analysed case law; in this respect, I present an extensive comparison. My monograph has a larger focus than Sourgens, Duggal, and Laird’s book because I extensively examine ICJ precedents, and the aim of my work is to demonstrate the important analogies in the field of evidence. Furthermore, I analyse precedents of the Permanent Court of International Justice (PCIJ) and of the mixed claims commission that are almost absent from this other title. This reflects the different approach I took in my methodology. I chose a deductive and what I would define as eclectic approach, which I also experimented with in my Ph.D. thesis State-Owned Enterprise in International Investment Arbitration and in the WTO Dispute Settlement System.20 In contrast, Sourgens, Duggal, and Laird opted for an inductive approach. The authors clarify the scope of their work by stating, ‘Evidence in international arbitration does not seek to force a particular logic upon a practice [. . .] it merely seeks to achieve an archaeological task – to uncover with care the operational code pursuant of which investment lawyers go about their daily lives’.21 In addition, the aim of my own scientific enquiry is to demonstrate my thesis—namely, that there is a strong cross-fertilisation between international private and public procedural law in the field of evidence. Furthermore, Sourgens, Duggal, and Laird come from the common law tradition, while I am a civil law jurist. Sourgens, Duggal, and Laird write, ‘The current state of jurisprudence would render any project seeking to impose a deductive method to impose deductive doctrinal order futile’.22 However, I challenge this view. While I agree that a deductive analysis is very difficult to conduct, I suggest that it is anything but futile. On the contrary, the study of the history of international adjudication (giving particular attention to the mixed claims commission) reveals that there are certain legal rules in the field of evidence that are consolidated and common to any field of adjudication, including investment arbitration, without falling into what Heather L. Bray calls ‘the danger of anachronism’.23 For this purpose, I updated my book to include the latest developments in ICJ and ICSID jurisprudence. Further to that, as it has been noticed by several authors,24 the investment arbitration system is facing a crisis of legitimacy. I argue 20

Cortesi (2018). Sourgens et al. (2018), p. 6. 22 Sourgens et al. (2018), p. 6. 23 Bray (2018), p. 102. 24 Langford and Behn (2018), p. 552. For a number of reasons, the development of this regime has precipitated a backlash from some states, various civil society actors and scholars. Commonly referred to as a ‘legitimacy crisis’, even some prominent insiders and expected supporters in the media have expressed disquiet. Marceddu and Ortolani (2020), p. 406. In Europe, the system has become so loathed that investor-state dispute settlement (ISDS) has been labelled as ‘the most toxic 21

1.1 Literature Review

7

that a comparative study which applies the teaching of the ICJ to investment arbitration could contribute to increase consistency of the system. Since 2018, two important evolutions in the realm of the law applicable to investment adjudication have occurred. The first was the 2019 approval of the resolution on the Equality of Parties before International Investment Tribunals from the Institute of International Law. The second innovation is the resolution of the International Bar Association (IBA) Council of 17 December 2020, which approved the 2020 version of the IBA rules on the taking of evidence (see infra Chap. 5). My analysis assumes that the current state of jurisprudence permits a deductive analysis, although I agree with Sourgens, Duggal, and Laird that in several respects it is fair to conclude that the doctrinal analysis of international investment arbitration is incomplete and the decisions are contradictory, but it is possible to identify certain areas of ‘jurisprudence constante’.25 Of course, I do not claim that my book or my method are in any way better than those of such eminent authors, but I think that the different approaches are complementary in nature, and I hope that my work will greatly contribute to this academic debate. I also wish to stress that the two books share a common point of reference in their authors’ admiration for the seminal work of Bin Cheng published in 1953— ‘General Principles of Law as Applied by International Court and Tribunals’26— which, as Sourgens, Duggal, and Laird27 highlight, ‘began the effort to restate the international law of dispute resolution through the derivation of general principles of law’.28 Cheng’s work has been a fundamental inspiration for my own work. Another important book that is close to my field of enquiry is that of James Gerard Devaney.29 Although this book’s field of enquiry is different from my own—I mainly focus on investment arbitration while Devaney examines the jurisprudence

acronym’ by the European Union’s (EU) trade commissioner, Cecilia Malmström, and described as ‘a full-frontal assault on democracy’ by the British environmentalist George Monbiot. Outside Europe, investment arbitration has not been exempt from criticisms either. The Nobel laureate Joseph Stiglitz has argued that investment arbitration undermines the sovereignty of nations, while many academics have pointed to certain dysfunctions of the system and policy-makers have criticized ISDS more or less explicitly, often declaring that investment arbitration is in need of a change or that it should not be featured in modern investment agreements anymore. To further complicate the picture, non-governmental organizations (NGOs) have argued that the promises of ‘growth and jobs’ upon which ISDS clauses are inserted in investment agreements are like a ‘Trojan horse’ that serves to disguise serious threats to democracy and the rule of law. 25 Diel-Gligor (2017), p. 457. ‘On the other hand, consistent lines of jurisprudence equally exist in some degree. Thus, while speaking of a true “crisis of consistency” would go too far, it has become clear that targeted countermeasures are clearly needed’. 26 Cheng (1953). 27 Sourgens et al. (2018), p. 6. 28 Sourgens et al. (2018), p. 5. 29 Devaney (2016).

8

1 Introduction

of the ICJ—he engages in a similar aim: fostering cross-fertilisation between the different fields of international law in the realm of evidence. Further to this, we are driven by a similar aim that is not simply to describe the jurisprudence of international adjudicatory bodies but also to rationalise their practice. In the preface to his book, Devaney says, the author skilfully examines how other tribunals such as the adjudicative bodies of the WTO and interstate-arbitrations conduct fact finding and make a number of proposals for reform, which will enable the ICJ to address some of the current weakness in its approach.30

However, our approaches are quite different concerning methodology and what I call the direction of cross-fertilisation. Concerning the methodology, the abundant body of jurisprudence already contains almost all the answers to technical problems, and there is no need for reform. Instead, there is a need for extensive analysis of international tribunal decisions in order to show that many allegedly necessary reforms (e.g., a more proactive approach in the taking of evidence)31 are already present in the jurisprudence of other adjudicatory bodies or to foster the analysis of why certain evidentiary gathering practices (such as fishing expeditions) did not develop in the field of international litigation. Finally, concerning the direction of cross-fertilisation, our works are simply complementary. The aim of Devaney’s work is to improve the fact-finding approach of the ICJ concerning the practice of other international adjudicatory bodies such as the WTO and international arbitration. I follow the same path but in the opposite direction, using the jurisprudence of the ICJ as guidance to better understand and explain ICSID and international investment arbitration decisions. It must also be noted that the book at hand does not deal with international investment arbitration but only with State-to-State arbitration. In this sense, my enquiry regarding cross-fertilisation between ICJ and international investment arbitration is a first. I must also mention the works of Durward V. Sandifer32 published in 1939 and reprinted in 1975, and those of Chittharanjan F. Amerasinghe33 and Gérard Niyungeko,34 both published in 2005. Sandifer wrote his book before the ICSID convention of 1965 entered into force, and as a consequence, I relied on it for older cases, primarily of the mixed claims commissions. Amerasinghe and Niyungeko’s books were reliable sources of inspiration, but they do not focus on international investment arbitration, and as such, their scope of enquiry is distinct from that of my own book. Concerning the 30

Devaney (2016), p. I. Faundez (2019), p. 80 “Article 50 allows the Court ‘at any time’ to appoint an individual or an institution to carry out an ‘enquiry’ or give an expert opinion. The Court, however, has rarely used these powers”. 32 Sandifer (1975). 33 Amerasinghe (2005). 34 Niyungeko (2005). 31

1.2 Research Questions and Methodology

9

comparison with the WTO, I relied on the work of Graham Cook35 which ‘focuses principles’ mainly already codified by the ICJ.

1.2

Research Questions and Methodology

The main research question asks whether it is possible to identify a law of evidence in international investment arbitration. The answer, as I will demonstrate, is yes, but this conclusion must be accepted with great caution. Evidence before international investment tribunals is regulated in an uneven manner. There are certain areas, such as the rules of presumption, where the body of case law is well developed and there are certain widely accepted and well-defined rules and principles. In other areas, such as the evaluation of evidence, the situation is quite different, and the only recognised principle is the freedom of evaluation of the arbitral tribunal. I have studied this issue in some depth, and as later demonstrated, it is possible to identify certain limits, but the landscape remains far from clearly defined. The second research question asks whether this law of evidence is somewhat internal to the investment arbitration sub-system of international adjudication. At this point, it is not possible to engage with whether investment arbitration is an independent system of law since answering this question would require another monograph. However, for the purpose of this work, I assume that investment arbitration is a hybrid system with important cross-fertilisation between general international law and private international law, or what authors such as Orsolya Toth call ‘Lex Mercatoria’.36 Again, the important debate on the true nature of Lex Mercatoria and its binding character remains outside the scope of my work. Thus, I simply make reference to the practice of international arbitral commercial tribunals since I disagree with certain authors37 who suggest that international investment arbitration is entirely encompassed by general international law. Indeed, the ICSID convention and bilateral investment treaties are instruments of international general law regulated by the Vienna Convention on the Law of Treaties of 1969. However, it is impossible to fully explain international investment arbitration without taking into account its hybrid nature as it has been clearly explained by Douglass and Moos.38 However, this creates a problem for the academic because in general, a deductive approach requires a strong theoretical foundation to support the thesis being argued. The word ‘hybrid’ is important and must be better defined, especially given the scope of the book, which is devoted to the analysis of a branch of international

35

Cook (2015), pp. 31–33. Toth (2017). 37 See, for example, De Brabandere (2014). Van Harten (2007). 38 Douglas (2004), pp. 151–289. On this issue see also Moss (2009), pp. 782–797. 36

10

1 Introduction

procedural law. According to De Brabandere, ‘the method used to settle international investment disputes is clearly modelled on the rules and principles of international commercial arbitration’.39 Therefore, as far as the field of enquiry of the present book it is concerned, the hybrid nature of investment arbitration cannot be denied. However, ‘hybrid’ clearly means that general public procedural law, which has its primary source in ICJ precedents, also has its place in the system. Furthermore, as is better explained in the first chapter of the present book, there is a diversity of function between investment and commercial arbitration. According to Professor Schreuer, More generally, investment tribunals are becoming increasingly sensitive to States’ public order functions. For example, cases involving environmental issues tribunals have shown much awareness of environmental concerns. Also, investment tribunals are dealing rather decisively with improprieties or illegalities on the part of the investors. An investor who does not appear before a tribunal with clean hands will be thrown out without mercy.40

This hybrid character of international investment arbitration should not discourage academic research on the attempts to rationalise the system. On the contrary, international investment arbitration should be regarded as fertile soil for crossfertilisation. I seek to resolve this problem by using what I refer to as an eclectic approach. In other words, I define the categories of the law of evidence as enshrined in most codes of civil procedure, and I then demonstrate the existence of a body of jurisprudence for each rule. Finally, I attempt to fill the gaps with the jurisprudence of the ICJ and the mixed claims commissions to define a rational body of law. I do not claim to have invented this methodology. In fact, I have borrowed this method from the traditions of other international tribunals41 and used it in place of a specific rule, and it involves applying corollaries of general principles and finding adequate solutions to each problem on a case-by-case basis. This is the traditional method used in jurisprudence,42 and it creates an ideal framework for the use and development of general principles of international law in the field of evidence. The study of this method must be conducted by means of an analysis of the practical application of principles concerning evidence before ICSID tribunals, from the more general principles to the more specific—for instance, presumptions drawn from those same principles. This type of approach allows the identification of the inner logic used by the ICSID tribunals and other jurisdictions in the field of investments to develop their juridical argumentations, showing how all this applies

39

De Brabandere (2014), p. 49. Schreuer (2015), p. 1906. 41 Cheng (1953), p. 303. 42 Eastern Extension, Australasia and China Telegraph Co. Ltd. Case, 1923, Reports of International Arbitral Awards, (U.N.R.I.A.A.), vol. VI, pp. 112–118. Available online at http://legal.un. org/riaa/cases/vol_VI/112-118_Eastern_Extension.pdf. On the same subject, see also Cheng (1953) Preface, p. xiii. 40

References

11

to the numerous problems emerging in international law regulating disputes between private investors and host states. Moreover, the advantage of an approach focused on the tribunals’ actions is that it enables an accurate reconstruction of the actual principles of the droit vivant, thus avoiding overly theoretical conclusions.

References Authors Alexander MG (1895) Traité Théorique et Pratique de l’Arbitrage International: Le Rôle du Droit dans la Fonctionnement Actuel de l’Institution et dans ses Destinés Futures, Paris, L. Larose Amerasinghe CF (2005) Evidence in international litigation. Martinus Nijhoff Publishers, Leiden Brown CA (2009) Common law of international adjudication. Oxford University Press, New York Cheng B (1953) General principles of law as applied by International Courts and Tribunals. Stevens and Sons Limited, London Cook G (2015) A digest of WTO Jurisprudence on public international concepts and principles. Cambridge University Press, Cambridge, e-book Cortesi GA (2018) Les émanations de l’État à vocation économique dans l’arbitrage des investissements et dans le contentieux de l’O.M.C., Ph.D. Thesis Université PanthéonSorbonne-Paris I; Università degli studi (Padoue, Italie). Facoltà di scienze politiche De Brabandere E (2014) Investment treaty arbitration as public international law, procedural aspects and implications. Cambridge University Press, Cambridge Devaney JG (2016) Fact-Finding before the international Court of Justice. Cambridge University Press, Cambridge Diel-Gligor K (2017) Toward consistency in international investment jurisprudence, Leiden, Brill Elkind JB (1984) Non-Appearance before the International Court of Justice: functional and comparative analysis. Martinus Nijhoff Publishers, Dordrecht Faundez J (2019) The international court of justice and maritime disputes, the case of Chile and Peru. Routledge, New York Feller AH (1935) The Mexican Claims Commissions 1923 – 1934. Macmillan, New York Garner BA (ed) (2009) Black’s law dictionary, 10th edn. Thomson Reuters, St. Paul Herdegen M (2011) International economic law. In: Wolfrum R (ed) The Max Planck Encyclopaedia of public international law, Vol V. OUP Indlekofer M (2013) International arbitration and the permanent court of arbitration. Kluwer Law International, AH Alphen aan den Rijn Kazazi M (1996) Burden of proof and related issues. Kluwer International, De Hague Niyungeko G (2005) La preuve devant les Juridictions Internationales. Éditions Bruylant, Bruxelles Poudret J-F, Besson S (2002) Droit comparé de l’arbitrage international. Schulthess Médias Juridiques SA, Genève Rosenne S (1965) The law and practice of the international court, 2 vols, Leyden, A. W. Sithoff Sandifer DV (1971) Evidence before international tribunals. The Foundation Press, Chicago,1939, Kraus Reprint, New York Sandifer DV (1975) Evidence before international tribunals. University Press of Virginia, Charlottesville

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Schreuer CH et al (2009) The ICSID convention, a commentary. Cambridge University Press, Cambridge Sourgens FG et al (2018) Evidence in international in international investment arbitration. Oxford University Press, Oxford Toth O (2017) The Lex Mercatoria in theory and practice. Oxford University Press, New York Van Harten G (2007) Investment treaty arbitration and public law. Oxford University Press, New York

Articles Böckstiegel K-H (2001) Presenting evidence in international arbitration. ICSID Rev Foreign Investment Law J 16(I) Spring, pp 1–9 Bray HL (2018) Understanding change: evolution from international claims commissions to investment treaty arbitration. In Schill SW et al (eds) International investment law and history. Edward Elgar Publishing, e-book Douglas Z (2004) The hybrid foundations of investment treaty arbitration. Br Yearb Int Law:151–289 Langford M, Behn D (2018) Managing Backlash: the evolving investment treaty arbitrator? Eur J Int Law 29(2):551–580 Marceddu ML, Ortolani P (2020) What is wrong with investment arbitration? Evidence from a set of behavioural experiments. Eur J Int Law 31(2):405–428, at. 406 Moss GC (2009) Commercial arbitration and investment arbitration fertile soil for false friends? In: Binder C et al (eds) International investment law for the 21st century, Essay in Honour of Christoph Schreuer. Oxford University Press, New York, pp 782–797 Schreuer C (2015) The future of international investment law. In: Bungenberg M, Grieble J, Hobe S, Reinisch A (eds) International investment law. Nomos, Baden-Baden Von Mehren GM, Salomon CT (2003) Submitting evidence in an international arbitration: the common lawyer’s guide. J Int Arbitr 20(3), Kluwer Law International, Printed in The Netherlands, pp 285–294

Chapter 2

The Burden of Proof and Its Exceptions

The rule onus probandi incumbit actori dates back to ancient Roman law and is probably one of the most consolidated principles in procedural law (both common and civil law). In the first chapter, this book examines the history of this principle and its application by mixed-claim commissions and investment arbitral tribunals. In the second part of the chapter, I examine the exceptions to the principle that have been developed by mixed-claim commissions. As citations reveal, these exceptions are still used in international investment adjudication and before the ICJ. More importantly, the evolutionary approach of the ICJ is reflected in the practice of arbitration tribunals, which are generally quite deferent towards the ICJ. As such, it is possible not only to identify a common set of rules applicable in the realm of burden of proof but also—and perhaps more interestingly—to show a multilayered dialogue between international courts and tribunals. Before discussing details, however, certain basic points concerning international investment arbitration procedure must be clarified. According to one author, The procedure in investment treaty arbitration resembles that of international commercial arbitration in many respects. But the presence of the state as a party, the applicability of public international law as the rule of the decision, and the inevitable incorporation of some elements of inter-state dispute resolution mechanism have combined to create a procedure that in a number of respects is distinct.1

The main research question that this first chapter is intended to answer is whether international investment arbitration is a purely adversarial system, like international commercial arbitration, or whether, given its hybrid nature, certain limitations to the adversarial model apply.

1

Legum (2018), p. 113.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_2

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2 The Burden of Proof and Its Exceptions

It is useful to clarify that the question of whether a rigid adversarial model or a more nuanced approach should be applied in international investment arbitration is a very debated issue. In brief, as explained by an author, The fact that arbitration [. . .] is an adversarial rather than inquisitorial process may also influence the outcome of a case. Arbitrators may decide a case based on the arguments and evidence presented to them, meaning that the conduct of the counsellors representing the disputing parties can have a significant – and direct – impact on the outcome of the case. [. . .] As investment arbitration intrinsically involves public interests, it has been argued that it is desirable for arbitrators to adopt a more inquisitorial attitude than would be required from their counterparts in commercial arbitration.2

The legal scholar who has advocated a more inquisitorial approach is Dr. Stephan Schill, who has correctly explained that Similarly, making use of independent fact-finding powers could be apposite in order to alleviate the rigidity of the burden of proof in cases where the party bearing it is in a structurally weaker position to furnish the necessary evidence. In such cases, arbitrators should give more weight to inquisitorial elements and make use of their fact-finding powers.3

The reason which justifies this different approach in international investment arbitration is found in the fact that, unlike in commercial arbitration, arbitrators are not simply in charge of solving a dispute between two private parties but on the contrary exercise a public function. As clearly clarified from a systemic perspective, Schill holds that In commercial arbitration, the decision-maker can remain relatively passive with regard to fact-finding. Instead, it is up to the parties to present facts that support their claim or their objections to the other party’s claim. Burden of persuasion and proof, accordingly, rest on the party making a factual allegation (actori incumbit probatio). In principle, this also holds true in investment treaty arbitration as well as other adversarial systems of international dispute settlement, for example the ICJ. Under special circumstances, however, the public dimensions of investment treaty arbitration may require a more active approach to factfinding by arbitrators than is customary in the settlement of private law disputes. While the facts in investment treaty arbitration, in principle, are owned by the parties and have no impact on actors outside the arbitral proceedings, certain questions relating to issues of international public policy militate towards requiring arbitrators to make use of independent fact-finding powers.4

This quotation clearly explains why in international investment arbitration exceptions to the rule of onus probandi incumbit actori are so important and cannot be detached by the basic rule governing burden of proof. After having defined the general framework of the rule of onus probandi incumbit actori, this book goes further, identifying all the situations in which, according to the legal rules governing the arbitral procedure, arbitrators are allowed (and possibly compelled) to take a

2

Verburg (2019), pp. 440–441. Schill (2010), p. 408. 4 Schill (2010), p. 423. 3

2.1 The Origins and Definition of the Principle of onus probandi. . .

15

more proactive attitude. These legal rules are tenets of public international law,5 and as a consequence, an attentive analysis of the precedents of the ICJ is conducted in order to identify the principles of public international substantive and procedural law which underpin the existence of these exceptions.

2.1

The Origins and Definition of the Principle of onus probandi incumbit actori: Between Common and Civil Legal Tradition

International investment arbitration is a hybrid dispute resolution mechanism. As already indicated in the introduction, it lies at the intersection between public and private international law but also between the common and civil legal traditions. Speaking generally about the nature of international investment arbitration, one author states, As is the case with other forms of international arbitration, investment treaty arbitration is a hybrid of civil law and common law procedure. Like many civil law systems, investment arbitration places a great emphasis on the written submissions that precede the hearing. Each party makes its case in the written submission, which present all of the evidence it relies upon to establish the case. Similar to civil law proceedings, the oral hearing in many ways merely supplements these written submissions. However, as in common law proceedings, the hearings are often multi-day affairs that feature cross-examination of witnesses by counsel and active questioning by the arbitral tribunal. The nature and variety of these hearings resemble more those of the common law proceedings than the civil law one.6

Article 27 of the United Nations Commission on International Trade Law and article 27 of the PCA rules of 2012 contain a very simple provision which states, ‘Each party shall have the burden of proving the facts relied on to support its claim or defence’.7 On the contrary, neither the ICSID convention nor the Rules of Procedure for Arbitration Proceedings annexed to it includes a clear code of the rules applicable to the matter of evidence. This silence is intentional. In this sense, the drafter of the

5

Tanzi (2020), p. 63. In international investment arbitration, like in inter-state litigation, the principles in question flow from the three-pronged pillar of an international tribunal’s mandate. Namely, with specific regard to an ICSID tribunal, from (i) its jurisdictional competence under Article 25 of the ICSID Convention; 30 (ii) the rules constituting the applicable law, under Article 42(1) of the said Convention; and (iii) the claims put forward by the parties, which define the contents and scope of the dispute. Such are the boundaries within which investment tribunals exercise their adjudicative function and the principles at hand operate by balancing the autonomy of the parties with that of the adjudicative function. 6 Legum (2018), pp. 103–104. 7 Daly et al. (2014), p. 101, para. 5.110, ‘Article 27 (1) states the generally accepted allocation of the burden of proof in international arbitration’.

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2 The Burden of Proof and Its Exceptions

ICSID convention drew inspiration from the procedural regulations applicable to the cases of the ICJ. In fact, ‘neither the Court’s Statute nor its Rules provide a basis for this general principle; in ascertaining it the Court did not cite any external evidence or basis, save for its precedent.’8 However, according to Ðorðeska, there is no doubt that the rule according to which ‘a litigant seeking to establish the existence of a fact bears the burden of proving them’.9 During the drafting of the ICSID convention, it was suggested that the general principles of international law be introduced, some of which could also be relevant to the field of evidence: for instance, the general canon of good faith.10 Eventually, it was decided that no specific provision would be introduced;11 instead, the creation of appropriate rules of evidence would be left to the ‘wisdom of arbitrators’.12 As a consequence, the first references to general rules were made directly by arbitral awards. Regarding the matter of the burden of proof, in one of its leading cases, the ICSID tribunal stated that there is ‘a general principle of law placing the burden of proof upon the claimant’.13 This principle is already in force in general international law, from which it has clearly been taken. A brief explanation of its interesting background makes it easier to understand its nature. As already stated in the introduction, a further effort to define the locution ‘burden of proof’ must be made. In other words, to discuss the content of this principle in international law, it is necessary to begin with a preliminary consideration: the reconstruction of the exact meaning of this adage is difficult due to the tension in this field between common law and civil law. In common law countries, the phrase ‘burden of proof’ has two meanings owing to the distinction between ‘burden of evidence’ (also called burden of production) and ‘persuasive burden’ (or burden of persuasion).14 A good starting point to understand this matter from a general perspective is Black’s Law Dictionary, which states,

8

Ðorðeska (2020), p. 302. Ðorðeska (2020), p. 301. 10 Gaillard (2004), p. 154: ‘Quelques principes tels que: ‘la prohibition de tout traitement discriminatoire, bonne foi, et l’interdiction de prendre des mesures contraires à l’ordre public international ou aux principes généraux du droit’. 11 Historique de le Convention CIRDI, Documents Relatif à l’Origine et à l’Élaboration de la Convention pour le Règlement des Différends Relatif aux Investissements entre États et Ressortissants d’Autres États, Vol. III, Washington D.C., CIRDI, 1968, p. 381: “J’ai exprimé certains doutes quant à la sagesse d’inclure dans la Convention, qui est un document essentiellement procédural et doit rester souple afin de satisfaire les besoins d’espèces extrêmement diverses, des règles de fond provenant du droit international considéré dans son ensemble”. 12 See Gaillard (2004), p. 154. 13 ICSID Case no Arb/87/3, Asian Agricultural Products Ltd v. Republic of Sri Lanka, published in 6 ICSID Review – Foreign Investment Law journal (1991), p. 527 et seq., §56. 14 Kazazi (1996), p. 24: “The phrase ‘burden of proof’ is an ambiguous term in common law countries, since it is used by the court to refer to different meanings. Its primary sense relates to substantive law and refers to the duty of a party to persuade the trier of fact by the end of the case of the truth of certain propositions. This burden is also called legal burden, persuasive burden, the burden of proof on the pleadings, the fixed burden of proof and the risk of non-persuasion”. 9

2.1 The Origins and Definition of the Principle of onus probandi. . .

17

In the past the term ‘burden of proof’ has been used in two different senses. (1) The burden of going forward with the evidence. The party having this burden must introduce some evidence if he wishes to get a certain issue into the case. If he introduces enough evidence to require consideration of this issue this burden has been met. (2) Burden of proof in the sense of carrying the risk of non-persuasion. The one who has this burden stands to lose if his evidence fails to convince the jury – or the judge in a non-jury trial. The present trend is to use ‘burden of proof only in its second meaning [. . .]’. The expression ‘burden of proof’ is tricky because it has been used by courts and writers to mean various things. Strictly speaking, burden of proof denotes the duty of establishing by a fair preponderance of the evidence the truth of the operative facts upon which the issue at hand is made to turn by substantive law. Burden of proof is sometimes use in a secondary sense to mean the burden of going forward with the evidence. In this sense it is sometimes said that a party has the burden of countering with evidence a prima facie case made against that party.15

In sum, the expression ‘burden of evidence’ is used in the context of a particular procedure according to which—often during the course of the proceedings—the judge decides whether there is sufficient evidence to proceed with the trial.16 The second phrase, ‘burden of persuasion’ refers to the duty of each litigating party to prove the truth of certain propositions. Although international arbitration procedures should be neutral with regard to any particular national model,17 the majority of scholars believe the concept of burden of proof as intended in civil law systems has nonetheless prevailed since the phrase ‘burden of proof’ or ‘charge de preuve’ simply refers to the duty of each litigating party to prove its own rights before the tribunal until ‘the tribunal itself is satisfied’.18 The aforementioned distinction has recently been the subject of a study on ‘the principles on the matter of evidence in international trial’19 by the Institut de Droit International. On that occasion, the issue was whether it should be necessary to distinguish between burden of proof and burden of evidence. Although the rapporteur Amerasinghe formally retained the distinction in his resolution project submitted in March and October 2002, the Commission stated that this distinction was not necessary.20 The most authoritative scholars agree with this conclusion.21

15

Garner (2009), pp. 236–237. Niyungeko (2005), p. 12. 17 Petrochilos (2004), p. 219. 18 Niyungeko (2005), p. 12. 19 Annuaire de l’Institut de Droit International (I.D.I), vol. 70-1, 2002–2003, p. 141. 20 Amerasinghe C. F., Final Report, Mars 2002, in Annuaire de l’I.D.I., vol. 70-1, 2002–2003, pp. 345–346. 21 Niyungeko (2005), p. 13. 16

18

2.2

2 The Burden of Proof and Its Exceptions

Identifying the Party Bearing the Burden of Proof

Having briefly explained the concept of burden of proof and its scope, I now proceed to the issue of whether this principle is actually in force. Scholars22 have been discussing the connection between the adage onus probandi incumbit actori and current international law since the 1926 Parker case, during which the issue was raised for the first time. The Parker case is named for a typewriter salesman who lived in Mexico City. After the Mexican Civil War, the US submitted their citizen’s claim for damages to the American - Mexican Claims Commission. In the first part of the trial, it had to be ascertained whether the Commission had jurisdiction over the case, and for this purpose, a key issue to be discussed was that of Parker’s citizenship. The decision on the procedural rules on evidence to be followed was important not only for the Parker case but also for the cases that would be discussed afterwards. Ultimately, the Commission denied the existence in international law of any rule governing the burden of proof similar to those in force at a local level, determining instead the existence of a different rule according to which the parties were simply required to cooperate between themselves and with the judge to establish the true facts.23 In the subsequent stages of the trial, the tribunal examined the evidence gathered by the lawyers and pronounced in favour of both Parker’s US citizenship and his right to receive monetary compensation for damages.24 Scholars thought it a good time to resolve the ambiguities that emerged from the Parker award by clarifying the meaning of the phrase ‘burden of proof’. An important position was that of Cheng, who in 1953 concluded that the Commission had used the term in the sense of a duty of the parties to produce evidence and allow full disclosure of the facts.25 Regarding the duty of the parties to cooperate between themselves, which can be seen as a possible limitation of the principle of onus probandi incumbit actori, it has been observed that not only were both rules considered applicable in the Parker case,26 but they were actually complementary.27 To conclude, the principle of onus probandi actori incumbit is long established, and its existence has been confirmed by a large number of authors28 and by the

22

Kazazi (1996), p. 38; Cheng (1953), p. 326; Niyungeko (2005), p. 12. William A. Parker (U.S.A.) v. United Mexican States, 31 March 1926 in Reports of International Arbitral Awards, Vol. IV, p. 39. Available online at http://legal.un.org/riaa/cases/vol_IV/35-41.pdf. “On the contrary, it holds that it is the duty of the respective Agencies to cooperate in searching out and presenting to this tribunal all facts throwing any light on the merits of the claim presented”. 24 The amount of compensation was $39,000 (Reports of International Arbitral Awards, vol. IV, p. 67). On this case, see also Kazazi (1996), p. 232, n. 20. 25 Cheng (1953), p. 327. See also, Amerasinghe (2005), p. 63; Kazazi (1996), p. 234; Niyungeko (2005), p. 25. 26 Amerasinghe (2005), p. 95. 27 Amerasinghe (2005), p. 95 “the two principles can and do coexist”. 28 See, for example, Lauterpacht (1958), p. 365; Cheng (1953), p. 327. 23

2.2 Identifying the Party Bearing the Burden of Proof

19

jurisprudence of the most authoritative international jurisdictions,29 including the WTO dispute settlement body.30 However, further clarification of the exact scope of this adage is needed. Sourgens, Kabir Duggal, and Lard note that ‘despite the near universal acceptance of this maxim [onus probandi actori incumbit] commentators have noted problems in the application of this basic principle’. Indeed, according to the aforementioned authors, ‘it might not always be easy to establish who the “claimant” is in any particular situation’.31 As later demonstrated, a comparative study of the jurisprudence of the ICJ and the Mexican Claims Commission can contribute to answering this question. In the 1990 case AAPL v. Sri Lanka, the ICSID tribunal specified that the term ‘actor’ in the principle of onus probandi actori incumbit does not refer to the plaintiff from a procedural perspective but rather to the real claimant.32 This clarification is important because the identification of the parties as claimant and defendant may vary depending on the issue being discussed. This subject has been addressed by international law jurisdictions in both general and specific fields. For general international law jurisdictions,33 the most interesting cases are the 1949 Corfu Channel case34 between the United Kingdom and Albania, the 1952 case concerning the Rights of Nationals of the United States of America in Morocco between France and the US,35 and the Nicaragua case of 1984.36 A very recent confirmation of the enduring validity of this principle was made by the ICJ in Costa Rica v. Nicaragua37 in 2018. The first case was taken to court by the United Kingdom, which complained about the loss of a warship due to the explosion of a mine in the Corfu Channel. The dispute was brought to the ICJ thanks to a compromise between the parties38 that asked the Court to decide whether Albania 29

Petrochilos (2004), p. 219, n. 232. Mavroidis et al. (2006), p. 127. 31 Sourgens et al. (2018), p. 54, para. 2.88. 32 AAPL v. Sri Lanka, ICSID Case No. ARB/87/3, Award 27 June 1990, §56, Rule (H). 33 On the general validity of this principle in ICJ jurisprudence, see also Hernandez (2014), p. 59. 34 Corfù Channel case, Judgment of April 9, 1949, I.C.J. Reports, 1949, p. 4. 35 Concerning Rights of Nationals of the United States of America in Morocco, Judgment of August 2, 1952; I.C.J. Reports 1952, p. 176. 36 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Jurisdiction and Admissibility, Judgment, I.C.J. Reports 1984, p. 392. 37 Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v. Nicaragua), Compensation, Judgment, I.C.J. Reports 2018, p. 15. 38 Corfu Channel (United Kingdom of Great Britain and Northern Ireland v. Albania), Special Agreement concluded on March 25th, 1948: “The Government of the People’s Republic of Albania, represented by [. . .] And the Government of the United Kingdom of Great Britain and Northern Ireland, represented by [. . .] Have accepted the present Special Agreement, which has been drawn up as a result of the Resolution of the Security Council of the 9th April 1947, for the purpose of submitting to the International Court of Justice for decision the following questions: I) Is Albania responsible under international law for the explosions which occurred on the 22nd October 1946 in Albanian waters and for the damage and loss of human life which resulted from them and is there 30

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2 The Burden of Proof and Its Exceptions

was responsible for the damages suffered by the British ships and whether the United Kingdom was responsible for breaking Albanian territorial sovereignty.39 From a formal perspective, Albania was the defendant country in the judicial procedure, but it identified itself as the real claimant in its own question regarding the breach of its sovereignty.40 Scholars have considered these statements as proof of the fact that in international law, the burden of proof must not be shared between the parties depending on their procedural position but must instead be based on the various substantive issues brought to the Court.41 The most interesting case on this subject is that of the Rights of Nationals of the United States of America in Morocco in 1952. The subject of the dispute between France and the US was the alleged tax exemptions for American citizens residing in Morocco, which was under French control at the time. In particular, the US claimed the illegitimacy of the local authorities’ decision that every person residing in Morocco should be subject to the same tax regulation. According to the US, this act was a violation of the international law that granted US citizens some tax exemptions. For political reasons, France brought the case to the ICJ and was thus the plaintiff from a legal perspective. The US government suggested that for this reason the Court should place the burden of proving the non-existence of American citizens’ tax exemptions on France.42 The Court, however, had a different opinion. In particular, the Court observed that according to the US, there were two legal bases for the tax exemptions: contract law and local customs. Regarding the latter, the

any duty to pay compensation ? II) Has the United Kingdom under international law violated the sovereignty of the Albanian People’s Republic by reasons of the acts of the Royal Navy in Albanian waters on the 2nd October and on the 12th and 3th November 1946 and is there an’ duty to give satisfaction? [. . .] 39 This second question should be split into two different questions because there were two actions that, according to Albania, had led to the violation of its sovereignty: the first one, on 22 October 1946, with the English ship simply passing through the Corfu channel, and the second on 12 and 13 November, with a large minesweeping operation in the channel. 40 Corfù Channel case, Duplique albanaise, Mémoires, vol. II, p. 353: (available only in French) “Le Royaume-Uni a-t-il violé, selon le droit international, la souveraineté de la République Populaire d’Albanie par les actions de la marine de guerre britannique dans les eaux albanaises le 22 octobre 1946 et les 12 et 13 novembre 1946, et y a-t-il lieu à donner satisfaction ? Le Gouvernement albanais est ici demandeur; il lui appartient de faire la preuve de la règle de droit qu’il invoque et des faits qu’il reproche au gouvernement britannique. Il entend faire cette preuve de façon complète, non par de simples présomptions, mais par des témoignages et documents indiscutables, empruntés, pour, la plupart, aux communications britanniques”. 41 Niyungeko (2005), p. 35. 42 Case Concerning Rights of Nationals of the United States of America in Morocco, Judgment of August 2, 1952; I.C.J. Reports 1952, p. 180: “1. The Submissions and Conclusions presented by the French Government in this case should be rejected on the ground that the French Government has failed to maintain the burden of proof which it assumed as party plaintiff and by reason of the nature of the legal issues involved”.

2.2 Identifying the Party Bearing the Burden of Proof

21

Court observed that since they were local customs and not general customs,43 the party that enforced them had to prove their existence independent of procedural positions.44 Another interesting case for this analysis is the decision of the ICJ in the very well-known Nicaragua case of 1984 between Nicaragua and the US regarding the latter’s alleged support of the activities of the Contras. In the preliminary judgment of this case (in which both parties were still party to the procedure), the Court adamantly established that such a procedural rule exists, stating, ‘Ultimately, however, it is the litigant seeking to establish a fact who bears the burden of proving it; and in cases where evidence may not be forthcoming, a submission may in the judgment be rejected as unproved, but is not to be ruled out as inadmissible in limine on the basis of an anticipated lack of proof’.45 With this statement, the Court made it clear that the rules of evidence are not purely procedural but are strongly related to the merit of the issues at stake. This position was confirmed in 2008 in Malaysia v. Singapore.46 A final case that deserves attention is the recent Costa Rica v. Nicaragua. In its application, Costa Rica contended that Nicaragua had in two separate incidents occupied the territory of Costa Rica in connection with the construction of a canal from the San Juan River to Laguna los Portillos (also known as Harbour Head Lagoon) and conducted certain related works of dredging in the San Juan River. According to Costa Rica, the dredging and the construction of that canal would seriously affect the flow of water to the Colorado River of Costa Rica and would cause further damage to Costa Rican territory, including the wetlands and national wildlife protected areas located in the region. In its judgement of 2018, the Court stated, ‘As a general rule, it is for the party which alleges a particular fact in support of its claims to prove the existence of that fact’ but noted that ‘nevertheless, the Court has recognized that this general rule may be applied flexibly in certain

43

Had they been general customs of international law, the Court itself would have had the duty of ascertaining their existence, according to the principle iura novit curia (on this topic, see infra Sect. 2.4.3). 44 Case Concerning Rights of Nationals of the United States of America in Morocco, Judgment of August 2,1952; I.C.J. Reports 1952, p. 200: “The second consideration relates to the question of proof. This Court, in the Asylum Case (I.C.J. Reports 1950, pp. 276–277), when dealing with the question of the establishment of a local custom peculiar to Latin-American States, said: ‘The Party which relies on a custom of this kind must prove that this custom is established in such a manner that it has become binding on the other Party’”. On this subject, see also Cheng (1953), p. 333. 45 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Jurisdiction and Admissibility, Judgment, I.C.J. Reports 1984, p. 392, para 101. 46 Sovereignty over Pedra Branca/Pulau Batu Puteh, Middle Rocks and South Ledge (Malaysia v. Singapore), Judgment, I.C.J. Reports 2008, p. 12, para. 45: “It is a general principle of law, confirmed by the jurisprudence of this Court, that a party which advances a point of fact in support of its claim must establish that fact”.

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2 The Burden of Proof and Its Exceptions

circumstances, where, for example, the respondent may be in a better position to establish certain facts’.47 Anderas Zimmermann and Christian J. Tams conclude that ‘according to jurisprudence constante of the Court the allocation of the burden of proof follows the well-established principle of onus probandi incumbit actori’.48 Robert Kolb reached the same conclusion.49 The approach of assigning the burden of proof on the basis of the substantive aspects of the case provides an answer to the objection raised by some scholars that the adage onus probandi incumbit actori should not be applied in international law because the consensual nature of international jurisdiction makes it difficult to identify the claimant and defendant.50 This objection to the principle was put forward by M. Dubisson, who goes as far as to suggest that sometimes it is not possible to clearly distinguish between claimant and defendant and thus to apply the rule onus probandi incumbit actori even if the case has been brought to the tribunal through a unilateral request.51 However, Dubisson’s conclusion is not very convincing, especially considering that from a systematic perspective, the concerned rule not only has the function of sharing the burden of proof between the parties but also has the value of a decision rule since it is intended to limit the risk of the ‘non liquet’ formula, the use of which must be prevented even in international law.52 If international judges decided that it was not possible to distinguish between claimant and defendant, they could not know who should bear the risk of failure of proof if none of the parties adduced convincing evidence. It seems that the stumbling blocks mentioned above can only be avoided by concluding that the adage refers to the substantive reality of a case. The ICJ confirmed this interpretation in the 1962 case between Cambodia and Thailand concerning the Temple of Preah Vihear, where the Court specified that since both parties claimed sovereignty over the same archaeological site, they were both to be considered claimants and should both bear the burden of proving their substantive claims.53 A recent confirmation of this ‘substantialist’ approach can be found in the

47

Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v. Nicaragua), Compensation, Judgment, I.C.J. Reports 2018, p. 15, at para. 33. 48 Zimmermann and Tams (2019), p. 1382, para. 35. 49 Kolb (2014), p. 235. 50 Dubisson (1964), p. 221. 51 Dubisson (1964), p. 221: “Il arrive, d’ailleurs, que la règle ‘actori incumbit probatio’ ne s’applique pas, même lorsque la procédure est introduite par voie de requête”. 52 Neff (2009), p. 64. 53 Case concerning the Temple of Preah Vihear (Cambodia v. Thailand), Merits, Judgment of 15 June 1962: I.C.J. Reports 1962, p. 6: “As concerns the burden of proof, it must be pointed out that though, from the forma1 standpoint, Cambodia is the plaintiff, having instituted the proceedings, Thailand also is a claimant because of the claim which was presented by her in the second submission of the Counter-Memorial and which relates to the sovereignty over the same piece of territory. Both Cambodia and Thailand base their respective claims on a series of facts and

2.2 Identifying the Party Bearing the Burden of Proof

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2021 case Qatar v. the United Arab Emirates.54 The empirical evidence of international tribunals’ jurisprudence confirms that this approach has been applied even outside the jurisprudence of the ICJ, and the problem of the consensual nature of international jurisdiction has apparently never been insurmountable. For instance, in the more than 4000 cases decided by the Iran-U.S. Claims Tribunal, the positions of plaintiff and defendant have been easily identifiable even when the trial involved several questions about various issues.55 On this topic, it is worth observing that the problem has been examined and resolved in the same way by the jurisprudence of the WTO Dispute Settlement Understanding: in the 1997 United States – Shirts and Blouses case, the WTO Appellate Body established that ‘the party who asserts a fact, whether the claimant or the respondent, is responsible for providing proof thereof’.56 An author who has recently examined this issue states, 7.2 It is well established in WTO jurisprudence that the burden of proof rests on the party that asserts the affirmative of a claim or defence, and that the party that asserts a particular fact is responsible for providing proof thereof. WTO panels and the Appellate Body have expressed their understanding that these and other principles governing the burden of proof in WTO dispute settlement proceedings reflect principles of general international law.57

A short comparison with WTO case law may be useful to confirm not only the existence of the rule according to which the claimant bears the burden of proof but also the fact of the importance of the substantive allocation of the burden of proof.

contentions which are asserted or put forward by one Party or the other. The burden of proof in respect of these will of course lie on the Party asserting or putting them forward”. 54 Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Qatar v. United Arab Emirates), Preliminary objections, Judgment of 4 February 2021, Separate opinion of Judge Iwasawa, para. 64: “Qatar bears the burden of establishing such a disproportionate impact. On the other hand, the UAE has the burden of demonstrating that the measures were based exclusively on nationality”. 55 Kazazi (1996), p. 225; Amerasinghe (2005), p. 91. 56 United States – Measures Affecting Imports of Woven Wool Shirt and Blouses form India, Report of the Appellate Body (AB 1997-1), 25 April 1997, WT/DS33/AB/R. On this topic, see Mavroidis et al., op. cit., p. 127. See also Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products Second Recourse To Article 21.5 of the DSU by New Zealand and the United States, Report of the Appellate Body (AB-2002-6), 20 December 2002, WT/DS103/AB/ RW2 WT/DS113/AB/RW2, ‘66. Thus, we have consistently held that, as a general matter, the burden of proof rests upon the complaining Member. That Member must make out a prima facie case by presenting sufficient evidence to raise a presumption in favour of its claim. If the complaining Member succeeds, the responding Member may then seek to rebut this presumption. Therefore, under the usual allocation of the burden of proof, a responding Member’s measure will be treated as WTO-consistent, until sufficient evidence is presented to prove the contrary. We will not readily find that the usual rules on burden of proof do not apply, as they reflect a “canon of evidence” accepted and applied in international proceedings’. 57 Cook (2015), e-book, pp. 290–291.

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2 The Burden of Proof and Its Exceptions

A part of the specific provision such as Article 10.30 of the Agreement on Agriculture, the WTO agreements, similar to most international treaties, ‘do [es] not contain general rules regarding the allocation of the burden of proof’.58 US – Gasoline was the first case to go through the WTO panel and Appellate Body process. In this case, the panel and the Appellate Body confirmed the General Agreement on Tariffs and Trade (GATT) rule that the party invoking an exception bears the burden of proving the element of such an exception. As for tribunals settling disputes in the field of investments, the issue of the burden of proof has been addressed by considering the peculiarities of the field since in disputes between states and private parties the state is usually the defendant. In many cases, the public parties have claimed that the distribution of the burden of proof should be based on the procedural position of the parties. This would allow the defendant to win the case even by adopting a passive attitude and simply denying the opposing party’s claims, relying on the difficulty for the private party of bearing the burden of proof alone.59 Therefore, the preference of international tribunals for the rule of distributing the burden of proof on the basis of the substantive aspects of each case exists probably at least in part because this solution allows a better balance of the parties’ positions since the defendant party must support its own claims. ICSID arbitrators often take as a model the jurisprudence of mixed commissions operating in cases of compensation for war damages. On this topic, the 1928 Georges Pinson case decided by the French-Mexican Mixed Claims Commission is particularly interesting. In the award, the Commission complained about the passive attitude of the defendant state. The President said, ‘I would not endorse the tacit thesis implied by the purely negative attitude of the Mexican state, according to which, to stand in the way of any claim raised by the opposing party, it was sufficient to deny the French nationality of the plaintiff, even after the presentation of a consular certificate’.60 A similar remark can be found in the aforementioned case of AAPL v. Sri Lanka, in which the ICSID tribunal, while stating the general rule according to which each party has the duty to bear the burden of proof for each of its substantive claims,61 made use of the doctrine endorsing the conclusions of the French-Mexican Commission.62 Other ICSID tribunals have adopted a similar approach. A case that must be cited is Metal-Tech Ltd. v. Republic of Uzbekistan, in which on 4 October 2013 where the arbitral tribunal resumed in a couple of sentence years of case law ‘the

58

Grando (2009), p. 153. Sandifer (1975), p. 92: “[. . .] there is a great advantage in the position of the defendant since it is admitted in our law that the burden of proof is always upon the plaintiff”. 60 Georges Pinson, French-Mexican Claim Commission, 19 April 1928, R.S.A. V, p. 372. See also, Niyungeko (2005), p. 39. 61 AAPL v. Sri Lanka, para. 56: ‘Hence, with regard to proof of individual allegations advanced by the parties in the course of proceedings, the burden of proof rests upon the party alleging the fact’. 62 Sandifer (1975), p. 96. 59

2.2 Identifying the Party Bearing the Burden of Proof

25

principle that each party has the burden of proving the facts on which it relies is widely recognised and applied by international courts and tribunals. The International Court of Justice as well as arbitral tribunals constituted under the ICSID Convention and under the NAFTA have characterized this rule as a general principle of law’.63 This affirmation was also confirmed in the most recent award in international investment arbitration in ICSID awards in 2019,64 2020,65 and 202166 and in non-ICSID international investment arbitration decisions, such as the one issued by the PCA in 2021.67 Consequently, as reflected in the maxim actori incumbat probatio, each party has the burden of proving the facts on which it relies. For instance, in Salini Costruttori S.P.A. and Italstrade S.P.A. v. Jordan,68 the defendant requested a refund of all legal

63

Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award 4 October 2013, para. 237. 64 Conocophillips Petrozuata B.V. Conocophillips Hamaca B.V. Conocophillips Gulf of Paria B.V. And Conocophillips Company v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30, Award, 8 March 2019 para. 271 ‘The burden of proof is based on two components. One is to determine the party required to submit to the Tribunal evidence relevant for the resolution of the dispute. The other is to identify the party bearing the burden of losing on a submission when the requested evidence has not been brought before this Tribunal. In many cases, but not in all cases, both components identify one and the same party’. 65 (DS)2, S.A., Monsieur Peter de Sutter et Monsieur Kristof de Sutter c. République de Madagascar (Affaire CIRDI ARB/17/18), Sentence, 17 avril 2020 para. 398. ‘Il n’est pas non plus contesté que le fardeau de la preuve du dommage incombe aux Demandeurs, de telle sorte que les réclamations incertaines, spéculatives ou non étayées devront être rejetées’. 66 Silver Ridge Power BV v. Italian Republic, ICSID Case No. ARB/15/37, Award, February 26, 2021 at para 518.What is decisive for the Tribunal, however, is that the Blusun v. Italy tribunal based its conclusion on the finding that the Puglia project “ran a significant risk of incurring legal or administrative difficulties, even if these could be (and in the event largely were) or administrative difficulties, even if these could be (and in the event largely were) overcome. Its success was by no means certain”. Differently put, the Blusun v. Italy tribunal found that in that case there were other plausible reasons for the difficulties regarding the attraction of adequate financing, and concluded that the claimants in that case had not succeeded in discharging the burden of proof falling upon them, i.e. that the measures adopted by Italy were the proximate cause of the failure of the project (see para. 516). 519. The present Tribunal also embraces this approach. [. . .] See also Mr. Joshua Dean Nelson v. The United Mexican States, ICSID Case No. UNCT/17/1 Final Award, 5 June 2020 para. 228. “[. . .] Therefore, Claimant has the burden to prove that, under Mexican law, Tele Fácil had the rights that Claimant considers were expropriated. The Parties do not dispute this approach”. 67 Venezuela US, S.R.L. v. The Bolivarian Republic of Venezuela, PCA Case No. 2013-34, Partial Award, (Jurisdiction and Liability) 5 February 2021 para. 221. ‘Although there is a general rule that it is for the party which alleges a fact in support of its claims to prove the existence of that fact, as the International Court of Justice stated: it would be wrong to regard this rule, based on the maxim onus probandi actori, as an absolute one, to be applied in all circumstances. The determination of the burden of proof is in reality dependent on the subject-matter and the nature of each dispute’. 68 Salini Costruttori S.P.A. and Italstrade S.P.A. v. The Hashemite Kingdom of Jordan, ICSID Case No. ARB/02/13, Award, 31 January 2006, para. 103.

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costs, claiming that the legal action taken by the Italian company was unlawful since it lacked any factual basis. The tribunal rejected the request and decided that each party should bear its own costs, observing that Jordan had not produced any evidence in support of its thesis. The tribunal’s award that favoured the defendant state was decided without any evidentiary element, thereby simply applying the rule that places the burden of proof on the plaintiff.69 It should be mentioned that the ICSID tribunal has an implicit power that allows it to allocate legal costs in different ways depending on the circumstances.70 On many occasions, tribunals have used this power to penalise an abuse of process71 by ordering the losing party to pay legal costs.72 In Salini v. Jordan, the tribunal refused to exercise its discretionary power and did not order the Italian company to pay legal costs, which demonstrates that the arbitrators thought they needed some element in support of the allegedly unlawful nature of the legal action brought by the Italian company against Jordan. It must be said that generally speaking, international judges and arbitrators are very reluctant to recognise the existence of an abuse of process. For instance, abuse of process has been invoked before the ICJ several times, but it has never been recognised. In the 2021 case Iran v. U.S.A., Judge ad hoc Brower stated in his separate opinion that ‘the concept of “abuse of process” continues, at age 95, to be the holy grail of international law as addressed by the Court, a storied mystery without dimensions, shape or content, with undefined “standards” for its application, which, as a result, though periodically discussed (more so recently), never ever has been invoked successfully before either this Court or the PCIJ’.73

Ibid., para. 104 “In fact, the Tribunal has not been able to determine what decision, if any, had been taken by the two Prime Ministers. It is because the burden of proof is on the Claimants that their claim is to be rejected”. 70 Rosell (2011), p. 115. 71 Gaffney (2010), p. 524. It has been noted that ICSID tribunals use both “abuse of right” and “abuse of process” without apparent distinction. In ICSID jurisprudence, these expressions refer to a “frivolous” or “illegitimate” use of a legal action. 72 Europe Cement Investment & Trade S.A.V. Republic of Turkey (ICSID Case No. ARB(AF)/07/2), Award, 13 August 2009, para. 185: “[. . .] an award to the Respondent of full costs will go some way towards compensating the Respondent for having to defend a claim that has no jurisdictional basis and discourage others from pursuing such unmeritorious claims”. 73 On the Case Alleged Violations of the 1955 Treaty of Amity, Economic Relations, and Consular Rights (Islamic Republic of Iran v. United States of America), Judgment of 3 February 2021, separate, partly concurring and partly dissenting opinion of Judge ad hoc Brower, para. 13. It is interesting to observe that abuse of process has been invoked before the ICJ by France, making reference to ICSID jurisprudence in the case Immunities and Criminal Proceedings (Equatorial Guinea v. France), Preliminary Objections, Judgment, I.C.J. Reports 2018, p. 292. The Court, however, decided not to open a dialogue on this issue with the ICSID system. On this point, see Immunities and Criminal Proceedings (Equatorial Guinea v. France), Preliminary Objections, Judgment, I.C.J. Reports 2018, p. 292, Declaration of Judge Owada, para. 18. On the separate but partially related issue of judicial propriety, see Appeal Relating to the Jurisdiction of the ICAO Council under Article 84 of the Convention on International Civil Aviation (Bahrain, Egypt, Saudi Arabia and United Arab Emirates v. Qatar) Judgment of 14 July 2020, 69

2.3 Onus probandi incumbit eius quid dicit: A First Conclusion

27

On the contrary, the entirely passive attitude of the defendant meant that there was no evidence on which to determine the matter of legal costs; thus, the tribunal could not order the losing party to pay the costs of the winning party. It could be said that the defendant party should be considered the substantive claimant with regard to the issue of the unlawful nature of the plaintiff’s claim; therefore, the burden of proof for that issue lay with the defendant party, which failed to prove its own claim.

2.3

Onus probandi incumbit eius quid dicit: A First Conclusion

In general terms, the rule according to which—with regard to the burden of proof— the distinction between claimant and defendant must be made considering the substantive aspects of the case is a general international law rule which has also been used by specialised jurisdictions in the field of investments. Having clarified that the general principle of onus probandi incumbit actori is in force in the field of investments74 and in general international law, it is necessary to consider its potential conflict with other provisions of the ICSID convention and Rules of Procedure and with other principles recognised in ICSID jurisprudence. The enforcement of this adage could give rise to problems regarding its exact meaning as intended by the tribunal and in relation to possible exceptions. To understand the nature of these difficulties, it could be useful to step back and consider the close relation between the adage of onus probandi incumbit actori and the adversarial system. If the procedure follows the adversarial model, the plaintiff bears the burden of proof; if the procedure is conducted following the form of the inquisitory process, as in the case of default of a party, the burden of proof can be influenced by the exercise of investigative powers by the tribunal. This systematic perspective brings attention to the fact that the most interesting aspect of the issue is not the mere existence in international law of the rule of onus probandi incumbit actori.75 This ancient Latin expression expresses an elementary rule of justice—an ancient rule based on common sense considerations.76 On the

para. 51-60. Also on this issue, see Jadhav (India v. Pakistan), Judgment, I.C.J. Reports 2019, p. 418, para. 49. 74 Soabi v. Senegal – Award 25 February 1988 – 2 ICSID Reports, 270; AAPL v. Sri Lanka – Award 27 June 1990, 4 ICSID Reports, 272; Tradex v. Albania, Award 29 April 1999, 14 ICSID Review – Foreign Investment Law Journal, 197, 219, 221 (1999): “In recent years, this principle has also been applied several times by arbitral tribunals in inter-State disputes (see for instance the Heathrow Airport User Charges case, 1992, 102 – International legal materials, p. 216). It has also been applied in commercial arbitration, in particular within ICSID. See also, Salini Costruttori S.P.A. And Italstrade S.P.A. vs. The Hashemite Kingdom of Jordan, ICSID Case No. ARB/02/13, para. 73. 75 Irish Case, ECHR, Judge Zekia separate opinion, 58, in International Law Report, p. 300. 76 Malek et al. (2010), p. 151.

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contrary, the crucial issue is to establish who has to bear this burden and how. While purely adversarial or inquisitorial models are rare, the classic distinction between these approaches is useful for verifying whether the general principle is still in force and whether its application reflects what is considered its prima facie meaning. To explore this field, I use an approach similar to that used in chemistry by making different elements interact with each other so that the true nature of each can be examined. However, as the introduction already stated, investment arbitrators perform a public function because a State is a party of the procedure, and in the largest number of cases, the basis of their jurisdiction is provided by a treaty. In accordance with this statement and with what the introduction of this chapter states, even if there is no doubt concerning the existence of the rule onus probandi incumbit eius quid dicit, it is also certain that there are many valid exceptions to this rule. These exceptions are not only the natural consequence of the applicability of general international law to the procedure before an international investment arbitral tribunal, but their study is fundamental to reach a perfect understanding of the scope of application of the rule onus probandi incumbit eius quid dicit.

2.4 2.4.1

Exceptions to the Application of the Rule of onus probandi incumbit eius quid dicit Burden of Proof and Default of a Party

Before turning to the main topic of this section, it is necessary to make a few preliminary remarks on the rules applicable in case of default of a party before the ICSID tribunal to show that they all belong to a common line of thought, which constitutes the origin of all rules on default in the statutes of the most important international tribunals. These preliminary remarks also demonstrate the utility of a comparative analysis of ICSID jurisprudence and the jurisprudential orientations of other international tribunals for finding solutions to some practical problems. The jurisprudence of the ICJ receives particular attention because of its leading role in the interpretation of principles of international law on the matter of evidence.77 As for the relevant legislation, it is necessary to clarify that the similarities between the rules of the ICSID convention and the Rules of Procedure of the ICJ on default are not haphazard. The history of the drafting of Article 45 of the ICSID convention and Article 42(4) of the ICSID Rules of Procedure shows that these provisions were directly

Pellet (2013), pp. 231–232: “With regard to the general principles of the [. . .] in absentia proceedings [. . .] the case law of the ICJ is accepted as having vested a rather high degree of authority in ICSID award”.

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inspired by Article 53 of the Statute of the ICJ78 and in particular by the fundamental principle expressed in this Article, according to which the absence of a party cannot be considered an admission of the other party’s assertions.79 This principle was codified in Article 53 of the ICJ in accordance with what was at the time a practice adopted by all international tribunals.80 Most arbitration rules81 are silent on the issue of defaulting of a party and especially on its consequences.82 The possibility of a judgement by default in which the absence of a party is deemed an admission of the other party’s claims appears to have been contemplated only in old arbitral agreements and in exceptionally rare cases that are now considered obsolete.83 No recent instance of such a provision has been found; hence, ‘there seems to be a consensus that in proceedings before international tribunals default “shall not be deemed an admission of the other party’s assertions”’.84 More specifically, Article 45 and Article 42(4) of the ICSID Rules of Procedure were explicitly conceived to clarify that the tribunal could decide in favour of the defaulting party.85 These rules must be considered together with the principle of non-frustration, which is one of the guiding principles of the ICSID convention.86 The aim of this principle is to avoid a litigant being prevented from accessing justice if the lack of cooperation by the other litigant paralysed the activity of the arbitration tribunal. The appearing party is obviously entitled to receive an award even in the absence of the other, but in case of default of a party, the procedure cannot be modelled after the adversarial system.87 The tribunal then takes the initiative by examining motu proprio the submissions of the active party.88 The duty of the arbitration panel to investigate the plaintiff’s claims regarding its own motion has been examined in LETCO v. Liberia89 in 1994 and Goetz

78 Schreuer et al. (2009), p. 709, para. 3: “The original text of the Preliminary Draft was closely modeled on art. 53 of ICJ. The subsequent discussions and resulting changes were not so much directed at questioning the basic principles contained therein but in clarifying them”. 79 Art. 42(3) ICSID Rules of Procedure for Arbitration Proceedings. 80 Elkind (1984), p. 101. 81 For example, International Chamber of Commerce (ICC) rules. 82 Moss (2008), p. 1223. 83 Sandifer (1975), p. 174: “[. . .] no recent instance of such a provision has been found”. 84 Broches (1995), p. 187. See also, Petrochilos (2004), p. 218. 85 Schreuer et al. (2009), p. 711. 86 Schreuer et al. (2009), p. 710: “This principle is a necessary procedural corollary to the last sentence of art. 25(1), whereby consent once given may not be withdrawn unilaterally”. 87 Schreuer et al. (2009), p. 712, para. 1. 88 See note E to arbitration rule 42 of 1968, ICSID Reports, n. 1, Cambridge University Press, 1993, p. 104. 89 Reed et al. (2011), p. 148: “Default proceedings, as in any international arbitration, place a substantial and difficult burden on both the tribunal and the sole participating party. To illustrate, in LETCO v. Liberia, in which Liberia failed to appear or present its case, the tribunal emphasized in the award that it submitted the claimant assertion to a careful scrutiny and had appointed an account

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v. Burundi90 in 1999. In both cases, the tribunal acknowledged the claims of the plaintiff but paid great attention to the rights of the absent party. In particular, in LETCO v. Liberia, the tribunal unreservedly confirmed that in case of default of a party, the duty to examine the validity of the claims of the appearing party ‘shifts onto the tribunal itself’.91 However, in the following paragraphs, the tribunal specified the scope of its own duty, observing that ‘the tribunal did not take for granted the assertions of law and fact made by the claimant. On the contrary, it submitted them to careful examination and its award is made on the basis of this examination’.92 The tribunal also emphasised that its duty to investigate the claims of the plaintiff had been entirely fulfilled and that for reasons of prudence, some information that was not strictly necessary had also been considered.93 This particularly careful approach demonstrates that the ICSID tribunal was well aware of the importance of its duty to examine the plaintiff’s claims motu proprio.94 This full awareness can also be inferred from the tribunal’s decision to explain its actions in the text of the award to prevent a lack of information about its investigation leading an ad hoc committee to set aside its judgement due to a serious procedural mistake. This hypothesis is anything but unlikely: in Klöcner II (unpublished), the ad hoc committee declared that the disrespect of the rules on the matter of the burden of proof should be sanctioned with the annulment of the judgement.95 As is later demonstrated, although in the case of default of a party the tribunal is not obliged to directly bear the burden of proof of the absent party, an excessively superficial investigation would allow the plaintiff not to bear its own part of the burden of proof, thus conferring upon the appearing party an unfair advantage. An approach similar to that taken in LETCO v. Liberia can be found in AMT v. Republic of Zaire, in which because of Zaire’s default the tribunal decided to appoint an expert to autonomously assess the damages suffered by the company SINZA (a subsidiary of AMT) to properly consider the reasons of Zaire.96 The firm to examine the claim for damages”. See also, Liberian Eastern Timber Corporation (LETCO) v. Republic of Liberia, ICSID Case No. ARB/83/2, Award, 31 March 1986, ICSID Reports Vol. II, 1994, pp. 343–380. 90 Antoine Goetz and others v. Republic of Burundi, ICSID Case No. ARB/95/3, Award, 10 February 1999, ICSID Reports, vol. VI, 2004, p. 20. 91 LETCO v. Liberia, ICSID Reports, vol. II, (1994), p. 356. 92 Ibidem. 93 LETCO v. Liberia, ICSID Reports, vol. II, 1994, p. 365: “According to the Concession Agreement, LETCO should not be obligated to demonstrate its compliance with the concession agreement in order to prove its right to recovery. Nonetheless, this tribunal has sought such proof both for reasons of prudence and to assist it in determining the award of possible damages”. 94 On this topic, see also Moss (2008), p. 1231, n. 66. 95 Moss (2008), p. 1233, n. 67. 96 American Manufacturing & Trading, Inc. v. Republic of Zaire, ICSID Case No. ARB/93/1, Award, 21 February 1997, ICSID Reports, Vol. V, 2002, para. 7.18–7.19 “The tribunal has never denied the Republic of Zaire any opportunity to defend itself for the sake of good administration of justice. The tribunal has never forsaken the principle of the right to be heard. Even without the Republic of Zaire entering in appearance to present its case the tribunal fully takes into account the

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expert report concluded that the total amount of damage suffered by SINZA was $4,452,500. The claimant complained about the inadequacy of the sum. The tribunal considered Zaire’s situation and submitted the report to the parties asking for their observations. The Republic of Zaire filed no submission.97 Only then, having considered the assertions of the claimant, did the tribunal proceed to exercise ‘its discretionary and sovereign power to determine the quantum of compensation’.98 The final amount of compensation awarded to AMT was $9,000,000. A simple comparison with the initial AMT request (for more than $21,000,000) demonstrates ictu oculi that the tribunal did not take for granted the assertions made by AMT. Moreover, its attempt to obtain suggestions from Zaire, allowing the state the option of making observations up to the last moment, clearly shows that the tribunal paid great attention to the rights of the absent party. This conclusion raises an interesting issue since it is not entirely clear how far a tribunal could go in its investigations before taking over the burden of proof of the absent party; thus, this conclusion violates the principle that provides that the burden of proof rests on the concerned party.99 For this purpose, it could be useful to make a comparison between ICSID jurisprudence and some judgements of the ICJ since the similarity of the provisions of their two statutes and the common rationales behind their rules have often led the two Courts to face similar difficulties. It is thus reasonable to suppose that some solutions suggested by the jurisprudence of the ICJ, after a rigorous assessment of compatibility, could also be applied in the field of international investments. Regarding the ICJ practice in this matter, it has been suggested that the limit on the inquisitorial powers of the tribunal should be guided by the principle of equality between the parties100 and on its corollary, according to which ‘the party which declines to appear cannot be permitted to profit from it absence’.101 This means that in respecting the position of the plaintiff, the Court must not raise defences on its own motion, nor must it require a higher standard of proof.102 These actions would

situation of Zaire. (7.19) The tribunal appointed Mr. Bernard Decaux of French nationality, [a] former civil servant of the World Bank, for the purpose of evaluating the damages suffered by societé SINZA”. 97 Ibidem, para. 7.20 “The report was submitted to the parties [. . .] The Republic of Zaire has not submitted its observations”. 98 Ibidem. 99 Moss (2008), p. 1225. 100 Thirlway (2013), p. 1006: “[. . .] the principle of equality of the parties would suggest that the absence of a party should neither prejudice that party, nor confer upon it an advantage in relation to the active party”. 101 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p. 26, §31. 102 Elkind (1984), p. 101.

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not be in line with the underlying line of thought in Article 53 of the statute of the ICJ.103 To highlight the risks of an excessively zealous attitude in favour of the defaulting party, it is helpful to recall the ICJ decision in the 1974 Nuclear Test case (New Zealand v. France), in which France did not appear.104 In that situation, the Court chose to base its decision on unilateral statements made by the defaulting party. In particular, the French president had announced in a public meeting that France would suspend its nuclear test programme in the Pacific Ocean. The Court considered these declarations acts creating unilateral obligations,105 and consequently, New Zealand’s claims were considered unfounded, the object of those claims being absent. According to the Court, the direct consequence was that there was no more reason to proceed to examine the case. With this choice, the Court essentially denied the plaintiff its right to a decision concerning the alleged unlawfulness of the military activities in which France was engaging.106 This decision was strongly criticised by a number of scholars and a minority of the judges. The latter observed that the Court had used information of its own knowledge, had based its final decision on elements gathered outside the course of the hearing, and had not even allowed the plaintiff the opportunity to make comments on those elements. These criticisms can be considered reasonable or unreasonable depending on the scope given to the principle of an adversarial process and to the powers of the tribunal. An interpretation that gives importance to the possibility of the non-defaulting party presenting its case—avoiding the risk of tribunals using generally known facts and rendering ‘surprise awards’—could consider the Court’s choice questionable since the present party was neither given the option to comment on the credibility of France’s unilateral acts nor in the first place invited to discuss their juridical qualification. This approach may be in line with the choices recently made in the commercial field, with some awards107 praised by scholars as an adequate practice that preserves the right to adversarial proceedings at every step of the trial.108 The importance of this new practice of dialogue between the parties and the Court should not be overestimated since the choice to examine additional elements remains a lawful power of the Court based on the principle of iura novit curia.

103 Elkind (1984), p. 102. “The drafting history of Article 53 and the law from which it is drawn indicate that it is erroneous to interpret that article as requiring a higher standard if the respondent fails to appear”. 104 Nuclear Tests (New Zealand v. France), Judgment, I.C.J. Reports 1974. 105 Ibid., para. 46. 106 See, for example, Nuclear Tests (New Zealand v. France), Joint Dissenting Opinion of Judges Onyeama, Dillard, Jimgnez De Aréchaga, and Sir Humphrey Waldock, I.C.J. Reports 1974. 107 Bogdanov v. Moldova, SCC Case, 93/2004. Available online at http://ita.law.uvic.ca/documents/ Bogdanov–Moldova-22September2005.pdf. 108 Bigge (2011), Available online at http://kluwerarbitrationblog.com/2011/12/29/iura-novit-curiain-investment-treaty-arbitration-may-must, accessed on 27 September 2021.

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In conclusion, it is difficult for judges to properly enforce the principle according to which, in case of default of a party, the tribunal must investigate its own motion, since in this case the tribunal is required to take action and remain neutral at the same time. In this respect, scholars have often discussed the challenge of finding a balance between the principle of equality of the parties and the tribunal’s powers to investigate. For this purpose, scholars have examined the practice of the ICJ that on many occasions has granted the absent party the option to defend itself through letters and observations informally submitted to the Court. Some authors have disapproved of this practice109 since by means of these informal remarks the absent party might influence the judges’ vision of some aspects of the case in unpredictable ways.110 This objection was raised by O’Connell, the Counsel for the Government of Greece in the 1979 Aegean Continental Shelf case.111 In his closing argument before the judges, O’Connell made the interesting observation that the Court’s approach was rather unbalanced in favour of the defaulting Turkey. According to O’Connell, the resulting situation could be described as such: when the absent party sent a mere informal note to the Court rather than appearing before the Court and discussing the point of law with the opposing party, the judges, according to the approach they themselves had chosen, necessarily took into account the statement of the absent party and consequently investigated to verify its validity. This inevitably led to the unfavourable consequence that an observation irregularly sent to the Court had a much higher value that a regular one. Therefore, according to the barrister, ‘not does only the applicant have the initial burden of proof, it has now thrust upon it the whole burden of proof, including the burden of negative proof’.112 This is a significant aspect because the admission of informal notes from the absent party is a practice also adopted by the ICSID tribunal. Therefore, it could be useful to verify whether on those occasions the tribunal acted on the aforementioned principle of equality of the parties. In the case Goetz v. Burundi mentioned above, the ICSID arbitral panel—after reminding the parties that ‘it is out of question that the tribunal will pronounce automatically in favour of the party appearing’113 only because of the default of the opposing party—mentioned the principle stated by the ICJ according to which the judicial authority ‘is not bound to confine its consideration to the material formally submitted to it by the parties’.114 However, the ICSID arbitrators clarified their 109

Sir Fitzmaurice (1980), p. 107. Thirlway (2013), p. 1003: “How to treat arguments presented in communication of this kind [. . .] will they nevertheless affect the mind of judges [. . .]?” 111 Thirlway (1985), p. 124. 112 Aegean Sea Continental Shelf, Oral Arguments on Jurisdiction, minutes of the public sittings, held at the Peace Palace, The Hague, from 9 to 17 October and on 19 December 1978, President Jiménez de Aréchaga presiding, p. 3119. Available online at http://www.icj-cij.org/docket/files/62/ 9491.pdf. 113 Goetz v. Burundi, ICSID Case No. ARB/95/3, in ICSID reports, n.VI, 2006, p. 22. 114 Military and Paramilitary Activities in Nicaragua and against this last (Nicaragua v. United States of America), Judgment, I.C.J. Reports 1986, para. 30. 110

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position by identifying some limits to their investigation, stating that like the ICJ, the ICSID tribunal was obliged to verify any conclusion submitted by the parties, but this duty did not include an examination of all details ‘in their minutia – a task which in certain cases and in the absence of contradiction, could reveal itself as totally impossible’.115 It is significant that this last sentence is quoted from the jurisprudence of the ICJ. From a systematic point of view, although the criticisms116 of the ICJ practice of admitting unofficial communications from the defaulting party are not completely unfounded, this issue cannot be resolved through a simple affirmative or negative answer; the question should rather be examined by considering the practical aspects of the issue. It is important to observe, especially in relation to the preliminary judgments, that the Court has a duty resulting from Article 53 of its statute to ascertain the existence of its own jurisdiction when a party fails to take part in the procedure. As a consequence, the Court shall find a compromise between the adversarial procedure and the use of its inquisitory powers. This idea of a compromise clearly stems from the words of the Court in the previously mentioned Aegean Sea Continental Shelf case of 1978, in which the Court stated, ‘The attitude of the Government of Turkey [the defaulting party] with regard to the question of the Court’s jurisdiction has however been defined in its communications to the Court of 25 August 1976, 24 April 1978, and 10 October 1978. The last-mentioned communication was received in the Registry on the morning of the second day of the public hearings, and was transmitted to the Agent of Greece by the Registrar later the same day. In these circumstances account can be taken of its contents’ but ‘only to the extent that the Court finds appropriate in discharging its duty, under Article 53 of the Statute, to satisfy itself as to its jurisdiction to entertain the Application.’117

In the most recent jurisprudence, reference to Article 53 seems to disappear as observed by Zimmerman and Tams,118 but it reappeared in 2020 in the case Arbitral award of 3 October 1899 of Guyana v. Venezuela. This case was brought to Guyana with regard to a dispute concerning the legal validity and binding effect of the award regarding the boundary between the Colony of British Guiana and the United States of Venezuela on 3 October 1899. Venezuela decided not to participate in the procedure, but following the path inaugurated by Turkey in the Aegean Sea Continental Shelf case, the respondent decided to provide the Court with a countermemorial supporting its position that the ICJ lacked jurisdiction. The Court was adamant that ‘the non-appearance of a party obviously has a negative impact on the sound administration of justice’,119 stressing that ‘the non-participation of a party in the proceedings at any stage of the case cannot, in any circumstances, affect the

115

Ibidem. See, for example, Sir Fitzmaurice (1980). 117 Aegean Sea Continental Shelf, Judgment, I.C.J. Reports 1978, p. 3. 118 Zimmermann and Tams (2019), p. 1479, para. 31. 119 Arbitral Award of 3 October 1899 (Guyana v. Venezuela), ICJ Judgment of 18 December 2020, Questions of jurisdiction and/or admissibility, para. 25. 116

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validity of its judgment’.120 However, the Court ultimately declared that it would follow the path inaugurated in the Aegean Sea Continental Shelf case and ‘take account of Venezuela’s Memorandum to the extent that it finds it appropriate in discharging its duty, under Article 53 of the Statute, to satisfy itself as to its jurisdiction to entertain the Application’.121 Regarding the identification of the rules applicable to the controversy—an aspect that should be kept rigidly separate from that of ascertaining the facts122—international tribunals have no difficulty in finding and independently verifying the exact rules of law applicable to each case123 in accordance with the principle of iura novit curia.124 The issue of the investigation of facts is very different since in international law the duty to provide evidence rests primarily on the litigants and the absence of any contact with the defaulting party can make it difficult for the tribunal to ascertain the material facts of the case. This matter has been analysed by the ICSID tribunal in S.A.R.L. Benvenuti & Bonfant v. People’s Republic of the Congo in which although there was no default in the technical sense, Zaire systematically failed to submit its pleadings within the time limits set by the court. During the course of the proceedings, the government of Zaire mentioned in a telex that it was in possession of certain documents concerning the case which could be remitted to the tribunal if Zaire would be given the option to do so.125 The agents of the claimant observed that the documents presented by the Zaire government were inadmissible because the time limit had expired.126 However, the ICSID tribunal allowed the defendant to submit its documents, clarifying that this exception was permissible due to the difficulties caused by the problematic political situation in Zaire.127 In this way, the ICSID tribunal showed awareness that unofficial statements and notes should only be accepted in very particular cases in which it would otherwise be impossible for the Court to properly administer justice. It is also necessary to observe that despite some criticism, the option to make exceptions to the principle of onus probandi incumbit actori is not only a discretionary power of the arbitral tribunal but

120

Ibid., para. 26. Ibid., para. 28. 122 Rosenne (2006), p. 1365. 123 Giovannini (2010), p. 501: “The duty of the Tribunal encompasses that one – proceed to an independent verification of the legal sources provided by the parties in the first place. In other words, the award can be based on independent legal sources”. 124 Payment in Gold of Brazilian Federal Loans Contracted in France (France. v Brazil), 1929 P.C.I.J. (ser. A) No. 21, July 12, 1929, Merit, para. 79: “the court [. . .] is a tribunal of international law, and [. . .] in this capacity, is deemed to know what law is”. On this topic, see also Cheng (1953), p. 299. 125 SARL Benvenuti & Bonfant v People’s Republic of the Congo, ICSID Case No. ARB/77/2, Award of 8 August 1980, ICSID Report Vol. I, 1993, para. 1.29. 126 Ibidem, para. 1.32. 127 Ibidem, para. 1.33: “The tribunal nevertheless considered that special circumstances [. . .] had prevented the normal functioning of certain Congolese State agencies, and these were such to explain the government failure to comply with the successive time limits fixed by the Tribunal”. 121

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also a duty deriving from the need to give adequate space to another equally relevant general principle of international law: that expressed in the adage audiatur et altera pars.128 Furthermore, Article 45 and Article 42(4) of the ICSID Rules of Procedure for Arbitration Proceedings, as well as Article 53 of the ICJ statute which inspired them, meet the need for international tribunals to be endowed with certain powers to proceed with a case when one of the parties is absent. The form of these provisions is very similar to those of some more recent provisions, such as Article 28 of the Statute of the International Tribunal for the Law of the Sea and Article 35 of the Protocol of 9 May 1978 which established the Judicial Tribunal of the Organization of Arab Petroleum Exporting Countries. This shaping of the articles demonstrates that the formula chosen by the drafters of Article 53 of the ICJ Statute and Articles 45 and 42(4) of the ICSID Rules of Procedure was considered a good compromise between the principle of autonomy of the parties and the powers of the tribunal to investigate facts on its own motion to adequately administer justice. In conclusion, finding this balance is like sailing between Scylla and Charybdis. This navigation is even more perilous considering that the international judges sailing the ship come from different legal traditions: according to Thirlway, ‘judges used to the adversarial system would be more readily prepared to accept that an ostensibly plausible argument not contested by the other party is a reliable basis upon which to make a judgement, whilst judges from inquisitorial backgrounds would be more “haunted by the fear that the truth may lie elsewhere”’.129 It is important to emphasise that when the court is not able to ascertain the truth of the facts by its own means, the option of the absent party submitting informal observations cannot be denied as a matter of principle, especially in cases of serious political crisis in the country involved.

2.4.2

Notorious Facts and Factual Investigations by the Tribunal

The concept of facts directly known by the tribunal is evidently accepted by many tribunals, including the ICJ. In the Island of Palmas case,130 the sole arbitrator, Huber, made reference to his own powers ‘to take into consideration the notorious facts’. In the 1974 Fisheries Jurisdiction case, the ICJ highlighted that it had the power to autonomously gather news relating to relevant facts.131 This delicate issue was also addressed in the previously mentioned Nuclear Test case, in which the ICJ was criticised for omitting to ask the parties to make comments on the facts that the 128

Thirlway (1985), p. 178. Thirlway (1985), p. 123, see also Devaney (2016), p. 118. 130 Island of Palmas Case, 2 U.N. Rep. Int’l Arb. Awards 829 (1928). 131 Fisheries Jurisdiction (United Kingdom v. Iceland), Merits, Judgment, I.C.J. Reports 1974, p. 3. 129

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Court had of its own accord chosen as a basis for its decision.132 In this sense, it is important to emphasise the limits of this instrument—limits which come from Anglo-American law and, albeit partially, from other national laws except for German law.133 From this perspective, the solutions vary depending on the case, although it is clear that the notorious facts should be well known to the entire community involved.134 The judicial notice issue is important because it can significantly influence the distribution of the burden of proof since the facts the tribunal considers well known are considered as given and do not need to be proven.135 In terms of its effect upon the burden of proof, the category of ‘notorious facts’ shows remarkable affinity with that of the information gathered either by the tribunal through the inspection of places in which the events giving rise to the dispute occurred or, in general, through direct investigation.136 The fact that tribunals have the power to autonomously ascertain facts raises questions about the scope of these powers and how they can be used, especially since scholars have observed that the judging panels in the field of international arbitration—and this is also true of arbitration on investments—have been shown to be more diligent in their fact-finding activities than other international jurisdictions.137 However, other scholars138 argue that arbitration tribunals operating in the field of investments, despite having considerable powers to use well-known facts, tend to use these powers less than they should.139 Additionally, in the WTO system, the members of panels have taken an approach of self-restraint, but in the end they admitted judicial notice, albeit reluctantly.140 In particular, it has been observed that although judges are empowered by Article 43 of the ICSID convention (and article. 22 (3) (c) of the ICSID Conciliation rules)141 to order the production of evidence and even to visit places connected 132

Nuclear Tests (New Zealand v. France), Judgment, I.C.J. Reports 1974, p. 457. Sandifer (1975), p. 269. 134 Sandifer (1975), p. 278. 135 Niyungeko (2005), p. 86. 136 Cheng (1953), p. 304 “[. . .] in this connection it may be mentioned that information obtained by a tribunal through an inspection of the places concerned in the proceedings (“descente sur le lieux”), a procedure which has sometimes been applied in International arbitral and judicial proceedings, present considerable affinity with judicial notice”. 137 Amerasinghe (2005), p. 161. 138 Schill (2010), p. 682. 139 Schill (2010), p. 683. 140 Egypt – Definitive Anti-Dumping Measures on Steel Rebar From Turkey, Report of the Panel, WT/DS211/R, 8 August 2002, ‘7.19 Turkey also argues that if we should decide, in terms of Article 17.5(ii), that the record that we can take into account should ordinarily be limited to the facts made available to the Investigating Authority during the course of the investigation, we nevertheless should adopt the legal principle of taking “judicial notice” of certain other facts.19 We are not aware of a principle of “judicial notice” at the WTO level. Certainly, we as Panelists have an awareness of matters pertaining to life, nature and society.’ 141 Nitschke (2019), p. 135. ‘A conciliation commission may, at any stage of the proceeding, visit the place connected with the dispute, provided that the parties may participate. Parties are in fact 133

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with the dispute (the so-called ‘descente sur les lieux’, which is well-known even to much older arbitration systems),142 they are generally rather reluctant to make use of those powers. It should be said that the practice of the ICSID tribunal regarding this matter follows the approach of other international tribunals, including the ICJ. The latter, for instance, used its power to visit the places in which the facts giving rise to the dispute occurred on only one occasion: the 1997 Gabčikovo-Nagymaros case.143 To find a precedent for the use of this means of evidence, it is necessary to go back to the 1937 Prises d’eau de la Meuse case decided by the PCIJ.144 Nevertheless, as some scholars have observed, during the more than 50-year history of this power, there has been no lack of requests for visits to the sites of disputes;145 for instance, concerning the 1960 South West Africa case146 and the 1992 Land, Island and Maritime Frontier Dispute,147 the Court decided that visits were not necessary. The ICSID tribunal took a similar approach. In SOABI v. Senegal in 1998, there was a fleeting reference to the president of the tribunal visiting Dakar,148 but no order of procedure was published in this respect.149 In Santa Elena v. Costa Rica, the ICSID tribunal was asked to visit the sites of the dispute,150 but the arbitrators concluded that there it was not necessary to do so. From these few instances and the poor jurisprudence available on this matter it can be inferred that the ICSID tribunal follows the established practice of other jurisdictions by making an extremely limited use of its power to autonomously gather information. Arbitral tribunals typically rely on the option to order the parties to produce evidence—a power which scholars have identified as the principal instrument available to arbitrators for the collection of evidence which has been deemed necessary for the resolution of the case but which has not been submitted by the parties. The main operational limitation of this practice is that the arbitrators have obliged to facilitate such site visits. In the conciliation cases registered to date, only one such site visit was conducted. 142 On this topic, see, for example, Cheng (1953), p. 304. 143 Gabčikovo-Nagymaros Project (Hungary v. Slovakia), Judgment, ICJ Reports 1997, p. 14. 144 Diversion of Water from the Meuse (Kingdom of Netherlands v. Kingdom of Belgium), C.P.J.I., 28 June 1937, Serie A/B, n. 70, p. 9. 145 Thouvenin (1997), pp. 333–340. 146 Southwest Africa, Order of 29 November 1965, I.C.J. Reports 1965, p. 9. 147 Land, Island and Maritime Frontier Dispute (El Salvador/Honduras: Nicaragua intervening), Judgement, 1992, p. 362, §22. 148 Société Ouest-Africaine des Bétons Industriels (SOABI) contre La République du Sénégal, ICSID (Affaire ARB/82/1), Fond, 9 février, 1988, para. 1.35: “1.35 De passage à Dakar le 28 février 1986, le Président du Tribunal a des entretiens avec des personnes qui pourraient éventuellement servir en qualité d’experts que le Tribunal s’était réservé la possibilité de nommer pour l’assister dans sa tâche.” 149 Schreuer et al. (2009), p. 671, para. 123. 150 Compañía del Desarrollo de Santa Elena, S.A. v. The Republic of Costa Rica, ICSID Case No. ARB/96/1, award, 17 February 2000, para. 14, n. 2: “The matter of a possible site visit was considered a number of times by the Tribunal during the course of the arbitration proceedings. The Tribunal eventually concluded that a site visit would not be necessary, and no such visit took place”.

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insufficient powers to sanction a lack of cooperation by the parties.151 The sanction is simply the option to draw ‘adverse inference’ from the party’s decision not to comply with the tribunal’s requests.152 The effectiveness of this instrument of sanction has been questioned by scholars: some have observed that this weapon is anything but fearsome,153 while others go so far as to define the obligation of the parties to cooperate with the tribunal as an ‘empty piety’.154 This dissatisfaction with the tendency of tribunals to not fully employ their powers has led the most careful scholars to question the relationship between the gathering of evidence and the protection of the values recognised by international law, an issue raised with specific reference to the trial model needed in the field of international investment law.155 According to these scholars, the public nature of this field suggests that inspiration has been drawn from the inquisitorial model. The idea—de iure condendo—is that of introducing a clearer separation between the models of international investment law and of commercial arbitration,156 in which the principle of autonomy of the parties is generally intended in a much broader way. According to these scholars, ICSID tribunals should more closely follow the practice of national courts in relation to ordering parties to produce evidence, giving adequate weight to the fact that the interests at stake are not those of two private parties but potentially those of entire populations.157

2.4.3

Iura novit curia

In the previous sections, attention has been focused on the option for the tribunal to establish the facts on its own motion in case of default or non-cooperation of a party. Another issue is the determining of the applicable law for the settlement of the 151

Schill (2010), p. 682. ICSID Arbitration Rules, 34(3). See also, IBA Rules on the Taking of Evidence, art. 9(5). 153 Paulsson (1996), p. 118. 154 Reisman and Freedman (1982), pp. 737, 738. 155 Schill (2010), p. 684. 156 Landau (2009), Available online at https://www.claytonutz.com/ialecture/previous-lectures/200 9/speech_2009. Accessed on the 15th October 2021: “What is their future policy space going to look like and this is a nascent emerging jurisprudence and so there is a responsibility upon these tribunals to produce awards which are not just decisions but provide guidance for future tribunals and so the model breaks down. It is not geared up for this. We need a way drawing all of this together of un-solidifying international arbitration and that is different from saying that it’s been judicialised. It’s not judicialised, it is unfortunately become a standard model and nobody has got the courage to depart from it”. 157 Schill (2010), pp. 683–684: “The practical effect of this is that the factual record in investment treaty cases may remain incomplete [. . .] This is problematic in any form of dispute settlement, but is especially so in investment treaty arbitration due to its public nature; it is not only the interest of two parties that are at stake, but potentially the interest of the whole population of the respondent state”. 152

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dispute. This must be kept separate from fact finding158 since the power to independently establish the applicable law is already considered a power of the tribunal in accordance with the principle of iura novit curia. In general, this principle can be defined as the rule according to which the judge applies the law ex officio without having to be bound by the submissions of the parties. According to recent legal theory, it is a corollary of the principle of ‘da mihi factum, dabo tibi ius’.159 The scope and practicality of this principle are not undisputed: on the contrary, several conflicting views have emerged regarding iura novit curia and the main issues arising from it. The first issue concerns the actual validity of the principle, meaning whether international law must also be proven in court. The second issue concerns the meaning of the adage. Some scholars assume that the adage implies only the option of the tribunal to make different legal qualifications to those suggested by the parties and that this does not consequently include the option for the judges to decide the dispute according to independent conclusions not discussed during the course of the hearing. According to this theory, should the tribunal deem it necessary to apply a rule not put forward by the parties, the tribunal would be required to submit the new legal theory to the parties and request their opinion. However, other authors suggest that the true importance of the principle of iura novit curia lies precisely in the tribunal’s freedom to develop its own arguments and give judgement accordingly. The final issue is whether the principle implies a mere power or an actual obligation on the part of the tribunal, at least in case of default of a party.160 Regarding the first issue, the criticism of the broad interpretation of the principle is based on the view that customary law must also be proven before international jurisdictions because the acknowledgment of the elements on which custom is established can be contested.161 The legal theory supporting this view notes that the very existence of some rules of international law has often been subject to lively debate,162 and this has led some judges to conclude that if a party requests the

158 Amerasinghe (2005), p. 50: “A clear distinction is made between fact and law. A claim whether relating to jurisdiction or merits, generally relies on facts and rules or principles of law to be sustained. The burden of proof is applicable only to the facts underlying a claim”. 159 Devaney (2016), p. 37. See also Kurkela (2003), p. 487, in Giovannini (2010), p. 496. 160 Bigge (2011), p. 53: “Judge Lagergren in his 1979 decision in BP Exploration Co (Libya) Ldt. v. The Government of the Libyan Arab Republic, 53 International Law report 297, 1979, a case arising under a concession contract found that – at least in the context of a sovereign respondent’s default – an arbitrator is ‘both entitled and compelled to undertake an independent examination of the legal issues deemed relevant by it, and to engage in considerable legal research going beyond the confines of the materials relied by the Claimant’”. 161 Niyungeko (2005), p. 86. 162 Nottebohm Case (second phase), Judgment of April 6th, 1955: I.C.J. Reports 1955, p. 4. Plaidoiries Dans La Deuxième Phase de l’Affaire, Audiences Publiques tenues du 10 au 24 février, du 2 au 8 mars, et le 6 avril 1955, sous la présidence de M. Hackworth: “Les tentatives faites à cet égard par le Guatemala sont restées vaines et l’onus probandi lui incombe. II n’a pas même pu établir la coutume invoquée par lui sur la base de la littérature du droit des gens”.

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application of a rule, it should also provide evidence of the existence of that rule.163 However, this does not appear to be a decisive argument. The fact that the parties may disagree on the existence of the elements—established practice and opinio juris—that constitute a rule of general customary law (local customs and national law are not within the scope of the application of the principle of iura novit curia)164 is not in itself an obstacle to the tribunal’s own independent investigation on the matter. From a general perspective, it may be sufficient to report that most scholars165 and jurisprudence of the ICJ166 and the WTO (citing the ICJ)167 consider the principle in force in general international law. Scholars and jurisprudence also consider the principle of iura novit curia applicable in the field of international investment law. This principle is occasionally explicitly mentioned by the ICSID and non-ICSID investment arbitral tribunals, but many first- and second-instance arbitration committees have proven themselves able to base decisions on rules that differ from those proposed by the parties. This means that in many cases the principle is considered so evident that it can remain implied. Regarding this matter, there are several cases in ICSID jurisprudence that are worthy

163 Fisheries case, Judgment of December 18th, I95I: I.C.J. Reports 1951, Individual opinion of Judge M. Alvarez, p. 116 (French original): “Tout État qui allègue un principe du droit international doit prouver son existence”. 164 On this topic, see Case Concerning Rights of Nationals of the United States of America in Morocco, Judgment of August 2, 1952, I.C.J. Reports 1952; Asylum Case, I.C.J. Reports 1950, pp. 276–277. 165 Niyungeko (2005), p. 85; Cheng (1953), p. 299; Thirlway (1981), pp. 58–60. 166 Brasilian Loans, 1929, PCIJ Series A, Nos, 20/21 p. 124 “The Court [. . .] is a tribunal of International law, and [. . .] in this capacity is deemed to know what law is”. 167 European Communities and Certain Member States - Measures Affecting Trade in Large Civil Aircraft - Recourse to article 21.5 of the DSU by the United States[. . .]- Report of the Appellate Body, 15/05/2018, WT/DS316/AB/RW ‘Consistent with the principle jura novit curia, it was not the responsibility of the United States to provide us with the “correct” legal interpretation of Article3.1 (b)199, nor does the United States’ appeal of the Panel’s interpretation of Article3.1(b) fall outside the scope of appellate review merely because the United States has expressed an opinion as to a “preferred” interpretation. See also European Communities – Conditions for The Granting of Tariff Preferences to Developing Countries, AB-2004-1, Report of the Appellate Body, WT/DS246/AB/ R, 7 April 2004, ‘105. We are therefore of the view that the European Communities must prove that the Drug Arrangements satisfy the conditions set out in the Enabling Clause. Consistent with the principle of jura novit curia, it is not the responsibility of the European Communities to provide us with the legal interpretation to be given to a particular provision in the Enabling Clause; instead, the burden of the European Communities is to adduce sufficient evidence to substantiate its assertion that the Drug Arrangements comply with the requirements of the Enabling Clause.’ See also ibidem n. 220 citing the ICJ. See also European Communities - EC Measures Concerning Meat and Meat Products (Hormones) - AB-1997-4 - Report of the Appellate Body WT/DS26/AB/R WT/DS48/ AB/R, para. 156 ‘Panels are inhibited from addressing legal claims falling outside their terms of reference. However, nothing in the DSU limits the faculty of a panel freely to use arguments submitted by any of the parties – or to develop its own legal reasoning – to support its own findings and conclusions on the matter under its consideration. A panel might well be unable to carry out an objective assessment of the matter, as mandated by Article 11 of the DSU, if in its reasoning it had to restrict itself solely to arguments presented by the parties to the dispute’.

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of attention. One example can be found in the judgement rendered by the ad hoc committee in MINE v. Guinea,168 in which it was specified that an ICSID tribunal can apply rules different from those proposed by the parties, provided that the tribunal remains within the legal framework of the law applicable to that dispute.169 This principle was clearly confirmed in 2020 in the ICSID system in Orascom Tmt Investments S.À.R.L. v. People’s Democratic Republic of Algeria, where again the possibility for the arbitral tribunal to rely on legal authorities not directly submitted by the parties was contested.170 In the final decisions, it was held that ‘in the Committee’s view, the Tribunal was thus under no obligation to invite the Parties to comment on these legal authorities that did not concern a legal issue in dispute between them’.171 In the non-ICSID investment tribunal, a recent confirmation of the enduring value of this principle has been given in the case PV Investors v. Spain decided by the PCA in 2020.172 The second issue regarding iura novit curia is particularly relevant because it concerns its relations with other principles of international law. Legal theory has criticised the principle as it is normally understood, complaining about its potential conflict with the adversarial procedure and objecting that it would be preferable for the tribunal—should it deem it necessary to apply rules different from those proposed by the parties—to submit its solution to the parties themselves, asking for their

168

Maritime International Nominees Establishment v. Guinea, ICSID Case No. ARB/84/4. Ibid., Decision of the ad hoc Committee, 22 December 1989, para. 6.40. 170 Orascom Tmt Investments S.A.R.L. V. People’s Democratic Republic of Algeria, ICSID Case No. ARB/12/35 Decision on Annulment September 17, 2020, “193. The Respondent also states that the Tribunal did ensure that the adversarial principle was respected at every stage of the arbitration proceeding, including at the Hearing and in the Post-Hearing Briefs. Contrary to the Applicant’s affirmation, the Tribunal did not have to warn the Parties that it was inclined to uphold two preliminary objections and to grant the Claimant an additional opportunity to present its arguments on these objections. Moreover, the Respondent argues, in the many procedural incidents initiated by the Claimant in the arbitration proceeding, where the Claimant initially refused to comply with the Tribunal’s instructions and subsequently alleged a violation of the adversarial principle, the Tribunal allowed both Parties to formulate their arguments under the same conditions. As the Tribunal accepted the Claimant’s argument that “the Tribunal may apply the maxim jura no[v]it curia (or jura novit arbiter) and rely on any applicable legal authorities it deems relevant to its analysis”, the Applicant cannot now reasonably criticize the Tribunal for having granted the Respondent’s abuse of rights objection while referring, inter alia, to extracts from two scholarly publications which were not debated. Consequently, in upholding the Respondent’s objections, the Tribunal treated the Parties equally and respected the Claimant’s right to be heard”. 171 Ibidem para. 226. 172 The PV Investors v. The Kingdom of Spain, Final Award, PCA Case No. 2012-14, 28 February 2020, para.519 ‘When applying the law governing the substance of the dispute, the Tribunal is not bound by the arguments and sources invoked by the Parties. Under the maxim jura novit curia – or, better, jura novit arbiter – the Tribunal is required to apply the law of its own motion, provided it seeks the Parties’ views if it intends to base its decision on a legal theory that was not addressed and that the Parties could not reasonably anticipate. 169

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comments.173 The origin of this doctrine dates back many years, with a similar objection that was raised—albeit without arousing great interest—by a dissenting judge in the case of Nottebohm174 decided by the ICJ in 1955. The judge objected that since the decision of the Court differed from the claims of either party, it would have been advisable to invite the parties to comment on the solution proposed by the judicial panel.175 In particular, the issue of iura novit curia in the field of investments has been examined on the basis of judgements not given by the ICSID.176 The leading case in this matter is Bogdanov v. Moldova decided by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). The sole arbitrator observed that the tribunal was free ‘within the borders of the applicable law [. . .], to give the legal qualifications and determine the legal consequences that it deems appropriate, even if they were not pleaded by the parties’.177 However, by applying Swedish arbitration practice, the arbitrator remarked that if the principle iura novit curia were used, the parties must be invited to make comments on the solution proposed by the Court to prevent such decisions coming to the parties as a ‘surprise’.178 This seems to have become the prevailing practice in the United Kingdom179 (where it is believed to be a simple solution to ensure fair treatment) and—with a few exceptions—in France.180 It seems that this is also the prevailing practice in Switzerland, where as stated in a recent article, ‘under established case law of the Swiss Federal Tribunal, the arbitral tribunal’s power to apply the law ex officio, which follows from the principle of iura novit curia, is restricted by the parties’ right to be heard if the parties could not anticipate that the tribunal would rely on a legal argument they did not invoke (unforeseeable legal grounds)’.181

173

Moss (2008), p. 1242; Giovannini (2010), p. 504. Case Nottebohm (Liechtenstein v. Guatemala), merit, Judgement of 6 April 1955, I.C.J. Reports 1955, p. 4. 175 Case Nottebohm, Dissenting opinion of Judge Klaestad, para. IV, pp. 30–31: “A solution upon these lines-severance of diplomatic protection from the question of nationality, and restriction of the right of protection-was never invoked by the Government of Guatemala, nor discussed by the Government of Liechtenstein. [. . .] In such circumstances, it is difficult to discuss the merits of such a solution except on a theoretical basis; but 1 shall mention some facts which show how necessary it would have been, in the interest of a proper administration of justice, to afford to the Parties an opportunity to argue this point before it is decided”. 176 Bigge (2011), p. 2. 177 Bogdanov v. Moldova, SCC Case, 93/2004. Available online at http://ita.law.uvic.ca/ documents/BogdanovMoldova-22September2005.pdf. 178 Bigge (2011), p. 2. 179 Giovannini (2010), p. 504. 180 Giovannini (2010), p. 505. 181 Meier and Mcgough (2014), p. 506. See also Block (2020), p. 31, para. 17. “When applying the law, the arbitral tribunal is not only bound by the arguments and sources invoked by the Parties. The principle iura novit curia – or better, iura novit arbiter – allows the Tribunal to form its own opinion of the meaning of the law, provided that it does not surprise the parties with a legal theory that was not subject to debate and 174

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Ultimately, scholars agree that international tribunals are also obliged to advance their conclusions to the parties to preserve the principle of the adversarial process.182 However, ICSID jurisprudence on the matter seems to be rather indifferent to this jurisprudential evolution, at least at present. For instance, in the award of Klöckner v. Cameroon of 1985,183 the annulment committee recalled the fundamental limit of ICSID tribunals that in formulating their arguments they cannot avoid consideration of the ‘legal framework’ established by the parties.184 The annulment committee then addressed the problem of the tribunal possibly following a reasoning of its own independently of the parties’ conclusions and resolved the question in a rather Solomonic way. As stated by the tribunal, ‘Even if it is generally desirable for arbitrators to avoid basing their decision on an argument that has not been discussed by the parties’,185 if arbitrators decide to apply a legal argument without submitting it to the parties, ‘it obviously does not follow that they therefore commit a “serious departure from a fundamental rule of procedure”’186 that could in any way justify an annulment of the judgement at first instance. A clearer statement was made in a more recent case—Vivendi v. Argentina—in which the annulment committee established that although the legal reasoning followed by the first instance tribunal ‘came as a surprise to the parties, or, at least, to some of them’,187 the tribunal’s behaviour could not be considered something new,188 nor could it be deemed sufficient reason to annul the award.189 This argument was clearly echoed by the ad hoc committee in the 2010 case Helnan v. Egypt.190

that the parties could not anticipate, pursuant the fundamental principle of due process”. See also Sourgens et al. (2018), p. 144, para. 7.32. 182 Moss (2008), p. 1239. 183 Klöckner Industrie-Anlagen GmbH and others v. United Republic of Cameroon and Société Camerounaise des Engrais, ICSID Case No ARB/81/2 (Klökner I), 3 May 1985. 184 Klockner v. Republic of Cameroon, ICSID Case (ARB/81/2) ad hoc Annulment Committee decision, 3 May 1985, para. 91: “The real question is whether, by formulating its own theory and argument, the Tribunal goes beyond the ‘legal framework’ established by the Claimant and Respondent. This would for example be the case if an arbitral tribunal rendered its decision on the basis of tort while the pleas of the parties were based on contract. Within the dispute’s ‘legal framework’, arbitrators must be free to rely on arguments which strike them as the best ones, even if those arguments were not developed by the parties (although they could have been)”. 185 Ibidem. 186 Ibid., para. 91: “Any other solution would expose arbitrators to having to do the work of the parties’ counsel for them and would risk slowing down or even paralyzing the arbitral solution to disputes”. 187 Compagñia des Aguas del Aconquija S.A. and Vivendi Universal v. Argentina, ICSID case No. Arb/97/3, Decision on the request for annulment, 10 August 2010, para. 84. 188 Ibid., para. 84: “But even if true, this would by no means be unprecedented in judicial decisionmaking, either international or domestic [. . .]”. 189 Ibid., para. 84: “[. . .]and it has nothing to do with the ground for annulment contemplated by Article 52(1)(d) of the ICSID Convention”. 190 Helnan International Hotels A/S v. Arab Republic of Egypt, ICSID Case No. Arb/05/19, Decision of the ad hoc committee, 14 June 2010, para. 23.

2.4 Exceptions to the Application of the Rule of onus probandi. . .

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However, the choices of ICSID tribunals that did not show themselves open to sharing the guidelines of doctrine should not be condemned. Ultimately, all the ICSID jurisprudence did was remain faithful to the classical interpretation of the principle of iura novit curia in force in general international law as defined by the ICJ even in very recent awards. Two examples must be cited: the first is a 2017 award published in 2021 according to which the principle iura novit curia allows the tribunal to also make reference to legal rules not cited by the parties.191 A similar view was upheld by the arbitral tribunal in the case Carlos Rios y Francisco Javier Rios c. República de Chile decided in 2021.192 These awards and decisions confirm the content of the aforementioned basic formulas iura novit curia and da mihi factum, dabo tibi ius, including that the ICJ is understood to know international law, that the burden of proof does not belong to any party, and that the applicable law should be determined by the Court itself. The proposition can be traced back to the Brazilian Loans case (1929) before the PCIJ, where it was stated, ‘The Court, which is a tribunal of international law, and which, in this capacity, is deemed to know itself what this law is’.193 This was refined at a later stage when the PCIJ ruled that from a general perspective, the most correct definition of the principle is still the one stating that ‘it cannot lightly be admitted that the Court, whose function it is to declare the law, can be called upon to choose between two or more constructions determined beforehand by the Parties, none of which may correspond to the opinion at which [the Court] may arrive [. . .] it must be presumed that the Court enjoys the freedom

191 Capital Financial Holdings Luxembourg SA c. Republique du Cameroun, Affaire CIRDI No. ARB/15/18, Sentence, 22 juin 2017, para 135 “[. . .] Le Tribunal arbitral considère que le principe jura novit curia lui permet de se référer aux sentences Marvin Feldman c. México, Nicaragua c. États-Unis d’Amérique et Argentine c. Uruguay, en dépit du fait que les Parties ne s’y sont pas référées, dans la mesure où ces sentences ne font qu’appuyer son raisonnement et ses conclusions”. See also para. 262 “Le Tribunal arbitral relève À cet égard qu’une sentence a été rendue dans le même contexte le 12 décembre 2016, dans la seconde affaire Tenaris. Cette sentence, récente, n’a certes pas été citée ou commentée par les Parties, mais le Tribunal arbitral considère que le principe jura novit curia lui permet de s’y référer dans la mesure où cette sentence ne fait qu’appuyer son raisonnement et ses conclusions (cf. également ci-dessus para. 135). L’utilisation que fait le Tribunal de cette sentence s’inscrit dès lors dans le prolongement de la sentence Tenaris citée et commentée par les Parties [RL-36], et partant, dans le même cadre juridique”. 192 Carlos Rios y Francisco Javier Rios c. República de Chile, (Caso CIADI No. ARB/17/16), Laudo, 11 de enero de 2021, para. 130. “Al dar efecto al derecho aplicable, sea en el contexto de jurisdicción, admisibilidad, o fondo, al Tribunal no le son vinculantes los argumentos presentados y las fuentes invocadas por las Partes. Conforme al principio de iura novit curia o, más precisamente, arbiter, el Tribunal debe aplicar el derecho como lo estime pertinente siempre que obtenga la opinión de las Partes al respecto en caso de que su decisión conste de una teoría jurídica no abordada por las Partes y que éstas no podrían haber anticipado razonablemente”. 193 Case Concerning the Payment in Gold of Brazilian Federal Loans Issued in France, Judgment of 12 July 1929, PCIJ Series A, No. 21, p. 124.

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which normally appertains to it, and that it is able, if such is its opinion, not only to accept one or the other of the two propositions, but also to reject them both’.194 According to this proposition, the ICJ’s authority to decide the applicable legal rules is not bound by any party’s claims. It is true that it is not prohibited for the Court to adopt the claim of either party, but this does not mean that the Court has an obligation to choose between the two. This was confirmed by the PCIJ, which stated in the Interpretation of Judgments of the Chorzow Factory (1927) that it was not bound by the interpretations chosen by the parties concerned, and it ‘must be able to take an unhampered decision’.195 Furthermore, in the Case Concerning the Application of the Convention of 1902 Governing the Guardianship of Infants (1958), the ICJ stated that ‘it retains its freedom to select the ground upon which it will base its judgment, and is under no obligation to examine all the considerations advanced by the Parties if other considerations appear to it to be sufficient for its purpose’.196 The ICJ has upheld this view in several subsequent judgements, the two most important of which are those in the Fisheries Jurisdiction cases of 1974, where the Court held that ‘it being the duty of the Court itself to ascertain and apply the relevant law in the given circumstances of the case, the burden of establishing or proving rules of international law cannot be imposed upon any of the parties, for the law lies within the judicial knowledge of the Court’.197 The third issue connected with the principle of iura novit curia is more complex since it concerns the question of whether this is a mere power or an actual duty of the tribunal. In the 2006 case Mitchell v. DRC,198 the ad hoc committee stated that while the tribunal could exercise the powers deriving from the principle of iura novit curia, it was not obliged to use them. More precisely, it specified that the tribunal ‘is not, strictly speaking, subject to any obligation to apply a rule of law that has not been adduced; this is but an option’.199 For international investment law outside of ICSID

194

PCIJ, Case of the Free Zones of Upper Savoy and the District of Gex, France v. Switzerland, Judgment, 1932, A/B. 46, p. 138. 195 Interpretation of Judgments No s. 7 and 8 Concerning the Case of the Factory at Chorzow, Judgment of 16 December 192 7, PCIJ Series A, No. 13, pp. 15–16. 196 Case Concerning the Application of the Convention of 1902 Governing the Guardianship of Infants (Netherlands v. Sweden), Judgment of 28 November 1958, I. CJ. Reports 1958, p. 62. 197 Fisheries Jurisdiction (United Kingdom v. Iceland), Merits, Judgment of 25 July 1974, I.CJ. Reports 1974, p. 9, para. 17; Fisheries jurisdiction (Federal Republic of Germany v. Iceland), Merits, Judgment of 25 July 1974, I.CJ. Reports 1974, p. 181, para. 18. 198 Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No Arb. 99/7 Decision on The Application for Annulment of The Award, 1 November 2006. 199 Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No Arb. 99/7, Decision on the Application for Annulment of the Award, 1 November 2006: “A comparable approach would have been along the lines of the adage jura novit curia – on which the DRC leaned heavily during the Annulment Proceeding – but this could not truly be required of the Arbitral Tribunal, as it is not, strictly speaking, subject to any obligation to apply a rule of law that has not been adduced; this is but an option – and the parties should have been given the opportunity to be heard in this respect – for which reason it is not possible to draw any conclusions from the fact that the Arbitral Tribunal did not exercise it”.

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jurisprudence, the approach to the principle under examination does not appear to be very different: one example in support of this conclusion is CME v. Czech Republic,200 which was conducted in accordance with the UNCITRAL rules. In this case, the tribunal observed that it was not ‘bound to research, find and apply national law which has not been argued or referred to by the parties and has not been identified by the parties and the Tribunal to be essential to the Tribunal’s decision’.201 Two orientations coexist regarding enforcement problems. The more recent of the two was expressed in the 2010 case Enron v. Argentina202 in which the tribunal seemed to identify in the principle iura novit curia not a mere power but a true obligation. However, a closer examination of the decision shows that the ad hoc committee adopted a more prudent approach. After giving an interpretation of the principle similar to that proposed in the Mitchell case,203 stating that the tribunal was not deemed to seek arguments different from those put forward by the parties, the appeal judge annulled the first instance award, basing this decision on the fact that the first instance arbitrators failed to look beyond the arguments of the parties and therefore did not apply rules that were relevant to the case.204 The Enron decision seems to reflect the approach of the ICJ decisions quoted by the ICSID ad hoc committee in the 2009 case RSM Production v. Grenada.205 In determining that every ICSID ad hoc committee has powers deriving from the principle of iura novit curia, the panel of the RSM case based its judgement on the ICJ decisions in the two aforementioned cases (Fisheries Jurisdiction of 1974 and its subsequent judgement Military and Paramilitary Activities in and against Nicaragua, 1986), reaching the conclusion that iura novit curia is not only a power but indeed an obligation of the judicial body.206 In other words, ‘the issue of ascertain[ing] the applicable law is not only important as a matter of substance, but becomes relevant also in the context of the Court propriety in rendering an opinion in the first place’.207 One final recent decision that must be cited and that confirms my analysis is the award rendered in the aforementioned case Metal-Tech Ltd. v. Republic of Uzbekistan on 4 October 2013.208 In the case at stake, the arbitral tribunal held that ‘in any CME v. Czech Republic, T 8735 – 01, RH 2003:55, (2) Stockholm Arb. Rep (2003). CME Czech Republic B.V. v. The Czech Republic, SCC, UNCITRAL Final Award, 14 Mars 2003, para. 411. 202 Enron Creditors Recovery Corp and Ponderosa Assets LP v. Argentine Republic, ICSID case No Arb/01/3, Decision on application for annulment, 30 July 2010. 203 Mr. Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No. Arb/99/7, Decision on Annulment, 1 November 2006, para. 45. 204 Enron Creditors Recovery Corp and Ponderosa Assets LP vs. Argentine Republic, ICSID case No Arb/01/3, Decision on application for annulment, 30 July 2010 §353 lett. (f) and “Decision” (1). 205 RSM Production v. Grenada, ICSID case No ARB/05/14 (Annulment Proceeding), Decision on RSM Production Corporation’s Application for a Preliminary Ruling, 29 October 2009, para. 23. 206 Ibidem. 207 Zimmermann and Tams (2019), p. 1867, para. 67. 208 Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award 4 October 2013. 200 201

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event, the Tribunal considers that, when it comes to applying the law, including municipal law, as opposed to establishing facts, the principle iura novit curia– or better iura novit arbiter–allows it to form its own opinion on the meaning of the law’.209 A similar view can be find in the recent case Monsieur Peter de Sutter et Monsieur Kristof de Sutter c. République de Madagascar of 2020, where the arbitral tribunal held: 132. Dans l’application du droit ainsi désigné, le Tribunal ne s’estime pas lié par les arguments invoqués et les sources citées par les Parties. Le principe iura novit curia – ou mieux iura novit arbiter – implique que le Tribunal se forge sa propre opinion sur les questions de droit qui se présentent À lui, À condition bien sûr de ne pas surprendre les Parties avec des théories juridiques qui n’ont pas été débattues ou que les Parties ne pouvaient anticiper210

In the Fisheries Jurisdiction case, the ICJ stated that the Court, being an international tribunal, has a duty to consider the rules of international law and to take into account any rule that may be relevant to the decision of the case on its own motion.211 In the Nicaragua case, the ICJ for the sake of completeness quoted the Lotus case decided by the PCIJ to clarify its own obligation to apply the principle of iura novit curia to determine whether the Court itself had jurisdiction to settle the dispute in case of default of a party.212 To conclude, it is worth noting that the understanding of iura novit curia as an obligation and not a mere power is also widespread in national law. There are several dispositions on this matter: for instance, section 34 of the English Arbitration Act provides the option for the arbitrator to ascertain law regardless of the requests made by the parties and national courts,213 which often imposes an actual obligation on arbitral tribunals to make independent investigations. Another example is that of France, where the obligation for the arbitrator to proceed to an independent verifi-

209

Ibid. para. 287. (DS)2, S.A., Monsieur Peter de Sutter et Monsieur Kristof de Sutter c. République de Madagascar (Affaire CIRDI ARB/17/18), Sentence, 17 avril 2020, para. 132. 211 Fisheries Jurisdiction (United Kingdom v. Iceland), Merits, Judgment of 25 July 1974, ICJ Reports 1974, p. 9, para. 17; Fisheries jurisdiction (Federal Republic of Germany v. Iceland), Merits, Judgment of 25 July 1974, ICJ Reports 1974, p. 181, para. 18. 212 “For the purpose of deciding whether the claim is well founded in law, the principle jura novit curia signifies that the Court is not solely dependent on the argument of the parties before it with respect to the applicable law (cf. “Lotus”, P.C.I.J., Series A, No. 10, p. 31), so that the absence of one party has less impact. As the Court observed in the Fisheries Jurisdiction cases: [see supra]” (Military and Paramilitary Activities in and against Nicaragua, 1986, ICJ Rep 14, p. 25). 213 English Arbitration Act, para. 34, in Giovannini (2010), p. 500. 210

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cation of the applicable law was explicitly stated in a decision by the Court of Appeal of Paris.214 The Federal Supreme Court of Switzerland,215 as well as the Belgian216 and German217 courts, follow similar approaches. In conclusion, although jurisprudence on this matter fluctuates, this means that the orientation of iura novit curia as an obligation and not a mere power appears to be preferable. One reason for this is that this approach is more rigorous since it means that the depth of analysis by each tribunal does not vary according to the goodwill of judges. In addition, as noted in the section on judicial notice, owing to the public nature and importance of the cases decided by the ICSID tribunals, it is preferable to take an approach that expands as far as possible the duties of the judges in examining facts and law relative to each res litigiosa.

2.4.4

Burden of Proof Concerning Jurisdictional Issues

One area that is fertile ground for cross-fertilisation is the question of proof and burden of proof in relation to jurisdiction. In general terms, it is submitted that concerning the issue of jurisdiction, there is no burden for the parties to discharge but simply the power of the arbitral tribunal to ascertain the existence of its jurisdiction. This is one of the most important exceptions to the simple application of the rule onus probandi incumbit eius quid dicit. From a theoretical perspective, the view supported in this paragraph is strictly based on ICJ precedents which codify general international procedural law. However, this issue is very important from a practical standpoint. It is well accepted that respondent states routinely contest the existence of the jurisdiction of ICSID and non-ICSID arbitral tribunals; consequently, the rules applicable to the jurisdictional phase may influence the outcome of a significant number of cases. To understand the issue at stake, reference must be made to the jurisprudence of the ICJ. The authors who commented on the issue of proof at the stage of jurisdiction (on the issue of the standard of proof at the jurisdictional stage, see infra Sect. 7.2.1) have attributed this problem to the principle of iura novit curia, and for this reason, I now examine this issue.

214

Societé VRV v. Pharmachin, Cour d’Appel de Paris, 25 November 1997, in Rev. Arb, 684 ff, 687 (1998). 215 N.V. Belgische Scheepvaartmaatschappij – Compagnie Maritime Belge v. N.V. Distrigas, Swiss Supreme Court, 19 December 2001, ATF 4P.114/2001. 216 Denis v. Mercelis and Crts., Bruxelles, in Journal des Tribunaux, 312 (1998), with note Bernard Hanotiau. 217 Raesche-Kessler, Recht und Praxis des Schiedsverfahrens, Köln, 156 (1999).

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According to Robert Kolb, ‘the burden of proof rule does not apply to establish the jurisdiction of the Court,218 the point of jurisdiction being a point of law’.219 Moreover, the Court must objectively ascertain that the conditions for establishing on the merit are met, which is a matter for scrutiny by the Court alone, it being the sole guardian of its judicial integrity according to a principle which dates back to the jurisprudence of the PCIJ, namely the case Prince von Pless of 1933220 also cited by the WTO Appellate Body.221 The applicability of this principle in the realm of international arbitration has also been recognised in the WTO dispute settlement system. It has been held that [. . .] As recalled by the Appellate Body in United States – Anti-Dumping Act of 191623, it is a widely accepted rule that an international tribunal is entitled to consider the issue of its own jurisdiction on its own initiative. The Arbitrators believe that this principle applies also to arbitration bodies. In case there be any question as to the jurisdiction of the Arbitrators to deal with this dispute, we provide brief reasons for our conclusion that we do have the necessary jurisdiction.222

In summary, in all international adjudication, the question of jurisdiction lies outside the realm of those to be disposed by the parties. The ICJ was adamant on this point in

218

Southwest Africa Cases (Ethiopia v. South Africa; Liberia v. South Africa), Preliminary Objections, Judgment of 21 December 1962: I.C.J. Report; 1962, p. 319, at para. 395. 219 Kolb (2014), p. 238. 220 Case Concerning the Administration of the Prince von Pless (Preliminary Objection) (1933) PCIJ Ser. A/B, No. 52, ‘Whereas the claim thus made raises a question regarding the Court’s jurisdiction, and as this question is connected with another, namely, whether, on the basis of Article 72, paragraph 3, of the Geneva Convention, a State, in its capacity as a Member of the Council, may claim that an indemnity be awarded to a national of the respondent State, who is a member of a minority; and as the latter question- which the Court feels called upon to raise proprio motuconcerns the merits, the Court cannot pass upon the question of jurisdiction until the case has been argued upon the merits’. 221 United States - Anti-Dumping Act of 1916 - AB-2000-5 - AB-2000-6 - Report of the Appellate Body, WT/DS136/AB/R; WT/DS162/AB/R, 28/08/2000, para. 54. ‘We agree with the Panel that the interim review was not an appropriate stage in the Panel’s proceedings to raise objections to the Panel’s jurisdiction for the first time. An objection to jurisdiction should be raised as early as possible and panels must ensure that the requirements of due process are met. However, we also agree with the Panel’s consideration that “some issues of jurisdiction may be of such a nature that they have to be addressed by the Panel at any time.”30 We do not share the European Communities’ view that objections to the jurisdiction of a panel are appropriately regarded as simply “procedural objections”. The vesting of jurisdiction in a panel is a fundamental prerequisite for lawful panel proceedings. We, therefore, see no reason to accept the European Communities’ argument that we must reject the United States’ appeal because the United States did not raise its jurisdictional objection before the Panel in a timely manner. See also para 54 note 30’. 222 United States - Section 110(5) of the US Copyright Act - Recourse to Arbitration under Article 25 of the DSU - Award of the Arbitrator WT/DS160/ARB25/1 09/11/2001, para. 2.1. See also footnote 24 of the same paragraph: ‘This is evidenced by Article 21 of the Optional Rules of the Permanent Court of Arbitration for arbitrations involving international organizations and States. See, Permanent Court of Arbitration: Optional Rules for Arbitration involving International Organizations and States, effective 1 July 1996, International Bureau of the Permanent Court of Arbitration, The Hague, The Netherlands.’

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its judgement in the case Border and Transborder Armed Actions (Nicaragua v. Honduras) of 1988, where it declared, ‘The existence of jurisdiction of the Court in a given case is however not a question of fact, but a question of law to be resolved in the light of the relevant facts’.223 This opinion was clearly reiterated in the Fisheries Jurisdiction Case (Spain v. Canada) of 1998: ‘There is no burden to be discharged in the matter of jurisdiction’.224 The question of judicial integrity concerning the duty of the Court to satisfy itself that it has jurisdiction is preliminary in nature, and it is central to international adjudication where a sovereign state is a party to the proceeding. This is an issue that is common to the cases presented before the ICJ and ICSID arbitral tribunals. I suggest that all the issues that may concern the question of whether the arbitral tribunal or the ICJ has jurisdiction are the expression of the duty of the tribunal to ascertain the existence of its competence. They shall be treated in the preliminary phase and the issue of proof shall be defined according to this need, with the powers ex officio of the international adjudicatory body shaped accordingly in a very broad manner. However, even when a tribunal agrees to confirm its own jurisdiction, basing itself on prima facie evidence, the plaintiff is not granted unlimited discretion regarding the amount and quality of evidence to be produced. Many issues relating to this matter are worthy of consideration. According to one element of the arbitration jurisprudence, in the jurisdictional stage, ‘the presentation of the claim as set forth by the Claimant is decisive’.225 This statement might lead one to think that an arbitral tribunal is willing to accept very superficial evidence. However, other decisions have clarified that the prima facie nature of the evidence produced by the plaintiff cannot go beyond certain limitations because the tribunal cannot simply accept the elements presented by the plaintiff and must instead receive sufficient evidence to begin its own investigation, which is required by the Kompetenz-Kompetenz principle. Jurisprudence has stated that if everything were to depend on characterisations made by a claimant alone, the inquiry to jurisdiction and competence would be reduced to naught, and tribunals would be bereft of the compétence de la compétence enjoyed by them under Article 41(1) of the ICSID Convention.226

This clarification may explain why jurisprudence on jurisdiction is not homogeneous in accepting prima facie evidence as a standard: other tribunals have requested a higher standard of proof. An example of this approach is the Phoenix Action Ltd case

223 Border and Transborder Armed Actions (Nicaragua v., Honduras), Jurisdiction and Admissibility, Judgment, I.C.J. Reports 1988, p. 69 para. 16. 224 Fisheries Jurisdiction (Spain v. Canada), Jurisdiction of the Court, Judgment, ICJ Reports 1998, p. 432. 225 Continental Casualty Company v. Argentina, Decision on Jurisdiction, para. 60–61. 226 Pan American Energy, LLC et al. v. The Argentina Republic, ICSID Case No. Arb/03/13, Decision on Preliminary Objections, July 27, 2006, para. 50.

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in which the tribunal stated that the facts on which jurisdiction is based must be proven, especially if they are ‘critical elements for the establishment of the jurisdiction itself’.227 In this sense, there is a clear analogy with the ICJ jurisprudence in the 1972 case India v. Pakistan, in which it was stated that the ICJ ‘must [. . .] always be satisfied that it has jurisdiction, and must if necessary go into that matter proprio motu’.228 However, it is interesting to note that even in this case, the tribunal does not deny that in general terms, decisions made during the jurisdictional stage may change at the merits stage. Certain investment arbitral tribunals have followed the same path. Outside the ICSID system, an arbitral tribunal constituted under the SCC rules held the following: 4.1.3.2 The Arbitral Tribunal’s power to rule on its own jurisdiction The Arbitral Tribunal has the power to rule on its own jurisdiction. Petrobart relies on Article 23.2 of the Foreign Investment Law in which the Republic has agreed to arbitrate investment disputes under the UNCITRAL Rules. The applicability of Article 21 of the UNCITRAL Rules does not require that there is a valid arbitration agreement between the parties. Article 21 of the UNCITRAL Rules is a codification of the doctrine of Kompetenz - Kompetenz and permits an Arbitral Tribunal to rule on its own jurisdiction and thereby on the validity of the arbitration agreement. The doctrine of Kompetenz - Kompetenz has also been codified in Article 2 of the Swedish Arbitration Act.229

The ICSID tribunals have examined the issue of the examination of jurisdiction proprio motu in a recent award, Oded Besserglik v. Republic of Mozambique, dispatched to the parties in 2019.230 In the case at stake, concerning the allegation of the expropriation of some fishing vessels by the authorities of the respondent State, after three years from the notice of the arbitration, an issue erupted abruptly: the respondent State objected to the jurisdiction of the arbitral tribunal claiming that the bilateral investment treaty

Phoenix Action, Ltd. v. The Czech Republic, ICSID Case No. Arb/06/5, Award, para. 64: “In sum, the Tribunal considers that as a general approach, it is correct that factual matters should provisionally be accepted at face value, since the proper time to prove or disprove such facts is during the merits phase. But when a particular circumstance constitutes a critical element for the establishment of the jurisdiction itself, such fact must be proven, and the Tribunal must take a decision thereon when ruling on its jurisdiction. In our case, this means that the Tribunal must ascertain that the prerequisites for its jurisdiction are fulfilled, and that the facts on which its jurisdiction can be based are proven”. 228 Appeal Relating to the Jurisdiction of the ICAO Council (India v. Pakistan), Judgment, I.C.J. Reports 1972, p. 52, para. 13: recently reiterated by Judge Tomka in his separate opinion in the case related to the Application of the International Convention for the Suppression of the Financing of Terrorism and of the International Convention on the Elimination of All Forms of Racial Discrimination (Ukraine v. Russian Federation), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 558, Judge Tomka separate opinion, para. 8. 229 Petrobart Limited v. The Kyrgyz Republic, SCC, Award, issued in Stockholm, Sweden, on 13 February 2003. para. 4.1.3.2. 230 Oded Besserglik v. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, award, October 28, 2019. 227

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(BIT) never entered into force, and as a consequence, the tribunal was without jurisdiction. The claimant answered that the objection raised by the respondent state was time barred since, according to articles 33 and 34 of the ICSID Additional Facility Arbitration Rules, the respondent should have raised the objection as soon as possible and in any way ‘up to the time of the submission of the counter-memorial as the last acceptable time, unless the objection rests on facts that were unknown to the objecting party at the time of the constitution of the tribunal’.231 The tribunal disposed the claimant objection and reaffirmed its duty to render valid and enforceable awards232 and then concluded that it had no other option than to consider the matter of jurisdiction ‘sua sponte’,233 thereby clarifying that even if the ICSID system is a hybrid dispute settlement, it has imported from the realm of public international law the idea that an international tribunal has a duty to ascertain its own jurisdiction even proprio motu. I discuss this case further in Chap. 5 since the fact that the ascertaining of jurisdiction followed an inquisitorial procedure also affected the evidence-gathering process. It must be said that the majority of the arbitral tribunals are not so ready to start any enquiry motu proprio. It seems fair to affirm that the most followed opinion is the one according to which the claimant has the burden of supporting its allegations prima facie while the respondent State has to discharge the burden of the factual

231

Laird and Gashaw (2020), pp. 1–8, at p. 3. Laird and Gashaw (2020), pp. 3–4 “Despite holding that, in raising the objection, the Respondent was in violation of article 45(2), the Tribunal found that it ‘may’ still determine whether the dispute was within its own competence by its own initiative under article 45 (3), even where a party fails to raise the objection itself. Under the principle of Kompetenz - Kompetenz, the Tribunal recognized its ‘duty to write valid and enforceable awards [and i]t follows that it must proceed only with such matters as are within its competence”. 233 Oded Besserglik V. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, award, October 28, 2019 para. 318. Claimant submits that the Tribunal has discretion in the matter of whether to consider its jurisdiction of its own accord under Article 45(3). This was suggested by the use of the word “may” in Article 45(3). According to Claimant, given the conduct of Respondent the Tribunal should not exercise this discretion in its favor. However, although the Tribunal is of the view that the considerable and inexcusable delay by the Respondent disentitles it to discretionary relief and from raising this objection under Article 45(2), once an objection of such a fundamental nature has been brought to its attention the Tribunal cannot decline to consider it sua sponte. 319. The use of the word “may” in Article 45(3) of the Arbitration Rules relates to the tribunal acting on its own initiative. It suggests that even where a party does not object to the competence of a tribunal, the tribunal may of its own initiative consider the question of its competence. It does not give a tribunal the discretion not to consider and examine its competence simply because an objection that raises an issue to the tribunal’s notice has been raised too late by a party. 232

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allegations supporting its objections to jurisdiction: this is true in ICSID234 and non-ICSID investment arbitration.235 Authors who have accurately studied the issue of burden of proof with regard to jurisdictional issues have divided the decisions made by investment arbitrators in

234 Raymond Charles Eyre And Montrose Developments (Private) Limited v. Democratic Socialist Republic Of Sri Lanka, ICSID Case No. ARB/16/25, Award, 5 March 2020, para.‘250. As a further preliminary point, the Tribunal confirms that the Claimants carry the burden of proof on their affirmative jurisdictional case. Where the burden shifts to the Respondent in connection with a particular Preliminary Jurisdictional Objection, the Tribunal will so indicate’. 235 Michael Ballantine And Lisa Ballantine v. The Dominican Republic Final Award, PCA Case No. 2016-17, Permanent Court of Arbitration 3 September 2019 para. 507. Article 27(1) of the UNCITRAL Rules, applicable to this case, establishes that “[e]ach party shall have the burden of proving the facts relied on to support its claim or defence”. This provision embodies the principle onus probandi actori incumbit, which is widely recognized and applied by international tribunals. 508. The tribunal in AAPL v. Sri Lanka qualified this principle as an “established international law rule” [. . .] 509. At the jurisdictional level and in the context of the DR-CAFTA, the tribunal in Pac Rim LLC v. El Salvador considered that “the Claimant has to prove that the Tribunal has jurisdiction” and “if there are positive objections to jurisdiction, the burden lies on the Party presenting those objections, in other words, here the Respondent”. The tribunal in Berkowitz v. Costa Rica also expressly referred to Article 27(1) of the UNCITRAL Rules and considered that “the accepted principle in international proceedings, at least at a level of generality, is that the burden rests in the first instance with the party advancing the proposition or adducing the evidence.” 510. Thus, the Tribunal concurs with the general approach followed by other DR-CAFTA tribunals and agrees with the tribunal’s opinion in Pac Rim LLC v. El Salvador that “it is not bound to accept the facts necessary to support or deny jurisdiction as alleged by the Claimant and the Respondent respectively; that the Claimant has the burden to prove facts necessary to establish jurisdiction (as it positively asserts); and that the Respondent has the burden to prove that its positive objections to jurisdiction are well-founded.” Mesa Power Group LLC v. Government of Canada, Award PCA Case No. 2012-17, 24 March 2016, para. 234. ‘Both Parties have made submissions on the allocation of the burden of proof in respect of jurisdiction and merits. Mesa submits that the Respondent bears the burden of proof for the jurisdictional defences it raises.19 On its part, the Respondent submits that the Claimant bears the burden of establishing that this Tribunal has jurisdiction over the present dispute. It also points out that where there is any ambiguity about whether it has jurisdiction or not, a tribunal should decline to act.235. The Tribunal recalls that Article 24(1) of the UNCITRAL Rules contains the rules applicable with respect to which Party bears the burden of proof. It provides: “Each party shall have the burden of proving the facts relied on to support his claim or defence.”236. Thus, each Party must establish the facts on which it relies in support of its claims and defences. It is for the Claimant to establish the factual elements necessary to sustain the Tribunal’s jurisdiction over the challenged measures’. Philip Morris Asia Limited v. The Commonwealth of Australia PCA Case No. 2012-12, Award on Jurisdiction and Admissibility, 17 December 2015, para. 495. ‘The Tribunal finds that there is no general disagreement between the Parties as to the principles governing burden of proof, although the application of these principles to certain preliminary objections requires further discussion. Specifically, it is for the Claimant to allege and prove facts establishing the conditions for jurisdiction under the Treaty; for the Respondent to allege and prove the facts on which its objections are based; and, to the extent that the Respondent has established a prima facie case, for the Claimant to rebut this evidence. Where relevant, the Tribunal will address the application of the burden of proof when discussing the various objections below’.

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three groups: the first one in which they group the majority of arbitral awards according to which ‘the claimant bears the burden of Proving the Tribunal Jurisdiction’,236 a second one in which they list cases in which ‘Either Party Can Bear the Burden of Proving or Disproving the Tribunal’s Jurisdiction’237 and the last one which they define as ‘The Centrist Position: Neither Party Bears the Burden of Proving the Tribunals Jurisdiction’.238 The authors concluded that ‘recent decisions in international arbitration law demonstrate that the burden of proof at the jurisdictional phase is an issue in a flux. Despite a long line of decisions holding perhaps simplistically, that the burden of proof lies with the claimant, many recent cases have suggested that it can lie with either party depending on which party is asserting the particular fact.’239 The conclusion, although correctly reflecting the current state of international investment law, is of little help since it does not provide the reader with any guidance nor duly take into account the fact that only the decisions included in the third group correctly consider the fact that it is a duty of the tribunal constituted under international law to ascertain the existence of its jurisdiction. In order to conclude the analysis of the issue of burden of proof at the jurisdictional stage, I must discuss the distinction between jurisdiction and admissibility with regard to the burden of proof. Fontanelli240 who examined this issue correctly noted that the ICSID dispute settlement has inherited the distinction between jurisdiction and admissibility from the ICJ in addition to the debate about which elements are relevant to this distinction. I think the best definition of admissibility is Martin Jarret’s: A concept with a special place in international law, admissibility is the metaphorical equivalent of the maturity of a merlot, with the merlot being the cause of action or the defence, and its consumption being the adjudication. Fundamentally the admissibility question asks: is the cause of action ready for adjudication? Habitually confused with jurisdiction, admissibility examines the claim itself, as opposed to the adjudicative power of the arbitral tribunal. The distinction is critical in international investment law, and disputes decided by arbitration more generally, because while decision on jurisdiction can be appealed, decision on admissibility cannot.241

This distinction is relevant for our enquiry since it affects the burden of proof. According to Fontanelli, it is sometimes argued that the distinction between jurisdiction and admissibility has repercussion on the burden of proof. Whereas this is technically true (the investor must prove the existence of the jurisdictional requirements; the State must prove that the claim on

236

Vasani et al. (2018), p. 313. Vasani et al. (2018), p. 316. 238 Vasani et al. (2018), p. 319. 239 Vasani et al. (2018), p. 330. 240 Fontanelli (2018), p. 142. 241 Jarret (2019), p. 8. 237

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2 The Burden of Proof and Its Exceptions which jurisdiction exists is inadmissible) the practice is more nuanced and rarely would a difference affect the outcome.242

I argue that although the practice of ICSID tribunals suggests otherwise, the most important aspect of the distinction is that while the challenges to admissibility of the claims are subject to the power of the parties, the arbitral tribunal as an international tribunal has a duty to satisfy itself that it has jurisdiction.243 In other words, ‘a broad consensus has formed that while jurisdiction goes to the power of an investment tribunal to decide a case, admissibility relates to the claims put forward in investment arbitration proceedings’244—an opinion confirmed by the 2018 ICSID case Georg Gavrilović v. Croatia.245 It is submitted that although the claimant shall submit prima facie evidence, the tribunal has an inherent power to compel the parties to produce further evidence to complete its enquiry. In more in detail, ICSID tribunals should follow the wellestablished principles arising from the jurisprudence of the ICJ that, as seen at the beginning of the paragraph, hold that there is no burden to discharge concerning jurisdictional matters. Although outside the ICSID system certain investment

242

Fontanelli (2018), p. 142. Wehland (2017), p. 246 ‘In sum jurisdiction and admissibility are concepts of considerable relevance in both proceedings under the ICSID Convention and proceedings under ICSID Additional Facility Rules. Whilst tribunals may be tempted to avoid deciding whether a particular objection relates to jurisdiction or admissibility with the argument that both types of objection prevent an examination of the merit of a case, the different scope of the review in relation to the concepts often makes it necessary to distinguish between them’. 244 Reinisch (2018), p. 132. 245 Georg Gavrilović and Gavrilović D.O.O. v. Republic of Croatia, ICSID Case No ARB/12/39, Award, 26 July 2018, para. 411. ‘The Tribunal agrees with the Respondent. Although the ICSID Convention includes no specific reference to admissibility, investor-State jurisprudence confirms that preliminary objections based on jurisdiction and on admissibility are permissible in the ICSID context. The facts and arguments underlying these two types of objections often overlap—and they certainly do here—but admissibility is nonetheless its own species of preliminary objection, separate and apart from jurisdiction. The Hochtief v Argentina tribunal clearly and succinctly described the distinction between jurisdiction and admissibility: “[j]urisdiction is an attribute of a tribunal and not of a claim, whereas admissibility is an attribute of a claim but not of a tribunal.” This Tribunal agrees. Questions of jurisdiction relate to the tribunal, e.g., whether the tribunal is empowered to resolve the dispute. Questions of admissibility relate to the claim itself, e.g., whether the claim is timely filed, whether it is ripe for adjudication, whether the procedural requirements have been met. Tribunals have asked, in the context of admissibility, questions such as: Did the claimant provide proper notification of its claims? Did the claimant fulfil domestic litigation requirements? Are the claims based on genuine, non-fraudulent documents? These types of questions—which relate to the claim, not the tribunal—are questions of admissibility. On this point, the Tribunal also adopts the reasoning of the Micula v. Romania tribunal, which similarly held that “an objection to jurisdiction goes to the ability of a tribunal to hear a case while an objection to admissibility aims at the claim itself and presupposes that the tribunal has jurisdiction.” In light of the jurisprudence cited above, with which the Tribunal agrees, the Tribunal finds that jurisdiction and admissibility are separate bases for preliminary objections. Thus, it is appropriate for the Tribunal to assess the Respondent’s admissibility objections separately from the Respondent’s objections to jurisdiction. The Tribunal turns to that admissibility analysis below. 243

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tribunals have held that ‘international arbitration is not an inquisitorial system where the Tribunal establishes the facts for a denunciating party, nor a system where it is sufficient to make a prima facie case relying on the opponent to rebut that case’,246 it is submitted that this approach shall be nuanced in the ICSID system that is an arbitral tribunal established under the auspices of an international Convention since an ICSID tribunal is empowered under Article 41 of the Convention to consider on its own initiative potential barriers to the Centre’s jurisdiction and its own competence, [and] it is [therefore] less likely to raise motu proprio issues relating to the admissibility of claims.247

It is submitted that all the procedural aspects relating to the ascertain of the tribunal jurisdiction should be mastered by the arbitrators. Sourgens248 correctly observed that the burden of proof regarding relevant facts is rarely discussed in investor-state decisions on jurisdiction and, thus, is significantly underdeveloped. The underdevelopment of burdens of proof and persuasion with regard to jurisdictional facts has led to increasing problems.249

As a matter of fact, Sourgens identifies the need for a balanced approach to the necessity of preserving the equality of arms between the State and the investor before investment arbitral tribunals and suggests drawing inspiration from ICJ and PCIJ jurisprudence.250 The idea suggested by Sourgens is perfectly in line with the aim of the present book that demonstrates the existence of a single law of evidence before international tribunals using the ICJ jurisprudence as guidance when it comes to contested issues. However, I suggest that the main principle concerning the burden of proof regarding jurisdictional issue shall not be limited to the principle of equality of arms but perhaps more importantly to the principle of Kompetenz - Kompetenz. This different approach is not simply theoretical but has important consequences. As already demonstrated in Sect. 2.4.3 (see supra), the principle iura novit curia or iura novit arbiter is also applicable to international investor-state arbitration. If the examination of jurisdiction is an issue of law and as a consequence according to ICJ jurisprudence there is no burden of proof to be discharged, it seems fair to conclude that the procedure concerning the establishment of fact should ultimately be more inquisitorial rather than adversarial. The claimant has to bring before the tribunal

246 MrA J O. MrsT L v. The Slovak Republic Respondent, UNCITRAL Ad Hoc Arbitration, Final Award, 23 April 2012, para. 148. 247 Fouret et al. (2019), The ICSID Convention, Regulations and Rules, a Practical Commentary, Cheltenham, Edward Elgar Publishing, para. 2.08. Admissibility objections may moreover generally be waived, whereas the jurisdictional requirements contained in article 25 (1) of the Convention are considered absolute and non-waivable. 248 Sourgens (2012), p. 38. 249 Sourgens (2012), pp. 896–897. 250 Sourgens (2012), p. 910. “The current academic paradigm’s focus on formal jurisdictional rules risks seriously distorting access to justice in investor-state arbitration. This potential distortion can be corrected by adoption of the jurisdictional jurisprudence of the ICJ, and its predecessor, the Permanent Court of International Justice.”

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prima facie evidence that the tribunal has jurisdiction, but after that, the tribunal is the master of the procedure. Sourgens, who is probably the only author to have examined this matter in depth, supports a different perspective. According to him, the tribunal is not the master of the substance of jurisdictional proof. Rather, the parties in their submissions supply the substance of jurisdictional proof. The tribunal’s jurisdictional competence means that a tribunal ‘is entitled to interpret the submissions of the parties’ and as the International Court of Justice explained, the tribunal ‘in fact is bound to do so.’ The tribunal thus is not free to establish jurisdiction beyond the parties’ submissions, but instead must ‘interact’ with the parties to do so.251

It is submitted that this approach fails to draw the necessary consequences of the approach to the burden of proof concerning jurisdictional matters based on the ICJ jurisprudence. It is submitted that ‘becoming the master of the substance of jurisdictional proof’, the tribunal may in effect alter the principle of equality of the parties, but this is a sacrifice that it is acceptable in order to protect the principle Kompetenz - Kompetenz. This is exactly what happened in the above-cited case Oded Besserglik v. Republic of Mozambique dispatched to the parties in 2019.252 The decision of the tribunal to examine motu proprio the issue of jurisdiction was in fact an advantage to the respondent that was time barred from raising an objection related to jurisdiction, but this is simply the consequence of the primacy of the Kompetenz - Kompetenz principle that is very important in general international law where jurisdiction is voluntary. The examination of the existence of jurisdiction is a duty of the tribunal under article 41 (2) of the ICSID Convention,253 Article 41 (2) of the Arbitration Rules254 (which is complementary to article 41 (2) of the

251 Sourgens (2012), p. 925. See also note 284 “An engagement in the substance of jurisdictional proof would either tilt the analysis in favor of one of the two competing premises of jurisdiction or involve the tribunal in contradictory reasoning by virtue of the inherent tension between both premises. Choosing one of the premises over the other is an impermissible excess of powers by over- or under-reaching the scope of the jurisdictional instrument. [. . .] Attempting to independently balance the competing premises would likely cause the tribunal to employ self- contradictory reasoning. [. . .]”. 252 Oded Besserglik v. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, award, October 28, 2019. 253 Article 41 ICSID Convention (2) “Any objection by a party to the dispute that that dispute is not within the jurisdiction of the Centre, or for other reasons is not within the competence of the Tribunal, shall be considered by the Tribunal which shall determine whether to deal with it as a preliminary question or to join it to the merits of the dispute”. 254 Article 41 (2) of the ICSID Arbitration Rules amended in 2006 and came into effect on April 10, 2006 [. . .] “The Tribunal may on its own initiative consider, at any stage of the proceeding, whether the dispute or any ancillary claim before it is within the jurisdiction of the Centre and within its own competence”. Cfr. non-binding explanatory notes at p. 107: [. . .] “However, it may also be raised by the Tribunal on its own initiative (paragraph (2)), and indeed the Tribunal has special responsibility to do so if one of the parties has defaulted (see Rule 42(4))”.

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Convention),255 and 45 (3) of the arbitration rules.256 Further to that Oded Besserglik v. Republic of Mozambique is not an isolated decision. A similar view on the broadness of the powers of the tribunal when jurisdictional issues are at stake was expressed in Vattenfall v. Germany in 2018, where the arbitral tribunal held that ‘[. . .] irrespective of the timeliness of Respondent’s objection, the Tribunal considers that it has a broad power to examine issues relating to its jurisdiction on an ex officio basis’.257 Further to this, the general idea on which the analysis of jurisdiction, following the teaching of the ICJ, should be based is an independent operation of the tribunal of treaty interpretation and not the use of the rule of the burden of proof or other presumptions; this seems in line with the most recent ICSID decisions such as Michael Anthony Lee-Chin v. The Dominican Republic in 2020258 and the last publication on this subject.259 As a concluding remark on this subject, this book agrees that ‘recent decisions in international arbitration law demonstrate that the burden of proof at the jurisdictional 255

Fouret et al. (2019), p. 325 n. 238. Article 45 (3) ICSID Additional Facility Rules, created on September 27, 1978, amended on in early 2006 and came into effect on April 10, 2006. [. . .] “The Tribunal may on its own initiative consider, at any stage of the proceeding, whether the dispute before it is within its competence”. See also Oded Besserglik v. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, award, October 28, 2019. “319. The use of the word “may” in Article 45(3) of the Arbitration Rules relates to the tribunal acting on its own initiative. It suggests that even where a party does not object to the competence of a tribunal, the tribunal may of its own initiative consider the question of its competence. It does not give a tribunal the discretion not to consider and examine its competence simply because an objection that raises an issue to the tribunal’s notice has been raised too late by a party”. 257 1. Vattenfall AB; 2. Vattenfall GMBH; 3. Vattenfall Europe Nuclear Energy GMBH; 4. Kernkraftwerk Krümmel GMBH & CO. OHG; 5. Kernkraftwerk Brunsbüttel GMBH & CO. OHG v. Federal Republic of Germany, ICSID Case No. ARB/12/12, Decision on The Achmea Issue, 31 August 2018, para. 19. 258 Michael Anthony Lee-Chin v. The Dominican Republic, ICSID Case No. UNCT/18/3, Partial Award on Jurisdiction, July 15, 2020 para. 118. “The majority of the Tribunal adopts Respondent’s assertion that the consent of the State (as well as that of any obligor) must be clear and unambiguous. It is essential that the tribunal called upon to resolve a dispute be persuaded that all the parties concerned (inter alia, a State in our case) have agreed to submit thereto. In the view of the Tribunal, the requirement that consent have such features should be understood in the sense that it must arise from the text, interpreted pursuant to the criteria accepted under international law, and not from presumptions or inferences based on expressions not contained therein. The proposition that a State’s consent is not to be presumed is as true as the proposition that a State may not invoke its condition as such in order to escape freely assumed obligations”. 259 Klopschinski et al. (2021), para. 4.22 ‘The International Court of Justice (ICJ) has ruled that under international law “there is no burden of proof to be discharged in the matter of jurisdiction;”. [. . .] Para 4.24 Thus the jurisdictional question for investment tribunals will remain to consider whether the burden of proof lies with a claimant to demonstrate, on balance of probabilities, that its IP-based asset qualifies as investment, or whether, as the ICJ has ruled, there is no burden of proof to be discharged in the matter of jurisdiction; instead it is an equal contest of arms between the investor and the host State’. 256

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phase is an issue in a flux.’260 Still, there are good reasons to at least express a preference. According to the present book, the only right approach is the one according to which it is a duty of the arbitral tribunal to ascertain the existence of its competence. This is in fact the approach that better reflects the approach of the ICJ, where ‘questions of competence itself may, and must, generally be raised proprio motu by the Court’.261 Further to that, as indicated at the beginning of this paragraph, this opinion has also been upheld by the WTO panels and reflects a common law of international adjudication.

2.4.5

Burden of Proof and the Issue of Bifurcation of the Arbitration Proceeding

Another issue that in my view may at least in part represent an exception to the classical rule onus probandi incumbit actori is the issue of bifurcation of a procedure, which is a matter almost unexplored by the recent literature in the realm of investment arbitration. According to the most recent commentary on the ICSID convention, bifurcation in investment treaty arbitration, is usually understood to refer to dividing the proceedings into separate phases on jurisdiction and on merits. Bifurcation is implied by the tribunal’s discretion under article 41(2) to deal with preliminary objections as preliminary questions or together with the merit.262

In a recent book, another author explains that Rule 41(1) of the Arbitration Rules of the Centre provides that an objection that the tribunal lacks jurisdiction over the dispute must be made as early as possible, and in any event no later than the expiration of the time limit for the filing of the counter memorial. After the raising of an objection to jurisdiction, the parties will be invited to file observations on the objection. If the tribunal so decides, there may follow oral procedures on objection. The tribunal may deal with the objection as a preliminary question or join it to the merits. [. . .] More often than not, tribunals have been able to deal with the objections as preliminary questions, rather than joining them to the merit of the dispute. The objections have led to awards declining jurisdiction over the dispute in around sixty cases.263

Franck, who wrote a book on costs in international investment arbitration, has examined bifurcation and holds that investment treaty arbitral tribunals often have discretion to bifurcate cases into phases resolving distinct legal issues. In practice, tribunals have tended to separate jurisdiction and the merits from damages. Although bifurcation historically have been justified as saving time and costs, there is generally debate within international arbitration about the value of

260

Vasani et al. (2018), p. 330. Amerasinghe (2009), p. 32. 262 Fouret et al. (2019), p. 341, para. 4.222-3. 263 Parra (2020), p. 65. 261

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bifurcation. John Gotanda suggests there is ‘no consensus’ as to whether bifurcation is generally appropriate and this uncertainty increases costs and delays. [. . .] Theoretically, bifurcation streamlines disputes and increases efficiency.264

A similar position has been stated by two authors who hold that where a party has made a request for bifurcation and the other party objects, the jurisprudence indicates that tribunals are guided by overarching principles of fairness and procedural economy. In giving substance to these principles, tribunals have typically taken into account (1) issues of procedural economy; (2) the likelihood that the determination of distinct issues in a separate phase will result in the dismissal of the entire case or reduces significantly its scope and complexity and the degree of overlap between factual and legal issues to be examined in each proposed phase.265

It is quite clear that regarding the issue addressed in the previous paragraph, the authors did not duly take into account the rules arising from general international law. To address the issue of evidence related to jurisdiction the examination of the more recent jurisprudence of the ICJ namely the recent case Certain Iranian Assets decided in 2019 may be useful.266 Among the many issues at stake in this case, there is one that has quite divided the bench of the ICJ (eleven votes to four),267 namely the issue of deciding whether Bank Markazi, which is the property of the Iranian State, was a company in the sense of the 1955 Treaty of Amity and therefore entitled to treaty protection. The analysis of this case will be useful to understand the theoretical framework of preliminary objections before the ICJ, and this will be useful to address the same issue before ICSID tribunals.

2.4.5.1

La raison d’être of Preliminary Objections in General International Law

Abi Saab explains that la raison d’être268 of preliminary objections is not only a matter of logic or procedural economy but also the protection of the interest of the respondent state. This consideration is the most important and was clearly expressed by the PCIJ in 1924 in the case Mavrommatis Palestine Concessions, in which the Court held the following: the Court, bearing in mind the fact that its jurisdiction is limited, that it is invariably based on the consent of the respondent and only exists in so far as this consent has been given, cannot content itself with the provisional conclusion that the dispute falls or not within the terms of

264

Franck (2019). Vasani and Vasani (2018), p. 306. 266 On the Case Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7. 267 Judges Tomka, Gaja, Crawford; Judge ad hoc Brower. 268 Abi-Saab (1967), p. 35. 265

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2 The Burden of Proof and Its Exceptions the Mandate. The Court, before giving judgment on the merits of the case, will satisfy itself that the suit before it, in the form in which it has been submitted and on the basis of the facts hitherto established, falls to be decided by application of the clauses of the Mandate.269

According to the original provision of article 62, para. 5 introduced in 1936, the Court could either give a decision on the objection or join the objection to the merit, but in 1972, this possibility was deleted from the Rules of the Court.270 Under article 79, para. 9 of the present rules, the Court can no longer join an objection to the merit, but it can reach the same de facto result, declaring that an ‘objection does not possess, in the circumstance of the case, an exclusively preliminary character’.271 Judge Huber recommended in general terms that the joining of preliminary objections to the merits should be exceptional since in international law, regardless of how many difficulties arise, the tribunal shall not proceed with the question of the merits without having first examined its own jurisdiction.272 According to Anzilotti, the joining of preliminary objections to the merits forces the state to remain before the tribunal for a longer time and thus ‘bears a different weight in the international field where jurisdiction is voluntary’.273 Case law from the PCIJ and ICJ underpins this view, and the criterion endorsed by the judges for the joinder of preliminary objections—in a limited number of cases274—to the merits was that of absolute necessity.275 This theoretical approach is further justified by the consideration that the party that raises a preliminary objection may have a vested interest not only in impeding the adjudicatory body reaching the merits of the case but also in ensuring ‘that the case is not discussed at all before the Court’.276 This view was confirmed in the Barcelona Traction case of 1964, in which the ICJ stated that it would not have joined the preliminary objection to the merits ‘except for good cause’.277 In the Barcelona Traction case, the problem arose from Mavrommatis Palestine Concessions, series A, n 2, 1924, p. 16. Zimmermann and Tams (2019), p. 1298. 271 Article 79, para. 9 of the Rules of the Court. 272 P.C.I.J., Series D, Addendum No. 2, Revision of the Rules of Court of June 26th, 1926, p. 89: “Moreover, for that very reason, it did not seem possible, except in particular cases, for instance under a general or special agreement between the Parties, to join the question of jurisdiction and the merits. Before an international court, which had to apply international law, questions of jurisdiction should be regarded as independent and preliminary. Whatever difficulties might result – they must bow before the fundamental principles of international law.” 273 P.C.I.J., Series D, Elaboration of the Rules of Court of March 11th, 1936, Third Addendum to No. 2, 1936, 647. 274 Shihata (1965), p. 87. 275 Ambatielos case (jurisdiction), Judgment of July 1st, 1952: I.C.J. Reports 1952, p. 28, Individual Opinion of Judge Levi Carneiro, p. 48 “I consider that such a joinder should only be made when it is absolutely necessary”. 276 See, regarding this aspect De Visscher (1966), p. 107. 277 Barcelona Traction, Light and Power Company, Limited, Preliminary Objections, Judgment, I.C.J. Reports 1964, p. 4, at 44. “It will not do so except for good cause, seeing that the object of a preliminary objection is to avoid not merely a decision on, but even any discussion of the merits”. 269 270

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the fact that the preliminary objection of the respondent state that concerned the jus standi of the applicant was ‘itself merely a reflection, or consequence, of the antecedent question of what is the juridical situation in respect of shareholding interests, as recognized by international law’,278 and, as a consequence, the Court could not decide the preliminary objection without issuing a judgment touching upon the merit. Hence, the joining of preliminary objections to the merits is the exception.

2.4.5.2

The Limited Exceptions Which Justify the Possibility to Join Preliminary Issues to the Merit

Jack Lang identifies two major grounds that justify the joining of preliminary objections to the merits: (a) the connection of facts that are relevant and material to the outcome of the dispute (connexité au niveau des données) and (b) the connection of solutions (connexité au niveau de solution)—a situation in which the decision may prejudge the merits of the case. In other words, the exception does not possess an exclusively preliminary character.279 This assessment is based on case law analysis. According to this author, there are only two main cases of the PCIJ in which the Court only relied on the necessity of better knowledge of the merit before deciding to join a preliminary exception to the merit, namely Prince von Pless280 of 1933 and Pajzs‚ Czáky‚ Esterházy of 1936.281 This difference is important since the legal technique and the different wording of the instrument conferring jurisdiction on an international court may permit different

278

Ibid. Lang (1968), p. 6. 280 CPJI, 4 February 1933, Series A/B, n. 52, p. 14 ‘Whereas, moreover, the Polish Government maintains that the acts mentioned in submission No. 1 of the Application relate only to a dispute between the Polish Treasury and the Prince von Pless as a tax-payer; whereas it states that it is in agreement with the German Government as regards the principle enunciated in submission No. 4 and denies that that principle has been violated or disregarded by it; whereas, on the other hand, the German Government appears to regard the acts mentioned in submission No. 1 as means used by the Polish Government of bringing unlawful pressure to bear upon the Prince von Pless; and as, accordingly, the question whether there is a difference of opinion, within the meaning of Article 72, paragraph 3, of the Geneva Convention, appears to be inextricably bound up with the facts adduced by the Applicant and can only be decided on the basis of a full knowledge of these facts, such as can only be obtained from the proceedings on the merits’. 281 CPJI, Order of 23 May 1936 (Preliminary Objection), Series A/B66, p. 9 ‘Whereas the further proceedings on the merits, by enabling the Court to obtain a clear understanding of the relation in which the appeal under Article X of Agreement II stands to the request for the interpretation of Agreements II and III under Articles XVII and 22 of these Agreements, and of the meaning and scope to be attached to the submissions presented “alternatively or cumulatively as the Court may see fit”, will place the Court in a better position to adjudicate with a full knowledge of the facts upon the second objection of the Yugoslav Government; Whereas both objections should therefore be joined to the merits, so that the Court will give its decision upon them and, if need be, upon the merits in one and the same judgment’. 279

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classifications of the same subject matter. Commentators such as Professor Santulli have explained that certain issues may be regarded as related to jurisdiction, admissibility or the merits depending on the international instrument conferring jurisdiction on the international tribunal.282 A good example is the qualification of the issue of the existence of a legal dispute: before an ICSID tribunal, in the case Monsieur Joseph Houben c. La République du Burundi of 2016,283 it was regarded as a matter of admissibility, whereas in a case before the ICJ in the same year, namely Obligations Concerning Negotiations Relating to Cessation of the Nuclear Arms Race and to Nuclear Disarmament (Marshall Islands v. United Kingdom), it was regarded as a matter of jurisdiction.284 It is possible to conclude that there are certain objections that are preliminary in nature, while others may be intertwined with the merits as a matter of logic. Moreover, there is what Judge Fitzmaurice called the ultimate merits:285 the part of the case that is not linked with any preliminary objections. Lang, however, suggests that it is even possible to claim that the argument related to the necessity for the Court to reach a better understanding of the case has never been used exclusively and that in the two cases is, to use Freudian terminology, only the expression ‘manifest’ of the ‘latent’ concern of the Court about not prejudging the merit of the case.286 282

Santulli (2002), p. 265. « On comprend désormais sans peine ces glissements: si une condition de recevabilité est incluse dans l’engagement juridictionnel comme limite à ce dont la juridiction est appelée à connaître, elle devient, en bon droit, une condition de compétence ». 283 Monsieur Joseph Houben c.La République du Burundi, Affaire CIRDI ARB/13/7, sentence, 12 janvier 2016, para 140 « Or, la nature du différend soumis À l’arbitrage n’est pas affectée par les modalités de notification et de rédaction de l’aide-mémoire prévues À l’article 8.2 du TBI. Le consentement de l’État À l’arbitrage existe indépendamment de ces modalités, des lors que la nature du différend soumis À l’arbitrage est celle d’un différend relatif À un investissement. En d’autres termes, les modalités de notification et de rédaction de l’aide-mémoire ne relèvent pas de la compétence du Tribunal arbitral. En revanche, ces modalités relèvent de la question de savoir si le différend porté par l’investisseur À l’encontre de l’État d’accueil, ici le Burundi, est suffisamment cristallisé pour pouvoir être soumis À l’appréciation des arbitres. En ce sens, la condition relève de la recevabilité de la demande. » 284 Obligations concerning Negotiations relating to Cessation of the Nuclear Arms Race and to Nuclear Disarmament (Marshall Islands v. United Kingdom), Preliminary Objections, Judgment, I.C.J. Reports 2016, p. 833, at 849 para. 36. Under Article 38 of the Statute, the function of the Court is to decide in accordance with international law disputes that States submit to it. Under Article 36, paragraph 2, of the Statute, the Court has jurisdiction in all “legal disputes” that may arise between States parties to the Statute having made a declaration in accordance with that provision. The existence of a dispute between the Parties is thus a condition of the Court’s jurisdiction. 285 Case concerning the Northern Cameroons (Cameroon v. United Kingdom), Preliminary Objections, Judgment of 2 December 1963: I.C.J. Reports 1963, p. 15, Separate Opinion of Sir Gerald Fitzmaurice, p. 103. 286 Lang (1968), p. 11 « On pourrait même à la limite prétendre qu’il n’est jamais utilisé à titre exclusif et que nous avons relevées dans deux affaires ne sont, pour reprendre la terminologie freudienne que l’expression “manifeste” de la préoccupation “latente” de la Cour de ne pas préjuger le fond ».

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Thus, in conclusion, theoretical reasons such as the protection of the sovereignty of the respondent state in general enjoy primacy over practical difficulties, and, as a consequence, the standard of absolute necessity correctly identified by Huber and the Court in the case Barcelona Traction cannot be considered met when only matters of evidence are at stake. The Court is endowed with a power enshrined in article 79 para. 8 of its Rules to ask the parties to produce evidence even before the hearings begin, and there is therefore no reason to join an objection to the merits that possesses an exclusively preliminary character.287

2.4.5.3

The Approach of the Court in the Case Certain Iranian Assets

In the case at hand, the Court concluded that the third objection did not possess an exclusively preliminary character, thereby joining this objection to the merits, with four votes in favour of and four votes against this point. Judges Tomka, Gaja and Crawford and Judge ad hoc Brower expressly or implicitly observed that the case had already been fully argued before the Court and was ready to be decided. Examining the process in more detail, the ICJ explained that its endeavour was solely to establish whether the characterization of a company within the Treaty of Amity was applicable to Bank Markazi. That, in reality, was the ‘only question raised by the third objection to jurisdiction’.288 According to Iran, the simple existence of a separate legal personality was sufficient to characterise Bank Markazi as a company. More specifically, according to the applicant, the nature of the activity conducted by Bank Markazi was immaterial to the outcome of the case. As a consequence, the applicant built its legal argument without entering details of the activities conducted by the state-owned bank.289 The Court, however, disagreed with Iran, stating, the Court therefore concludes that an entity carrying out exclusively sovereign activities, linked to the sovereign functions of the State, cannot be characterized as a ‘company’ within the meaning of the Treaty and, consequently, may not claim the benefit of the rights and protections provided for in Articles III, IV and V.290

While still in the preliminary stage, the Court reached two important conclusions: first, the US could not deny that Bank Markazi has an autonomous legal personality, 287 Zimmermann and Tams (2019), p. 1299 ‘According to Art. 79, para 8 of the rules, the Court may, whenever necessary, request the parties to argue ‘all question of fact and law’ (including those touching upon certain aspects of the merit) in order to enable it to determine its jurisdiction or the admissibility at the preliminary stage of the proceeding. Rather than carrying the preliminary objections over into the merit phase, to dispose of the objections at the earliest stage of the proceeding’. 288 Para 84. 289 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 para. 94. 290 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 para. 91.

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and the fact that the bank is wholly owned by the Iranian government does not in itself have any consequence for the protection granted to Bank Markazi by the treaty.291 The Court observed that the applicant ‘little attempt[ed] to demonstrate that, alongside the sovereign functions which it concedes, Bank Markazi engages in activities of a commercial nature’.292 According to the dissenting opinion of Judge ad hoc Brower, ‘The Court’s expression “little attempt” is in truth exceedingly charitable, as Iran has done nothing whatsoever [. . .] to provide even a scintilla of an indication that Bank Markazi has engaged anywhere in commercial activity’.293 However, in reality, Iran’s approach is understandable considering the fact that the applicant built its argument in a different way, suggesting according to its interpretation of the treaty that there was no need to examine the activity of Bank Markazi. In that case, however, the Court would have concluded that the activities at hand were relevant and material to the outcome of the case and that they pertained to a later stage of the proceedings.294 As a consequence, it would be fair to conclude that the applicant cannot be considered to have been unwilling to cooperate with the Court; on the contrary, the Court followed its approach of judicial self-restraint in the use of its own powers of enquiry, as highlighted by Judges Tomka and Crawford: Article 79, paragraph 8, provides that ‘[i]n order to enable the Court to determine its jurisdiction at the preliminary stage of the proceedings, the Court, whenever necessary, may request the parties to argue all questions of law and fact, and to adduce all evidence, which bear on the issue’.295

291

Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 para. 88 ‘In the first place, the United States cannot contest the fact that Bank Markazi was endowed with its own legal personality by Article 10, paragraph (c), of Iran’s 1960 Monetary and Banking Act, as amended — and indeed it does not do so. In the second place, the fact that Bank Markazi is wholly owned by the Iranian State, and that the State exercises a power of direction and close control over the bank’s activities — as pointed out by the United States and not contested by Iran — does not, in itself, exclude that entity from the category of “companies” within the meaning of the Treaty. 292 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7. 293 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 dissenting opinion of judge ad hoc Brower. 294 Public sitting held on Wednesday 10 October 2018, at 10 a.m., at the Peace Palace, President Yusuf presiding, in the case concerning Certain Iranian Assets (Islamic Republic of Iran v. United States of America) 60. Dans cette hypothèse, il resterait que les États-Unis prétendent aussi que le traité ne protège les « compagnies » que dans la mesure où elles exercent une activité privée, ou commerciale ou d’affaires. Ce n’est pas exact. Mais À supposer que, par extraordinaire, la Cour en vienne à̀ entériner cette interprétation, il lui faudrait alors déterminer quelles sont les activités de Bank Markazī auxquelles se rapportent les traitements dont l’Iran se plaint. L’Iran affirme qu’il s’agit sans aucun doute d’activités professionnelles. Les États-Unis semblent prétendre que tel n’est pas le cas. Il y a donc un différend de fond, nécessitant, pour être résolu, de plaider les faits, ce qui relève À l’évidence d’une autre phase de la procédure. 295 Para.9.

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This provision endows the Court with the power to request further evidence proprio motu to avoid the joining of preliminary objections with the merits. In this sense, according to Kubo Mačák, the change of the rules in was intended ‘to be not just one of drafting, but of substance’.296 When the ICJ came to the question of whether the objection possessed an exclusively preliminary character, the Court paid little attention to the exceptionality of the decision to join the exception to the merits. Rather, the Court limited itself to quoting its previous judgment in Territorial and Maritime Dispute Nicaragua v. Colombia297 of 2007, thereafter simply affirming that it would join the third preliminary objection to the merits.298 In more detail, the Court stated in para. 96 that in principle, a party raising preliminary objections is entitled to have these objections answered at the preliminary stage of the proceedings unless the Court does not have before it all facts necessary to decide the questions raised or if answering the preliminary objection would determine the dispute, or some elements thereof, on the merits.

The second part of the test outlined by the Court (‘or [. . .] merit’) is indeed coherent with its previous jurisprudence and with article 79, para. 9. In contrast, the idea enshrined in the first part of the test (‘unless [. . .] dispute’) seems to be a return to what Jack Lang called ‘the connection of facts which are relevant and material to the outcome of the dispute (connexité au niveau des données)’, and that was applied in only two precedents of the PCIJ and later abandoned, especially after the redrafting of the rules in 1972. Further to that, what it is truly missing in the Court’s judgement is any reference to its power of enquiry into factual issues motu proprio. As established above, the joining of preliminary objections to the merits should be limited to cases of absolute necessity. Whether or not the Court has fully utilised its own analysis using its limited inquisitorial powers, the standard of absolute necessity is not met. Absolute necessity should be understood as a last resort option that is only available after the Court has made full use of other methods, such as article 79(8). It is therefore not surprising that Judges Tomka and Crawford299 spoke in their joint opinion of a departure from the Court’s previous jurisprudence.

296

Zimmermann and Tams (2019), p. 1298. Territorial and Maritime Dispute (Nicaragua v. Colombia), Preliminary Objections, Judgment, I.C.J. Reports 2007, p. 832 para. 51. 298 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 para 96. ‘Under Article 79, paragraph 9, of the Rules of Court, when it is called upon to rule on a preliminary objection, the Court must give its decision “in the form of a judgment, by which it shall either uphold the objection, reject it, or declare that the objection does not possess, in the circumstances of the case, an exclusively preliminary character”. 299 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7, Joint separate opinion of Judges Tomka and Crawford, para. 9 ‘The decision of the Court in the present case to join the third preliminary objection of the United States to the merits marks a departure from the Court’s previous adherence to the regime set out in Article 79, paragraph 9.’ [. . .] 297

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The Court’s approach is flawed on this point. Abi-Saab, who wrote extensively on the issue of preliminary objections, observed that the true scope of preliminary objections avoids discussion of the merits. On this basis, he criticised the decision on jurisdiction in Barcelona Traction of 1964300 (a decision much more prudent than the one under analysis) for having inverted the reasoning according to which the Court gave primacy to the notion of the sound administration of justice over the protection of the interests of the defendant state,301 which the early jurisprudence had qualified as part of the notion of sound administration of justice.302 The Court’s decision in the case at hand seems contrary to most recent developments. As discussed by an author303 in 2016, a survey was undertaken calling for senior lawyers to give advice on how ICJ procedures could be improved. Improving the procedural efficiency of the Court was the dominant theme of its 70th anniversary commemoration, and this inspired a considerable amount of commentary by senior practitioners.304 The International Law Association has even advocated for the abolition of the classical procedure related to preliminary objections. According to the International Law Association proposal, a new procedure should be established in which the Court directs the parties to make submissions on jurisdiction and admissibility in their initial pleadings if required. The current amendment to the rules, which, as already stated, entered into force on 21 October 2019 (after the judgment under analysis), is something of a compromise: it has not abolished the preliminary objections procedure, but it makes clear that the primary decision rests with the Court. According to

The presumption is therefore in favour of a decision at the preliminary stage, rather than joinder to the merits. Article 79, paragraph 8, of the Rules of Court, the substance of which was added in 1972, reinforces this view, at least in relation to objections to the jurisdiction of the Court. 300 Barcelona Traction, Light and Power Company, Limited, Preliminary Objections, Judgment, I.C.J. Reports 1964, p. 4. 301 Abi-Saab (1967), p. 198 ‘Il est difficile d’éviter la conclusion que cet arrêt témoigne d’un changement d’orientation en la matière, plus favorable à l’extensions du champ d’application de la jonction. Cela ne peut aller sans affaiblir la base même et l’utilité réelle de la technique des exceptions préliminaires’. 302 Barcelona Traction, Light and Power Company, Limited, Preliminary Objections, Judgment, I.C.J. Reports 1964, p. 4, at. 43. ‘The Permanent Court of International Justice drew attention to an important aspect of the matter when, as mentioned above, it said that “the Court may order the joinder of preliminary objections to the merits, whenever the interests of the good administration of justice require it”. But the safeguarding of the rights of respondent States is equally an essential part of “the good administration of justice”, and it is in the interests of the respondents that the Rules of Court should contain Article 62 permitting the filing of preliminary objections’. 303 Sarvarian (2019), p. 74 ‘In April 2016, the International Court of Justice held a colloquium to commemorate the 70th anniversary of its establishment. One of the principal themes of this event was the potential adoption of improvements to the procedures and working practices of the Court. Responses to a Counsel Survey revealed a general interest in procedural reform at the Court, particularly with respect to the areas of evidence and procedural efficiency.’ 304 Sarvarian (2019), p. 76.

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one author, with these amendments, ‘the Court may be seen to be taking back some control over its procedure and timetable’.305 The joining of preliminary objections to the merits is not a symptom of procedural efficiency. On the contrary, the parties are compelled to argue the full case before a Court that may conclude that it does not have jurisdiction over the present case. As a consequence, one may wonder whether the Court respected the requirement of absolute necessity expressed in the 1964 case Barcelona Traction. Those judges who wrote separate opinions seemed to agree that the issue related to the nature of Bank Markazi had already been fully argued before the Court.306 On this point, the opinion of Judges Brower, Tomka and Crawford seemed clear cut. First, Judge Brower stated, ‘I concur entirely with the joint separate opinion of Judges Tomka and Crawford. The Court indeed “ha[d] the necessary information about Bank Markazi to decide the question at this stage”’.307 Second, he declared that he cannot see how the Court ‘could have found otherwise than that Bank Markazi is not a “company” for purposes of the Treaty’.308

2.4.5.4

Concluding Remarks on the Approach of the ICJ to the Treatment of Preliminary Objections

In conclusion, I suggest that the Court in its role of guidance of international adjudicatory bodies should be more cautious in joining preliminary objections to the merits since the true purpose of the technique of procedural objection it is not simply to foster procedural efficiency but also to protect the interest of the respondent State to not be forced to stay in a process before a tribunal that may or may not have jurisdiction. In this sense it must be recalled, as I did at the beginning of this section, that international jurisdiction, at least when a state is involved, is always exceptional since its cornerstone is state consent.

305

Mcintyre (2019) https://www.ejiltalk.org/the-international-court-of-justice-releases-new-rulesof-court/, accessed on Friday 9 April 2021. 306 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7, separate opinion of judge Brower paras 24, 32 Judge Brower, e.g., stated, ‘I concur entirely with the joint separate opinion of Judges Tomka and Crawford. The Court indeed “ha[d] the necessary information about Bank Markazi to decide the question at this stage”’. He also declared that he could not see that the Court ‘could have found otherwise than that Bank Markazi is not a “company” for purposes of the Treaty’. 307 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7, separate opinion of judge Brower para. 24. 308 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7, separate opinion of judge Brower para. 32.

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2.4.5.5

The Issue of Bifurcation in International Investment Arbitration: The Need for a Guidance

No part of this debate has made its way to arbitral jurisprudence that unfortunately focuses only on procedural efficiency in ICSID309 and non-ICSID310 international investment arbitration. In a recent case, the arbitral tribunal correctly identified the source of its empowerment in article 41(2) and correctly observed that there is no formal burden to discharge in this phase311 since the tribunal is the master of this part of the procedure. The PCA has formulated a test that may be used in investment arbitration to verify whether the request of the respondent for bifurcation shall be upheld or rejected. The arbitral court stated the following: 38. The Tribunal begins its analysis by setting out the applicable standard in relation to the issue of application as raised in this case. Articles 17.1 and 23.3 of the UNCITRAL Rules

309

Red Eagle Exploration Limited v. Republic of Colombia (ICSID Case No. ARB/18/12), Decision on Bifurcation, 3 August 2020 para. 65. Second, the objection is not merits related and, if successful, would actually dispose of the entire case, but in view of the lack of evidence in support of the contentions of the Respondent, the Tribunal considers that bifurcation would not be justified. 66. In sum, on the basis of the materials available to it the Tribunal does not find merit in the objections raised by the Respondent. Westmoreland Mining Holdings Llc v. Government of Canada, (ICSID Case No. UNCT/20/3), Procedural Order No. 3, Decision on Bifurcation, 20 October 2020 para. 45. ‘The decision in this Procedural Order 3 only relates to bifurcation. The Tribunal’s considerations and decisions regarding bifurcation do not prejudice any future decision the Tribunal will make with respect to the substance of the Respondent’s preliminary objections or the Disputing Parties’ submissions on the merits. 46. Article 21(4) of the 1976 UNCITRAL Rules provides as follows: “In general, the arbitral tribunal should rule on a plea concerning its jurisdiction as a preliminary question. However, the arbitral tribunal may proceed with the arbitration and rule on such a plea in their final award.” It follows that when a party raises an objection to jurisdiction, the presumption is that such objection will be determined as a preliminary issue. Having said that, this is a matter for the Tribunal’s discretion and we are not bound by that presumption; it is after all only a presumption. There will be circumstances where this presumption will not be followed, in particular where the matters raised by the objection are inextricably interlinked with the merits.’ 310 OOO Manolium-Processing v. The Republic of Belarus, Decision on Bifurcation, August 1, 2018 para. 8. For the above reasons, and considering the principles of procedural economy and cost efficiency, the Tribunal decides not to bifurcate the proceedings. 311 Orazul International España Holdings S.L. v. Argentine Republic (ICSID Case No. Arb/19/25) Decision on The Respondent’s Request for Bifurcation, 7 January 2021 para. 30 ‘Accordingly, the Tribunal looks to the established case law on bifurcation in ICSID proceedings. At the outset, the Tribunal agrees with the tribunal in Churchill Mining v. Indonesia, which held that the “[b] ifurcation of preliminary issues is within the discretionary power of an ICSID tribunal.” It further agrees with the Parties that in resolving the question of whether to grant the Respondent’s request, the overarching factor to consider is one of procedural efficiency; in other words, whether bifurcating is more likely to increase or decrease the time and costs associated with the arbitration or could significantly contribute to clarifying and simplifying the dispute before the Tribunal. Further, while there is no formal burden of proof, the Tribunal must nevertheless be persuaded that, on balance, bifurcation will facilitate that objective’.

2.4 Exceptions to the Application of the Rule of onus probandi. . .

71

give discretion to the Tribunal to decide jurisdictional objections. Neither of those provisions imposes a presumption in favour of or against bifurcation. Thus, in accordance with Article 17.1, the overarching principle that shall guide the Tribunal’s decision is procedural fairness and efficiency, having regard to the totality of circumstances. 39. [. . .]. Although framed somewhat differently, both Tribunals seemed to consider the same factors or criteria, i.e.: Whether the request is substantial or is the objection prima facie serious and substantial? Whether the request, if granted, would lead to a material reduction in the proceedings at the next stage or could the objection, if successful, dispose of all or an essential part of the claims raised?; Whether bifurcation is impractical in the sense that the issues are too intertwined with the merit that it is very unlikely that there will be any savings in time or cost or can the objection be examined without prejudging or entering the merits?312

A similar position was upheld by the PCA in 2019.313 Overall, the approach of the ICSID and not the ICSID arbitral tribunal must be criticised for the lack of any theoretical foundation. Georges Abi-Saab already showed some concern when in the Barcelona Traction case the ICJ began to apply a less rigorous approach to the matter of bifurcation. If the interest of the respondent State is no longer taken into account when an international tribunal is called upon stating on the issue of bifurcation, this would inevitably alter the whole technique of

312 Glencore Finance (Bermuda) Limited v. The Plurinational State of Bolivia, PCA Case No. 201639, Procedural Order No. 2: Decision on Bifurcation, 31 January 2018, para. 38 -39. 313 The Estate of Julio Miguel Orlandini-Agreda 2. Compañía Minera Orlandini LTDA.v. The Plurinational State of Bolivia, PCA Case No. 2018-39 1., Decision on The Respondent’s Application for Termination, Trifurcation and Security for Costs July 9, 2019 para. 127. The Tribunal further notes that the Parties do not disagree materially with respect to the applicable criteria for bifurcating jurisdiction from liability/merits. For example, the Respondent relies on the decision of the tribunal in Philip Morris v. Australia to identify three criteria for bifurcation:(i) whether the jurisdictional objections are prima facie serious and substantial; (ii) whether the jurisdictional objections are intertwined with the merits; and (iii) whether the jurisdictional objections, if granted, are capable of disposing of the whole case or an essential part of the case.273The Respondent also refers to the decision of the tribunal in Philip Morris v. Australia to point out that a tribunal’s decision on bifurcation must take into consideration the matter of efficiency, i.e., the savings of costs and time that may result from bifurcation. [. . .] Para. 136. The Tribunal further believes that its decision not to bifurcate jurisdiction from liability is not at variance with the goal of conducting efficient proceedings. When jurisdictional objections are raised, there is always the possibility that the tribunal declines jurisdiction. In a unitary proceeding, such a result would lead to inefficiency in that the parties will have also spent time and resources arguing the merits. This possibility has to be weighed against the inefficiency of the tribunal finding jurisdiction after a separate jurisdictional stage and only then proceeding to the merits. When seeking to determine which of the two alternatives is more likely to result in a more efficient proceeding, tribunals take into consideration, among other matters, the time, cost and fees associated with the presentation of the parties’ case on damages, the engagement of damages experts, etc., which typically constitutes part of the merits stage.

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preliminary objections.314 As a consequence, de iure condendo, an approach more inspired by the older jurisprudence of the ICJ would be preferable.

2.5

The Exceptions to the Rule onus probandi incumbit eius quid dicit: Some Practical and Theoretical Conclusions

At this point, it is possible to identify two conclusions, the first one from a practical perspective and a second one, perhaps more important, from a theoretical standpoint. First, from a practical standpoint, even if in the ICSID Convention or in the ICSID rules for arbitration proceedings there is no mention of the expression onus probandi incumbit eius quid dicit, this rule it is a well-established principle of general international law applicable to ICSID and non-ICSID investment arbitration since it is the expression of an international law of adjudication already developed by the ICJ. A second conclusion stems from the fact that according to what the introduction stated, investment arbitration is a hybrid dispute settlement system. Consequently, the regulation applicable to its procedure is also hybrid. This affirmation becomes clearer through the examination of the many exceptions I have identified. In international commercial arbitration, the duties of the tribunal to investigate issues on its own motion are substantially reduced since it is the realm of the adversarial system in which all the aspects of the procedure are at the parties’ disposal. This it is not the case with investment arbitration. In commercial arbitration, ‘in the event of a failure of one of the parties to participate in the proceedings, and the failure to produce the necessary factual information that may counter the claim presented by the claimant, the tribunal will proceed with the dispute’.315 However, as paragraph of the present book indicates, and as confirmed by Eric De Brabandere, the situation is very different in investment arbitration, where the tribunal is compelled to conduct several enquiries concerning its own motion. A similar conclusion may be also reached analysing the greater importance that the principle iura novit curia enjoys in the field of international investment law. Finally, a similar conclusion can be reached through the analysis of the duty of the international investment arbitral tribunal to conduct its independent enquiry on the existence of its own jurisdiction and on the matter of bifurcation. Within this book, as far as possible, case law has been exposed, highlighting the existence of different opinions but using the ICJ as guidance in an attempt to select which could be the best possible course of action has been done.

314 Abi-Saab (1967), p. 198 ‘Il est difficile d’éviter la conclusion que cet arrêt témoigne d’un changement d’orientation en la matière, plus favorable à l’extensions du champ d’application de la jonction. Cela ne peut aller sans affaiblir la base même et l’utilité réelle de la technique des exceptions préliminaires’. 315 De Brabandere (2014), p. 115.

References

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References Authors Abi-Saab G (1967) Les Exceptions Préliminaires dans la Procédure de la Cour Internationale. Pedone, Paris Amerasinghe CF (2005) Evidence in international litigation. Martinus Nijhoff Publishers, Leiden Amerasinghe CF (2009) Jurisdiction of specific international tribunals. Martinus Nijhoff Publishers, Leiden Block G (2020) Arbitration and protection of investments in energy and infrastructure sectors. Éditions Bruylant, Bruxelles Broches A (1995) Selected Essays, World Bank, ICSID and other subjects of public and private international law. Martinus Nijhoff Publishers, Dordrecht Cheng B (1953) General principles of law as applied by International Courts and Tribunals. Stevens and Sons Limited, London Cook G (2015) A digest of WTO Jurisprudence on public international concepts and principles. Cambridge University Press, Cambridge, e-book Daly BW, Goriatcheva E, Meighen HA (2014) A guide to the PCA arbitration rules. Oxford University Press, New York De Brabandere E (2014) Investment treaty arbitration as public international law, procedural aspects and implications. Cambridge University Press, Cambridge De Visscher C (1966) Aspects récents du droit procédural de la Cour International de Justice, A. Pedone, Paris Devaney JG (2016) Fact-Finding before the international Court of Justice. Cambridge University Press, Cambridge Ðorðeska M (2020) General principles of law recognized by civilized nations (1922-2018). BrillNijhoff, Leiden Dubisson M (1964) La Cour International de Justice, préface de P. Reuter, L.G.D.J., Paris Elkind JB (1984) Non-Appearance before the International Court of Justice: functional and comparative analysis. Martinus Nijhoff Publishers, Dordrecht Fontanelli F (2018) Jurisdiction and admissibility in investment arbitration. Brill, Leiden, Boston Fouret J, Gerbay R, Alvarez GM (2019) The ICSID convention, regulations and rules, a practical commentary. Edward Elgar Publishing, Cheltenham Franck SD (2019) Arbitration costs, myths and realities in investment treaty arbitration. Oxford University Press, New York Gaillard E (2004) La Jurisprudence du CIRDI, Editions A. Pedone, Paris Garner BA (ed) (2009) Black’s law dictionary, 10th edn. Thomson Reuters, St. Paul Grando MT (2009) Evidence, proof and fact-finding in WTO dispute settlement. Oxford University Press, New York Hernandez GI (2014) The International Court of Justice and its Judicial function. Oxford University Press, New York Jarret M (2019) Contributory fault and investor misconduct in investment arbitration. Cambridge University Press, Cambridge Kazazi M (1996) Burden of proof and related issues. Kluwer International, De Hague Klopschinski S et al (2021) The protection of intellectual property rights under international investment law. Oxford University Press, New York Kolb R (2014) The Elgar companion to the International Court of Justice. Edward Elgar Publishing Limited, Cheltenham Lauterpacht H (1958) The development of international law by the international court. Steve & Sons, London Malek HM et al (2010) Phipson on evidence, 17th edn. Thomas Reuters (Legal) Limited, London Mavroidis PC et al (2006) The World Trade Organization. Oxford University Press, New York

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Niyungeko G (2005) La preuve devant les Juridictions Internationales. Éditions Bruylant, Bruxelles Parra A (2020) ICSID: an introduction to the convention and centre. Oxford University Press, New York Petrochilos G (2004) Procedural law in international arbitration. Oxford University Press, New York Reed L et al (2011) Guide to ICSID arbitration, Wolters Kluwer, Alphen aan den Rijn Rosenne S (2006) The law and practice of the international court, 1920–2005, vol III. Martinus Nijhoff Publisher, Leiden Sandifer DV (1975) Evidence before international tribunals. University Press of Virginia, Charlottesville Schill SW (2010) international investment law and comparative public law. Oxford University Press, New York Schreuer CH et al (2009) The ICSID convention, a commentary. Cambridge University Press, Cambridge Shihata IFI (1965) The power of the international court to determine its own jurisdiction. N Hijhoff Sourgens FG et al (2018) Evidence in international in international investment arbitration. Oxford University Press, Oxford Thirlway H (1985) Non-appearance before the international court of justice. Cambridge University Press, Cambridge Thirlway H (2013) The law and the procedure of the international court of justice, fifty years of jurisprudence, Vol. I. Oxford University Press, New York Zimmermann A, Tams CJ (2019) The Statute of the International Court of Justice, 3rd edn. Oxford University Press, New York

Articles Bigge DM (2011) Iura novit curia in Investment Treaty Arbitration: May? Must? Kluwer Arbitration Blog, 29 December, http://kluwerarbitrationblog.com/2011/12/29/iura-novit-curia-ininvestment-treaty-arbitration-may-must Fitzmaurice G (1980) The problem of the “non-appearing” defendant government. Br Yearb Int Law 51:89–122 Gaffney JP (2010) Abuse of process in investment treaty arbitration. J World Investment Trade 11(4):515–538 Giovannini T (2010) International arbitration and Jura Novit Curia. In: Fernández-Ballestreros MÁ, Arias D (eds) Liber Amicorum, Bernardo Cremades, Madrid, La Ley, pp 495–509 Laird IA, Gashaw M (2020) Besserglik v Mozambique: a lesson in returning to the basics. ICSID Rev:1–8 Landau T (2009) The day before Tomorrow: Future Developments in International Arbitration, Sydney, 21 October, http://www.claytonutz.com/ialecture/2009/transcript_2009.html Lang J (1968) La jonction au fond des exceptions préliminaires devant la C.P.J.I et la C.I.J. Journal du Droit International Legum B (2018) An overview of procedure in an investment treaty arbitration. In: Yannaca-Small K (ed) Arbitration under international investment agreements. Oxford University Press, New York Mcintyre J (2019) The International Court of Justice Releases New Rules of Court, November 4. https://www.ejiltalk.org/the-international-court-of-justice-releases-new-rules-of-court/, accessed on Friday 9 April 2021 Meier A, Mcgough Y (2014) Do lawyers always have to have the last word? Iura Novit Curia and the right to be heard in international arbitration: an analysis in view of recent Swiss case law. ASA Bull 3/2014

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Moss GC (2008) Tribunal’s powers versus party autonomy. In: Schreuer C (ed) The Oxford handbook of international investment law. Oxford University Press, New York, pp 1206–1245 Neff SC (2009) In search of clarity: Non Liquet and international law. In: Kaikobad KH, Bohlander M (eds) International law and power: perspectives on legal order and Justice Essay in Honour of Colin Warbrick. Martinus Nijhoff Publisher, Leiden, pp 63–85 Nitschke F (2019) The ICSID conciliation rules in practice. In: Titi C, Gomez KF (eds) Mediation in international commercial and investment disputes. Oxford University Press, New York Paulsson J (1996) Overview of methods of presenting evidence in different legal systems. in gen. In: Jan Van Den Berg A (ed) International Council for Commercial Arbitration, Congress series n. 7, Planning Efficient Arbitration Proceedings, The Law Applicable, in International Arbitration. Kluwer Law International, pp 112–130 Pellet A., (2013), The case law of the ICJ in investment arbitration. ICSID Rev. Oxford University Press 2:223–240 Reinisch A (2018) Jurisdiction and admissibility in international investment law. In: Gattini A, Tanzi A, Fontanelli F (eds) General principles of law and international investment arbitration. Brill Nijhoff Leiden, Boston Reisman M, Freedman E (1982) The Plaintiff Dilemma: illegally obtained evidence and admissibility in international adjudication. Am J Int Law 76(4):737–753 Rosell J (2011) Arbitration costs as relief and/or damages. J Int Arbitr 28(2):115–126, Kluwer, pp 115–121 Santulli C (2002) Observations sur les exceptions de recevabilité dans l’affaire du Mandat d’arrêt du 11 avril 2000 (République démocratique du Congo c. Belgique). Annuaire français de droit International 48(1):257–280 Sarvarian A (2019) Procedural economy at the International Court of Justice. Law Pract Int Courts Tribunals 18 Schill S (2010) Crafting the international economic order: the public function of investment treaty arbitration and its significance for the role of the arbitrator. Leiden J Int Law 23:401–430 Sourgens FG (2012) By equal contest of arms: jurisdictional proof in investor-state arbitrations. North Carolina J Int Law 38 Tanzi A (2020) On judicial autonomy and the autonomy of the parties in international adjudication, with special regard to investment arbitration and ICSID annulment proceedings. Leiden J Int Law 33:57–75 Thirlway HWA (1981) Evidence before International Court and Tribunals. In: Bernhardt R (ed) Encyclopedia of public international law. North Holland Publishing Company, Amsterdam, vol. 1 Settlement of Disputes, pp 58–60 Thouvenin JM (1997) La descente de la Cour sur les lieux dans l'affaire relative au projet Gabčikovo – Nagymaros. Annuaire Française de droit International 43:333–340 Vasani BS, Vasani SZ (2018) Bifurcation of investment disputes. In: Yannaca-Small K (ed) Arbitration under international investment agreements, 2nd edn. Oxford University Press, New York Vasani BS et al (2018) Burden and standard of proof at the jurisdictional stage. In: Yannaca-Small K (ed) Arbitration under international investment agreements, 2nd edn. Oxford University Press, New York Verburg C (2019) Modernising the energy charter treaty: an opportunity to enhance legal certainty in investor-state dispute settlement. J World Invest Trade 20:425–454 at. 440–441 Wehland H (2017) Jurisdiction and admissibility in proceedings under the ICSID convention and the ICSID additional facility rules. In: Baltag C (ed) ICSID Convention after 50 years – unsettled issues. Wolters Kluwer, AH Alphen aan den Rijn, pp 227–247

Chapter 3

Presumptions

This third chapter is strictly linked with the second one: in a certain way, presumptions also represent an exception to the pure application of the rule onus probandi incumbit eius quid dicit. However, given presumptions’ importance and their different characterisation, their analysis is conducted in a separate chapter. Anticipating the conclusion, it is fair to say that through the analysis of the presumption, it is possible to show the influence of certain specific rules of general international law on investment arbitration. None of the presumptions hereby identified would be applicable in the realm of commercial arbitration because these presumptions are nothing else but the procedural corollary of certain important substantial rules of general international law. I examine three presumptions, namely that in favour of the validity of official acts and statements, that according to which state responsibility is not to be presumed and the presumption of nationality (of natural persons). The conclusion of the present chapter demonstrates how the study of presumptions can contribute to understanding the hybrid nature of international investment arbitration.

3.1

General Notions Concerning Presumptions

In addition, there are other exceptions to the rule of onus probandi incumbit actori, some of which can be identified in the presumptions of general international law applied in the field of international investment law. Before examining this topic, it is necessary to define the concept of presumption in international law. One

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_3

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classification proposed by French doctrine1 suggests dividing the field of presumptions into two groups: one comprising presumptions that represent a logical reasoning through which an unknown fact is inferred starting from a known fact and the other comprising those presumptions that simply allow one to accept a fact as true until proven otherwise. The latter are called presuppositions.2 This classification does not correspond to the division between simple and legal presumptions nor to that between relative presumptions ( juris tantum) and absolute presumptions (iuris et de iure) because presuppositions are always legal since they are expressed through judicial rules, and they are also relative since they by definition admit evidence to the contrary. Although this classification as well as other classifications in the field of presumptions3 could raise some concerns due to being too abstract, it has the merit of grouping into a single category the most common presumptions in international investment law, which is the subject of the next section. The integration of the second typology into the field of presumptions is somewhat controversial since there is an idea that a presumption in order to be such should entail a shift of the object of proof.4 However, this perspective is advocated by a minority of scholars.5 Presumptions that assume a fact is true until proven otherwise are considered presumptions in all respects by most authors6 and accepted in international jurisprudence.7 Nevertheless, some scholars have denied the existence of presumptions in international law; in particular, Witenberg observes that international law, unlike national law, is not based on the decision of legislators who can establish legal presumptions of authority.8 This criticism has been examined by most of the authors who have dealt with this issue. Some have attempted to resolve the question by beginning from the meaning of the term ‘presumption’ in international law. In particular, owing to the clear absence of a unitary legislative authority, it has been observed that legal presumptions—in the strict national sense—do not exist in the international field. It is not inconceivable that there may be situations in which international tribunals would deem it appropriate to apply presumptions drawn from national laws, but in these cases, those presumptions would undergo a process of change and rationalisation as a result of their assimilation into international law. This doctrine then suggests that presumptions should be considered to be in force in international 1

Niyungeko (2005), pp. 106–107. De Visscher (1969), pp. 35–36. 3 Grossen (1954), p. 33. 4 Deveze (1980), pp. 481–486, in Niyungeko (2005), p. 106. 5 Niyungeko (2005), pp. 106–107. 6 Amerasinghe (2005), p. 212. 7 Islamic Republic of Iran v. United States of America (1986), 11 Iran-U.S. CTR, p. 276: “The practice of international and domestic courts shows that direct evidence [ . . . ] is not the only type of evidence that may be legitimately considered in reaching a decision. Circumstantial evidence, indicia and presumptions may be considered, so long as they lead to conclusion consistent with the facts”. 8 Witenberg (1936), 1936-II, p. 46. 2

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law, keeping in mind that the adjective ‘legal’ cannot but be adapted to its meaning in international law based on the case law of international tribunals.9 Other scholars base their confutation of Witenberg’s critique on direct examples of the widespread use of presumptions by international tribunals.10 This method can be considered correct since a rule is deemed in force if the existence of practice and opinio juris is verified. However, this interpretation is not able to satisfactorily explain why some presumptions are more widespread than others. A more useful approach would be to begin from the premise that international law is an autonomous legal system with its own values to preserve and therefore its own needs to meet.

3.2

Specific Presumptions

In some situations, the inversion of the burden of proof can be viewed as necessary for protecting the fundamental values of international law and sometimes even peremptory norms.11 These requirements create the social necessity of a stricter scrutiny of the plaintiff’s reasons, thereby justifying the decision to place the burden of proof for some events on the plaintiff. An example of this approach can be found in the presumption omnia rite esse acta praesumuntur and the principle according to which the limitations on a state’s sovereignty cannot be presumed: both measures are intended to protect the full sovereignty of states (see infra Sects. 3.2.1 and 3.2.2). Other rules used to share the burden of proof—such as that according to which the liability of the state cannot be presumed—are probably the result of the same line of thought. The presumption in favour of the proof of nationality can instead be considered an indication of the disfavour towards cases of statelessness. In other words, it is reasonable to believe that the aforementioned presumptions are the procedural counterpart of some rules of public international law. This could explain why these presumptions have also been used in international investment law, as demonstrated in the following sections in which each presumption is examined more closely.

9

Kazazi (1996), p. 244. Judge Alfaro, Separate opinion, in Temple of Preah Vihear Case, cit. in Amerasinghe C. F., op cit., p. 213: “The principle of estoppel ‘constitutes a presumption juris et de jure in virtue of which a State is held to have abandoned its right if ever had it, or else that such a State never felt that it had a clear legal title on which it could base its opposition to the right asserted or claimed by another State’”. See also, Cheng (1953), p. 304; Sandifer (1975), p. 98; Kazazi (1996), p. 245. 11 Amerasinghe (2005), p. 218. 10

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3.2.1

3 Presumptions

Presumption That States Respect the Law in General and International Law in Particular (omnia rite esse acta praesumuntur)

The existence of this presumption has been questioned by the doctrine12 because when it was called for, it apparently did not entail a change in the allocation of the burden of proof. According to the judge who authored this objection, presuming the lawfulness of state acts simply means that the party claiming the unlawfulness of the act has not satisfied the burden of proof (‘ne l’avait pas démontrée à suffisance’).13 According to this approach, the presumption under consideration does not imply any significant benefit for the state since in a case involving its responsibility, it could not simply call for the presumption of lawfulness of state acts in its defence. Sourgens, Duggal and Laird have in my view correctly observed that ‘this presumption inures both in favour of the host State in defending against allegation of wrongdoing,14 and in favour of the investor15 relying upon official acts as a predicate for their claims’.16 However, this argument is not very persuasive because under any circumstances it is not advisable for the defendant to limit itself to denying the opponent’s allegations without adducing any evidence in its favour. The latter observation is even more convincing if one considers that the presumption omnia rite esse acta praesumuntur remains relative and can therefore be overturned by contrary evidence—an event which could easily happen, especially if the international jurisdiction is satisfied with a relatively low standard of proof (on this topic, see infra Chap. 7). The observations made here do not remotely undermine the presumption of the compliance of state acts with international law. Not only is the presumption widely

12

Grossen (1954), p. 63. Grossen (1954), p. 63. 14 Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. The Government of Mongolia, UNCITRAL, Decision on Interim Measures, 2 September 2008, para. 81 “There is a presumption of validity in favour of legislative measures adopted by a State and the burden of the proof is upon those who challenge such measures to demonstrate their invalidity”. 15 International Thunderbird Gaining Corp. v. Mexico, UNCITRAL, Separate opinion of Thomas Wälde of 26 January 2006 para. 60. “In light of the differing opinions on the legal value and meaning of the “Oficio”, one needs to bear in mind the burden of proof situation: Thunderbird has to prove that the Oficio conveyed to it, from the perspective of a reasonable foreign businessman in the gambling industry and in the specific context of the interaction between Thunderbird and SEGOB, the message that it could operate the software-driven video poker machines it imported. Mexico, on the other hand, has to prove that the Oficio was tainted by insufficient, but mandatory disclosure by Thunderbird. This is a high threshold because, first, Mexico has to counter the presumption of the validity of official acts of government which respect for government requires; secondly, it has total control over all the documentation and witnesses—its own past and present SEGOB officials who alone can testify about what they knew and did not know. We therefore have to measure the evidence to see if Thunderbird has met this burden of proof, and, if so, Mexico has met its burden of proof”. 16 Sourgens et al. (2018), p. 130. 13

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recognised in the jurisprudence of international tribunals17 as testified by several authors,18 but it is also carefully applied by international investment tribunals. This presumption was first developed in the field of general international law as testified to by the dissenting opinion of Judge Ečer in the previously mentioned Corfu Channel case,19 but it has also been enforced in the field of international investment law. On this subject, the award in Methanex Corporation v. United States20 decided in 2005 in accordance with the UNCITRAL rules is of interest. In this case, the US strongly contested the jurisdiction of the tribunal, which gathered a significant amount of evidentiary material to decide the preliminary question of whether the tribunal itself had jurisdiction over the case. However, the tribunal did not fail to clarify (§45) that the evidentiary material had been assumed only (italics in the original) for the purpose of deciding the issue of jurisdiction and that the burden of proof remained with the plaintiff, Methanex, which still had to overturn the presumption of innocence and the doctrine omnia rite esse acta praesumuntur. Finally, the tribunal was careful to recall that nothing in this procedural operation could ‘be taken as casting the slightest shadow over the targets of Methanex’s allegations’.21 The extreme circumspection and prudence arising from the vocabulary used by the tribunal shows that the presumption was anything but irrelevant. This is because of the rationale underlying the presumption which, as illustrated in the prologue of Frierdich and Company decided by the French-Venezuelan Mixed

17

Frierdich and Company Case, in Reports of International Arbitral Awards Mixed Claims Commission (France-Venezuela), 1903–1905, vol. X, pp. 9–355, p. 53: “There is a very proper presumption to this effect; and it is proper public policy and a proper protection of the public and its interests that such a presumption should attend the execution of official duties”. 18 Amerasinghe (2005), p. 24: “Presumptions in favor of the validity of acts of various government authorities are not infrequently been invoked” Sandifer (1975), p. 99. See also, Ralston (1936), p. 83; Niyungeko (2005), p. 116; Cheng (1953), p. 305: “International tribunals have referred to general principles of the law of evidence and not to customary law, when they have applied principles of law recognized in national legal system. In the Valentiner Case, for example, it was said that the principle omnia rite acta praesumuntur was ‘a universally accepted rule of law’”. 19 Opinion Dissidente du Dr B. Ečer, p. 119, Affaire du Detroit de Corfou, Arrêt du 9 avril 1949 : “Je pense donc qu'il y a en droit international en faveur de chaque État une présomption qui correspond à peu près à la présomption d'innocence en faveur de chaque individu dans le droit national : la presumptio juris qu'un État se comporte en accord avec le droit international”. 20 Methanex Corporation v. United States, 3 August 2005, in the matter of an international arbitration under chapter 11 of the North American Free Trade Agreement and the UNCITRAL arbitration rules. Available online at http://www.state.gov/documents/organization/51052.pdf. 21 Methanex Corporation v. United States, para 45 (italics in the original): “Accordingly, these materials can be only assumed facts for the purpose only of the Tribunal’s decision in this Award on the USA’s challenges on jurisdiction and admissibility – and nothing more. Given that the legal burden of proving its disputed factual allegations remains to be discharged by Methanex, together with the legal presumptions of innocence and the legal doctrine of omnia praesumuntur rite esse acta, nothing in our recital of factual materials below should be taken as casting the slightest shadow over the targets of Methanex’s allegations”.

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Claim Commission in 1902, is intended to ensure the proper administration of public interests.22 The enduring existence of this presumption is further testified to by the jurisprudence of the PCA which applied this presumption to national judicial acts in the recent case Chevron v. Ecuador of 2018. In this case, the arbitrators held the following: 8.41 A claimant’s legal burden of proof is therefore not lightly discharged, given that a national legal system will benefit from the general evidential principle known by the Latin maxim as omnia praesumuntur rite et solemniter esse acta donec probetur in contrarium. It presumes (subject to rebuttal) that the court or courts have acted properly. This general principle was described by Professor O’Connell as follows, as cited to the NAFTA tribunal in Loewen (with footnotes there and here omitted): ‘When one comes to examine failure of the courts themselves, “palpable deviations” from the accepted standards of judicial practice are not so readily ascertained. For one thing, there is a presumption in favour of the judicial process. For another, defects in procedure may be of significance only internally, and not work an international injustice. For a third, wide discretion must be allowed a court in the reception and rejection of evidence, in adjournment, and in admission of documents, and it cannot be said that deviations even from the municipal law rules of evidence are deviations from an international standard. The first thing that must be ascertained is whether as a result of court manoeuvrings substantial injustice has been done to the claimant; the second is whether these manoeuvrings really amount to obstruction of the judicial process and are extrinsic to the merits of his claim. Bad faith and not judicial error seems to be the heart of the matter, and bad faith may be indicated by an unreasonable departure from the rules of evidence and procedure.’23

3.2.2

The Responsibility of the State Is Not to be Presumed

Also relevant in the field of international investment law is that ‘the responsibility of the state is not to be presumed’. This presumption is quite old and was wellexpressed in the case of Haj Mohamend Harrej (Tanger Horses) in 1924,24 which concerned a theft of horses in Spanish Morocco during a period of civil unrest. The question submitted to the arbitrator by the British plaintiff was whether Spain was to be held responsible for the damage since the state had sovereignty over those territories at that time. Because there was no certainty about when exactly the theft had occurred, the arbitrator, Max Huber, deemed it appropriate to presume that the horse theft had happened after the month of June when the uprising had begun. The arbitrator justified his decision by observing that the documents and oral reports 22

Frierdich and Company Case, in Reports of International Arbitral Awards, Mixed Claims Commission [France-Venezuela] 1903–1905, op. cit., p. 45. “Such a presumption of regularity and propriety is a proper protection of public and its interests”. 23 1. Chevron Corporation (“Chevron”) 2. Texaco Petroleum Company (“TexPet”) v. The Republic of Ecuador, PCA Case No. 2009-23 Second Partial Award on Track II dated 30 August 2018, para. 8.41. 24 Haji Mohamend Harrej (Tanger Horses), 1924, 2 UNRIAA, p. 615, at. p. 699.

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submitted by the parties’ representatives did not indicate the exact moment at which the theft had taken place. Because of this doubt, it was not acceptable to presume that it had been during a time of peace in the region. This presumption was decisive in favour of Spain. The arbitrator chose to align himself with the ‘principle according to which the international responsibility of the State is not to be presumed’25 while noting that this principle depended on its relationship with the concept of responsibility itself. The same presumption was recalled, albeit with some amendments, in the 1991 case Asian Agricultural Products Ltd. v. Republic of Sri Lanka,26 in which the ICSID tribunal stated that in the evaluation of the international responsibility of Sri Lanka, it was necessary to consider that presumption because it represented a consolidated rule of international law.27 The presumption of the non-responsibility of the state was relevant to the case because the tribunal had been asked to decide whether the destruction of a shrimp farm, which occurred during a government bombing aimed at regaining control over an area occupied by rebel forces, constituted a violation of the duty of the state to protect the foreign investor. The company AAPL asked for compensation for the damage suffered. The tribunal considered the claim to be legitimate and ordered Sri Lanka to pay damages. The aspect relevant to my purposes concerns the evidentiary material: during the adversarial procedure, both parties produced evidence since the claimant intended to prove that the action of the government army had been excessive and the defendant intended to prove that the destruction of the shrimp farm was due to the military actions of the rebels. In paragraph 85(d) of the award, the tribunal stated that the evidence gathered was insufficient but based on the principle of the free appreciation of evidence deemed that the state was responsible anyway.28 This decision appears to be seriously contradictory since the tribunal itself in paragraph 56 of the award recognised the presumption of the non-responsibility of the state. The most thorough scholars have noted the discrepancies between this award and general international law provisions: in particular, they have expressed scepticism about the tribunal’s decision to reject the plaintiff’s requests based on due 25 Recueil des sentences arbitrales publié par les Nations Unies, II, p. 699 in Grossen (1954), p. 66, Cheng (1953), pp. 305–306. 26 Asian Agricultural Products Ltd V. Republic of Sri Lanka, ICSID Case no Arb/87/3, Award, 27 June 1990, para. 56. 27 AAPL Ltd v Sri Lanka, op. cit., §56: “Nevertheless, in order to handle the legal issues related to evidence, the above stated canons have to be implemented by taking into consideration the following established international law rules: [. . .] Rule (J) ‘The international responsibility of the State is not to be presumed. The party alleging a violation of international law giving rise to international responsibility has the burden of proving the assertion’ (The Tanger Horses case [1924]; the Corfu Channel case [1949], and the Belgium Claims case [1930])”. 28 AAPL Ltd v. Sri Lanka, op. cit., para. 85: “Therefore and faced with the impossibility of obtaining conclusive evidence about what effectively caused the destruction of the farm premises during the period in which the entire area was out of bounds under the exclusive control of the governmental security force, the Tribunal considers the State’s responsibility established in conformity with the previously stated international law rules of evidence (especially Rules (L) and (M), supra §56)”.

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diligence agreements while accepting the plaintiff’s claims based on general international law, for which, considering the presumption I am examining, the position of Sri Lanka was juridically stronger.29 However, according to another interpretative hypothesis, the decision on the government’s responsibility was not expressed in the paragraph criticised by scholars but rather in a few sentences above: in that passage, the judges observe that the government did not contest a piece of evidence that was actually conclusive and thus adequate to overcome the presumption. According to this piece of evidence, there was at that time a very good relationship between the farm’s management and the government authorities (para. 85, b); therefore, it would have been reasonable to expect that the people in charge of the operations would attempt to contact the company’s management to minimise the risks associated with the operation that was about to begin. However, the government authorities had not done anything about this.30 Of all the possible interpretations, this is the most plausible because it does not imply a serious error of procedure deriving from the evidently contradictory nature of the reasons for the award. Other interpretations would lead to the paradox of an award that recognises the existence of a presumption while stating rules of international law and then denies that same presumption at the moment of deciding the case. The interpretation considering the evidence instead highlights that the presumption has the only effect of creating prima facie evidence in favour of the government,31 which can therefore be overturned, as in the present case, by non-contested evidence. The relevance of this presumption was also upheld in a more recent case.32

29 ICSID Reports vol. 4, op. cit., p. 250: “The tribunal had misapplied the rules of customary International law relating to state responsibility. In customary International law there was a general presumption of non-responsibility with liability admissible under exceptional cases such as damage resulting from military operations directed by a State which was wanton or unnecessary. These rules were contained in article 4(1) and 4(2) of the Treaty. As article 4(2) incorporated, refined and exhausted the due diligence rule with respect to the categories of civil disturbances enumerated in article 4(1) and liability under article 4(2) had already been rejected, it follows that there could be no further liability under customary International law. Furthermore, given the gravity of the situation the Government had a compelling duty to undertake a military operation to regain control of the area, the mechanism of which were within its exclusive discretion. Accordingly, even if customary law had been applicable there would have been no violation of Sri Lanka’s due diligence obligation (pp. 312-17)”. 30 AAPL Ltd v. Sri Lanka, op. cit., §85: “The Respondent never contested the evidence given by Mr. Santiapillat, neither during the written phase of the proceedings, nor when he gave his testimony at the Oral Hearing, about what he expressed in his letter of February 2, 1987, addressed the Sri Lankan President of the Republic by stating: ‘We maintained very cordial relationship with the senior officers of the security forces in Batticaloa, repeatedly told them that, if they had the slightest reservation about any of our Batticaloa staff they should let us know quietly and we would take action directly to get such persons out of the company’”. 31 Kazazi (1996), p. 273. 32 Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt ICSID ARB/99/6 12 April 2002, para. 94. “. . . Rule (J) - The international responsibility of the State is not to be presumed. The party alleging a violation of international law giving rise to international responsibility has the burden of proving the assertion.

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The presumption here described may be applied to establish the standard of proof necessary in international law to determine the attributability of the state for an unlawful act. In international law, attributability has been defined as ‘an intellectual operation necessary to bridge the gap between the individual or a group of individuals and the attribution of the breach of an obligation and responsibility to the State’.33 This operation appears to be particularly complex when verifying the international law on attributability of the state regarding acts performed by parastatal companies, state-controlled companies, and private entities that directly or indirectly act under the direction of the state. Scholars34 in the field of investments have examined the matter of the standard of proof required to attribute responsibility for the actions of those entities to the states which control them. Even if there is no unanimity, it has been noted that to attribute responsibility for actions performed by state-participated or state-owned companies to the state itself, an appropriate standard would be that established by national commercial law such as US law, which does not allow the piercing of ‘the corporate veil’ and attribution of responsibility to shareholders except in extraordinary cases.35 The interest in the issue of state responsibility for the acts of state-owned enterprises has exploded in recent years, and the scope of the matter goes far beyond the limits of the present work. However, it is important to cite one case that has attracted much attention from scholars: Maffezini v. Spain. In this case, the arbitrators stated that ‘The question [of] whether or not SODIGA [a state-controlled company] is a State entity must be examined first from a formal or structural point of view. Here a finding that the entity is owned by the State, directly or indirectly, gives rise to a rebuttable presumption that it is a State entity. The same result will obtain if an entity is controlled by the State, directly or indirectly’.36 This statement has received attention from eminent scholars who have accepted it without questioning its validity in relation to international investment law.37 As already demonstrated, this presumption fits into the field of the presumption discussed in this chapter, and as a consequence, only one of the two of the abovementioned presumptions can represent the real state of the applicable law in investorstate arbitration. Fortunately, in my opinion, a more recent investment tribunal, the Tulip Real Estate case38 of 2014, restored the legality, stating that this alleged

33

Starke (1950), pp. 204–205, in Grossen (1954), p. 66. See also, Cheng (1953), pp. 180–181. Perera (2005), pp. 499–529. 35 Wm. Passalacqua Builders, Inc. v. Resnick Developers S, Inc. F. 2nd 131, 139 (2nd Circ. 1991); on this topic, see also Perera (2005), p. 526. 36 Emilio Agustín Maffezini v. The Kingdom of Spain, Decision on Jurisdiction, ARB/97/7, ICSID 25 January 2000, para. 77. 37 Voss (2011), Dolzer and Schreuer (2012), p. 223. 38 Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Award, 10 March 2014: ‘289. Finally, the Tribunal does not accept the Claimant’s contention that, as a matter of international law, majority ownership of an entity by the State gives rise to a presumption of statehood in respect of that entity. While the decisions in Maffezini and Salini may have held otherwise, the Tribunal is not bound by those decisions. Rather, 34

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presumption of statehood is not grounded in international investment law. On the contrary, other authors who have undertaken the analysis of evidence in international law have suggested that the question remains open.39 To tackle the issue of evidence related to jurisdiction when a State enterprise is a party to the arbitration, an examination of the more recent jurisprudence of the ICJ may be useful with regard to the recent case Certain Iranian Assets decided in 2019.40 As already demonstrated (see supra §2.4.5), of the many issues at stake in the case at hand, there is one that has quite divided the Court (eleven votes to four),41 namely the issue of deciding whether Bank Markazi, which is the property of the Iranian State, was a company in the sense of the 1955 Treaty of Amity and therefore entitled to treaty protection. Given that Bank Markazi is entirely owned by the Iranian government, the other possible qualification is that the bank is an instrumentality of the Iranian State and as a consequence should be treated as a part of that State and therefore not entitled to treaty protection. This was the second time the issue of qualifying a State bank came before the Court. The only precedent is the Norwegian Loans case that was decided in 1957,42 which according to one author represented a missed occasion for the Court to say something concerning State-owned enterprises.43 It is suggested that this case represents, at least for now, a missed occasion to foster a dialogue between the ICJ and the ICSID tribunals. ICSID arbitral tribunals had matured some experience in deciding whether a State-enterprise qualifies as an autonomous legal entity or, on the contrary, as part of the State. The reason for the importance of this issue in the ICSID system is the growing importance of State-owned enterprises in the field of international investment as both claimant and respondent.

the Tribunal is compelled to decide the issues before it in accordance with the BIT and applicable principles of international law. The conclusion of the Tribunal is that there is no basis under international law to conclude that ownership of a corporate entity by the State triggers the presumption of statehood. The position of the Tribunal is that, whilst state ownership may, in certain circumstances, be a factor relevant to the question of attribution, it does not convert a separate corporate entity into an ‘organ’ of the State”. 39 Sourgens (2018), p. 126, para. 641. 40 On the Case Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7. 41 Judges Tomka, Gaja, Crawford; Judge ad hoc Brower. 42 Case of Certain Norwegian Loans, Judgment, I.C.J. Reports 1957, p. 9, Dissenting Opinion of Judge Read p. 91. 43 Badia (2014), p. 43.

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In the ICSID system, according to article 25 (1) of the ICSID Convention, the jurisdiction of the tribunal is limited to dispute between a nation of another contracting State and the State hosting the investment.44 When the State enterprise acts as claimant, the so-called Broches test applies. According to this test, ‘for purposes of the Convention a mixed economy company or government-owned corporation should not be disqualified as a “national of another Contracting State” unless it is acting as an agent for the government or is discharging an essentially governmental function.’45 Another situation in which it is important for ICSID tribunals to rightly qualify State-owned enterprises is when their action may engage the responsibility of the respondent State. Here it is necessary to make a very important remark in order to avoid being misunderstood. The international rules concerning attribution, codified in the ILC articles, are conceived to establish the State responsibility for wrongful acts at the international level. However, according to certain ICSID tribunals, these rules could also be applied for other purposes, namely, to understand whether an entity (generally a State company) is part of the State (no matter whether on the applicant or respondent side) when not in a situation immediately related to the issue of wrongful acts. The existence of this approach in the ICSID system is due to the fact that although there is an infinite series of books which try to define the State in international law, at this stage there is not a universal definition of the exact perimeter of this entity according to international law. As a consequence, when it comes to hybrid entities such as State companies, international courts and tribunals apply ILC articles as a tabula in naufragio, or ‘a plank in a shipwreck’46 in order to define whether a State company is part of the State. This approach is and remains questionable from a theoretical standpoint and is even contested by certain authors47 since this is not the purpose for which these rules

44

Convention on the Settlement of Investment Disputes between States and Nationals of Other States, signed in Washington on the 18 March 1965, Article 25 ‘(1) The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may with- draw its consent unilaterally’. 45 Broches (1995), p. 202. 46 Crawford (2010), p. 135, “To conclude, there has been a certain tendency for investment tribunals to seize on the Articles as a tabula in naufragio, ‘a plank in a shipwreck’. That tendency is magnified where the members of the tribunal are not public international lawyers, which is increasingly the case in investment treaty arbitration.”. 47 Bastid-Burdeau (2018), p. 280. ‘Whether these rules [ILC articles on State responsibility] can be transposed to the jurisdictional phase, and can be considered for the purposes of determining jurisdiction and, further, whether an entity dependent on the State becomes party to an arbitration agreement, thereby consenting to arbitration by virtue of these rules, is question that has not often

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were drafted, but it is submitted that it is an ingenious approach to bridge the gap still existing in international law. Briefly, the idea is that attributability is a completely separate question from illegality, and the rules related to attributability can also be applied when no illegal act is involved. The idea of the separability of attribution and illegality is not new. In 1984, Condorelli with regard to attribution spoke about a sort of ‘circularity’48 between the illegality of the violation and the attributability of the act to the State. The true innovation of certain ICSID tribunals is to also apply rules of attribution when there is no contention that the State has committed a wrongful act, and on this point there must be no confusion since ‘the ILC itself, however, has warned not to confuse attribution for purposes of State Responsibility with attribution for other purpose’.49 This idea of using the ‘attribution test’ when no illegal act has occurred has been applied in different cases,50 but the most developed and most interesting, since it makes direct reference to the ILC articles, is Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen decided on 31 May 2017.51 In this case, the arbitral tribunal was confronted with the issue of deciding whether the State company Beijing Urban Construction Group Co. Ltd. could be regarded as an entity entirely independent from the Chinese state to which it belongs. This was a jurisdictional question because if the tribunal concluded that the company was not independent, then the dispute would have been between the Chinese State and the Republic of Yemen, which would be a State-to-State dispute and therefore out of the remit of an ICSID tribunal, which can adjudge only investor-State disputes. The tribunal observed that ‘the Broches factors are the mirror image of the attribution rules in Articles 5 and 8 of the ILC’s Articles on State Responsibility. The Broches test lays down markers for the non-attribution of State status’.52 The arbitral tribunal went further with its analysis and examined whether the Beijing Urban Construction Group Co. acted as an agent or discharged an essentially governmental function in the construction of the airport and then concluded that it had jurisdiction over the dispute. All the analysis was conducted by the arbitral tribunal at the jurisdictional stage, thereby clarifying that it is possible for an international tribunal to perform such an inquiry during the preliminary phase of the procedure. been considered by tribunals or courts. Fortunately, as noted, the answer, according to the English Court of Appeal was an emphatic “no”. 48 Condorelli (1984), pp. 96–97. 49 Klabbers (1996), p. 100. 50 E.g. Ceskoslovenska Obschodni Banka, A.S. v. The Slovak Republic, ICSID Case No. ARB/97/4, Decision on Objections to Jurisdiction, May 24, 1999. 51 Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen, ICSID Case No. ARB/14/30, 31 Decision on Jurisdiction, May 2017. 52 Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen, ICSID Case No. ARB/14/30, 31 Decision on Jurisdiction, May 2017, para. 34.

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A similar approach was applied by several ICSID arbitral tribunals when the State enterprise was on the respondent side. In this situation, attribution is again a jurisdictional question. If the acts of the enterprise are not attributable to the respondent State, then it is private-private dispute and the requirements of article 25 (1) of the ICSID convention are not met. The rationale of my opinion emerges in reviewing ICSID case law before some ICSID tribunals,53 especially in Toto Costruzioni v. Lebanon54 of 2009, Teinver S. A., Transportes de Cercanías S.A. v. Argentina of 2012,55 and Interocean Oil Development Company v. Nigeria of 2020.56 In all these cases, the arbitral tribunals qualified the issue of attribution of the acts of the State-owned entity as a jurisdictional matter.57 The idea underlining this qualification is that if the act which was considered contrary to the investment treaty obligations were not attributable to the respondent State, then the dispute was between two private parties and therefore the tribunal, which shall rule on investor-state conflicts, would have been without jurisdiction.58

53 Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award, June 18, 2010, para. 143. Electrabel S.A. v. Hungary, ICSID Case No. ARB/07/19, Decision On Jurisdiction, Applicable Law And Liability, November 30, 2012, para. 7.61. Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Award, March 10, 2014, para. 327. “In conclusion, the Tribunal therefore determines by majority that Emlak’s conduct with respect to the Contract and the Ispartakule III Project is not attributable to the Turkish State and is, on that basis, outside the remit of the Tribunal.” See Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Decision on Annulment. December 30, 2015, para. 192. “Neither the ICSID Convention nor the BIT uses the term “remit.” The English Oxford Dictionary defines the term as “the referring or consignment of a matter to some other person or authority for settlement,” “the transfer of a case from one Court or judge to another” or as “an area of authority” frequently used as part of the expression “within (also beyond, etc.) one’s remit”. 54 Toto Costruzioni Generali S.p.A. v. The Republic of Lebanon, ICSID Case No. ARB/07112, Decision on Jurisdiction, September 11, 2009. 55 Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic, ICSID Case No. ARB/09/1, Decision on Jurisdiction, December 21, 2012. 56 Interocean Oil Development Company and Interocean Oil Exploration Company v. Federal Republic of Nigeria, ICSID Case No. ARB/13/20, Award, 6 October 2020 “176. The Tribunal can have no jurisdiction over harms that are not attributable to Respondent. As the Parties have also recognized, however, that analysis is based on the context of each event. In the section on liability infra, the Tribunal’s presents its analysis of whether the alleged harms should be considered attributable to Respondent”. 57 Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic, ICSID Case No. ARB/09/1, Decision on Jurisdiction, December 21, 2012., para. 217 “[. . .] the question of attribution is jurisdictional in nature, this case law also recognizes that not all questions of attribution are identical or involve an identical context. Case law on this subject does support the conclusion that matters of state attribution should be adjudicated at the jurisdictional stage when they represent a fairly cut-and-dry issue that will determine whether there is jurisdiction”. 58 Santulli (2015), p. 188. Amadio (1967), p. 101“Ratione personae, la compétence du Centre est spécialisée à un type précis de différend international. Le Centre n’a vocation à connaitre ni les différends interétatiques ni entre les personnes privées. Il ne peut connaitre que des différends de

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This approach is not always possible, but the tribunal should use it when the issue of attribution is ‘a fairly cut-and-dry issue’.59 Outside the ICSID system, the PCA has not rejected the idea that attribution can be regarded as a jurisdictional question even if it is correctly highlighted that this analysis cannot be conducted in abstracto but only in concreto and since in the case under examination the matter of attribution was intertwined with the merit the PCA joined to the merit the jurisdictional exception raised by the claimant.60 At this point, it is possible to draw an analogy between the case Certain Iranian Assets and the aforementioned ICSID, ICJ, and PCIJ and assess whether the Court was right in joining to the merit the third objection to jurisdiction raised by the US. I begin my analysis from the judgment of the Court. The ICJ did not simply limited itself in joining the third objection to the merit. First, the Court interpreted the submission of the parties, and following its jurisprudence according to which it is not compelled to reject or approve their pleading but on the contrary is entitled to make an autonomous qualification,61 the Court declared that the third preliminary exception could be resumed in the problem of knowing whether Bank Markazi ‘was a company for the purposes of the treaty’.62 The Court, even if still at the preliminary stage, made two important conclusions: that the US could not deny that Bank Markazi has an autonomous legal personality and that it is wholly owned by the Iranian government does not in itself have any consequence for the protection granted to Bank Markazi by the treaty.63

nature mixte entre “un État contractant (ou telle collectivité publique ou tel organisme dépendant) de lui et le ressortissant d’un autre État contractant”. 59 Cortesi (2017). 60 Windstream Energy LLC v. Government of Canada, Award Permanent Court of Arbitration, 27 September 2016, para. 232. The disagreement between the Parties concerns the interpretation and application of Article 1503(2) of NAFTA (“State Enterprises”), which provides: “233. Article 1503(2) of NAFTA makes it clear that the State parties to NAFTA are responsible for the conduct of State enterprises, but only to the extent that such enterprises are empowered to exercise governmental authority. [. . .] 234. [. . .] any of the specific acts or omissions of the OPA at issue in this case are indeed attributable to Canada requires an assessment of the relevant directions and therefore cannot be made in abstracto, but only in concreto, in the context of an assessment of the relevant direction. Any such determination is necessarily closely intertwined with the merits and therefore cannot be decided independently of the merits. Consequently, the Tribunal considers it appropriate to defer the consideration of this issue to the merits.” 61 PCIJ, Case of the Free Zones of Upper Savoy and the District of Gex, France v. Switzerland, Judgment, 1932, A/B. 46, p. 138. 62 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 para 84. ‘The Court observes first that, although the wording of the third preliminary objection refers to “treatment accorded to the Government of Iran or Bank Markazi”, the question before it is solely that of whether Bank Markazi is a “company” within the meaning of the Treaty of Amity and is thereby justified in claiming the rights and protections afforded to “companies” by Articles III, IV and V’. 63 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 para. 88 ‘In the first place, the United States cannot contest the fact that Bank Markazi was endowed with its own legal personality by Article

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I acknowledge that the case before the Court is not whether the acts of Bank Markazi are attributable to Iran. In the same vein, the issue before ICSID tribunals is not whether the acts of State-owned enterprises are attributable to the respondent state. Rules of attribution are applied at the jurisdictional stage for the purposes of ascertaining whether the tribunal has jurisdiction. In the case before the ICJ, the question it is not whether Bank Markazi performs sovereign acts for the purposes of attribution to Iran. The jurisdictional objection raised by the US is very similar to the one raised by Yemen in the aforementioned case Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen decided on 31 May 2017.64 The reasoning of the US in the Certain Iranian Assets case is that even if Bank Markazi owns its own legal personality according to Iranian municipal law, this legal personality should be disregarded since it performs sovereign activities,65 or in other words ‘discharges an essential governmental function’ according to the second branch of the Broches test which mirrors article 5 of the ILC articles on State responsibility. As such, the question of attribution strictu senso is entirely outside of the issue before the ICJ since it was not for the ICSID arbitral tribunal to decide whether the Beijing Urban Construction Group Co. Ltd. should be considered part of the Chinese State for the purpose of the application of article 25 (1) of the ICSID Convention. As Judges Tomka and Crawford describe it, ‘the preliminary question is whether Bank Markazi is entitled, as a “company”, to those Treaty rights. That question is separate from the Court’s assessment, at the merits stage, of whether the Respondent has violated those rights, if they exist’.66 The Court does not speak about attribution; it presents the issue as a simple matter of treaty interpretation. As such, one could observe that the question before ICSID arbitral tribunals is simply a matter of interpreting article 25 (1) of the ICSID convention. However, this issue should not mislead the reader: international

10, paragraph (c), of Iran’s 1960 Monetary and Banking Act, as amended — and indeed it does not do so. In the second place, the fact that Bank Markazi is wholly owned by the Iranian State, and that the State exercises a power of direction and close control over the bank’s activities — as pointed out by the United States and not contested by Iran — does not, in itself, exclude that entity from the category of “companies” within the meaning of the Treaty. 64 Beijing Urban Construction Group Co. Ltd. v. Republic of Yemen, ICSID Case No. ARB/14/30, 31 Decision on Jurisdiction, May 2017. 65 US memorial, para. 9.19 ‘In sum, the obligations contained in Articles III, IV, and V must be read naturally and in their proper context, meaning, where a State entity is concerned, in concert with Article XI. Entities that exercise sovereign functions – acting as “the State as such” properly considered “companies” under the Treaty, and the manner in which such entities are treated is not regulated by the rules set out in these articles. This being the case, Iran’s claims relating to the treatment of Bank Markazi fall outside of the “company” protections in Articles III, IV, and V and must be dismissed’. 66 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7, Joint Separate Opinion of Judges Tomka and Crawford, p. 51.

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commentators such as Santulli have already highlighted those certain issues may be regarded as related to jurisdiction, admissibility, or merit depending on the international instrument conferring jurisdiction on the international tribunal.67 The true issue before the ICJ and the ICSID tribunal is the same: if a State enterprise performs an essentially governmental function, then it is not a company for the purpose of either the Treaty of Amity of 1955 or the ICSID convention, the company is not entitled to treaty rights, and the Court or the ICSID arbitral tribunal has no jurisdiction. The only difference between the two approaches is that ICSID arbitral tribunals have applied article 5 of the ILC articles to improve the quality of their analysis. The Court has not tried to verify whether by applying these rules it could already have enough elements to decide the issue before it. On the contrary, the ICJ decided to join the objection to the merit without demonstrating the absolute necessity correctly settled in its earlier jurisprudence. The Court did not follow the path inaugurated in the case Questions Relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia)68 of 2014 in which judge Cançado Trindade in his separate opinion explicitly recalled the ICSID case Libananco v. Turkey69 of 2008 (on these cases, see infra §3.3.1)—an initiative that could have represented the beginning of a two-sided dialogue between the ICJ and ICSID tribunals and not discussed their approach to this matter. As Alain Pellet states, ‘The ICJ simply does not refer to ICSID decisions or awards’.70 The Court—mindful of its prestige—seems to ignore the case law of other international courts and tribunals and, as Maurice Mendelson says, it ‘regards itself, as the supreme public international law tribunal, and as such would not wish to be seen to rely too heavily on the jurisprudence of other bodies’.71 Globally, this indifference is in fact less pronounced than it appears, but it is complete as far as the ICSID is concerned, and while it is true that the cases which are put before the Court do not lend themselves to references to specific ICSID jurisprudence, it should be noted that investment tribunals implement general principles, the scope of which goes far beyond investment law alone. The Diallo case could have been an opportunity for the Court to focus more directly on ICSID arbitration; not only has the Court not referred to it, but the judgment of 24 May 2007 Santulli (2002), p. 265. “On comprend désormais sans peine ces glissements : si une condition de recevabilité est incluse dans l’engagement juridictionnel comme limite à ce dont la juridiction est appelée à connaître, elle devient, en bon droit, une condition de compétence”. 68 Questions relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia), Provisional Measures, Order of 3 March 2014, I.C.J. Reports 2014, p. 147, Separate opinion of Judge Cançado Trindade. 69 Libananco Holdings Co. Ltd. v. Turkey, ICSID case ARB/06/8, decision on preliminary issues, of 23 June 2008, p. 42, para. 2. 70 Pellet (2013), pp. 223–240. 71 Mendelson (1996), p. 83. 67

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on preliminary objections shows the great caution, to say the least, of the World Court vis-à-vis the ICSID system. In this sense, the Court refrains from adopting a role of guidance in the proliferation of international adjudicating bodies. More significant to my purposes are the observations made by these scholars regarding private agents acting on behalf of the State. According to scholars and arbitrators to attribute the responsibility of actions performed by those agents to the state, the burden of proof should be particularly onerous.72 According to this doctrine, this choice would be justified by the fact that the state, by entrusting a private actor with typically public activities or functions, seeks to reduce its own responsibilities. Thus, there must be proof of a direct causal link between the state and the damage suffered by the private investor, and the plaintiff should also supply the necessary elements to prove that this entity was in fact authorised to act in the name of the state. In these circumstances, the existence of a de facto public company must be proven on the basis of general principles of international law, and there must be proof of a causal link. It is evident that after the demonstration of the existence of an unlawful act conducted by an individual, the high standard of proof required by this recent doctrine is simply the modern revisitation of the old presumption that the responsibility of the state is not to be presumed.

3.2.3

Presumption of Nationality (of Natural Persons)

In the field of international investment law, the nationality of the plaintiff is directly related to its right to bring legal proceedings because having citizenship of a state other than the host country is an essential condition for the plaintiff to have its claim admitted by an ICSID tribunal.73 However, the verification of nationality remains a question of fact which therefore depends on rules of evidence. For the presumption of nationality, the central aspect is the significant value of the assertions of consular authorities, which are crucial whenever the citizenship of a natural person is questioned. Curious as it may appear, the determining of nationality in international arbitration has always been a controversial issue and has raised considerable problems even in recent times.74

EDF (services) Ltd v. Romania, ICSID Case No. ARB/0/13, Award, 3 October 2009, §170. On this subject, see also Crawford (2010), pp. 127–199., pp. 130, 157: “[. . .] the conduct of public entities, although own by and therefore subject to the control of, the State is not attributable to the State ‘unless they are exercising element of governmental authority within the meaning of ILC art. 5’. There is therefore a strong presumption in International law that the separateness of corporate entities should be observed”. 73 Art. 25 ICSID Convention. 74 Wisner and Gallus (2004), p. 927. 72

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There are several reasons for these difficulties, one of which is of a purely factual nature: at the time of the drafting of the ICSID convention, the business world was much less internationalised than it is today,75 and national rules were much less likely to be intertwined or to interfere with other national rules. As a result, determining the citizenship of a natural person was much less complex.76 Another difficulty, which is strictly juridical in nature, derives from the fact that there is no unambiguous criterion for determining the citizenship of an individual when it is uncertain.77 The subject of this section is in itself boundless; however, it is crucial to the existence of an arbitral jurisdiction in the field of international investment law. As one author recently noticed, ‘protection from the state is one purpose of nationality. In international investment law states historically brought claims on behalf of their nationals. A state would need a legitimate basis to intervene in a conflict with another sovereign state’.78 Most of the difficulties come from the second of the issues mentioned above, namely the lack of a parameter for determining citizenship in international law. Of the various aspects of this topic, I outline those which are more strictly evidentiary issues. In general international law, when the question of the citizenship of one of the parties arises, the arbitrators may have several options from which to choose. One doctrine follows the criterion of free appreciation by international arbitrators: this solution was adopted in the previously mentioned cases of Georges Pinson and William Parker decided by the French-Venezuelan Mixed Commission, which are still representative.79 Another option for proving the citizenship of an individual is to consider the national law of the state which claims the individual as one of its nationals. One final theory supported by only a minority of scholars concerns the application of the rules of evidentiary procedure of the defendant state.80 Regarding

75 Mavroidis (2006), p. 833: To give an idea of the rise of international investments in the second half of the twentieth century, it is noted that, between 1973 and 1996, the total investments went from 25 billion dollars to 305 billion dollars. 76 Wisner and Gallus (2004), p. 927. 77 Grossen (1954), p. 81. 78 Sipiorsky (2019), p. 55. 79 Grossen (1954), p. 81. 80 Reports Of International Arbitral Awards, 4 Septembre 1920, vol. I, pp. 7–57, pp. 22–23. A similar solution was adopted, according to part of the doctrine, in the Affaire des propriété religieuses: “Attendu [. . .] Que la réclamante se dit Espagnole comme étant née de parents espagnols à Metrico, province de Guipuzcoa (Espagne); Attendu que le Gouvernement Portugais objecte que la réclamante ne rapporte pas la preuve de sa nationalité; Attendu que le Gouvernement Espagnol a eu connaissance de cette exception par le contre-mémoire portugais et n'a formulé aucune observation; Attendu que le Tribunal est chargé, en vertu de l'article 1er du Compromis, de statuer sur les réclamations relatives aux biens de ressortissants de l'Espagne, de la France et de la Grande-Bretagne, mais que la réclamante ne prouve pas, de la manière qui est prescrite tant par le Code Civil espagnol que par le Code Civil portugais, qu'elle appartient à une des nationalités susdites”; see Affaire des propriété religieuses (France, Royaume-Uni, Espagne c. Portugal), Court permanent d’arbitrage, Réclamatione espagnole en faveur de Dona Conception Barranechea y Manterola, Reports Of International Arbitral Awards, 4 Septembre 1920, vol. I, pp. 7–57, pp. 22–23. See also, Grossen (1954), p. 82.

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the matter examined here, it is sufficient to observe that international tribunals have generally shown preference for the first option. This general statement, of course, is not a satisfying description of the detection method applied by international tribunals when determining the nationality of a certain individual. From the perspective of general international law, the leading case on the matter is the well-known Nottebohm case81 decided by the ICJ in 1955. In this case, the Court had to decide on the legitimacy of the diplomatic protection offered to Nottebohm by the Principality of Liechtenstein against the Republic of Guatemala. Nottebohm was born in Germany but had lived in Guatemala for more than 20 years. He had started a flourishing business in Guatemala and returned to Germany occasionally for business and holidays. Shortly before the outbreak of the Second World War, he asked the government of Liechtenstein to naturalise him as a citizen, and the Liechtenstein authorities accepted his request after he had paid a generous contribution. The newly recognised Liechtenstein citizen moved back to Guatemala. However, in 1943, his assets were expropriated by the local government because the government of Guatemala did not recognise Nottebohm’s new citizenship and still considered him German and therefore a citizen of one of the Axis powers. A few years later, Liechtenstein exercised diplomatic protection to permit Nottebohm to receive compensation for the prejudice suffered. The first issue brought before the ICJ concerned the admissibility of the plaintiff’s claim as the Republic of Guatemala contested Nottebohm’s citizenship and therefore the legal standing of the Principality. The Court decided the claim was inadmissible because the citizenship of the claimant country, which was the necessary condition for the diplomatic protection, had to be examined by following rules of international law and not by making reference to the national rules of the Principality. In particular, the Court stated that as a condition of admissibility, the citizenship should be based on a genuine connection82 between the individual and the claimant state. The language employed by the Court to define this connection was rather vague, sometimes making reference to the place where Nottebohm’s family lived and sometimes to the location of his business.83 It is clear that these criteria were rather inaccurate, leaving open the possibility of different interpretations. The criterion of the most genuine connection is also in force in the field of international investment law, except for cases provided for by Article 23(2)(a): a

81

Case Nottebohm (Second phase), (Liechtenstein v. Guatemala), Judgment of 6 Avril 1955, ICJ Reports 1955, p. 4. 82 Affaire Nottebohm (Liechtenstein v. Guatemala), deuxième phase, Arrêt du 6 avril 1955, C.I.J. Recueil 1955, p. 23. “According to the practice of States, to arbitral and judicial decisions and to the opinions of writers, nationality is a legal bond having as its basis a social fact of attachment, a genuine connection of existence, interests and sentiments, together with the existence of reciprocal rights and duties”. 83 Ibid., p. 25. “At the date when he applied for naturalization Nottebohm had been a German national from the time of his birth. He had always retained his connections with members of his family who had remained in Germany and he had always had business connections with that country”.

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provision excluding the jurisdiction of the tribunal if the investor has a double citizenship, one of which is of the host state. This probably explains why many states while drafting bilateral investment treaties (BITs) that bind them together feel the need to explicitly derogate from the criterion of the ‘most genuine connection’, establishing that to verify the jurisdiction of the ICSID tribunal, only national law is to be applied.84 A practical example can be found in the ICSID case Champion Trading v. Egypt,85 in which to determine the citizenship of the plaintiff Wahba, Egyptian law was applied. The claimant party asked for the application of the same criterion as in the Nottebohm case, which would certainly have been favourable to the plaintiff, because Wahba had been living in the US for many years, and both his family and his primary centre of interest were in the US. However, after examining his request, the tribunal stated that the criterion of the Nottebohm case was the general principle, which was not to be applied when clear exceptions had been provided for, and it explained that the Champion Trading case was precisely one of those exceptions.86 Egyptian law, with a quite peculiar presumption, establishes that people with Egyptian origins retain Egyptian citizenship for 100 generations with no regard for where those generations have lived. This deprived the claimant and his children, who had never even been in Egypt, of the foreign citizenship necessary to bring the claim before the tribunal.87 For the more strictly technical issue of proof of citizenship, it should be observed that all mixed claims commissions have admitted that in the absence of more consistent elements, nationality can be proven by producing a consular certificate.88

Wisner and Gallus (2004), p. 929: “In a clause common to most BITs, the Egypt-United States BIT in question in Champion Trading states in its Article I(1)(e) that ‘national’ means ‘a natural person who is a national of a party under its applicable law’”. 85 Champion Trading Company, Ameritade International Inc, James T. Wahba, Johon T. Wahba and Timoty T. Wahba v. Arab Republic of Egypt, ICSID case No. Arb/02/09, Decision on Jurisdiction, 21 October 2003. 86 “The Claimants argue that the Egyptian nationality of the three individual Claimants does not correspond to the prevailing definition of nationality in international law. If they are to be considered Egyptian it is only because of Egyptian law which conferred Egyptian nationality on them at birth. The Claimants submit that, in fact, they neither have today nor ever have had any particular ties or relations with Egypt. Claimants conclude that such an involuntary nationality should not to be taken into account when interpreting the Convention. The Nottebohm and A/18 decisions, in the opinion of the Tribunal, find no application in the present case. The Convention in Article 25 (2)(a) contains a clear and specific rule regarding dual nationals. The Tribunal notes that the above cited A/18 decision contained an important reservation that the real and effective nationality was indeed relevant ‘unless an exception is clearly stated’. The Tribunal is faced here with such a clear exception” (Champion Trading, decision on Jurisdiction, p. 16). 87 Wisner and Gallus (2004), p. 929. 88 Sandifer (1975), p. 98: “Presumptions have often been invoked in relation to the proof of citizenship. In absence of countervailing evidence effect has been given to the presumptions that complying with the rules of the commission raises a presumption of citizenship”. 84

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As specified in the Lynch case,89 the certificate constitutes prima facie evidence in favour of the party submitting the certificate, though its probatory force is not absolute and it can be overturned if there is contrary evidence deemed more consistent, as in the 1903 Flutie case90 decided by the US-Venezuela commission. It is worth specifying that although this probatory method is based on the consular certificate of nationality, which is an act of internal law, its legal basis and functioning are still regulated by international law. This means, for instance, that even if a country’s national law gave absolute value to the consular certificate, the international tribunal would still be free to investigate to verify its truthfulness. A similar situation in the field of international investment law arose in H. N. Soufraki v. UAE.91 The plaintiff Soufraki submitted a certificate of Italian nationality to the tribunal as proof of his citizenship. The certificate had been drawn up by Italian authorities, which the plaintiff deemed to be the most qualified to interpret Italian national law. However, in this case, the interpretation of law was not the main problem: Article 13, lett. d) of law n. 91 of 5 February 1992 provides that an individual who has lost Italian citizenship reacquires it after one year of residence. As a result, the dispute between the parties was reduced to the mere factual question of whether Soufraki had actually lived in Italy for the length of time required. The international tribunal was thus free to make its own evaluations without having to consider the question of the value of any potential investigation made by national authorities. In short, the tribunal accepted the certificate as ‘prima facie evidence’92 but deemed it necessary to proceed with further investigations. In particular, the cross-examination by the defendant’s lawyer noticed some contradictions in Soufraki’s assertion.93 The tribunal ultimately decided that although there was prima facie evidence in favour of the plaintiff, he had not succeeded in satisfying the burden of proof. The claim was therefore rejected. Soufraki asked for the annulment of the award. The ICSID ad hoc committee rejected the arguments of the claimant by explicitly recalling the previously mentioned Flutie case. The similarities between the two cases are indeed remarkable: Flutie was born in Syria but had lived in the US for some time, a period after which he believed he had become a naturalised American. He then moved to Venezuela, where he began a retail business. Approximately one year later, an uprising occurred in Venezuela, causing Flutie significant economic

“All that an international commission can reasonably require in the way of proof of nationality is prima facie evidence sufficient to satisfy the Commissioners and to raise the presumption of nationality, leaving it open to the respondent State to rebut the presumption by producing evidence [. . .]” (Robert John Lynch [Great Britain] v. United Mexican States, Decision No. 1, November 8, 1929). On this subject, see also Grossen (1954), p. 81; Cheng (1953), p. 323. 90 Flutie Case, in Reports of International Arbitral Awards, Recueil Des Sentences Arbitrales 1903–1905, vol. IX, pp. 148–155. 91 Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Award, 7 July 2004. 92 Ibid., para. 63. 93 Ibidem. 89

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loss. When the US-Venezuelan Mixed Commission was formed, Flutie asked for compensation. In that case as in Soufraki’s case, the citizenship of the claimant had to be ascertained; in the Flutie case, too, the arbitral tribunal observed that the claimant had not been able to prove that he had lived in the country of naturalisation for the amount of time established by US law as needed to acquire American citizenship. Soufraki’s situation was similar to that of Flutie since according to the ICSID tribunal, Soufraki had been unable to prove that he had spent one year in Italy. Both plaintiffs were able to obtain a consular certificate of the country in which they claimed citizenship, but in both cases, the international arbitration tribunals observed a discrepancy between the assertion made in the certificate and the further evidence gathered94 and on that basis rejected the claims due to lack of jurisdiction.

3.3

Presumptions: A Preliminary Conclusion

The analysis conducted in this chapter provides an opportunity to examine and demonstrate how the procedural rules of general international law are intertwined with those of investment arbitration. Unfortunately, aspects which are complex or unclear within general international law remain complex and unclear in international investment arbitration. In this sense, the abundance of ICSID case law is perhaps a source of inspiration for legal scholars to strengthen or reduce the value of certain legal theory, but today, the shape of international procedural rules concerning the value of official documents, state responsibility and citizenship of natural persons remains unclear. The first presumption that has been examined, namely omnia rite esse acta presumuntur, even if not supported by an enormous body of case law, is probably widely accepted. The situation regarding the second presumption is still unclear: in the field of international investment law, an approach which tends to consider the issue of attribution as a jurisdictional matter rather than as a merit issue is silently growing; however, the most recent literature on this subject, showing perhaps a simplistic attitude, has not truly examined the issue and has limited itself to a statement of principle according to which ‘the attribution of conduct to a State for the purpose of its international responsibility is to be considered as a question of merit not of jurisdiction, in that it represents the ‘subjective’ element of an internationally wrongful act’.95 In my view, the possibility to detach the ‘subjective element’ from the subjective one is exactly what allows an arbitral tribunal, especially in the case of a ‘fairly cut-and-dry issue’, to adjudge the issue at the jurisdictional stage

94

Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Decision of the ad hoc Committee on the application for annulment, 5 June 2007, para. 69. 95 De Stefano (2020), p. 134.

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as the arbitrators did, for example, in the above-mentioned case Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic.96 Be that as it may, there are good reasons to hope that further developments in the ICJ jurisprudence will eventually clarify this matter. The last issue to be addressed is that concerning the presumption of nationality of a natural person: here again, even if the ICJ precedent the Nottebohm Case provides some guidance, its application remains difficult. From a higher level of abstraction, I think that the existence and the enduring validity of the above-mentioned presumption in general international law and their influence on international investment law have been demonstrated. At this point, I move towards more practical aspects of the arbitral procedure, such as the admission, gathering and evaluation of evidence. It becomes clear that even if up to this point it may seem that investment arbitration its purely encompassed in general international law, these remaining aspects of the procedure are, by contrast, largely borrowed from commercial arbitration, thereby clarifying the classification proposed by this book of international investment arbitration as a hybrid system. I return to this consideration in the general conclusion of the book.

References Authors Amadio M (1967) Le Contentieux International de l’investissement privé. L.G.D.J, Paris Amerasinghe CF (2005) Evidence in international litigation. Martinus Nijhoff Publishers, Leiden Badia A (2014) Piercing the Veil of the state enterprises in international arbitration. Kluwer, Croydon Broches A (1995) Selected Essays, World Bank, ICSID and other subjects of public and private international law. Martinus Nijhoff Publishers, Dordrecht Cheng B (1953) General principles of law as applied by International Courts and Tribunals. Stevens and Sons Limited, London De Stefano C (2020) Attribution in international law and arbitration. Oxford University Press, New York De Visscher C (1969) Problèmes de Confins en Droit International Public, Paris, Pedone Deveze J (1980) Contribution à l’étude de la charge de la preuve en matière civile, Thèse de l’Université de Tolouse Dolzer R, Schreuer C (2012) Principles of international investment law, 2nd edn. Oxford University Press, Croydon Grossen J (1954) Les Présomptions en Droit International Public. Delachaux & Niestlé, Neuchâtel

96 Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic, ICSID Case No. ARB/09/1, Decision on Jurisdiction, December 21, 2012., para. 217 “[. . .] the question of attribution is jurisdictional in nature, this case law also recognizes that not all questions of attribution are identical or involve an identical context. Case law on this subject does support the conclusion that matters of state attribution should be adjudicated at the jurisdictional stage when they represent a fairly cut-and-dry issue that will determine whether there is jurisdiction”.

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Kazazi M (1996) Burden of proof and related issues. Kluwer International, De Hague Klabbers J (1996) The concept of treaty in international law. Kluwer Law, The Hague Mavroidis PC et al (2006) The World Trade Organization. Oxford University Press, New York Niyungeko G (2005) La preuve devant les Juridictions Internationales. Éditions Bruylant, Bruxelles Ralston JH (1936) Supplement to 1926 revised edition of the law and procedure of international tribunals. Stanford University, California Sandifer DV (1975) Evidence before international tribunals. University Press of Virginia, Charlottesville Santulli C (2015) Droit du contentieux international, 2nd ed. Paris, L.G.D.J. Sipiorsky E (2019) Good faith in international investment arbitration. Oxford University Press, New York Sourgens FG et al (2018) Evidence in international in international investment arbitration. Oxford University Press, Oxford Starke JG (1950) An introduction to International law, 2nd edn. Butter Worths, London Voss JO (2011) The impact of investment treaties on contracts between host states and foreign investors. Nijhoff, Leiden Witenberg JC (1936) La théorie des preuves devant les juridictions internationales, Recueil des cours de l’Académie de droit International, - vol II

Articles Bastid-Burdeau G (2018) Defining the Respondent State in Investment Treaty Arbitration: are there Specific Standards of Jurisdiction? In: Banifatemi Y (ed) Jurisdiction in Investment Treaty Arbitration. IAI, New York Condorelli L (1984) L’imputation à l’État d’un fait internationalement illicite : solutions classiques et nouvelles tendances, R.C.A.D.I., VI, t. 189 Cortesi G (2017) ICSID Jurisdiction with regard to state-owned enterprises – moving toward an approach based on general international law, 16. The Law & Practice of International Courts and Tribunals Crawford JSC (2010) Investment arbitration and the ILC articles on state responsibility. ICSID Rev Foreign Invest Law J 25(1):127–199 Mendelson M (1996) The International Court of Justice and the sources of international law. In: Lowe V, Fitzmaurice M (eds) Fifty years of the international court of justice: essays in Honour of Sir Robert Jennings. CUP, Cambridge Pellet A., (2013), The case law of the ICJ in investment arbitration. ICSID Rev. Oxford University Press 2:223–240 Perera SM (2005) State responsibility, ascertaining the liability of states in foreign investment disputes. J World Investment Trade 6(4):500–529 Santulli C (2002) Observations sur les exceptions de recevabilité dans l’affaire du Mandat d’arrêt du 11 avril 2000 (République démocratique du Congo c. Belgique). Annuaire français de droit International 48(1):257–280 Wisner R, Gallus N (2004) Nationality requirements in investor-state arbitration. J World Invest Trade 5:927–946

Chapter 4

The Admissibility of Evidence

This chapter constitutes the most living part of the book. The ship navigating the Antarctica of arbitral procedural law has searched in the theoretical basis of investment arbitration and now moves to the other part of the continent, more closely linked with practical aspects of arbitration. The issues related to the admissibility of evidence represent a frontier between the more theoretical aspects addressed in the first chapter and the more practical ones examined in the next three chapters. The issue of admissibility is also a frontier from a practical standpoint: rules on admissibility are those which govern the possibility to bring evidence before the arbitral tribunal or it can be deemed as a sort of line between what the eyes of the arbitrators see and what they do not consider. The first issue addressed is that certain rules that are very important in AngloAmerican common law are not applicable in general international law because they are designed for a process in which the verdict is decided by a jury. Here I focus on the 2014 ICJ case Questions Relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia), where Judge Cançado Trindade in his separate opinion explicitly recalled the 2008 ICSID case Libananco v. Turkey that shows the beginning of a two-sided dialogue between the ICJ and ICSID tribunals (the ICJ is often quoted by ICSID arbitral tribunals, but the opposite is quite rare). Later in the chapter, I examine particularly important cases such as Conoco Philips v. Venezuela, which relates to the discovery of false evidence after the closure of the procedure and the related argument of the inherent powers of international tribunals as set out by the ICJ in the two nuclear test cases (New Zealand v. France) of 1995 and 1974.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_4

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4.1

4 The Admissibility of Evidence

The General Principle of Freedom of Admission of Evidence by an International Tribunal

There is a general consensus among scholars that international tribunals are not bound by specific rules in relation to the admissibility of evidence.1 In some countries, the means of proof admitted are set down strictly by the law, while tribunals may ask for new evidence at any moment. This power is conferred to international tribunals, for instance, by Article 77(1) of the International Tribunal for the Law of the Sea rules2 and similar provisions can be found in Article 62(1) of the Statute of the ICJ3 and in Article 10(1) of the United Nations Appeals Tribunal rules.4 However, especially in the case of the ICJ ‘consistent with the theme of scarce rules of evidence in international litigation the admissibility of evidence is similarly unconstrained by detailed evidentiary rules and procedures’.5 As Devaney has noted, ‘one possible explanation offered to explain the ICJ’s flexible approach toward evidence and broad powers to determine the evidentiary weight of any piece of evidence that comes before it is that ‘[u]nlike a common-law jury, this highly qualified and experienced international bench is not considered to need protection from potentially unreliable evidence’.6 Additionally, in the WTO system, the members of the panels have adopted a liberal approach towards the admission of evidence, stressing the fact that they also enjoy great freedom concerning the evaluation of evidence (regarding this aspect, see infra Chap. 6). The WTO panellists, citing Kazazi, held the following:

1

Rosenne (1965), pp. 556–557. Von Mehren and Salomon (2003), pp. 285–294, Kluwer Law International, p. 285: “[T]he restriction upon admissibility of evidence sometimes encountered in municipal procedure [. . .] have no place in international adjudication, where the relevance of facts and the value of evidence tending to establish facts are left to the entire appreciation of the Court”. “Usually the applicable ‘rule’ in an international arbitration is that the tribunal has broad discretion to determine what evidence it should hear. The tribunal admits most or all of the evidence offered by the parties and then determines what weight, if any, should be given to particular pieces of evidence”. Elkind (1984), p. 95: “Eisman quotes from the Mavromatis Palestine Concession Case to the effect that, in exercising international jurisdiction the Court is not bound to attach the same importance to matters of form as in municipal law” (PCIJ, Ser. A, No. 2, p. 12, at p. 34). 2 Art. 77 Rules of the Tribunal. Available online at https://www.itlos.org/fileadmin/itlos/documents/ basic_texts/Itlos_8_E_17_03_09.pdf. 3 Art. 62(1) Rules of Court (1978), adopted on 14 April 1978 and entered into force on 1 July 1978. 4 “On its own volition, the Tribunal may order the production of evidence if it is in the interest of justice and the efficient and expeditious resolution of the case, provided that the Appeals Tribunal shall not receive additional written evidence if it was known to the party seeking to submit the evidence and should have been presented to the Dispute Tribunal” (Rules of Procedure of the United Nations Appeals Tribunal, art. 10[1]. Available online at http://www.un.org/en/oaj/files/ unat/basic/2012-04-11-rules-of-procedure.pdf). 5 Devaney (2016), p. 35. 6 Devaney (2016), p. 36.

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6.34 In addition, we note that, under Article 13.2 of the DSU, Panels have a general right to seek information ‘from any relevant source’. In this context, we consider that, as a general rule, panels have wide latitude in admitting evidence in WTO dispute settlement. The DSU contains no rule that might restrict the forms of evidence that panels may consider. Moreover, international tribunals are generally free to admit and evaluate evidence of every kind, and to ascribe to it the weight that they see fit. As one legal scholar has noted: ‘The inherent flexibility of the international procedure, and its tendency to be free from technical rules of evidence applied in municipal law, provide the ‘evidence’ with a wider scope in international proceedings [. . .]. Generally speaking, international tribunals have not committed themselves to the restrictive rules of evidence in municipal law. They have found it justified to receive every kind and form of evidence and have attached to them the probative value they deserve under the circumstances of a given case’. It has clearly been held in the WTO that information obtained in consultations may be presented in subsequent panel proceedings.7

In any case, some scholars have stated that tribunals have this power regardless of any provision explicitly provided for in their statute.8 This consideration is the immediate consequence of the fact that to properly administer justice, tribunals must be considered as having ‘inherent powers’ that allow them to fully appreciate the issues submitted to them.9 Therefore, as a general rule, any possible limitation on the powers of the tribunal with regard to a particular case—for example, if the tribunal is obliged to accept only one type of evidence—should be explicitly stated in the compromis. It is known that before national courts, the submission of evidence is subject to compliance with time limits set by law. This is not the case for international tribunals, which usually have the power to decide autonomously and generally make quite liberal use of this power.10 The origin of this practice can be traced back to the 1794 Jay Treaty,11 through which the US and Great Britain created a mixed commission with the power to consider without restrictions any evidence submitted. According to Article VI, the Commission had the power to examine ‘all such Persons as shall come before them [. . .] and also to receive in Evidence according as they may think most consistent with Equity and Justice all written positions’.12 This choice appears all the more significant considering that it was made by two countries with very similar legal traditions, especially in those years, and which therefore could certainly have reached an agreement on restrictions concerning evidence. Despite this possibility, the US and Great Britain evidently deemed it

7

European Communities—Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India—Report of the Panel, WT/DS141/R, para. 6.34. 8 Amerasinghe (2005), p. 161. 9 On this subject, see Brown (2009), p. 90. 10 Amerasinghe (2005), p. 162. 11 Treaty of Amity, Commerce, and Navigation, Between His Britannic Majesty and the United States of America, 1794. 12 Ibid., art. 6.

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more appropriate not to impose restrictions on international jurisdiction. Later, other treaties establishing international jurisdictions followed the same line of thought. No restrictions were imposed on the ICJ; even Article 52 is not a restriction13 in the sense here given to the term since it simply states that if a party submits evidence after the expiry of the time limit, causing the objection of the other party, the Court has the power to accept or reject the evidence in question.14 This means that the Court has wide discretion on the rules governing the admissibility of evidence. In the Nicaragua case, for instance, although the Court did not accept press articles and extracts from books as evidence, it did consider them as material that might strengthen other pieces of evidence submitted to the Court.15 In many cases, arbitration tribunals have claimed that they have great freedom to admit evidence that is useful for reaching the moral certainty of the historical truth of relevant facts to settle a dispute. For instance, in the previously mentioned Parker case, the tribunal stated that its great freedom in admitting evidence would have helped to uncover the whole truth about the case.16 In the Shufeldt case, decided on the basis of a specific agreement between the US and Guatemala, it was explicitly stated that in international law, rules concerning the admission of evidence are not as strict as they are before national courts.17 In the course of their history, international tribunals have admitted all kinds of evidence, weighing its value by considering the circumstances of the particular case. This general principle of freedom has the practical effect of relieving the party submitting the evidence of the burden of proving its admissibility. At the same time, if the admissibility of a piece of evidence is contested before an international jurisdiction, the contesting party bears the burden of proving its inadmissibility.18 Moreover, if a piece of evidence is adduced by one of the litigants without the other party contesting its admissibility, the judge may take this into consideration to appreciate the value of the piece of evidence in question. The principle of freedom of appreciation is also in force in international investment law because arbitration rules grant judges wide discretion regarding the

13

Kazazi (1996), p. 183. Amerasinghe (2005), p. 167. 15 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p. 14, p. 40. 16 USA v. Mexico, 1923, Opinion of the Commissioners, 1927, p. 39, 4 U.N.R.I.A.A., pp. 39–40. On the same subject: “In the absence of an express provision to the contrary, the Commission has the right to adopt whatever means it determines upon to obtain evidence” (Franqui case, 1903, U.N.R.I. A.A. vol. X, pp. 751–753, p. 751). See also, Sandifer (1975), p. 121. 17 Shufeldt claim (Guatemala v. USA), arbitral decision 24 July 1930 Vol. II pp. 1079–1102, p. 1083: “On the question of evidence over which there was some argument, I may point out that in considering the cases quoted on both sides it is clear that international courts are by no means as strict as municipal courts and cannot be bound by municipal rules in the receipt and admission of evidence”. 18 Sandifer (1975), p. 121, Amerasinghe (2005), p. 167. 14

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admissibility of evidence.19 For instance, Article 34 of the ICSID rules states that the tribunal should decide on the admissibility of evidence and its probative value. Similar provisions can be found in Article 20, subs. 6 of the American Arbitration Association rules and in Article 25, subs. 6 of the UNCITRAL rules.20 According to jurisprudence, the principle of freedom of appreciation is in force in the field of investment law, and the decision on whether a piece of evidence is relevant to the case is left to the discretion of the judge at any stage of the proceedings.21 The ICSID tribunal specified the scope of its powers in the WENA Hotels Limited case, stating that the plaintiff had criticised the tribunal’s decision on the relevance of factual evidence submitted by WENA to prove the loss it claimed to have suffered.22 The tribunal then specified that ‘irrespective of whether the matter is one of substance or procedure, it is in the Tribunal’s discretion to make its opinion about the relevance and evaluation of the elements of proof presented by each Party’.23 This discretion is not limitless, and its limits should be clarified to prevent this flexibility—originally intended to allow ‘tailor-made’ solutions—from degenerating into pure arbitrariness.24 However, conventional rules have never entailed specific rules on how to set out those limits, which are then identified on the basis of general principles taken from the field of general international law.25 The existence of the principle of free admissibility of evidence in international law does not imply that there are no limits in this field; rather, the limits in question, according to the best legal doctrine, have been taken from a number of general principles recognised by civilised nations26 and the general canon of good faith, which according to Sipiorski ‘plays a gap-filling role allowing tribunals to rely on the principle where the rules or Convention provide limited guidance on how to structure decisions on evidence. In their behaviour, tribunals bear the burden of ensuring that due process is ensured and respected through their varied legal culture and approaches’.27

19

Schreuer et al. (2009), p. 643, para. 11. Von Mehren and Salomon (2003), p. 290. 21 Niyungeko (2005), p. 275; Schreuer et al. (2009), p. 643, para. II. 22 Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on Annulment Proceeding, 5 February 2002, para. 47. 23 Wena Hotels Limited v. Arab Republic of Egypt, (ICSID Case No. ARB/98/4, Annulment Proceeding, para. 107: “However, irrespective whether the matter is one of substance or procedure, it is in the Tribunal’s discretion to make its opinion about the relevance and evaluation of the elements of proof presented by each Party. Arbitration Rule 34(1) recalls that the Tribunal is the judge of the probative value of the evidence produced”. 24 Von Mehren and Salomon (2003), p. 286. 25 Sandifer (1975), p. 9. 26 Cheng (1953), p. 308: “General principles prevailing in foro domestico relating to evidence must, therefore, to be applied”. 27 Sipiorsky (2019), p. 164. 20

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Limits of the General Principle of Free Appreciation of Evidence The Limit of Relevance

Among the limits to the principle of free appreciation of evidence, the first and perhaps most important concerns the relevance of evidence. Recent ICSID jurisprudence related to intellectual property dispute28 has upheld this view, stating that Evidence must relate to the subject of the proceeding and those that do not refer to the facts being discussed are inadmissible, as well as legally ineffective. [. . .] 437. This is a general principle of evidence that must, we believe, be universal. Whether it is applicable in the present case is a matter that will become clear when the Tribunal discusses the significance given to the Foley Letter by the Supreme Court.29

The same rules apply, mutatis mutandis, to ICSID annulment ad hoc committees in the annulment procedure.30 As for its general meaning, it is enough to recall that as a principle, only relevant facts should be proven; therefore, tribunals will necessarily reject evidence or ‘offers to prove’ regarding non-relevant facts.31 As for the practical procedures in this examination, it is necessary to distinguish between two categories: evidence introduced during the written procedure, which is usually attached to the procedural documents of one of the parties, and evidence supplied during or after the oral proceedings. The latter must usually be authorised by the tribunal since it is subject to a relevance control depending on its announced subject. If the opposing party believes that a certain fact is unrelated to the matter of the dispute, it can oppose the submission of the evidence and the tribunal may reject the evidence without even being aware of its content. In this sense, it could be said that the lack of relevance of a piece of evidence may cause its inadmissibility,

28

Klopschinsky (2020), p. 244. Bridgestone licensing services, inc. And Bridgestone Americas, inc. v. Republic of panama, ICSID case no. ARB/16/34, Award, 14 August 2020, para. 436–437. 30 Carnegie Minerals (Gambia) Limited v. Republic of The Gambia, ICSID Case No. ARB/09/19, Annulment Proceeding, Procedural Order No. 2, August 20, 2018 para. 35. ‘The Committee notes that the authority given to it under Article 52(3) of the Convention is “to annul the award or any part of it” on the specific grounds set out in the Convention. It also notes that certain provisions of the Convention applying to the operation of investment tribunals, including those relating to the production of documents, also apply to the Committee mutatis mutandis (Article 52(4)). 36. While there is no doubt that the Committee can order the production of documents it would be justified in doing so only if those documents were relevant to the issues before the Committee on annulment. These relate to claims that there was a manifest excess of power by the Tribunal, a deviation from a fundamental rule of procedure and a failure to state reasons.’ 31 Niyungeko (2005), p. 275. 29

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implying that this is a limitation of the principle of freedom of appreciation of evidence before international tribunals.32 Regarding the first category of evidence, there is no preliminary procedure for evaluating its admission: being attached to the procedural documents, this evidence is brought before the tribunal in any case, being it relevant or not. In Metalclad Corporation v. Mexico,33 on a question about the production of documents made from one party to the other, the president of the arbitration tribunal concluded that at that stage of the proceedings he was not in a condition to decide the range within which the documents and materials requested could be relevant to the trial. As a consequence, he ordered Metalclad to submit the documents in question. This type of evidence is therefore admitted without prior examination. Its examination during the trial does not concern its admission; therefore, the issue of substantive admissibility fades into that of actual evaluation of evidence. It should be remembered that the lack of preliminary filters is justified by the fact that international arbitrators are professional jurists. People’s juries have never been established in international practice; thus, arbitrators do not need to be ‘protected’ from hearing inadmissible evidence until the question of admissibility has been addressed by the parties and decided by the judge. Although objections concerning the admissibility of evidence and the weight given to it are substantially different in many national laws, in commercial arbitration and international investment law, both the admissibility and the probative value of evidence are decided by the same person: the arbitrator. Consequently, the traditional issues of common law courts concerning the admissibility of evidence are not found in the field of international arbitration law. The tribunal’s decision on the admissibility of evidence may also be implicit: in the ICSID case Tradex Hellas S.A. v. Albania,34 the tribunal, taking into consideration the issues put forward by the parties about how ‘evidence objected to’ had been considered, clarified that it was not necessary ‘to deal with and decide on objections regarding evidence which, in the Tribunal’s judgment, is not relevant for it in deciding on the claim before it’.35 A case that can be quoted as a summary of the orientation of ICSID tribunals on this matter is Aguas del Tunari S.A. v. Bolivia.36 In the decision, the tribunal summarised procedural order No. 1 of 8 April 2003 concerning Bolivia’s requests to produce evidence and obtain the immediate rejection of the claims brought against it. After emphasising that Article 43 of the Convention and Arbitration Rule 34(2) grants arbitrators a substantial amount of discretion on the submission of documental evidence and on the witnesses proposed by the parties, the tribunal identified some guidelines and limits which narrow and redirect this discretion: ‘In general, the Tribunal’s discretion to order the production

32

Niyungeko (2005), p. 116. Metalclad Corporation v. The United Mexican States, ICSID Case No. ARB(AF)/97/1. 34 Tradex Hellas S.A. v. Republic of Albania, ICSID case ARB/94/2, Award, 29 April 1999. 35 Ibid., para. 83. 36 Aguas del Turnari S.A. v. Bolivia, ICSID Case No. ARB/02/3, decision on Jurisdiction, 21 October 2005. 33

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of evidence is informed by concepts of materiality, relevance and specificity present in the laws of evidence generally and by the customs of evidentiary production in international arbitration generally’.37 The same approach was also followed in Tidewater Inc. v. Venezuela,38 where the tribunal recalled that on the question of whether it is necessary to order a party to produce a document, its discretion should be guided by the relevance and materiality test following the IBA Rules of Evidence. The relevance test is useful for resolving the first problem, where both the parties and the arbitrators must decide whether a particular document can be admitted as evidence or whether the tribunal should be asked to order its production. In common law countries, the phrase ‘relevant evidence’ generally refers to evidence that has a tendency to make a fact more or less probable in the eyes of the tribunal depending on whether it is admitted.39 This definition is used in common law rules of evidence in which the concept of materiality is linked to that of relevance. However, in international trade arbitration, those are two separate criteria, and most arbitration rules authorise judges to keep relevance and materiality separate in their decisions. The IBA Rules on the Taking of Evidence in International Arbitration (IBA rules), which on the issue of relevance and materiality have remained unchanged by the 2020 amendment (on this issue see infra Chap. 5), clearly state that evaluations of relevance and materiality are the two crucial criteria for admitting evidence or for requiring that the opposing party bring that evidence before the court.40 This means that relevance is the first criterion for admissibility, although in practice it is not easy to enforce. Arbitrators are usually reluctant to limit the submission of evidence, instead allowing the parties to present evidence of dubious value because, as arbitrators know, any award could be declared unenforceable if a party demonstrates that the procedure followed by the tribunal left it unable to 37

Ibid., para. 25. Tidewater Inc. v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5 Procedural Order No. 1 on Production of Documents, pp. 6–7, para. 14: “The Claimants emphasize the high threshold of ‘necessity’ under Article 43 and Rule 34, suggesting that production of a document should only be ordered if the document is ‘essential’ to the resolution of the dispute. The Tribunal considers that the primary purpose of the phrase ‘if it deems it necessary’ in the Convention and Rules is to confirm that it is for the Tribunal ultimately to determine whether the requested evidence is what it needs in order to decide the matter before it. The Tribunal further considers that, in deciding whether or not it is necessary to order production of a document, it should be guided by the tests of relevance and materiality in the IBA Rules. The Tribunal finds no underlying conflict between these concepts. As it was put by the Tribunal in Aguas del Tunari S A v Bolivia, the ICSID Convention and Rules grant a tribunal ‘a substantial measure of discretion regarding the production of documentary evidence although such discretion was guided by several considerations: [T]he Tribunal’s discretion to order the production of evidence is informed by concepts of materiality, relevance and specificity present in the laws of evidence generally and by the customs of evidentiary production in international arbitration generally. More particularly, Article 43 provides that the Tribunal may order the production of evidence at any stage in the proceedings when in the tribunal’s judgment such an order is “necessary”. 39 Pilkov (2014), p. 2. 40 Pilkov (2014), p. 2. 38

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present its case. However, it must be emphasised that the parties only have the right to the opportunity to present their evidence. This does not mean that arbitrators are obliged to encourage the party to make use of that right. The main problem, therefore, lies in the fact that although national laws grant the inviolability of the adversarial principle (‘the chance to present its own case’) through the threat of the unenforceability of the award, they do not usually include provisions for limiting potential abuses, such as when a party produces an enormous amount of evidence for clearly dilatory or obstructionist purposes. In particular, scholars41 have shown concern about the so-called ‘battles of documents’,42 which evocative expression has been used to describe those situations in which both parties, for fear of leaving something out of their probative material, overload arbitral tribunals with documents of questionable utility. While the tribunal has the option to declare such evidence inadmissible, the situation remains unsatisfactory. Scholars have suggested as a practical solution having a meeting with the parties before the trial to identify significant subjects on which it seems appropriate to conduct probative investigations. Regarding this latter aspect, procedural order No. 4 issued by the ICSID tribunal in the 2011 case Al Tamimi v. Oman,43 in which a practical application of this line of thought can be found, is certainly worthy of attention. The tribunal, after recalling the order of procedure No. 1, which made reference to Articles 3 and 9 of the IBA rules44 and in particular to the principle of relevance and materiality stated in Article 3(3)b,45 proceeded to examine the requests of the parties. The tribunal organised the requested documents in a table, stating that the order for the production of some of the documents had been denied because of their presumed lack of relevance or materiality.46 The tribunal then observed that it felt ‘uncomfortable’47 deciding on the matter of disclosure relative to the apparent question of dual nationality at the beginning of the procedure. According to the tribunal, there were two ways to resolve the situation: one was to ask the defendant to draw up a brief memorandum stating its probable objections to the jurisdiction of the tribunal without prejudice to a full articulation of the objections in its response, which still had to be prepared. In this case, after receiving the memorandum, the tribunal would have decided on the question of disclosure. The second option was to postpone the tribunal’s decision until after the filing of the response concerning the objections on the matter of jurisdiction. To prevent undue delay in the procedure of disclosure, the tribunal chose the first alternative and asked the defendant to complete a three-page

41

Böckstiegel (2001), pp. 1–9. Böckstiegel (2001), p. 7. 43 Adel A Hamadi Al Tamini v. Sultanate of Oman, ICSID Case No. Arb/11/33, Procedural Order No. 4, 5 February 2013. 44 Ibid., para. 4. 45 Ibid., para. 5. 46 Ibid., para. 10. 47 Ibid., para. 14. 42

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memorandum in which it should clarify if and how it intended to question the jurisdiction of the tribunal, the precise nature of its objections and why the documents it had requested and which had not been rejected by the tribunal should be considered relevant. The tribunal then ordered the plaintiff to answer the memorandum within seven days of its filing. In the case of an unsatisfying exchange of information, the tribunal reserved the right to postpone its final decision on disclosure until after the filing of the counter-memorial. There is no doubt that the limit of relevance is an applicable rule in the ICSID law of evidence and perhaps in international adjudication. However, it is difficult to identify how much this principle is effective from a practical standpoint given the reluctance of arbitrators to declare the inadmissibility of a document only on the ground of an alleged lack of relevance of a single piece of evidence. It will be possibly easier to draw a first conclusion clarifying the relation existing between the limit of relevance and that of materiality that will be described in the next paragraph.

4.2.2

The Limit of Materiality

In common law systems, the concept of materiality is linked to that of relevance, and as anticipated, it does not have a separate identity. However, in international arbitration, the criterion of materiality is mostly considered in connection with ‘the outcome of the case’, whereas in general terms, relevance concerns the relation between the evidence and the case.48 To better appreciate the distinction between relevance and materiality, it is useful to note that every piece of evidence may be evaluated separately. The relevance of each piece of evidence is an independent category and does not in any way influence the relevance of other elements in the same matter. In contrast, materiality is a dependent category: after the admission of one piece of evidence, all the subsequent pieces of evidence regarding the same facts become less ‘material’. In other words, materiality is linked to the concept of sufficiency of evidence: after the tribunal has been provided with sufficient elements, any additional relevant evidence concerning the same fact is not ‘material’ to the decision of the case. For example, if the date of a meeting has already been proven through the submission of an official document, a witness called to prove the same fact is not considered material. The tribunal may avoid considering evidence that is implicit in other evidence previously admitted. This ‘redundant’ evidence is excluded because it is relevant but not material. It should also be remarked that a piece of evidence cannot be irrelevant and immaterial at the same time because its materiality can be assessed only after its relevance is recognised.

48

Pilkov (2014), p. 2.

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The risk associated with the combination of the ‘immateriality/rejection of evidence’ may be significant if in its decision the tribunal denies the existence of a fact that the party intended to prove through elements rejected as immaterial in the preliminary procedure. For this reason, if the tribunal doubts a fact in relation to which some evidence has been deemed immaterial, it would be good practice to invite the interested party to comment before rendering the award.

4.2.3

General Limitations on Admissibility: A First Conclusion

In the conclusion we can assert that because of the use of juries in the common law system, common law procedure is characterised by technical, restrictive rules of evidence which may preclude the admission of documentary or testimonial evidence for lack of sufficient relevance, materiality or credibility. In common law jurisdictions, considerable time and effort are often spent in procedural wrangling concerning the admissibility of particular evidence. On the contrary, as noticed by Robert Pietrowski, Historically, international tribunals have had little patience with such practice and have taken the view that they should hear and consider everything that each party has to say concerning the dispute. The tribunal itself determines the relevance, materiality and probative value of all evidence submitted by the parties and does not need to hear argument from the parties concerning these matters. It is for the parties to submit the evidence and for the tribunal to evaluate it.49

Thus, in the South-West Africa cases, in responding to objections by the applicant’s agent concerning testimony of the respondent’s witness, the President of the International Court of Justice stated, The evidence will remain on the record; the Court is quite able to evaluate evidence, and if there is no value in the evidence, then there will be no value given to this part of the evidence [. . .] This Court is not bound by the strict rules of evidence applicable in municipal courts and if the evidence established by the witness does not sufficiently convey that the evidence is reliable in point of fact, then the Court, of course, deals with it accordingly when it comes to its [. . .]50

Although international tribunals generally admit any evidence that a party deems necessary to establish its case, a tribunal always has authority to determine that evidence is inadmissible in appropriate circumstances. Evidence may be excluded if it is unduly burdensome, duplicative, defamatory or obviously irrelevant.

49

Pietrowski (2006), pp. 373–410. South-West Africa cases, (Second Phase), (1966) ICJ Rep., Pleadings, vol. 10, p. 122; vol. 11, p. 460. 50

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4 The Admissibility of Evidence

Admissibility in the Strict Sense

Before proceeding with the subject of admissibility in the strict sense, it must be made clear that the application of all the principles examined in this chapter must in any case follow the criteria of efficiency and speed. This need is highlighted in the documents of the International Institute for Conflict Prevention and Resolution,51 in which it is recognised that ‘since requests for information based on possible relevance are generally incompatible with [the need for speed and efficiency], disclosure should be granted only as to items that are (1) relevant and material and (2) for which a party has a substantial, demonstrable need in order to present its position’.52 Materiality has already been mentioned since ‘the substantial, demonstrable interest to present its position’53 that the party should have is precisely the criterion of materiality. Therefore, since the gathering and discovery of evidence is a timeconsuming activity, the criterion of materiality must be kept in serious consideration. The IBA rules also demonstrate that the admission of evidence is separate from the order of the production of evidence: in the latter case, materiality is decisive since the tribunal must compare the production of evidence with the burden placed on the opposing party or with the required expenses. The IBA rules require the party that proposes to produce evidence to demonstrate that the requested documents are relevant to the case and material to the decision. Unlike relevance and materiality, admissibility in the strict sense is a purely legal criterion, although the need for efficiency and speed must not be overlooked in its application. This may explain why legal provisions are very rare in this field as well, often leaving the choice to the wisdom of arbitrators who can consider the criteria of admissibility in the strict sense only in cases in which the juridical good protected by these criteria appears significant. Therefore, as in other areas, the IBA rules—and rules on international arbitration—grant tribunals wide discretion to determine the so-called ‘admissibility strictu sensu’. However, this discretion has certain limits in practice, even in cases not governed by arbitral rules. The criteria of admissibility in the strict sense follow rules of exclusion based either on the assumption that a certain means of evidence may be unreliable or on the need to protect some documents (the so-called ‘privileges’). Unlike relevance and materiality, the criteria of admissibility of particular pieces of evidence are established in detail in several countries’ legal systems. In fact, in many countries, substantive regulations include rules limiting the option to submit evidence to

51 International Institute for Conflict Prevention and Resolution, Inc., an American law organization that deals with alternative dispute resolution and arbitration and, while carrying out this activity, conducts and promotes research in the field. 52 CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration, Art. 1(a). Available online at http://www.cpradr.org/resources/ALLCPRArticles/ tabid/265/ID/CPR-Protocol-on-Disclosure-of-Documents-and-Presentation-of-Witnesses-in-Com mercial-Arbitration.aspx. 53 IBA Rules art. 3.11.

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national courts. This often leads to a debate about whether these ‘restrictive’ rules are procedural and therefore part of the lex fori but not of the lex arbitri, in which case they are not binding for arbitrators, or whether they are an integral part of substantive law, in which case they must be enforced by arbitrators. In the latter case, the choice of whether to enforce substantive law is left to the discretion of arbitrators. In any case, the fact that the judges’ discretion is subject to limitations is widely recognised by scholars and practitioners: for the sake of clarity, these limitations are examined individually.

4.3.1

Inadmissibility of Evidence Obtained Through Violation of International Law, State Secrets, or Professional Confidentiality

An intuitive answer to the question of whether evidence obtained through a violation of international law is admissible would be a negative one. However, as observed in legal doctrine,54 there is no clear precedent in international law regarding the inadmissibility of evidence gathered unlawfully. The same doctrine has observed that the conduct adopted by the ICJ in the Corfu Channel case is compatible with both the conclusion that evidence obtained unlawfully must be considered inadmissible and the opposite thesis.55 The United Kingdom stated that its violation of Albanian territorial waters was due to the need to preserve the integrity of certain pieces of evidence that were essential to the decision of the case, and the Court simply did not consider those pieces of evidence without expressing an explicit opinion on their validity. In the case of United States Diplomatic and Consular Staff in Tehran, the question relative to the evidence obtained through a violation of international law was only informally raised before the ICJ.56 In particular, Iran, while refusing to appear before the Court, sent a letter claiming that the matter of hostages should be considered marginal because the occupation of the embassy was for the purposes of finding proof of the interference of the US government in Persian internal affairs during the Shah’s reign. The letter also claimed that without that act of force, the new government would not have managed to obtain evidence of the illegal activities of the US and that without those documents it would have been impossible to decide the case brought before the Court. The Court did not take any position on the fact that the evidence, given the method by which it had been obtained, was in any case inadmissible but rather peremptorily ordered Iran to ‘immediately place in the hands of the protecting Power the premises, property, archives and documents of the

54

Amerasinghe (2005), p. 179. Amerasinghe (2005), p. 178. 56 Amerasinghe (2005). 55

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United States Embassy in Tehran and of its Consulates in Iran’.57 Thirlway58 remarked that this order implied a judgment of inadmissibility, whereas another scholar considers it an excessively pretentious reconstruction.59 The question of illegally obtained documents has been raised in very recent times in the case Timor-Leste v. Australia60 before the ICJ. The dispute under examination arose because of an initiative taken by the Australian secret services. An arbitration procedure regarding some matters relative to sea borders between the two states is ongoing.61 During the night of 3 December 2013, Australian intelligence agents entered the office of the lawyers of Timor-Leste and seized some sensitive documents. The Timor-Leste government brought a request for provisional measures before the ICJ, claiming in particular that the Court should order Australia to send all the seized documents to the Peace Palace in the Hague. The legal bases of the requests made by Timor-Leste were both the principle of immunity of states and inviolability of their documents and the principle of professional confidentiality between lawyer and client; the latter has even been claimed by Timor-Leste to be a general principle of law.62 Australia asked the Court to reject the application of the plaintiff, claiming that the principles mentioned by Timor-Leste are not absolute and may have exceptions, especially if there is reason to suppose that the documents in question concern the commission of a fraud.63 However, despite suggesting that the principles of inviolability of state documents and of professional confidentiality may be balanced with other needs due to public security, Australia did not clarify which elements in particular indicated that a fraud might have occurred.

57

United States Diplomatic and Consular Staff in Tehran,Judgment, 1.C.J. Reports 1980, p. 3, order of 15 December 1979, p. 12 58 Thirlway (1984), pp. 622–641. 59 Thirlway (1984), pp. 636–637. 60 Questions Relating to The Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia), Request for the Indication of Provisional Measures Order, 3 March 2014. 61 Permanent Court of Arbitration, Arbitration under the Timor Sea Treaty (Timor-Leste v. Australia), pending since 23 April 2013, details available online at: http://www.pca-cpa.org/ showpage.asp?pag_id¼1403. 62 Questions Relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia), Request for the Indication of Provisional Measures Order, 3 March 2014, para. 24: “Timor-Leste states that the rights which it seeks to protect are the ownership and property rights which it holds over the seized material, entailing the rights to inviolability and immunity of this property (in particular, documents and data), to which it is entitled as a sovereign State, and its right to the confidentiality of communications with its legal advisers. Timor-Leste moreover holds that confidentiality of communications between legal counsel and client is covered by legal professional privilege, which it states is a general principle of law”. 63 Ibid., para. 25: “[. . .] there is no general principle of immunity or inviolability of State papers and property, and [. . .] whereby any State is entitled to the confidentiality of all communications with its legal advisers, that principle (akin to legal professional privilege) is not absolute and does not apply when the communication in question concerns the commission of a crime or fraud, constitutes a threat to national security or to the higher public interests of a State, or undermines the proper administration of justice”.

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In the 2014 order, the Court restricted the field of investigation by stating that it is not necessary at the provisional stage to express a view on the matter of whether the principles or the alleged exceptions are indeed part of international law but that it is sufficient to consider whether the rights claimed by the plaintiff are plausible.64 The Court concluded that because of the principle of sovereign equality of states it is indeed plausible that a government involved in a proceeding for the peaceful resolution of a dispute on borders is allowed to confidentially communicate with its lawyers; therefore, it accepted the request for provisional measures, ordering that the documents be sealed and that Australia should not in any way allow their disclosure to other parties. However, the Court did not order that the documents be brought to the Peace Palace, instead accepting the promise of the Attorney General of Australia that it would not make improper use of those documents, especially in the arbitral proceeding brought before the Court. This issue was ultimately rather controversial since some judges believed the measure to be excessively lenient65 while others saw it as excessively severe.66 The latter focused especially on the binding nature of Australia’s unilateral undertaking, thus suggesting that the provision of the Court was unnecessary. Interesting as this may be, the case is likely to have little effect on international investment law. It is true that Judge Cançado Trindade in his separate opinion explicitly recalled the ICSID case Libananco v. Turkey,67 in which, as will be seen, the approach of the ICSID tribunal was strongly in favour of the protection of professional confidentiality, demonstrating the existence in international law of a doctrine endorsing ‘complete’ protection of the confidentiality principle. However, the Court did not express a clear view in its order, nor did it ever explicitly state that illegally obtained evidence should be considered inadmissible in any case. Although a similar conclusion could be drawn from the decision of the Court to order provisional measures, the Court itself did not identify the legal basis for its order in the inviolability of professional confidentiality as such but rather in the principle

“At this stage of the proceedings, the Court is not called upon to determine whether the rights which Timor-Leste wishes to see protected exist; it need only decide whether the rights claimed by Timor-Leste on the merits, and for which it is seeking protection, are plausible” (Ibid., para 26). 65 Separate Opinion of Judge Cançado Trindade, in Questions Relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste V. Australia), p. 1: “I have concurred with my vote to the adoption of the present Order of 03.03.2014, as I consider that the provisional measures of protection ordered by the Court are better than nothing, [. . .] I think that the Court should have gone further, and should have ordered the measure requested by Timor-Leste, to the effect of having the documents [. . .] delivered into the custody of the Court itself here at its siège at the Peace Palace at The Hague”. 66 Dissenting opinion of Judge Greenwood, Dissenting opinion of Judge ad hoc Callinan, in Questions Relating to the Seizure and Detention of Certain Documents and Data (Timor-Leste v. Australia). 67 Separate Opinion of Judge Cançado Trindade, in Questions Relating to the Seizure and Detention of Certain Documents and Data, p. 10. (The reference to an ICSID award made by an ICJ judge is something new in the jurisprudence of the Court.) 64

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of equal sovereignty of states according to Article 2 of the United Nations Charter.68 This leads to the difficulty of imagining the potential influence of this decision on ICSID jurisprudence. While there is obviously no need to underline that the principle of equality between states does not apply to private investors, it would be inconceivable to treat public and private parties differently by granting the state the privilege of confidential communication while not considering the individual entitled to the same right according to international law. In the case of international investment arbitration, therefore, it is necessary to consider as two (at least partially) separate issues the protection of the confidential communication of the parties and the consequent issue of the evaluation of evidence obtained in the violation of this right. To bridge what seems to be a clear regulatory gap, it would not appear acceptable to have an unlimited right to make use of illicitly acquired evidence, and scholars have attempted to identify a prohibition in the universal scope of the principle of ‘nullus commodum capere de sua iniuria propria’,69 which is widely recognised by jurisprudence70 and international doctrine as a corollary of the more general canon of good faith.71 This issue has not been explicitly resolved in the field of international investments either,72 although as will be seen, it is possible to identify some consolidated practices such as the protection of state secrecy and professional confidentiality—matters which cannot be ignored by arbitrators, as is widely recognised.73 According to an authoritative study by the American Law Institute, a party is entitled to object to disclosure on the basis of privileges.74 According to this theory, the impeding causes or the limitations on disclosure are those established by the national law of the party in possession of the ‘privileged’ document or by the law

Questions Relating to the Seizure and Detention of Certain Documents and Data, para. 27 “The Court notes that this claimed right might be derived from the principle of the sovereign equality of States, which is one of the fundamental principles of the international legal order and is reflected in Article 2, paragraph 1, of the Charter of the United Nations”. 69 Kazazi (1996), p. 206. See also, Amerasinghe (2005), p. 179. 70 PCIJ, Chorzow Factory Case, 1927, A. 9, p. 19; Merits A.17 pp. 51, 62 in Cheng (1953), p. 149: “It is moreover, a principle generally accepted in the jurisprudence of International arbitration, as well as by municipal Courts that one party cannot avail himself of the fact that the other has not fulfilled some obligation [. . .] if the former party has, by some illegal act prevented the latter from fulfilling the obligation in question”. 71 Fallah (2020), p. 176. ‘Special treatment of such evidence is warranted, on the one hand, by the principles of proper administration of justice, good faith and ex iniuria ius non oritur, and on the other hand, by a desirable policy of deterring state misconduct and fostering unity of the international legal system’. See also Cheng (1953), p. 149. 72 Blair and Vidak (2018), p. 259. ‘In the absence of clear rules on the admissibility of illegally obtained evidence, a trend may be discerned based on existing case law. The authors draw a two-fold conclusion: first, the fact that evidence is obtained illegally will not automatically disqualify such evidence as inadmissible; and second, while a common test for deciding admissibility of unlawfully obtained evidence is still to be defined [. . .]’ 73 Pilkov (2014), p. 2. 74 ALI/Unidroit Draft Rules of Transnational Civil Procedure, 2000, Rule 24.2. 68

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under which the document was produced. Documents regarding state secrets (or the secrets of international organisations) would probably belong to one of these categories, but they are in any case privileged as a separate category. Clearly, the question of whether a party honestly believes certain documents to be reserved is not decisive: unless the parties agree, this is a matter for the tribunal to determine. In general terms, scholars conclude that if a party is allowed to restrict its own obligation of disclosure because of an applicable privilege, the other party is allowed to make use of a similar privilege on the basis of the principle of equality of the parties. Intuitively, this equality may be more formal than substantial because the party in question does not necessarily have an interest in keeping some of its documents concealed. However, no party should be allowed to make claims based on evidence that the party itself intends to keep confidential since this evidence could not be examined and commented upon by the opponent.75 In Biwater Gauff v. Tanzania,76 the ICSID tribunal claimed not to be bound in any way by national law procedures. The question arose because of some documents that according to the defendant should remain secret on the basis of an internal rule that prevented certain public administration documents from being shown. The tribunal observed not only that such a strong privilege would have violated the principle of equality of arms but also that its own nature as an international tribunal allowed it to inquire into the responsibility of a state and therefore to reject any objection based on principles of internal law.77 The analogies with the decision of the Mixed French-Mexican Commission in the 1927 Mallen case, in which it was specified that ‘the Commission can not apply strict rules of evidence such as re-prescribed by domestic law’,78 and with the 1903 Lozano case, in which the Mixed Spanish-Venezuelan Commission remarked that ‘the question of admissibility of the proof presented shall not prejudge its efficacy, which shall be appreciated [. . .] without regard to objections of a technical nature, or provisions of a local legislature’,79 are evident.

75

Petrochilos (2004), p. 221. Biwater Gauff (Tanzania) Ltd., v. United Republic of Tanzania, ICSID Case No. Arb/05/22. 77 Biwater Gauff v. Tanzania, Procedural Order No. 2, May 2006, p. 8: “[. . .] the nature of this dispute resolution process is entirely different from a national court process. This is an international tribunal, governed by an international convention, which is mandated to enquire into the conduct and responsibility of a State in light of its international treaty and customary international law obligations. It is hardly conceivable that, in this setting, a State might invoke domestic notions of public interest and policy relating to the operations of its own Government as a basis to object to the production of documents which are relevant to determine whether the State has violated its international obligations and whether, therefore, its international responsibility is engaged. This is certainly not the context in which the doctrine of ‘public interest immunity’ was developed”. 78 Mallen Case, 1927, Concurrent Opinion by the American Commissioner, Op. of Com. 1927, p. 264, at p. 268, in Cheng (1953), p. 308. 79 Lozano Case, Mixed Claims Commission (Spain-Venezuela) 1903, Vol. X, pp. 735–759. See also, Sandifer (1975), p. 13. 76

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The ICSID tribunal also had to ensure that the principle of equality of arms was respected in Libananco v. Turkey,80 from which the opinion of Judge Cançado Trindade was previously quoted. In the Libananco case, a Cypriot investor brought a dispute against Turkey on the seizure of some industrial companies operating in the energy sector. The dispute was further complicated by the suspicion that Turkey might be using its security forces to spy on electronic mail between the claimant and its counsel. In February 2008, the claimant informed the tribunal that according to a newspaper, Turkey had intercepted approximately 1000 emails and confidential messages. Initially, the reaction of the Turkish government was to deny the accusation. When the claimant was able to produce documentary evidence of the interception, the government replied that criminal investigations could not be suspended just because of a pending ICSID arbitration. Turkey also admitted that the counsel’s emails had been intercepted while denying any intention to violate professional confidentiality or to communicate the acquired information to the arbitrators conducting the proceedings. Finally, Turkey observed that after a meeting with the prosecutor general, the privileged documents that should not have been intercepted had been destroyed. The claimant’s counsel noted that prejudice had already been caused and that the interception was an intimidatory act. The counsel then asked for a summary judgement in favour of its client. The tribunal considered the situation very seriously, observing that the events had strongly undermined the basic principles of procedural fairness and the respect for the legal prerogatives of the claiming party. Moreover, the action constituted a lack of respect for the tribunal itself. The judges also reminded the parties that like any international tribunal, the ICSID is endowed with inherent powers to ensure the integrity of any case brought before its jurisdiction regardless of whether the party committing a violation is an individual or a sovereign state.81 Nevertheless, the tribunal rejected the application for a summary judgement, which would have been a way to sanction Turkey’s behaviour, accepting instead Turkey’s commitment not to repeat such an action. The tribunal also specified that it gave great importance to privileges and confidentiality.82 From its own perspective, the tribunal could not rely on any particularly significant precedent; therefore, it chose to adopt a practical approach by considering the actual prejudice that could have been caused to the damaged party by the breach of the obligation of fairness and good faith.83 Ultimately, the tribunal did not impose sanctions but simply recognised Turkey’s responsibility, as the ICJ did with the United Kingdom in the Corfu Channel case. This leaves open the question of the appropriateness of a sanction that in the case of relationships between states shortly after a war could certainly have a much more dissuasive effect than it would have today in investment arbitration procedures.

80 Libananco Holdings Co. v. Turkey, ICSID Case no. Arb/06/8, Decision on preliminary issues, 23 June 2008. 81 Libananco Holdings Co. v. Turkey, Decision on preliminary issues, para. 78. 82 Ibid., para. 80. 83 Nelson (2008), p. 3.

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In the field of investments, the only precedent for the matter is the Methanex case,84 in which one of the parties used private detectives ‘to rummage through the garbage’ of a third party to find documents in support of its cause. The plaintiff claimed that ‘its evidence-gathering tactics’ were legal,85 but the judges expressed a different opinion: in particular, the tribunal stated that the means used by the plaintiff were wrong, just as it would be considered wrong if the US had employed its secret services to spy on the opposing party.86 The plaintiff’s behaviour was found to be in breach of the UNCITRAL rules. In these cases, as in those previously treated, the inadmissibility strictu sensu of a piece of evidence must be proven by the party opposing its submission.

4.3.2

ICJ Guidance on the Issue of Settlement Privilege

The ICJ has set one clear restriction on the principle of free admissibility, ostensibly in order to ensure good judicial order. Devaney highlights that ‘the first of this limitation is evidence originating from negotiations between the parties seeking resolution of a particular dispute’.87 This has been described as ‘[p]erhaps the only clear-cut example of evidence being considered inadmissible by the Court’.88 The consistent practice with regard to negotiations between States seeking to resolve a particular dispute has led to the development of a general rule that the Court will not ‘consider evidence consisting of statements [. . .] made in the course of such negotiations, so that the information or documents generated cannot then be used against the parties in any pending or future litigation’.89 A clear example of this limitation can be seen in the Chorzóv Factory case of 1927 in which the PCIJ stated ‘[that it] has already had occasion to state that it can take no account of declarations, admissions or proposals which the Parties may have made during direct negotiations between them’.90 This vision is a common principle of general international law that is also widely accepted in international commercial and investment arbitration. According to Jeffrey Waincymer, who has written extensively on international commercial arbitration, ‘it is generally accepted that without prejudice or otherwise confidential comments during settlement negotiations are not admissible before a tribunal’.91

84

Methanex Corporation v. United States of America, UNCITRAL, Final award, 3 August 2005. Ibid., para. 44. 86 Ibid., para. 54. 87 Devaney (2016), p. 37. 88 Riddel and Plant (2009), p. 154. 89 Kazazi (1996), p. 402. 90 Chorzow Factory Case, 1927, P.C.I.J. A. 9, p. 19; Merits A.17. 91 Waincymer (2012), p. 813. 85

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In international investment arbitration, there are two leading case on this issue:92 in SGS v Paraguay of 2012, a BIT case under the ICSID Arbitration Rules, the Respondent asserted that certain discussions between the parties were protected by settlement privilege, but the Tribunal did not rule on the question of privilege.93 In Merrill Ring Forestry v Canada,94 a NAFTA case under the UNCITRAL Arbitration Rules, the Tribunal held that all statements made in connection with or during consultations held pursuant to Article 1118 of NAFTA (‘the disputing parties should first attempt to settle a claim through consultation or negotiation’) were confidential and privileged settlement discussions. This attitude of the tribunals is also codified in article 9.3(b) of the IBA Rules on the Taking of Evidence in International Arbitration. The commentary states, ‘The broad language used in article 9.3(b) (“in connection with and for the purpose of”) takes into account the fact that settlement privileges relate not only to oral or written statements submitted to the other side during the negotiations, but also to internal documents prepared specifically for these negotiations’.95 It seems that on this issue it is fair to conclude that at the procedural level, the same rules apply both in the field of general international adjudication and in the field of commercial and investment arbitration.

4.3.3

Evidence Produced After the Expiry of the Time Limit Set by the Tribunal

In the field of international disputes, cases of inadmissibility of evidence are often due to the evidence being presented after the expiry of the time limit. Although it is useful for a tribunal to have access to all the evidence concerning a case, it has been observed that it is neither appropriate nor useful for the parties to keep the tribunal at their disposal by choosing without any limitation when they will submit their 92

Sheppard (2016), p. 682. SGS Société Générale de Surveillance S.A. v. The Republic of Paraguay, ICSID Case No. ARB/07/29, Award, 10 February 2012, para. 65. “[. . .] Respondent also asserts that at no point did Paraguay make an unequivocal promise to pay and that much of the discussion between the parties is protected by settlement privilege. The Tribunal will address the relevance of these matters in due course. However, apart from these points, neither party contests the occurrence of the events as described.” 94 Merrill & Ring Forestry LP v Government of Canada, UNCITRAL, Amended Confidentiality Order, 18 February 2008, para 22. All statements made in connection with or during the consultations are confidential and privileged settlement discussions. All such statements are made without prejudice to either disputing party’s legal position, and shall be inadmissible for any purpose in any legal proceeding. Any information disclosed by or on behalf of a disputing party shall be confidential and shall not constitute a waiver of any privilege. Any files or notes created or maintained by the disputing parties are solely for their own use and shall be destroyed following the termination of the consultations. 95 Ashford (2013), p. 159. 93

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evidence.96 Usually, the conflict between the need to reach a conclusion within a reasonable period of time and the obligation to ensure that each party has the opportunity to present its case is reconciled by admitting evidence produced after the time limit provided that this does not affect the principle of equality of the parties and that there is no dilatory purpose. The problem is not significant as long as both parties agree. For instance, in the case of Minquiers and Ecréhos,97 both litigants submitted evidence to the ICJ after the closure of the written part of the proceedings, but neither France nor the United Kingdom raised objections to the evidence presented by the opposing party.98 In the field of investments, the matter is regulated principally by Article 33 of the Rules of Arbitral Procedure, which requires that both parties indicate to the ICSID Secretary General, within the time limits set by the tribunal, which evidence they intend to produce and which they intend to request from the other party. This provision appears to be influenced by civil law and shows a clear disapproval of surprise evidence. Although it has been explicitly established that evidence must be submitted within the time limits set by arbitrators, arbitrators themselves have generally adopted a rather liberal attitude on this matter following the general practice of international tribunals. An example of this approach can be seen in the previously mentioned case Benvenuti & Bonfant v. Congo, where the tribunal, despite the objections of the lawyers of the claimant,99 accepted Congo’s request to send documents.100 However, the exception was at least partially justified by the political situation in Congo at the time, which had certainly prevented the normal functioning of some Congolese ministries.101

4.3.4

False Evidence and New Evidence Discovered After the Award

The issue of false evidence is a matter that has always be treated with great caution by international tribunals,102 including the ICJ, which in this matter has not satisfactorily fulfilled its role of guidance of international law. 96

Amerasinghe (2005), p. 167. The Minquiers and Ecrehos case, Judgment of November 17th, 1953, I.C. J. Reports 1953, p. 47. 98 Fitzmaurice (1980), p. 577. 99 Benventi & Bonfant v. Congo, ICSID Reports, n.1, Cambridge University Press, 2000, p. 343, para. 1.32. 100 Ibid., para. 1.29. 101 Ibid., p. 344, para. 1.33: “The tribunal nevertheless considered that special circumstances of a domestic political nature had prevented the normal functioning of certain Congolese State agencies, and these were such to explain the government failure to comply with the successive time limits fixed by the Tribunal”. 102 Chen (2015), ‘One commentator expressed his disagreement this way: “it might be opportune for further thought to be given to the procedure that should be followed if it is alleged that false 97

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The matter of false evidence arose for the first time in Qatar v. Bahrain103 in 2001 with respect to certain disputes between the two States relating to sovereignty over the Hawar Islands, sovereign rights over the shoals of Dibal and Qit’at Jaradah, and the delimitation of their maritime areas. In this case, Qatar relied on 82 documents the authenticity of which was later challenged by the agents of Bahrain. The Court ordered Qatar to file an interim report on the authenticity of such documents. As the Court stated in its judgement of 2001, 20. Qatar duly filed its interim report within the time-limit fixed. Citing the differing views between the experts of the Parties and between its own experts, Qatar stated in that report that it had ‘decided [to] disregard all the 82 challenged documents for the purposes of the present case so as to enable the Court to address the merits of the case without further procedural complications’. In a letter of 27 November 1998, the Agent of Bahrain noted ‘the effective abandonment by Qatar of [. . .] the impeached documents’ and concluded in consequence that Qatar ‘cannot make any further reference to the 82 forged documents, that it will not adduce the content of these documents in connection with any of its arguments and that, in general, the merits of the case will be adjudicated by the Court without regard to these documents’. By letter of 15 December 1998, the Agent of Qatar expressed ‘[his Government’s] regret at the situation that [had] arisen and the inconvenience that this [had] caused to the Court and Bahrain’.104

The flawed approach of the Court was correctly voiced by Judge Fortier, who in his separate opinion held the following: 6. [. . .] in my opinion I cannot consider Qatar’s case without having in mind the damage that would have been done to the administration of international justice, indeed to the very position of this Court, if the challenge by Bahrain of the authenticity of these documents had not led Qatar, eventually, to inform the Court that it had ‘decided [to] disregard al1 the 82 challenged documents for the purposes of the present case’. [. . .] 11 [. . .] I believe that the Court, in considering the Parties’ conflicting versions of the facts in this case, had a duty to do more than merely narrate the Parties’ respective exchange of letters following Bahrain’s challenge of the authenticity of 82 documents which loomed as central to Qatar’s case. I regret that it elected not to do so.105

The reluctance of the ICJ to draw adverse inference against a party which has submitted false evidence has made its way to the realm of international economic

evidence has been presented to the Court, as well as investigating the sanctions available”. In point of fact, this was not the first time that the ICJ was confronted with an allegation of altered documents. In a previous case, the court chose not to say anything as well, effectively treating those documents as non-existent’. 103 Maritime Delimitation and Territorial Questions between Qatar and Bahrain, Merits, Judgment, I.C.J. Reports 2001, p. 40. 104 Maritime Delimitation and Territorial Questions between Qatar and Bahrain, Merits, Judgment, I.C.J. Reports 2001, p. 40, para. 20. 105 Maritime Delimitation and Territorial Questions between Qatar and Bahrain, Merits, Judgment, I.C.J. Reports 2001, p. 40, para. 20., Separate opinion of judge Fortier para. 6-11.

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law and has been qualified as a presumption of good faith of evidence emanating from international law subjects in international economic adjudication. In interstate arbitration in the WTO system, the arbitrators draw express inspiration from the ICJ approach (confirming its role of guidance), holding the following: 2.11 However, since this case relates to subsidies granted for the purchase of aircraft produced by the Brazilian aircraft manufacturer, Embraer, a large number of data essential for the resolution of our task is only available to that company. We assumed that Embraer was independent from the Brazilian government and, for that reason, we could not treat statements from that company as we would have if they had originated from a subject of international law.106

A similar position was held in another WTO case where the members of the panel confirmed the enduring validity of such presumption of good faith when evidence comes from international law subjects.107 Before ICSID arbitral tribunals, the issue arose in a different manner because new evidence was discovered after the arbitral tribunal had rendered its award. The problem of decisions adopted on the basis of false evidence or, similarly, the discovery after an award of new evidence that would have been sufficient to determine a different outcome, has long-fascinated scholars and generated difficulties for international arbitrators given the unlikelihood of finding adequate solutions to the many complex issues arising from such situations. This subject has been treated at the level of national law, but it emerges in all its complexity in international arbitration. This should not be surprising: whereas in national law these problems can be resolved by legislators in a more or less satisfactory way, in the field of 106 Brazil - Export Financing Programme for Aircraft - Recourse to Arbitration by Brazil under Article 22.6 of the DSU and Article 4.11 of the SCM Agreement - Decision by the Arbitrator, WT/DS46/ARB, 28/08/2000, para. 2.11. See also note. 15 ‘See preceding paragraph, where we apply a presumption of good faith to statements and evidence originating in subjects of international law (on production and appraisal of evidence, see, inter alia, International Court of Justice (“ICJ”) judgement of 9 April 1949 Corfu Channel Case, ICJ Reports 1949, p. 32; ICJ judgement of 11 September 1992 Land, Island and Maritime Frontier Dispute (El Salvador v. Honduras, Nicaragua intervening), ICJ Reports 1992, p. 399, para. 63; ICJ judgement on merits Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. United States of America), ICJ Reports 1986, p. 40, para. 60.’ 107 European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India - Report of the Panel, WT/DS141/R, 30/10/2000, 6.216 ‘As noted above, India bears the burden of coming forward with sufficient evidence to make a prima facie case that the European Communities failed to act consistently with its obligations under Article 5.4 to determine the necessary level of support prior to initiation. We presume that Members act in good faith in the context of dispute settlement proceedings, and are unwilling to assume possible malfeasance in the absence of evidence to that effect. We consider that the “doubts” which India has as to the European Communities’ actions in this regard do not establish the necessary prima facie case in this context—the “evidence” of the fax headers relied on by India does not, in our view, constitute evidence of fraud sufficient to overcome the presumption of good faith. Moreover, we believe it is more probable that these inconsistencies in the photocopies are attributable to the photocopying itself, rather than to the perpetration of a massive fabrication of fax headers and footers by the EC investigating authority to hide a failure to make a determination of standing prior to initiation. We therefore do not consider it necessary to examine the originals of the documents in question’.

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international arbitration, given the general lack of specific provisions regulating the functioning of those jurisdictions, the possible solutions emerge from principles of law inferred from the general system. This is a thorny issue because of the overcrowding of general principles in this field. On one side, there are principles regulating evidentiary material and, more generally, the course of proceedings, such as the adversarial principle that ensures the right of every party to present its case, and on the other side, there are principles such as res judicata108 intended to prevent re-litigation and ensure that procedures are fast and efficient. The latter are very important principles in the field of investments because as is widely recognised, one of the most attractive aspects of the ICSID convention is precisely the ‘finality’109 of its awards, whose implementation cannot be contested.110 During the drafting of the convention, the problem of finding a balance between procedural fairness and decisional rapidity was a significant factor in shaping the annulment mechanism, which was not conceived as an appeal but rather as a narrow remedy intended to control the actions of the tribunal from a procedural perspective. From this perspective, a limitation of rights and entitlements is considered acceptable since more importance is given to the speed of the decision. This cannot be ignored because the use of additional remedies at a judicial level to fill potential gaps in the law must inevitably take into account the general legal system, and judges cannot disregard the balance of principles identified in the drafting of the convention, nor can they ignore the need to do justice to the parties, which is intrinsic to any legal system. Therefore, any potential solution must not only consider the remedies available to the parties, but it must also identify the legal premises necessary to implement those remedies. This issue arose in all its complexity in Conoco Philipps v. Venezuela, which is here analysed for a deeper understanding of the matter. The dispute concerned a change in the royalties paid by the US company to the South American country for extraction of crude oil. An agreement between the parties established that in case of an increase in the applicable rate of income tax, the state should offer an adequate compensation through good faith negotiations, though the parties intended to keep their negotiations confidential. For this reason, the ICSID tribunal found itself in the unusual situation of having to decide, without knowing the content of Venezuela’s proposals, whether they were derisory as claimed by the plaintiff or whether they complied with the government’s obligations. During the hearings, both parties called

108

The validity and the importance of the principle of res judicata in international law has been recently confirmed by the I.C.J. in the Case Maritime Delimitation in the Caribbean Sea and the Pacific Ocean (Costa Rica v. Nicaragua) and Land Boundary in the Northern Part of Isla Portillos (Costa Rica v. Nicaragua), Judgment, I.C.J. Reports 2018, p. 139 and in the case Question of the Delimitation of the Continental Shelf between Nicaragua and Colombia beyond 200 Nautical Miles from the Nicaraguan Coast (Nicaragua v. Colombia), Preliminary Objections, Judgment, I.C.J. Reports 2016 (I), p. 125, para. 58. 109 The term “finality” refers exactly to the fact that the dispute is definitively resolved by the judgment. 110 Bishop and Marchili (2012), p. 20.

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their negotiators as witnesses, and both negotiators respected the obligation of confidentiality but confirmed the arguments of their own parties. The tribunal decided not to give credibility to the witness of the government and considered the assertions of the negotiator appointed by the company as decisive. To explain its decision, the tribunal observed that ‘whatever confidentiality agreement there was, has not prevented the submission to it by the Respondent of the ConocoPhillips proposals of June and August 2007’.111 On 3 September 2013,112 the ICSID tribunal rendered its first award, which established the responsibility of Venezuela and postponed the determination of the amount to be paid. However, in the period between the partial decision and the decision that should have determined the amount of compensation, the Wikileaks case broke. Among the leaked papers were US embassy documents that proved that Venezuela had indeed conducted productive negotiations: therefore, the content of the decision should have been reviewed. The delicate question was submitted to the tribunal by the attorneys of the defendant in a letter dated 8 September 2013, which requested a new hearing to examine the new evidence. In particular, the defence panel asked for a ‘reconsideration’113 of the decision of 3 September 2013. It would have been interesting to examine the tribunal’s position on the admissibility of new evidence—which, incidentally, had been unlawfully obtained by a third party acting outside the defendant’s control. However, this will not be possible since the tribunal rejected the reconsideration request in a statement dated 10 March 2014114 in which it was clarified (§9) that the matter of evidence would not be examined. The judges believed that it was necessary to resolve the preliminary issue of whether the ICSID tribunal was allowed to reconsider its own partial decision because of some inherent power: the answer given to this question was negative. For this reason, the tribunal stated that there was no necessity to consider the substance of the case. Venezuela’s request was therefore rejected on the basis of strictly procedural arguments, which generated severe criticism from the dissenting Judge

111 Conoco Phillips Petrouzata B.V., Conoco Phillips Hamaca B.V. Conoco Phillips Gulf of Paria B.V. and Conoco Phillips Company v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/ 30, Decision on Jurisdiction and the Merits, 3 September 2013, §400. 112 Ibidem. 113 The term “reconsideration”, used by the lawyers of the defendant, is of difficult classification. It is not easy to understand whether it refers to an ordinary or extraordinary remedy. It could be associated with the remedy of revision, but the latter is provided for in Article 51 of the ICSID convention, which sets time limits for its use: it is no coincidence that the letter requesting “reconsideration” makes reference to the tribunal’s inherent powers, thus demonstrating that there was no clear legal basis to support the request. The general features of this remedy, as it appears to be intended in this case, are as follows: (1) that it can be used for both final and non-final judgements, and (2) that it can be used for both errores in judicando and errores in procedendo. 114 Conoco Phillips Petrouzata B.V., Conoco Phillips Hamaca B.V. Conoco Phillips Gulf of Paria B.V. and Conoco Phillips Company v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/ 30, Decision on Respondent’s Request for Reconsideration, 10 March 2014.

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Abi-Saab. In fact, it is useful to begin from Judge Abi-Saab’s dissenting opinion115 to discuss the issues arising from this decision, which involved both the theme of evidence and that of inherent powers in evidentiary and procedural matters. In his dissenting opinion, arbitrator Abi-Saab identified a logical mistake in the method used by the majority of the arbitration panel to decide on the question submitted.116 In the decision concerning the reconsideration, the majority observed that ‘this decision is limited to answering the question whether the Tribunal has the power which the Respondent would have it exercise. The decision does not address the grounds the Respondent invokes for reconsidering the part of the Decision which it challenges and the evidence which it sees as supporting those grounds. The [decision-making] power must be shown to exist before it can be exercised’.117 The dissenting judge believed that while the last sentence quoted above was correct, the point that the arbitrator considered implicit in the reasoning of the majority (that the existence of the power must be assessed separately before considering the legal bases on which it would exercise the power)118 was seriously incorrect. According to arbitrator Abi-Saab, the existence of the power must depend upon and its scope vary according to the fulfilment of the specific purpose for which the power has been given. In other words, the power varies depending on the aim pursued. This reasoning is certainly fascinating, but this matter is not undisputed in legal doctrine. An element of the doctrine119 has identified several general principles of law as possible sources of the ‘inherent powers’, one of which is the duty to carry out the judicial function.120 This approach dates back to the jurisprudence of the PCIJ, which in the Mavrommatis Palestine Concession case of 1924 declared itself at liberty to adopt ‘the principle which it considers best calculated to ensure the administration of justice, most suited to procedure before an international tribunal and most in conformity with the fundamental principles of international law’.121 Significant jurisprudential data to evaluate the approach of the ICJ regarding inherent powers can be found in the two decisions relating to New Zealand v. France of 1974 and 1995, respectively. In the first judgment, the Court developed a very broad vision of its implicit powers. In para. 23 of the first decision, the Court declared that it was invested with an ‘inherent jurisdiction’ allowing it to take any initiative it deemed necessary to

115 Conoco Phillips Company v. Venezuela, Decision on Respondent’s Request for Reconsideration, Dissenting Opinion of Georges Abi-Saab. 116 Ibid., para. 3. 117 Conoco Phillips Company v. Venezuela, Decision on Respondent’s Request for Reconsideration, 10 March 2014, para. 9. 118 Conoco Phillips Company v. Venezuela, Dissenting Opinion of Georges Abi-Saab, para. 4. 119 Brown (2009), p. 80. 120 Ibidem. 121 Mavrommatis Palestine Concessions (Greece v. U.K.), 1924 P.C.I.J. (ser. B) No. 3 (Aug. 30), p. 16.

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ensure that the exercise of its jurisdiction over the merits, if and when it exists, is not frustrated. The Court simultaneously observed that its inherent powers performed the function of ensuring compliance with the ‘inherent limitations on the exercise of the judicial function of the Court, and to maintain its judicial character’.122 As is well known, the Court decided that given the French president’s declaration that the country would not continue with atmospheric nuclear tests, the dispute was devoid of purpose, and therefore there was no reason to continue with the examination of the case. However, in para. 63 of the judgment, the ICJ by virtue of its inherent powers granted New Zealand the possibility of requesting a re-examination of the situation if the basis of the 1974 judgment had been altered by France’s subsequent conduct. In 1995, New Zealand made a request for a review of the situation since France had conducted some underground nuclear tests.123 The plaintiff identified the legal basis of his request directly in para. 63 of the 1974 sentence, noting that the initiatives of France made it necessary to reopen the trial. The Court in its subsequent decision reopened the case, thereby advocating for itself a new atypical remedy originating from its judicial function.124 Thirlway Hugh criticises this idea, suggesting that ‘the Court has sometimes indicated that its action or inaction (particularly in procedural matters) is dictated by consideration of “sound administration of justice”,125 which, it has been suggested acts as a sort of compass in procedural questions. The danger of this expression [. . .] is its lack of precision’. However imprecise the definition of inherent power may be, I suggest that its existence in the jurisprudence of the Court cannot be denied and that it is another situation in which the precedents of the ICJ represent a good guideline for investment arbitrators. Accepting this theory means agreeing with the functional interpretation proposed by the dissenting arbitrator. However, if these convincing premises are accepted, the criterion with which to define the limits of the exercise of the inherent powers is still to be identified. Although scholars agree that the tribunal’s inherent powers are not a carte blanche allowing them exorbitant prerogatives,126 it is true that there are no certainties in the definitions of the limitations. The difficulties of the doctrine lie in the choice of a criterion for attributing powers whose etiological and teleological profiles tend to overlap. In other words, a criterion which could be summarised in a sentence such as ‘the court has the powers it feels necessary to have’ does not appear to be very respectful of the modern view of judicial powers that is

122

Nuclear Tests (New Zealand v. France) Judgment, ICJ Reports 1974, p. 457 at para. 23. Request for an Examination of the Situation in Accordance with Paragraph 63 of the Court’s Judgment of 20 December 1974 in the Nuclear Tests (New Zealand v. France) Case, ICJ Reports 1995, p. 288. 124 On this issue see Cortesi (2015), pp. 556–557. 125 Thirlway (2016), p. 60. 126 Brown (2009), p. 78. 123

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based on the theory of the rule of law. The most recent doctrine has similarly criticised the tendency of some authors to define the limits of inherent powers through the same arguments used to demonstrate their existence. Those results have thus been considered of dubious value.127 The doctrine then reaches a conclusion that currently appears unsatisfactory, identifying different limits depending on the relationship between the parties: when international judges are more regardful towards litigants, the tribunals are usually less inclined to use powers not expressly provided for, whereas other jurisdictions, especially those in the private or investment field such as the ICSID, have proven to be more inclined to use their inherent powers.128 This latter observation, albeit of uncertain value, may tilt the balance in favour of the existence of the aforementioned inherent power, thus allowing a rehearing on the controversial issue. Once the possibility of exercising the inherent power is established, its nature and scope must be clarified. Regarding its nature, the first problem arising is purely procedural: it is not clear whether the power to reconsider some parts of the award is ordinary or extraordinary in nature since there is no certainty of whether the award rendered on 3 September 2013 should be considered res judicata. This issue is addressed in the dissenting opinion, which highlights some contradictions. As arbitrator Abi-Saab observes, the majority attempted to ignore the logical contradiction between two sentences of the decision of 3 September:129 the first states that all decisions reached before the decision on the merits should be incorporated into the final decision, which would prove that partial decisions are not yet res judicata, and the second states that ‘it is established as a matter of principle and practice that such decisions that resolve points of dispute between the Parties have res judicata effect’130 (italics in the original). This topic is a significant one, because the value of res judicata as a general principle of international law131 has often been opposed to the theory of inherent powers when discussing the matter of rehearing,132 and the doctrine takes into account whether the tribunal has already rendered the final award in its consideration of reopening the case.133 In particular, it is often noted that in the practice of mixed

127 Paparinskis (2011), p. 8: “The better view is that these criteria, while relevant to the concept of inherent powers, are not limitations of inherent powers. The first three propositions form a part of the process of identifying the existence and scope of inherent powers. For example, if inherent powers are derived from the necessity to fulfill international judicial functions, the nature of judicial jurisdiction and functions of the particular court will form a part of the argument for establishing the scope and content of inherent powers. It seems superfluous to reintroduce the same arguments as limitations”. 128 Brown (2009), p. 81. 129 Conoco Phillips Company v. Venezuela, Decision on jurisdiction and the merits, 3 September 2013, para. 20. 130 Conoco Phillips Company v. Venezuela, Dissenting Opinion of Georges Abi-Saab, para. 37. 131 Wehland (2013), p. 168. See also, Cheng (1953), p. 336. 132 Brown (2009), p. 183. 133 Sandifer (1975), p. 283.

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claims commissions, once a matter has been decided, the judges are usually very reluctant to reopen a case unless there is an explicit authorisation from the parties or a clear provision in the statutory document of the commission. The Leggett case and the Pious Found case between Mexico and the US, both decided under the treaty of 22 May 1902, have been quoted as examples. In Pious Found in particular, the tribunal specified that the rule of res judicata ‘applies not only to the judgements of tribunals created by the State, but equally to arbitral awards rendered within the limits of the jurisdiction established by the compromis’.134 In the most recent awards, a tribunal perhaps unconvincingly argued that interim decision are not res judicata, but they still bind the parties.135 Assuming the premises analysed so far, the question may be summarised as follows: one party which, without fault, has not been able to submit potentially decisive evidence in favour of its own position loses the case but cannot ask for an immediate reconsideration of its evidence because the interlocutory judgement which settled part of the dispute must be intended as res judicata; in addition, the party cannot ask for a revision because the first instance trial has not yet concluded. Later, when the amount of compensation has been determined, the party can send an appeal request to the ICSID ad hoc annulment committee, but there is a significant risk that the request will be denied. The doctrine is divided on the possibility of submitting new evidence before the annulment committee: although in the ICSID cases of Sempra136 and Enron137 new evidence was considered, the common opinion makes reference to the cases of Wena138 and MTD,139 in which the annulment procedure was seen as a remedy that did not include the examination of new evidence.140

134

Sandifer (1975), p. 285, n. 3. GMBH and RWE Innogy AERSA S.A.U. v. Kingdom of Spain, ICSID Case No. ARB/14/34, Award, 18 December 2020 para. 90. ‘On this basis, prior determinations such as made in the Decision would be seen as binding on the Parties, but not res judicata as such. This does not in any way mean that such determinations could be revisited at will: they still bind the Parties. [. . .] 91 The Tribunal has not been referred to the Standard Chartered Bank and Burlington Resources cases and, in the current case, it does not see the slightly different approach there adopted as material. While the Tribunal notes the conclusion reached by the tribunals in Standard Chartered Bank and Burlington Resources that it may be appropriate for an ICSID tribunal to re-open a decision in exceptional circumstances such as, by analogy, where the circumstances would justify revision under Article 51 of the Convention, no such circumstances have been put before the Tribunal’. 136 Sempra Energy International v. Argentine Republic, ICSID Case No ARB/00/4, Decision on the Argentine Republic’s Request for Annulment of the Award, 29 June 2010. 137 Enron Creditors Recovery Corp and Ponderosa Assets, LP v. Argentine Republic, ICSID case No ARB/01/3, Decision on the Argentine Republic’s Request for Annulment of the Award, 30 June 2010. 138 Wena Hotels Limited v. Egypt, ICSID Case No ARB/98/4, on the Arab Republic of Egypt Request for Annulment of the Award, 8 December 2000. 139 MTD Equity Sdn Bhd and MTD Chile SA v. Chile, ICSID Case NO ARB/01/7 Decision on the Application for Annulment of the Republic of Chile, 21 March 2007. 140 Bishop and Marchili (2012), p. 199. 135

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One final possibility after a final award rendered by ICSID could be to allow the losing party to file a revision request based on Article 51 of the convention. However, the party would bear a high standard of proof for the request to be admitted141 and, more importantly, because of the provision of Article 51(4), the award would be temporarily executed.142 Another aspect143 criticised by judge Abi-Saab in his dissenting opinion was the majority’s decision not to consider Article 38 of the ICSID Arbitration Rules of Procedure,144 which allows the ICSID tribunal to reopen a proceeding in the event of potentially decisive new evidence.145 It is true that tribunals have historically been reluctant to re-examine a case and allow the parties to submit new evidence after the oral procedure is closed, albeit with potential exceptions. An example can be found in the practice of the Iran-US Claims Tribunal, where there was clear tension between the two poles, namely the reluctance to reopen the oral procedure and the possible exceptions due to very particular situations. It should be said that initially, when a reconsideration of some pieces of evidence in Dames and Moore v. Islamic Republic of Iran was requested, the tribunal showed extreme caution. It stated that each party had the right to submit evidence before the tribunal rendered the award, but this right was no longer in force after the award had been rendered. Undoubtedly, after the closure of the oral procedure (which the tribunal intends as the hearing in which the conclusions are made clear), no evidence can be admitted unless the tribunal itself deems it necessary due to exceptional circumstances. Consequently, the right to reopen the oral procedure is not a given, but it may exist if certain circumstances arise before the rendering of the award. The crucial criterion for a decision to reopen the oral procedure is ‘if a tribunal find the aforementioned exceptional circumstances to have occurred’—a circumstance that the tribunal had never found in its 13 years of activity.146 In the Dames and Moore case, for the first time the tribunal found these circumstances to have occurred, principally because the case was almost entirely based on the credibility of certain people and, therefore, the tribunal deemed it fundamental to Kreindler (2010), p. 689: “As regards the general burden of proof in ICSID revision proceedings, in light of the exceptional nature of revision proceedings and their effects on res iudicata, strict standards must apply”. 142 “The Tribunal may, if it considers that the circumstances so require, stay enforcement of the award pending its decision. If the applicant requests a stay of enforcement of the award in his application, enforcement shall be stayed provisionally until the Tribunal rules on such request” (ICSID Convention, art. 51[4]). 143 Conoco Phillips Company v. Venezuela, Dissenting Opinion of Georges Abi-Saab, para 53. 144 Conoco Phillips Company v. Venezuela, Decision on Respondent’s Request for Reconsideration, 10 March 2014, para. 22. 145 Rule 38, Closure of the Proceeding: “(1) When the presentation of the case by the parties is completed, the proceeding shall be declared closed. (2) Exceptionally, the Tribunal may, before the award has been rendered, reopen the proceeding on the ground that new evidence is forthcoming of such a nature as to constitute a decisive factor, or that there is a vital need for clarification on certain specific points”. 146 Aldrich (1996), p. 450. 141

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cross-examine each of these witnesses in the presence of the others. A similar approach—namely reluctant but open to possibilities—can be found in the decision issued by the United States-Germany Mixed Claims Commission, which faced a similar problem in the 1922 Sabotage case.147 The Commission had been asked to decide on the responsibility of Germany in relation to two fires: one in New York Harbor and the other in an ammunition factory in New Jersey. Before proceeding to examine the case, it is worth mentioning how the Commission was organised. According to the statutory document,148 the Commission was composed of two bodies: two commissioners, one of American nationality and one German, and one Umpire, who would be chosen by the President of the US. The statutory agreement of the Commission stated that in case of disagreement between the two commissioners, the Umpire would suggest which rules were to be applied in each case or group of cases.149 In the first stage of the proceedings, the questions submitted by the American party were rejected because of lack of evidence. Later, in May 1933, the US lawyer asked for the case to be reopened because he believed that he had sufficient elements to prove that some of the evidence on which the Commission had based its decision was false. After the request, the members of the Commission communicated their disagreement with the hypothesis of reopening the case to the Umpire. Unsurprisingly, the German commissioner opposed the reconsideration while the US commissioner was in favour of it. Therefore, the Umpire’s decision did not concern the possible falseness of the evidence but rather the question of whether the Commission had the power to proceed to re-hearings. The test applied by the Umpire could be a particularly interesting basis from which to infer a regula iuris for the problem that arose in the Conoco case. In particular, in the Sabotage case, the solution to the problem was divided into three questions:

147 Lehigh Valley Railroad Company Agency of Canadian Car and Foundry Company, Limited and Various Underwrites (Sabotage Cases), Docket Nos. 8103, 8117 et alt. (sometimes known as the Black Tom and Kingsland cases) in Sandifer (1975), p. 287. 148 Mixed Claims Commission United States and Germany, Established in pursuance of the Agreement between the United States and Germany dated August 10, 1922, Rules of Procedure, As adopted November 15, 1922, and amended from time to time, to December 31, 1932. 149 See n. supra Art. 7 “Decisions”: “(c) The Umpire may join with the two National Commissioners in announcing — or in the event of their disagreement certified to him shall announce — principles and rules of decision applicable to a group or groups of cases for the guidance as far as applicable of the American Agent, the German Agent, and their respective counsel, in the preparation and presentation of all claims. (d) All decisions shall be in writing and signed by (1) the Umpire and the two National Commissioners, or (2) by the two National Commissioners where they are in agreement, or (3) by the Umpire alone when the two National Commissioners have certified their disagreement to him. Such decisions need not state the grounds upon which they are based in 1922 RULES OF PROCEDURE, As adopted November 15, 1922, and amended from time to time, to December 31, 1932”.

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(1) whether the Commission had misconstrued the evidence (2) whether the decision had been reached on the basis of false evidence (3) whether a piece of evidence discovered after the award had been presented150 The Sabotage case ended with an award, signed by the Umpire only, assigning a significant amount of compensation to the US party. The value of the last part of the procedure remains dubious since it was already 1939 and the German commissioner had left his role.151 However, the opinion expressed by the Umpire is particularly interesting. There are three methodological approaches applicable to the Conoco case. The first is the open approach. The underlying idea of the test proposed by the Umpire is that at least theoretically, the explicit conferral of reconsideration powers is not essential for a rehearing to be possible. Second, the ‘open-minded’ approach of the judicial body in the Sabotage case suggests that although the proceeding had already been concluded, the res judicata was not an insurmountable barrier. A third point, which is probably the most interesting one from a methodological perspective, concerns the pragmatic attitude of the Commission, which did not discuss at an abstract level whether the reconsideration power existed but focused instead on the actual circumstances of the case. In the Conoco case, one could conclude that the criticisms advanced by Judge Abi-Saab in his dissenting opinion regarding the excessive abstractness of the decision are convincing. The ICSID tribunal could have recalled the applicability of inferred rules in general international law and could thus have recognised that Article 38 of the Rules of Procedure, far from being a provision of minor importance, was the procedural counterpart of a general principle recognised at an international level according to which if a tribunal becomes aware of having ignored evidence of vital importance it cannot use the principle of res judicata to evade the obligation to provide justice to the parties. The most recent jurisprudence of the Ad Hoc Committee seems to uphold this view, stating the following: 159 The Committee therefore agrees that the Tribunal correctly identified its power to judge its own competence including the power to reconsider prior jurisdictional decisions, as provided by Articles 41(1) and 44 of the ICSID Convention and ICSID Arbitration Rules 41(1) and 41(2). 160 Additionally, SCB HK claims that under Arbitration Rule 38(2), there is no blanket prohibition on reconsidering decisions before an award, and that it may occur in exceptional circumstances. The Committee agrees with this position.152

However, the insufficiency of the majority’s decision is particularly clear at a methodological level: the decision to discuss the existence of power without taking

150

Sandifer (1975), p. 288. Carlston (1946), p. 50. 152 Standard Chartered Bank (Hong Kong) Limited and Tanzania Electric Supply Company Limited (TANESCO) ICSID Case No. ARB/10/20) (Annulment Proceeding), Decision on the Application for Annulment, August 22, 2018, para. 159–160. 151

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into consideration the evidence submitted by the defendant deprived the tribunal of an argument that could have allowed it to exercise the inherent power and at the same time narrow its application to a particular case.

4.4

Admissibility of Evidence: The ICJ Guidance: A Preliminary Conclusion

At the end of this chapter, it is possible to draw a conclusion about the issue of the admissibility of evidence in international investment arbitration. According to my findings, the general principle governing the law of evidence is that of the freedom of admission. Since the very beginning of international adjudication, the strict rules governing the admission of evidence in the common law system have had no place in international arbitration. However, during the years, certain limitations to this principle emerged, and some are well settled. The two general principles, relevance and materiality, can only be broadly defined since their application is more linked to the efficiency of the proceeding rather than to the protection of a precise rule of international law. Given the tailor-made nature of international arbitration, their interpretation shall remain smooth to ensure that their application can be adapted to each specific case. Moving to the more specific rules governing the admissibility of evidence, it is clear that as in the other chapter of the books, each matter is well settled in international investment arbitration only if it is clearly defined in general international adjudication. The best example is the settlement privilege clearly recognised by the ICJ and easily transposed in international investment arbitration. Jurisprudence related to other matters concerning the admissibility of evidence is far less accurate. A good example is the issue of illegally obtained evidence: since the ICJ never created a clear rule on this matter, the question of whether illegally gathered proofs are admissible before an international arbitral tribunal remains quite open. The reading of the awards suggests that arbitrators are rightly concerned with the necessity to protect the equality of the parties in a procedure. Disloyal evidencegathering tactics should have no place in international adjudication. The problem addressed in the last part concerning the existence of inherent powers of international tribunals to reopen a proceeding when new evidence is discovered after the arbitral tribunal has rendered its award is interesting, but the conclusions in favour of the existence of such power seem more grounded in the exigence of basic rights to justice than on a convincing interpretation of the rules of law.

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References Authors Aldrich GH (1996) The Jurisprudence of the Iran-US claims tribunal. Oxford University Press, New York Amerasinghe CF (2005) Evidence in international litigation. Martinus Nijhoff Publishers, Leiden Ashford P (2013) The IBA rules on the taking of evidence in international arbitration. Cambridge University Press, Cambridge Bishop RD, Marchili SM (2012) Annulment under the ICSID convention. Oxford University Press, Croydon Brown CA (2009) Common law of international adjudication. Oxford University Press, New York Carlston KS (1946) The process of international arbitration. Columbia University Press, New York Cheng B (1953) General principles of law as applied by International Courts and Tribunals. Stevens and Sons Limited, London Devaney JG (2016) Fact-Finding before the international Court of Justice. Cambridge University Press, Cambridge Elkind JB (1984) Non-Appearance before the International Court of Justice: functional and comparative analysis. Martinus Nijhoff Publishers, Dordrecht Kazazi M (1996) Burden of proof and related issues. Kluwer International, De Hague Niyungeko G (2005) La preuve devant les Juridictions Internationales. Éditions Bruylant, Bruxelles Petrochilos G (2004) Procedural law in international arbitration. Oxford University Press, New York Riddel A, Plant B (2009) Evidence before the international court of justice. British Institute of International and Comparative Law, London Rosenne S (1965) The law and practice of the international court, 2 vols, Leyden, A. W. Sithoff Sandifer DV (1975) Evidence before international tribunals. University Press of Virginia, Charlottesville Schreuer CH et al (2009) The ICSID convention, a commentary. Cambridge University Press, Cambridge Sipiorsky E (2019) Good faith in international investment arbitration. Oxford University Press, New York Thirlway H (2016) The international court of justice. Oxford University Press, New York Waincymer J (2012) Procedure and evidence in international arbitration. Kluwer Law International, Alphen aan de Rijn Wehland H (2013) The coordination of multiple proceedings in investment treaty arbitration. Oxford University Press, New York

Articles Blair C, Vidak E (2018) Gojkovic’WikiLeaks and beyond: discerning an international standard for the admissibility of illegally obtained evidence. ICSID Rev 33(1):235–259 Böckstiegel K-H (2001) Presenting evidence in international arbitration. ICSID Rev Foreign Investment Law J 16(I) Spring, pp 1–9 Chen S (2015) Re-assessing the evidentiary regime of the International Court of Justice: a case for codifying its discretion to exclude evidence. Int Comment Evid 13(1):1–40 Cortesi G (2015) Falsità delle Prove Scoperte dopo La Decisione Arbitrale e Rimedi Esperibili Nel Sistema ICSID. Diritto del Commercio Internazionale:556–557

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Fallah SM (2020) The admissibility of unlawfully obtained evidence before international courts and tribunals. Law Pract Int Courts Tribunals 19:147–176 Fitzmaurice G (1980) The problem of the “non-appearing” defendant government. Br Yearb Int Law 51:89–122 Klopschinsky S (2020) Public policy considerations in intellectual property-related international investment arbitration. In: Geiger C (ed) Intellectual property and investment law. Edward Elgar Publishing, Cheltenham Kreindler R, (2010) Application for “Revision” in investment arbitration: selected current issues. In: Fernández-Ballestreros M Á, Arias D (eds) Liber Amicorum, Bernardo Cremades, La Ley, Madrid, pp 679–697 Nelson TG (2008) Paranoids have enemies too: wiretapping and other clandestine informationgathering techniques in international arbitration. Mealey’s Int Arbitr Rep 23(9):3–9 Paparinskis M (2011) Inherent powers of ICSID tribunals: broad and rightly so, 1 July 2011 in investment treaty arbitration and international law, Vol. 5. In: Laird I, Weiler T (eds) Juris Publishing, http://ssrn.com/abstract¼1876705 Pietrowski R (2006) Evidence in international arbitration. Arbitr Int 22(3):373–410 Pilkov K (2014) Evidence in international arbitration: criteria for admission and evaluation. Arbitration 80(2):147–155 Sheppard A (2016) The approach of investment treaty tribunals to evidentiary privileges. ICSID Rev 31(3):670–689 Thirlway HWA (1984) Dilemma or Chimera? – admissibility of illegality obtained evidence in international adjudication. Am J Int Law:622–641 Von Mehren GM, Salomon CT (2003) Submitting evidence in an international arbitration: the common lawyer’s guide. J Int Arbitr 20(3), Kluwer Law International, Printed in The Netherlands, pp 285–294

Chapter 5

The Taking of Evidence

This chapter examines the taking of evidence in international arbitration in the field of investments. The subject of this chapter is closely tied to those of both Chaps. 4 and 6; the latter concerns the evaluation of evidence after it has been admitted and taken. There are of course topics which could be mentioned in the previous or subsequent chapter because the admissibility of a piece of evidence often depends on whether the evidence-taking procedure has been properly followed; additionally, the evaluation of the same piece of evidence, as in the emblematic case of testimonial evidence, varies widely depending on how it has been taken. For instance, if testimonial evidence is taken into consideration, it becomes apparent that the same declarations of knowledge of a fact may be more or less significant depending on whether they have been made through an informal written communication or through an accurate and direct cross-examination before the tribunal. However, for purposes of clarity and classification precision, the discussion has been divided into three chapters: Chap. 5 (the taking of evidence), Chap. 6 (the evaluation of evidence), and Chap. 7 (the standard of proof). The most significant linking points are highlighted from time to time. Of course, while identifying the rules and principles in force in the field of evidence taking, particular attention is given to the practical—or even mechanical—aspect of the taking of evidence: since the purposes of this dissertation are not just didactic ones, some aspects such as the preparation of witnesses or the current approaches to cross-examination are examined in order to not overlook those mechanisms which, albeit not important in a dogmatic sense, may often have great influence on the conduct of the proceedings and on their outcome. It is worth observing that as in many other fields of international law, that of evidence-taking in investment arbitration is not based on strict rules which apply in all situations without exceptions. On the contrary, for what concerns the whole field of evidence, the procedural system in force in arbitration is based on flexibility: for this reason, it

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_5

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is necessary to study jurisprudence and recurring situations in order to identify its main features.

5.1 5.1.1

The Applicable Legal Framework for the Taking of Evidence Equalities of Parties Before International Investment Tribunals: The Institute of International Law Resolution 2019 and the IBA Rules Amendment of 2020

When introducing the specific issue of the taking of evidence, it is important to highlight those important innovations occurred in 2019 and 2020. The first is the approval of the resolution of the Institute of International Law of 2019 on the Equalities of Parties before International Investment Tribunals. The Resolution operates in a similar manner to the work of the International Law Commission. It takes the form of a set of draft articles founded on the detailed research presented in the Report that aim to codify international law and, where appropriate, to propose its progressive development. As such, it is intended to serve two complementary purposes: (1) to give practical guidance to parties and to tribunals in the many practical contexts in which equality issues arise in the process of resolving investment disputes; and (2) to contribute to the ongoing process of reform of investor–State dispute settlement in inter-governmental bodies.1 Concerning evidence, the most important part of resolution is Part II, Chapter 2, which considers questions of pleading and evidence: the equality of arms in the procedure generally (article 8) and specific questions of evidence (article 9), including objections to production of documents (article 10) and the use of improper means to obtain or inhibit the production of evidence or otherwise to obtain an unfair advantage in the proceedings (article 11). Given their sensitivity and importance, the latter two articles were the subject of particularly close and careful consideration in the Institute. Article 10 (Objections to production of documents) addresses objections based on commercial confidentiality or State secrecy. As regards State secrecy, the Resolution frames the question as one of balancing the public interest in the administration of justice with the public interest in the confidentiality of government communications. The Resolution treats this question as one of international law for the tribunal to

1

Mclachlan (2021), p. 2.

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decide, not as a self-judging provision determined according to the national law of the affected State.2 All these issues must be examined with proper attention, because as I demonstrate later in this chapter, they bear a significant weight in international investment arbitration. Before entering into details, however, certain preliminary remarks on the incompleteness of the ICSID rules concerning the marshalling of evidence, and therefore the importance and the value of these supplementary rules of evidence, are necessary. The issue of evidence in the ICSID system is regulated in a spotty way and consists of five articles from 33 to 38. Rule 33 Marshalling of Evidence Without prejudice to the rules concerning the production of documents, each party shall, within time limits fixed by the Tribunal, communicate to the Secretary-General, for transmission to the Tribunal and the other party, precise information regarding the evidence which it intends to produce and that which it intends to request the Tribunal to call for, together with an indication of the points to which such evidence will be directed. Rule 34 Evidence: General Principles (1) The Tribunal shall be the judge of the admissibility of any evidence adduced and of its probative value. (2) The Tribunal may, if it deems it necessary at any stage of the proceeding: a. call upon the parties to produce documents, witnesses and experts; and b. visit any place connected with the dispute or conduct inquiries there. (3) The parties shall cooperate with the Tribunal in the production of the evidence and in the other measures provided for in paragraph (2). The Tribunal shall take formal note of the failure of a party to comply with its obligations under this paragraph and of any reasons given for such failure. (4) [. . .] Rule 35 Examination of Witnesses and Experts (1) Witnesses and experts shall be examined before the Tribunal by the parties under the control of its President. Questions may also be put to them by any member of the Tribunal. [. . .] Rule 36 Witnesses and Experts: Special Rules Notwithstanding Rule 35 the Tribunal may:

2

Mclachlan (2021), p. 6.

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(a) admit evidence given by a witness or expert in a written deposition; and (b) with the consent of both parties, arrange for the examination of a witness or expert otherwise than before the Tribunal itself. The Tribunal shall define the subject of the examination, the time limit, the procedure to be followed and other particulars. The parties may participate in the examination. Rule 37 Visits and Inquiries; [. . .] (1) If the Tribunal considers it necessary to visit any place connected with the dispute or to conduct an inquiry there, it shall make an order to this effect. The order shall define the scope of the visit or the subject of the inquiry, the time limit, the procedure to be followed and other particulars. The parties may participate in any visit or inquiry. [. . .] Rule 38 Closure of the Proceeding (1) When the presentation of the case by the parties is completed, the proceeding shall be declared closed. (2) Exceptionally, the Tribunal may, before the award has been rendered, reopen the proceeding on the ground that new evidence is forthcoming of such a nature as to constitute a decisive factor, or that there is a vital need for clarification on certain specific points. I do not comment on each provision since an excellent commentary was edited for this purpose in 2019.3 On the contrary, I focus on the issues that these rules leave open. Another important innovation is the 2020 adoption of the new version of the IBA rules on the taking of evidence that are widely applied by international investment arbitration tribunals to fill the gaps left open by institutionary rules. It is submitted that the amendment of 2020 is far from being ground-breaking but contains significant innovations that are outlined in the rest of the chapter. However, it is worth noting from the start that the most recent arbitral decision on this subject confirmed the success of the IBA rules on the taking of evidence as a gap-filling tool as far as these rules are deemed consistent with institutionary rules,4 and the same view is shared by commentators who held that ‘parties and tribunals in

3

Fouret et al. (2019), para. 24.20–24.149. E.g. Lupaka Gold Corp. v. Republic of Peru, ICSID Case No. ARB/20/46, Procedural Order No. 1, 16 April 2021, para 15.1. ‘The Tribunal will use the IBA (International Bar Association) Rules on the Taking of Evidence in International Arbitration (adopted by a resolution of the IBA Council on 17 December 2020) as guidelines, insofar as they are consistent with the ICSID Convention and Arbitration Rules’. Angel Samuel Seda and others v. Republic of Colombia, ICSID Case No. ARB/19/6, Procedural Order no. 1, 7 April 2020, para. 15.1. ‘The International Bar Association Rules on the Taking of Evidence in International Arbitration (2010) (“IBA Rules of Evidence”) shall guide the Tribunal and the parties regarding document production in this case’. 4

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investment treaty arbitrations increasingly agree upon the application of the IBA Rules on Evidence or at least agree that the tribunal may be guided by such Rules when making decisions on evidentiary issues’.5

5.1.2

The Relevance of Good Faith and the Possible Guiding Role of ICJ and WTO Case Law

As has been shown and is further demonstrated in the rest of the book, there is no doubt that the international arbitral tribunals enjoy vast discretion concerning the admissibility, taking, and evaluation of evidence. As such, much of the present work is devoted to the identification of the limits of such discretion and of the possible principles for an arbitral tribunal to follow to avoid that discretion becoming arbitrariness. Sipiorsky examined the same issue in 2019 and in her book suggests that the general principle of good faith also has a role to play in the realm of the taking of evidence. She writes, A fair trial cannot be ensured where corrupt or untruthful evidence is submitted to the tribunal for consideration. Standards must be applied by a tribunal in order to ensure that the evidence submitted by the parties meets a certain threshold standard – even if not passing a test as high as that required by a national court. Although the general standard for submission of evidence may be somewhat more malleable and determined by the tribunal on a case-bycase basis, there are still larger requirement to fulfil to ensure that justice is being sought by the tribunal. Good faith plays a gap-filling role, allowing tribunals to rely on the principle where the rules of Convention provide limited guidance on how to structure decisions on evidence. In their behaviour, tribunals bear the burden of ensuring that due process is ensured and respected through their varied legal culture and approaches.6

The approach suggested by the author is indeed correct even though it remains on quite a general level. To answer to the general research question of the present book—that is, whether it is possible to identify, at least at a certain level of abstraction, a role of guidance of the ICJ in the realm of evidence in international investment arbitration—it is necessary to make a short digression. The ICJ Statute, however, is to be read together with the court’s Rules of Court, which are intended to supplement the general rules set forth in the [ICJ Statute] and to make detailed provision for the steps to be taken to comply with them. In fact, the Rules of Court were promulgated as a result of the court invoking article 30 of the ICJ Statute, but like the ICJ Statute, the Rules of Court do not contain very comprehensive provisions on evidence, let alone provisions relating to the

5 6

Sheppard (2016), p. 673. Sipiorsky (2019), p. 164, para. 7.60–7.61.

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admissibility or exclusion of evidence.7 Further to this, the rules are substantially silent on the issue of the taking of evidence analysed in the present chapter.8 These are important limitations and, as a consequence, I mostly rely on the ICJ jurisprudence in order to identify the principles which may inspire the investment arbitral tribunal. We have already showen (see supra §4.3.2) that at least one principle is well established with regard to the admissibility of evidence, namely the settlement privilege. Now I turn to other principles that may be inferred from the ICJ jurisprudence. The general approach of the ICJ concerning the taking of evidence has already been summarised by Malintoppi, who states, [. . .] Article 48 of the Statute provides in general terms that ‘[t]he Court shall . . . make all arrangements connected with the taking of evidence’. This is usually done through orders of the Court, although informal decisions on procedural questions are also conveyed through instructions or communications to the parties by the Registrar.9 Orders relating to the taking of evidence under Article 48 include: (i) arranging for site visits (Gabčikovo-Nagymaros);10 (ii) requesting the parties to produce documents or provide information; (iii) asking questions to agents or counsel; (iv) asking questions to witnesses or experts or calling sua sponte witnesses and experts at the hearing; (v) appointing experts (notable examples are Corfu Channel where the Court appointed a committee of three experts to provide an opinion on a matter of fact, and Gulf of Maine where a Chamber appointed a technical expert);11 and (vi) requesting an inter-national organization to supply information regarding a case.12

The leading case is the judgment Croatia v. Serbia issued in 2015.13 In the case at hand, the Court was confronted with a large amount of evidence, and its findings may be very useful to foster cross-fertilisation between the ICJ and the ICSID arbitral tribunals. In the final part of the present section, as I did for the burden of proof (see supra Chap. 2 § 2.1), I briefly examine the WTO case law on the issue of the gathering of evidence. Turning back to the ICJ, I briefly summarise the so-called ‘second genocide case’ that greatly contributed to clarify the ICJ approach to the gathering of evidence,

7

Chen (2015), at. p. 40. Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3 para. 196. “The Court recalls that neither its Statute nor its Rules lay down any specific requirements concerning the admissibility of statements which are presented by the parties in the course of contentious proceedings, whether the persons making those statements were called to give oral testimony or not. The Court leaves the parties free to determine the form in which they present this type of evidence”. 9 Zimmermann and Tams (2019). 10 See supra §1.2.2). 11 Delimitation of the Maritime Boundary in the Gulf of Maine Area, Judgment, I.C.J. Reports 1984, p. 246. 12 Malintoppi (2016), p. 422. 13 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3. 8

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evaluation of evidence, and standard of proof. The findings of the ICJ in the case at hand will also be used in the next two chapters. On 2 July 1999, Croatia filed an Application against the Federal Republic of Yugoslavia ‘for violations of the Convention on the Prevention and Punishment of the Crime of Genocide’. As a basis for the Court’s jurisdiction, Croatia invoked Article IX of that Convention, according to which both Croatia and Yugoslavia were parties. As far as the issue of this book is concerned, there are two points to retain: first, Croatia asked to submit testimonial evidence before the Court on an unprecedented scale, and second, the Court had access to many other sources, such as documentary evidence provided by international organisations and the findings of the International Criminal Tribunal for the former Yugoslavia (ICTY). As a consequence, on several occasions I rely on the findings of the ICJ in this particular case. As a final remark linked to the main research question of the present book that concerns the existence of a general law of evidence common to all fields of international economic law with the ICJ serving as guidance, it is worth noting that the IBA rules on the taking of evidence have been recently mentioned by a WTO panel in the 2018 case Thailand v. Philippines.14

5.2

Documentary Evidence

Documentary evidence may be decisive for the outcome of a procedure of international arbitration. International tribunals operating in the investment field acknowledge the importance of documentary evidence as well as the importance of helping the parties in the difficult task of obtaining adequate evidence. American law firms often suggest a pre-trial discovery according to the practice followed in the US;15 however, in investment arbitration, the parties and the arbitrators normally come from different legal traditions. Practitioners belonging to civil law countries are often

14

Thailand - Customs and Fiscal Measures on Cigarettes from the Philippines - Recourse to article 21.5 of the DSU by the Philippines - Report of the Panel, 12/11/2018, WT/DS371/RW, para. 7.35. Given that the relevant WTO dispute settlement rules and procedures are silent on the issue of lawyer-client privilege, we consider that it is appropriate to review wider international practice in this regard. We do so with a view to identifying common principles that may be equally appropriate to dealing with issues of lawyer-client privilege in the WTO dispute settlement context. In this respect, we note that lawyer-client privilege is specifically regulated in the procedural rules of certain international courts and tribunals. 7.36. The International Bar Association Rules on the Taking of Evidence in International Arbitration 161 provide that an international arbitral tribunal shall exclude any document from evidence or production if there exists a “legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable”. However, those rules also indicate that tribunals must also take into account “any possible waiver of any applicable legal impediment or privilege by virtue of consent, earlier disclosure, affirmative use of the Document, statement, oral communication or advice contained therein, or otherwise”.’ 15 Böckstiegel (2001), p. 6.

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not familiar with courts relying on a great production of documents, and therefore they are not always enthusiastic about this practice.16 International arbitrators naturally follow the principle according to which each party is responsible for the presentation of its case; therefore, they expect the parties (and the plaintiff in particular) to be ready to defend their case with the evidence they already have.17 In view of the above, rules and standards of international arbitration law have been modelled basing on the necessity to grant an adequate power of evidence gathering while at the same time avoiding onerous ‘fishing expeditions’. This choice has been confirmed by jurisprudence which explains that ‘a balance must be struck between the interest of the Arbitral Tribunal in uncovering the truth of the matters at issue in the arbitration, and the efficiency of the arbitral proceedings’.18 The first consequence of this balancing effort is the practice of accepting only requests for specifically identified documents. Even though the principal institutional rules regarding arbitration in the investment field establish that the tribunal has the power to order the production of documents, they do not identify specific procedures or standards to be followed. For the ICSID, relevant rules are art. 43 of the Convention and art. 34 of the ICSID Rules of Procedure, which require that the parties cooperate for the production of documents. Similar rules are the UNCITRAL rules, which are also very brief on the matter: art. 24, subs. 3 states that the tribunal may order the production of documents at any moment during the proceedings. If a party refuses to produce some pieces of evidence, according to ICSID rules, the tribunal must make formal note of the fact, whereas UNCITRAL rules simply state that the tribunal should decide based on the evidence presented. Only in the UNCITRAL Notes on Organizing Arbitral Proceedings it is explicitly established that if a party fails to produce evidence the tribunal may consider it negatively; however, these notes are not binding. In the field of evidence taking, as in other fields, the IBA Rules play an important role: the tribunals themselves, given their independence on procedural matters, often use the IBA Rules as guidelines even when there is no agreement between the parties about it.19 Both the 1999 and 2010 versions of the IBA Rules lay down a rather complete procedure for the production of documentary evidence. Art. 3, subs. 3 is particularly significant because it establishes that any request for documents should include ‘a description of each requested Document sufficient to identify it, or [. . .] a description

16

Paulsson (1996), p. 119. IBA Working Party, Commentary, op. cit., pp. 19–20; Gaillard and Savage (1999), p. 690. 18 International Thunderbird Gaining Corp. v. Mexico, UNCITRAL, Procedural Order no. 2 31 July 2003. 19 C.M.E. Czech Republic B.V. (the Netherlands) v. The Czech Republic, UNCITRAL, Partial Award, 13 September 2001, §46. “[. . .] in accordance with art. 15.1 of the UNCITRAL Arbitration Rules, the tribunal decided to conduct the arbitration in the manner it considers appropriate. For this purpose, the tribunal decided, to the extent appropriate, to apply the IBA rules”. 17

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in sufficient detail (including subject matter) of a narrow and specific requested category of Documents that are reasonably believed to exist’.20 The 2020 version of the rules has not changed on this point. The published decisions on the production of documents indicate that in general, tribunals follow the approach laid down in the IBA Rules, especially for what concerns criteria aimed at limiting the request for documents. In S.D. Myers v. Canada, the tribunal asked the parties to request the production of ‘documents or categories of documents identified with adequate specificity’.21 In International Thunderbird v. Mexico, the tribunal provided a better explanation of the standard required by specifying that the expression ‘narrow and specific’ used in the IBA Rules should be intended as ‘reasonably limited in time and subject-matter in view of the nature of the claims and defences advanced’.22 In Biwater Gauff Ltd. v. Tanzania, the tribunal, considering the plaintiff’s application for provisional measures, approved its request for ‘a specifically identified, narrow category of documents that are of obvious potential relevance and materiality to the issues in dispute’.23 At the same time, the tribunal rejected a request for ‘broad categories’ of documents. A detailed example of the modus procedendi before the ICSID jurisdiction on the boundaries of the categories of available documents can be found in the Tokios Tokéles case.24 To organise the production of documents, the tribunal had arranged a preliminary meeting between the parties on 3 June 2003, where it was decided that as an answer to the defendant’s requests for documents, the claimant would be bound to produce ‘as many documents as it considers appropriate and responsive’25 to the defendant’s requests. The latter, following the reception of the documents, had simply filled in a long list of omissions. At that point, the claimant had turned to the tribunal, complaining about the breach of the initial agreement. The defendant firmly denied the fact and asked the tribunal to order the production of documents within 10 days. The tribunal, reminding the parties of their duty to cooperate with the production of evidence, ordered the claimant to produce the documents.26

20

IBA Rules, art. 3(3). S.D. Myers v. Canada, UNCITRAL, Procedural order no. 1, 28 May 1999, §5-15. See also, for instance, Feldman v. Mexico, ICSID Case No. Arb. (AF/ 99/1, Procedural order n. 2, 3 May 2000, para 8, “reasonably specified documents”. 22 International Thunderbird v. Mexico, UNCITRAL, Procedural Order no. 2, 31 July 2003, para 2. 23 Biwater Gauf ltd v. Republic of Tanzania, ICSID Case No. Arb/05/22, Procedural Order no.1, 31 March 2006, para 104. 24 Tokios Tokelės v. Ukraine, ICSID Case No. ARB/02/18. 25 Tokios Tokelės, Proc. Ord. No. 2, 1 July 2003, p. 1. 26 Ibid., p. 2. 21

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5 The Taking of Evidence

Document Production and Legal Privileges

When discussing production of documents, it must be kept in mind that there may sometimes be problems due to the existence of some privileges. The importance of privileges has been already discussed as a cause of inadmissibility of evidence obtained by means of a breach of those privileges; however, it is necessary to make some further considerations on the matter because even though it is true that the ICSID tribunal gave great importance to the confidential nature of certain documents in the aforementioned Libananco case, the tribunal’s effort to reduce as much as possible the area accessible to the opposite party during the taking procedure is noteworthy. An example of this approach can be found in the Oko case, in which the plaintiff requested that the defendant produce certain documents. The Estonian government replied that the requested materials included some information covered ‘by the attorney-client privilege’ since they concerned the relationship between two people who had attended the meeting as legal advisers of the party. The tribunal, while not denying the importance of the privilege, was not convinced and asked for clarifications, ordering the party to provide adequate justification.27 International arbitration in the field of investments sometimes faces challenges which are specific to that field because nations are involved, because rules regarding privileges may be different from country to country, or because there may be criminal investigations against one of the parties. It is worth noting that ICSID, UNCITRAL, SCC, and ICC rules are silent on this matter.28 There are other arbitration rules which contain explicit provisions concerning evidentiary privileges, but these rules are not applied in investment arbitration.29

27

Oko Pankki Oyj (Formerly Called: Oko Osuuspankkien Keskuspankki Oyj), Vtb Bank Deutschland) Ag (Formerly Called: Ost-West Handelsbank Ag), Sampo Bank Plc v. The Republic of Estonia, ICSID Case No. ARB/04/6, Procedural Order no. 2, 15 July 2005, pp. 1–2. 28 Sheppard (2016), pp. 672–673. 29 Sheppard (2016), p. 673. ‘Notable exceptions, which expressly refer to evidentiary privileges, are the 2013 Arbitration Rules of the Singapore International Arbitration Centre (SIAC) (which were updated in 2016), the 2011 JAMS International Arbitration Rules, and the 2014 International Dispute Resolution Procedures of the International Centre for Dispute Resolution (ICDR). The SIAC Arbitration Rules empower the tribunal to determine any claim of legal or other privilege (Article 27(o)). The JAMS Arbitration Rules permit the tribunal to ‘take into account’ applicable principles of legal privilege such as those involving the confidentiality of communications between lawyer and a client (Article 25.4). The ICDR Rules provide that: ‘[t]he arbitral tribunal shall take into account applicable principles of privilege, such as those involving the confidentiality of communications between a lawyer and client. When the parties, their counsel, or their documents would be subject under applicable law to different rules, the tribunal should, to the extent possible, apply the same rule to all parties, giving preference to the rule that provides the highest level of protection. (Article 22) This provision is especially unusual in that it addresses the issue of conflict of privileges (see discussion below). However, no investment treaty arbitrations appear to have been conducted under the SIAC, JAMS or ICDR Rules’.

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Regarding privileges, art. 9, subs. 2, lett. b of the IBA Rules 202030 makes it clear that the production of documents may be excluded because of legal obstacles the existence of which must be determined by the tribunal. The IBA Rules remained unchanged after the 2020 reform. This was certainly deliberate and reflects the ongoing lack of consensus on this developing issue. Concerning the extent of legal privilege (Articles 9.2(b) and 9.4), the rule on issues of legal impediment or privilege still only speaks of the parties’ ‘expectations’ of privilege. In practice, parties frequently assert that they have a certain expectation of privilege as a defence against the production of certain documents. Since different jurisdictions provide for different levels of legal privilege, this inevitably leads to laborious debates about the scope and applicability of different national concepts of privilege for which there is no internationally recognised compromise. It has been argued that the popular ‘most favoured nation’ approach, when applicable, is required by procedural fairness and favoured by the IBA Rules, but different approaches are used by arbitral tribunals on a case-by-case basis. The IBA Rules are, in any event, not an appropriate vehicle to impose a standard where there is not yet an international consensus.31

Some commentators have suggested that domestic rules of evidence should not apply in international arbitration at all (and, by extension, in investment treaty arbitration). Instead, the argument goes that it is a matter always for the arbitrators to admit any evidence that they consider relevant and not admit evidence that they consider irrelevant. In support of this contention it has been said that the overall objective of any tribunal is to do justice between the parties by discovering the truth

30

9.2. The Arbitral Tribunal shall, at the request of a Party or on its own motion, exclude from evidence or production any Document, statement, oral testimony or inspection, in whole or in part, for any of the following reasons: [. . .] (b) legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable (see Article 9.4 below); [. . .] 4. In considering issues of legal impediment or privilege under Article 9.2(b), and insofar as permitted by any mandatory legal or ethical rules that are determined by it to be applicable, the Arbitral Tribunal may take into account: (a) any need to protect the confidentiality of a Document created or statement or oral communication made in connection with and for the purpose of providing or obtaining legal advice; (b) any need to protect the confidentiality of a Document created or statement or oral communication made in connection with and for the purpose of settlement negotiations; (c) the expectations of the Parties and their advisors at the time the legal impediment or privilege is said to have arisen; (d) any possible waiver of any applicable legal impediment or privilege by virtue of consent, earlier disclosure, affirmative use of the Document, statement, oral communication or advice contained therein, or otherwise; and (e) the need to maintain fairness and equality as between the Parties, particularly if they are subject to different legal or ethical rules. 31 http://arbitrationblog.kluwerarbitration.com/2021/03/28/2020-revision-of-the-iba-rules-on-thetaking-of-evidence-in-international-arbitration/ accessed on the 27 of April 2021.

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as best it can and this might be thwarted if the tribunal did not have access to the evidence that it considered relevant.32

According to Sheppard, there are many arguments against the approach according to which international arbitrators should completely disregard national rules on evidentiary privilege. Among these arguments I deem extremely persuasive the one according to which many international instruments recognise the application of evidentiary privileges in litigation with transnational aspects reflecting a consensus of its importance—for example, the 1970 The Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters allows a party to refuse to give evidence in so far as the party has a privilege or duty to refuse to give the evidence under the law of the State of execution or under the law of the State of origin of the request (Article 11). Similarly, the 2004 Principles of Transnational Civil Procedure, adopted by the American Law Institute and the International Institute for the Unification of Private Law, provide that ‘effect should be given to privileges, immunities, and similar protections of a party or non-party concerning disclosure of evidence or other information’ (Article 18.1).33

Sheppard (2016), p. 675 criticizing Blackaby et al. (2015), paras 6–81: ‘In practice, tribunals composed of three experienced international arbitrators from different legal systems approach the question of the reception of evidence in a pragmatic way. Whether they are from common law or civil law countries, they tend to focus on establishing the facts necessary for the determination of the issues between the parties and are reluctant to be limited by technical rules of evidence that might prevent them from achieving this goal.’ 33 ALI/UNIDROIT Principles of Transnational Civil Procedure, available at https://www.unidroit. org/instruments/civil-procedure/ali-unidroit-principles accessed on the 1st of May 2021. 18. Evidentiary Privileges and Immunities. 18.1 Effect should be given to privileges, immunities, and similar protections of a party or non-party concerning disclosure of evidence or other information. 18.2 The court should consider whether these protections may justify a party’s failure to disclose evidence or other information when deciding whether to draw adverse inferences or to impose other indirect sanctions. 18.3 The court should recognize these protections when exercising authority to impose direct sanctions on a party or non-party to compel disclosure of evidence or other information. Comment: P-18A All legal systems recognize various privileges and immunities against being compelled to give evidence, such as protection from self-incrimination, confidentiality of professional communication, rights of privacy, and privileges of a spouse or family member. Privileges protect important interests, but they can impair establishment of the facts. The conceptual and technical bases of these protections differ from one system to another, as do the legal consequences of giving them recognition. In applying such rules choice-of-law problems may be presented. P-18B The weight accorded to various privileges differs from one legal system to another and the significance of the claim of privilege may vary according to the context in specific litigation. These factors are relevant when the court considers drawing adverse inferences from the party’s failure to produce evidence. [. . .] P-18D In some systems, the court cannot recognize a privilege sua sponte, but may only respond to the initiative of the party benefited by the privilege. The court should give effect to any procedural requirement of the forum that an evidentiary privilege or immunity be expressly claimed. According 32

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A recent arbitral award made clear that privileges arising from national law are in effect relevant in international investment arbitration, thereby demonstrating that the aforementioned idea that ICSID arbitral tribunals are not bound by national laws since they are constituted under an international convention is far from being universally accepted. More specifically, the arbitral tribunal held the following: In PO5, the Tribunal addressed the Parties’ submissions on whether there is an exception to the waiver of privilege where parties have a common interest. The Tribunal held that, ‘the onus is on GTH to demonstrate that the law applicable to privilege for each communication recognises common interest privilege and that the communication qualifies for common interest privilege.’ GTH was granted leave to present evidence concerning the attachment of common interest privilege for each relevant communication, provided that it did so without delay.34

Some agreements, like NAFTA, contain explicit provisions which exempt those documents whose publication may endanger state security from being disclosed. Tribunals have also dealt with privileges like Canadian crown privilege and cabinet privilege and US deliberative process privilege; in those cases, tribunals have always established that rules from national laws do not directly apply to the field of international arbitration.35 In Glamis Gold Ltd v. United States, for instance, the tribunal remarked that American rules were not directly applicable to the case for either what concerned the production of documents or what concerned privileges enjoyed by particular categories of documents.36 However, the tribunal decided that the privilege was in force anyway since there was consensus on the fact that it was reasonable for the parties to expect the privilege to be applied.37 It must be recalled that in any case, the protection of national privilege shall be balanced with the right of a party to present its own case and with the principle according to which ‘a State cannot escape international obligations by invoking its own national law’ enshrined in article 27 of the Vienna Convention on the Law of Treaties as has been observed in Biwater v. Tanzania of 2006.38

to such requirements, a privilege or immunity not properly claimed in a timely manner may be considered waived. 34 Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16, Award, 27 March 2020, para. 164. 35 Kennedy (2005), p. 1785. The crown privilege, the cabinet privilege and the deliberative process privilege are privileges on the basis of which a country may refuse to disclose certain acts, especially the ones leading to the promulgation of laws and regulations. On this subject see, for instance. 36 Glamis Gold Ltd v. United States, UNCITRAL, Decision on Parties’ Requests for Production of Documents Withheld on Grounds of Privilege, 17 November 2005, para. 20. 37 Glamis Gold Ltd v. United States, UNCITRAL, Decision on Parties’ Requests for Production of Documents Withheld on Grounds of Privilege, 17 November 2005, para. 21–25. 38 Biwater Gauff (Tanzania) Ltd., v. United Republic of Tanzania, ICSID Case No. ARB/05/22, procedural order n. 2. ‘More fundamentally, however, the nature of this dispute resolution process is entirely different from a national court process. This is an international tribunal, governed by an international convention, which is mandated to enquire into the conduct and responsibility of a State

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Another example regarding privileges, this time concerning the confidentiality of criminal investigations, shows the attention the ICSID tribunal has given this matter. In Procedural Order no. 3, in the Tokios Tokéles case, the production of documents concerned in particular, those regarding a criminal investigation conducted by the judges of the defendant country. The defendant replied to the plaintiff’s request by claiming that according to Ukrainian law, it was impossible to fully disclose the material. In this case, the tribunal established that Ukraine should deliver all documents which according to Ukrainian law had to be available to indicted defendants in order for them to prepare their defence.39 In any case, requests for disclosure cannot be used for different purposes than that of collecting documents. In the aforementioned Tokios Tokéles case, the plaintiff initially requested any possible record and wiretap of the employees of the company; then, perhaps realising the enormity of the request, the plaintiff downsized it to the simple question of whether its employees had been intercepted. The tribunal observed that the plaintiff’s request, being a simple question to the opposite party, was not within the purpose of disclosure: thus, no action was necessary on the part of the tribunal. On the basis of the cases observed, it is reasonable to conclude that the practice of discovery is currently in force in international law.40 However, the practice has necessarily been adapted to this field. Even though scholars believe it acceptable to grant each party the right to identify the documents gathered by the opposing party and to order their production,41 it is not easy to implement this approach in international law because there are practical difficulties which increase the possibility of a party opposing discovery. As has been observed, the effectiveness of these systems often depends at least partially on the good faith of the opposing party;

in light of its international treaty and customary international law obligations. It is hardly conceivable that, in this setting, a State might invoke domestic notions of public interest and policy relating to the operations of its own Government as a basis to object to the production of documents which are relevant to determine whether the State has violated its international obligations and whether, therefore, its international responsibility is engaged. This is certainly not the context in which the doctrine of “public interest immunity” was developed. The doctrine is not a general principle of law as understood for the purposes of article 38 (1)(c) of the Statute of the International Court of Justice. Neither is it provided for in the ICSID Convention or the ICSID Arbitration Rules (which endow ICSID Tribunals with broad powers to order the production of documents). Further, if a State were permitted to deploy its own national law in this way, it would, in effect, be avoiding its obligation to produce documents in so far as called upon to do so by this Tribunal. This, in itself, is an international legal obligation arising from the State’s consent by way of the BIT to ICSID arbitration. It may also thereby stifle the evaluation of its own conduct and responsibility. As such, this would be to undermine the well-established rule that no State may have recourse to its own internal law as a means of avoiding its international responsibilities. This principle finds expression in Article 27 of the Vienna Convention on the Law of Treaties 1969, as well as numerous other international decisions and commentaries’. 39 Tokios Tokelės v. Ukraine, ICSID Case No. ARB/02/18, Procedural Order No. 3, 18 January 2005, para 24–32. 40 Paulsson (1996), p. 119. 41 Paulsson (1996), p. 118.

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additionally, in many cases the requesting party ends up finding exactly what it did not want to see and ‘carefully steered away from smoking guns’.42

5.2.2

The Consequence of Non-Production of Documents: Adverse Inference in ICSID Practice

Contrary to domestic courts and tribunals, ICSID arbitrators (like most international judges) do not have the ability to hold a litigant in contempt to encourage cooperation with a court order and ensure the orderly administration of justice. As a consequence, ‘a party in an ICSID arbitration therefore risks being unable to fully present its case, as the evidence required for a party to prove its case ‘often rests exclusively in the hands of adverse parties, which lack obligation or incentive to divulge harmful information’.43 Arbitral tribunals may rely on two legal authorities to draw adverse inference. The first is article 34 (3) of the ICSID arbitration rules, which states, The parties shall cooperate with the Tribunal in the production of the evidence and in the other measures provided for in paragraph (2). The Tribunal shall take formal note of the failure of a party to comply with its obligations under this paragraph and of any reasons given for such failure.44

The other legal authority applied by investment tribunals is art. 9, subparagraph 6 (e.g., subparagraph 5 of the 1999 and 2010 IBA rules which the reform of 2020 has renumerated but left unchanged) of the IBA rules of 2020, which is drafted as follows: If a Party fails without satisfactory explanation to produce any Document requested in a Request to Produce to which it has not objected in due time or fails to produce any Document ordered to be produced by the Arbitral Tribunal, the Arbitral Tribunal may infer that such document would be adverse to the interests of that Party.45

The commentary on the IBA Rules further explains the power of the arbitral tribunal in drawing adverse inferences, stating, Article 9. 6 (formerly Article 9.4 in the 1999 text and 9.5 in the 2010 text) of the IBA Rules of Evidence provides that if a party fails to comply with a procedural order of an arbitral tribunal concerning the production of documents, the arbitral tribunal may infer from this failure to comply that the content of the document would be adverse to the interests of that party. This inference also applies when an opposing party does not make a proper objection to a request to produce within the time-limit set by the arbitral tribunal, but nevertheless fails

42

Paulsson (1996), p. 118. Polkinghorne and Rosenberg (2015), p. 741. 44 ICSID Rules of Procedure for Arbitration Proceedings (ICSID Arbitrations Rules) (April 2006) art. 34 (3). 45 IBA Rules on the Taking of Evidence in International Arbitration Adopted by a resolution of the IBA Council, 17 December 2020 International Bar Association. 43

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to produce requested documents. As an additional deterrent, Article 9.8 provides that in assigning costs, the arbitral tribunal may also consider the failure of a party to conduct itself in good faith in the taking of evidence. Such failure may include a failure to comply with orders to produce.46

Tribunals have been following IBA Rules and paying great attention to the possibility of drawing negative conclusions from the lack of production of certain documents. In Waste Management v. Mexico, for instance, the tribunal made explicit reference to art. 9, subs. 5 of the 1999 IBA Rules, concluding that the last sanction for the lack of production of documents is that of drawing conclusions which are negative for one of the parties.47 It must be added that several arbitral tribunals48 even in very recent times49 have followed the praxis of informing the parties in their first procedural order that failure to produce the requested evidence may cause the drawing of adverse inference. One may wonder how the drawing of adverse legal inference practically works. According to M. Polkinghorne and C. B. Rosenberg, the decision of the tribunal to draw adverse inference affects the burden of proof. More specifically, Properly applied, the adverse inference does not, according to modern parlance, shift a party’s burden of proof but rather alleviates the standard (or quantum) of proof by allowing the party to discharge its burden of proof using indirect or circumstantial evidence rather than direct or primary evidence. [. . .] The adverse inference thus enables a party to discharge its burden of proof in the absence of evidence otherwise insufficient to make its case. In other words, the adverse inference acts as a ‘gap filler’ to ‘substitute for a piece of essential evidence’.50

One must therefore ask in which cases it is reasonable for an arbitral tribunal to draw adverse inferences since IBA rules ‘provide no guidance as to how and when to make such adverse inferences’.51 Polkinghorne and Rosenberg suggest that a good test is set forth in Iran—US claim tribunals, and this is perfectly in accordance with

46

Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration https://www.ibanet.org/Document/Default.aspx?DocumentUid¼4F797338-693E-4 7C7-A92A-1509790ECC9D accessed on the 27 of April. 47 Waste Management, Inc. v. Mexico, ICSID Case No. ARB(AF)00/3, Procedural Order Concerning Disclosure of Documents, 1 October 2002. 48 See for example Posˇtova’ banka, as and ISTROKAPITAL SE v Hellenic Republic, ICSID Case No ARB/13/8, Procedural Order No 1, 20 December 2013, para 15.3 “The failure to produce [documents] as ordered may result in adverse inferences drawn by the Tribunal as regards the credibility of a witness or the merits of the defaulting party’s case”. See also Churchill Mining Plc v Republic of Indonesia, ICSID Case No ARB/12/14, Procedural Order No 1, 6 December 2012, para 15.9 The failure to produce [documents] as ordered may result in adverse inferences drawn by the Tribunal as regards the merits of the defaulting party’s case”. 49 See for example: Odyssey Marine Exploration, Inc. (USA) v. United Mexican States (ICSID Case No. UNCT/20/1) Procedural Order No. 1, 23 April 2020, para,17.5.7. “Should a party fail to produce documents as ordered by the Tribunal, the Tribunal shall draw the inferences it deems appropriate, taking into consideration all relevant circumstances”. 50 Polkinghorne and Rosenberg (2015), pp. 742–743. 51 Amaral (2018), p. 7.

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the eclectic approach applied in the present book. According to the aforementioned test, the arbitral tribunal shall draw adverse inferences if the following conditions are met: (1) the party seeking the adverse inference must produce all available evidence corroborating the inference sought; (2) the requested evidence must be accessible to the inference opponent; (3) the inference sought must be reasonable, consistent with facts in the record and logically related to the likely nature of the evidence withheld; (4) the party seeking the adverse inference must produce prima facie evidence; and (5) the inference opponent must know, or have reason to know, of its obligation to produce evidence rebutting the adverse inference sought.52 Other tribunals have penalised the non-cooperating party by increasing the legal costs it should pay.53 In fact, the ICSID Convention expressly provides that unless the parties agree otherwise, an ICSID tribunal has the discretion to allocate the costs of the arbitration, including parties’ expenses, the tribunal’s fee and expenses, and the costs of the ICSID secretariat. However, as has been correctly observed, ‘This option may be “too little, too late”, as the costs of an ICSID arbitration generally are significantly less than the amount in controversy and usually are allocated at the end of the proceeding, after the parties have pled their cases’.54

5.3 5.3.1

Testimonial Evidence Testimonial Evidence of a Fact

Proof by means of witnesses has always had a significant role in international and national law. At the same time, there has always been a flourishing discussion regarding which methods to use to ensure that witnesses are a reliable source of evidence. According to an authoritative definition, testimonial evidence consists of judicial assertions made by people not connected with the dispute.55 This is an interesting definition since the status of testimonial evidence is not restricted to assertions made before the court even though the latter constitute the most common typology of witness evidence. The methods for collecting evidence in international procedure have varied over time. At first the procedure was similar to that in force in civil law countries,56 52

Sharpe (2006), p. 551. Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB(AF)/99/1. 54 Polkinghorne and Rosenberg (2015), p. 743. 55 Sandifer (1975), p. 206. 56 Sandifer (1975), p. 218. 53

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whereas today most scholars recognise cross-examination and Anglo-Saxon influence as predominant.57 The ICSID Rules of Procedure for Arbitration Proceedings contain two articles on the examination of witness and experts, namely articles 35 and 36. Rule 35: Examination of Witnesses and Experts (1) Witnesses and experts shall be examined before the Tribunal by the parties under the control of its President. Questions may also be put to them by any member of the Tribunal. (2) Each witness shall make the following declaration before giving his evidence: I solemnly declare upon my honour and conscience that I shall speak the truth, the whole truth and nothing but the truth.

(3) Each expert shall make the following declaration before making his statement: I solemnly declare upon my honour and conscience that my statement will be in accordance with my sincere belief.

Rule 36: Witnesses and Experts: Special Rules Notwithstanding Rule 35 the Tribunal may: (a) admit evidence given by a witness or expert in a written deposition; and (b) with the consent of both parties, arrange for the examination of a witness or expert otherwise than before the Tribunal itself. The Tribunal shall define the subject of the examination, the time limit, the procedure to be followed and other particulars. The parties may participate in the examination. The most recent commentary on the ICSID Convention explains, article 35 and 35 work in tandem, with article 36 as an exception to the starting position that witness and experts ‘shall be examined before the tribunal’. As explained in the Notes to Rule 35 of 1968 Arbitration rules (now rule 36) the reason for admitting exception is practical: the Tribunal may encounter certain difficulties in obtaining such evidence (because has no power of compulsion). The Notes also suggest that Rule 36 is possible since ‘international tribunals are not fettered by the technical evidentiary rules of national law’.58

Concerning rules that may be applied in investment arbitration other than ICSID rules, it must be said that articles 35 and 36 echo similar rules to be found in Articles 42 and 43 of the Arbitration (Additional Facility) Rules. Other rules offer a different approach to the examination of witness and experts. Thus, for example, Articles 27 (Evidence) and 28 (Hearings) of the

57 58

Strong and Dries (2005), p. 311; Böckstiegel (2001), pp. 7–8. Fouret et al. (2019), p. 1102 para. 24.41.

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UNCITRAL Arbitration Rules (2010), article 20 (Witness(es)) of the LCIA Rules (2014), and Articles 32 (Hearings) and 33 (Witness) of the SCC Rules (2017) make no express provision for admitting a written deposition in lieu of examination before the tribunal.59

These rules are silent on many aspects of the gathering of this type of evidence, and the reason is probably that it was impossible to find a good compromise between the civil country procedure and the procedure in the common law system, where crossexamination plays a crucial role. However, the idea of filling the gap in the ICSID rules on the matter has been present in the field of international investment law for quite a long time. This idea can be found in the already mentioned IBA Rules which, regarding witness evidence, reflect the compromise reached by cultures of civil law and common law.60 The IBA Rules do not explicitly provide for cross-examination, but art. 4, subs. 8 (which remained unchanged under the 2020 revision of the IBA rules) requires that the witnesses who have submitted written statements appear before the arbitral tribunal: from the formulation of this provision, it is possible to infer that each party has the right to proceed to the cross-examination of the other party’s witnesses.61 Cross-examination and ‘witness conferencing’ are increasingly popular in international arbitration but are not mandatory, leaving it to the discretion of the arbitral tribunal to arrange the procedure with the parties on a case-by-case basis. The commentary on the IBA explains, The 2020 Review Task Force’s change to Article 8.5 also sought to address some uncertainty that was reported in the public consultation process about whether, when a witness statement is to stand as direct testimony but the other party waives its right to cross-examine, the party that presented the witness may nevertheless call the witness to give evidence at the hearing. Article 8.5 as revised makes clear that the tribunal may allow such further direct testimony. Nothing in the IBA Rules of Evidence, prevents an arbitral tribunal from hearing witnesses in another manner, such as the traditional method in certain civil law countries where witnesses are initially questioned by the arbitral tribunal, followed by questioning by the parties. This is a technique which presupposes a thorough knowledge of the case and a full study of the law by the arbitral tribunal.62

59

Fouret et al. (2019), p. 1102 para. 24.43. Freyer (2008), p. 1. 61 Strong and Dries (2005), p. 311. ‘An objecting party might rely not only on the general principle that each party is entitled to know the evidence on which its opponent intends to rely in advance of any hearing but also on an analogy to article 4(8) of the IBA Rules, which states that ‘[i]f a witness who has submitted a Witness Statement does not appear . . . the Arbitral Tribunal shall disregard that Witness Statement unless, in exceptional circumstances, the Arbitral Tribunal determines otherwise’. By requiring the attendance of a witness who has submitted a statement in all but exceptional circumstances, the IBA Rules foster a party’s right to cross-examine the opposition’s witnesses. This goal of the IBA Rules would be subverted if a witness who has not submitted a statement or who fails to appear at the hearing could nevertheless be heard from through the hearsay utterances of a witness who has submitted a statement and appears at the hearing’. 62 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration 1999 IBA Working Party 1 & 2010 IBA Rules of Evidence Review Subcommittee & 2020 IBA Rules of Evidence Review Task Force, available at: https://www.ibanet.org/Document/ 60

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The use of cross-examination in international law—which is in any case considered to be a good method to ascertain the credibility of witnesses—shows that international procedure is leaning towards the common law model. However, this shift requires some adjustments to be made in the field of international arbitration, partly to overcome a possible cultural suspicion and partly to adapt the system to the specific characteristics of international jurisdictions. It has been observed in particular that some civil law arbitrators do not have a very positive opinion of this practice. Even when the examiner’s behaviour towards the witness is particularly respectful, some embarrassing situations may occur. One rather curious case reported by an author is that of a lawyer belonging to an important law firm who was conducting a long and accurate cross-examination. The lawyer was ready to follow any subtle indication given by the board but did not have to; Goldman, a French arbitrator, simply asked how long he intended to torture the witness. However, it should not be concluded that it is absolutely impossible to find an effective synthesis. On another occasion, Goldman was able to clarify his opinion on the matter. On that occasion, the counsel of the party which had produced the witness asked to give the witness a break in order for him to collect his thoughts. A civil law arbitrator might have been inclined to accept the request, but Goldman rejected it, observing that cross-examination is from his perspective a ‘terrible, but permissive weapon’63 if conducted appropriately. Since he believed this latter condition to have been fulfilled, he decided to let the cross-examination continue. The organisation of a cross-examination is quite a complex procedure if considered at a strictly technical level. The first duty of the parties is that of supplying a complete list of the documents they intend to produce in their favour. This makes it possible to avoid the already mentioned ‘surprise’ evidence64 which is not welcomed, not only because of the principle of equality of arms but because the tribunal should be able to correctly organise the oral stage of the proceedings. Each party then has to ask its witnesses to complete a written declaration of knowledge (the so-called witness statement). The purpose of this practice is twofold: it allows the opposing party to prepare its counter-examination65 and it helps narrow the subject of the oral examination, avoiding unnecessary digressions. The preparation of statements is described in detail in the IBA Rules, which require that the written declaration contain ‘a full and detailed description of the facts, and the source of the witness’s information as to those facts, sufficient to serve as that witness’s evidence in the matter in dispute [. . .]; an affirmation of the truth of the Witness Statement’.66

Default.aspx?DocumentUid¼4F797338-693E-47C7-A92A-1509790ECC9D accessed on the 1st of May 2021, p. 27. 63 Friedland (1996). 64 See, for instance, Duke Energy, Procedural Order No. 2, para 6. 65 1999 IBA Working Party & 2010 IBA Rules of Evidence Review Subcommittee, Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration, p. 4. 66 IBA Rules, art. 4, subs. 5.

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The emphasis put on the facts suggests, as has been observed, that a witness’s personal opinions on the circumstances they report should not be included in their declarations because they are generally considered irrelevant.67 The implementation of these operations is very important: there are several precedents of international courts refusing to allow the taking of testimonial evidence during the oral phase if the witness has not previously completed a written declaration concerning the facts about which they should be questioned.68 The importance of the preparation of the written statement is not born with the IBA rules but reflects a longstanding rule of international law that, albeit quite formalistic, has always been observed since the time of mixed claim commission: that the written statement of the witness is signed. While there is no certainty that an international court or tribunal will attach any evidentiary weight to a written statement or affidavit without a subsequent oral examination, it is quite settled that such a body will not accept an unsigned statement. Regarding this issue, I again make reference to the aforementioned 2007 case Croatia v. Serbia. Scholars agree that the value of a witness statement depends on both formal and substantial prerequisites.69 The formal prerequisites, such as the signature or confirmation of the declaration, are clearly settled in order to ensure that the statement is attributable to a specific person, while the substantial ones, such as integrity and impartiality, are related to the credibility of the witness. As a general rule, the Court has stated that it ‘cannot accord evidential weight to those statements which are neither signed nor confirmed’.70 The Court seems to uphold the view that the mere fact that certain statements satisfy the formal requirements does not guarantee their probative value per se. Consequently, the majority stated that the Court would proceed to a sort of cross-checking of those statements with other sources of evidence to verify whether, even in the absence of certain ‘reliability requirements’—for example, an indication of the circumstances in which they were given—they could have a certain probative value.71 However, it might be argued that the Court ended up taking for granted all the assertions contained in certain statements on the condition that they were signed or, more generally, satisfied the formal requirements. In one instance, for example, the Court concluded that a statement made before a domestic court by a nurse who described ill treatment of Croats by Serb forces inside the clinic of Vocin in Western Slavonia had no evidential value because it ‘contained

67 Strong and Dries (2005), p. 307. ‘the witness statement is essentially a description of certain facts known to the witness. A witness’ lengthy speculations as to certain events are generally pointless’. 68 Bühler and Dorgan (2000), p. 6, citing Order of February 1994, §4, ICC Case No. 7314 (1996) J Dr. Int (Clunet) 1045 at. p. 1046. In Strong and Dries (2005), p. 312, n. 67. 69 Cheng (1953), p. 312, Niyungeko (2005), p. 360, Sandifer (1975), p. 208. 70 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3 Para. 198. 71 Ibidem, Para 199.

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no details about the nature of the proceedings or the court where the statement was made’ and, moreover, it was not signed.72 On the other hand, the Court held that another statement describing the acts of ill treatment to which the author and others had allegedly been subjected in late August 1991 could be given evidential weight because it was signed and represented a first-hand account. A similar line of argument was made by the Court in other relevant paragraphs, in which the Court said that ‘it must give . . . evidential weight’73 or that it ‘can give credence’74 to signed statements or statements which were subsequently confirmed. By taking this stance, it seems that in the Court’s view, the existence of the formal elements provides evidential weight regardless of the existence of the substantial requirements. Although the Court was careful not to assign an unduly high probative value to those statements, one cannot but agree with Judge Donoghue who, in her separate opinion, lamented that ‘the Court[‘s] analysis seems to leap from the refrain that a statement deserves evidential weight to a finding that actus reus of genocide is established’.75 Another interesting point concerns the reports prepared by the Croatian police which provided accounts of witnesses or statements not signed or confirmed. On the whole, the Court did not give any evidential weight to these reports, taking the same prudent view as in the Nicaragua judgment of 1986 that was subsequently upheld in the genocide judgment of 2007.76 The decision of the Court not to give any weight to police reports in the present case, as well as similar sources of evidence in precedent cases, suggests the existence of a trend to disregard ex parte evidence in cases where the international responsibility of a state is at stake, in line with the Court’s careful choice to apply a high standard of proof77 (on the issue of standard of proof, see infra Chap. 7). It must be mentioned that even though each party has the right to cross-examine the witnesses of the opposing party, cross-examination is not necessary for the evidence to be taken correctly. Since a great deal of time may be spent in the oral examination of witnesses, international tribunals, the ICSID included, usually allow cross-examination only if the opposing party requests it.78 Even in such a case, if a party intends to make use of the right to cross-examine a witness, it is obviously obliged to inform the opposing party beforehand. In many cases, in order to avoid procedural inefficiency, international tribunals identified appropriate solutions to narrow the subject of testimonial examination. In

72

Ibidem, Para. 343. Ibidem, Para. 314. 74 Ibidem, Para. 318 and 322. 75 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3, Declaration of Judge Donoghue, para 9. 76 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3, para. 213. 77 Gattini and Cortesi (2015), p. 907. 78 Oko Case, Procedural Order No. 4, para 2. 73

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the Duke Energy case, for instance, the tribunal allowed re-direct examination of witnesses only when it concerned issues that arose during the cross-examination. Another example of a tailor-made solution can be found in the Tokios Tokéles case. In Procedural Order No. 5, the tribunal decided that every witness statement was to be considered as direct evidence: in this way, there was no necessity for the parties to conduct initial questionings of their own witnesses asking them to illustrate their position. Scholars have confirmed the possibility of making use of this practice.79 In the Tokios Tokéles case, there were further limitations at the following stages of the proceedings: cross-examination had to be limited to the content of the statements, and re-direct examination had to be limited to the issues emerging as controversial during the cross-examination.80 A significant issue concerning cross-examination is that of witness preparation. This expression might at first seem to refer to a practice possibly used to alter or manipulate the testimony; however, authoritative scholars have clarified that the first piece of advice given to a witness must be that of telling the truth since during crossexamination the first goal of any examiner is to establish the credibility of the witness: inevitably, an ‘over-prepared’ witness could quickly lose any credibility in the arbitrator’s eyes. However, it should not be concluded that witness preparation is an unnecessary practice: on the contrary, it has been observed that if a witness is presented to the court without having revised the main points of the subjects on which they will most likely be questioned, they may offer arbitrators nothing but silent answers, thus wasting everybody’s time.81 It is clearly accepted in the practice of international tribunals that at the end of examination and cross-examination, arbitrators may want to ask some questions of the witness; however, it has been observed that arbitrators’ role in this regard is often quite passive, probably because of the necessity for them not only to be impartial but also to appear impartial.82 The issues examined certainly show that international tribunals in the field of investments do not strictly apply the rules regulating cross-examination: as in any other stage of the proceedings, they are granted a significant degree of independence and can therefore adjust the scale and length of oral examinations depending on the time available and on whether and how there have been objections to the evidence presented. The observations made during cross-examination are also valid regarding the amount of time given to each party to interrogate or counter-interrogate witnesses. The approach usually followed by international tribunals is that of distributing the available time equally among the parties in order to respect the principle of equality.

79

1999 IBA Working Party & 2010 IBA Rules of Evidence Review Subcommittee, op. cit., p. 16. See also Böckstiegel (2001), p. 8. 80 Tokios Tokéles, Procedural Order No. 5. 81 Bühler and Dorgan (2000), pp. 20–21. 82 Kurkela and Turunen (2010), p. 149.

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However, it has been observed that a rigid enforcement of this principle may clash with the principle of ensuring each party the opportunity to fully present its case.83 Thus, scholars generally suggest that tribunals, should they deem it necessary to do so, create a time schedule in accordance with the requirements of each specific case.84 For instance, some tribunals as a practical rule assign an equal amount of time to each party, leaving some backup time to be used if a party needs it.85 Although this is not an ideal solution, this practice allows tribunals to be quite flexible. Another method used to ensure both parties equal opportunities to conduct their examinations is that of establishing, in consultation with the parties, the total amount of time needed for the oral examination and then proceeding to examine all witnesses together on all matters. This method helps the parties compare witnesses and experts discussing the same subjects so that arbitrators can have a clearer vision of the differences in the testimonies and can judge the witnesses’ credibility.86 This method is recommended by the official commentary on the IBA Rules,87 and it is especially efficient when it comes to taking the testimonies of experts or consultants about particularly complex technical issues.

5.3.2

Factual Testimony and de relato Testimony (Hearsay Evidence)

The theme of testimonial evidence cannot be adequately discussed without including the most vexing question in this field, namely indirect testimony. The issue of its admissibility, the problems connected with its taking, and, most of all, the question of how much weight to assign to it have been debated at length over the years. To examine this theme, it is certainly necessary to define the field of investigation. Hearsay evidence is defined as a statement made by someone other than the person who is actually called to testify and who is requested to provide proof of what he or she states.88 In some cases, evidence may also be double hearsay if the witness reports what has been told by a person who knows about the subject of the testimony from a third person. Common law jurisdictions consider de relato testimony, whatever the degree of hearsay, to be unreliable since there is no way for the

83 Bishop and Childs (2009), p. 14, available online at: http://www.kslaw.com/imageserver/ KSPublic/library/publication/9-10IBAChilds.pdf. 84 Bühler and Dorgan (2000), pp. 24–25. 85 Bishop and Childs (2009), p. 15. 86 Böckstiegel (2001), p. 8. 87 1999 IBA Working Party & 2010 IBA Rules of Evidence Review Subcommittee, op. cit., p. 23. 88 Civil evidence act. 1995, s 1(2); see also Federal Rule on evidence 801(c) US. Cit in Strong and Dries (2005), p. 302. “a statement made otherwise than by a person while living oral evidence in the proceedings which is tendered as evidence of matters stated”.

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opposing party to submit the person to cross-examination. There is no way to determine whether the statement heard by the witness was not intended seriously or whether the listener, in the light of new information, has unintentionally reinterpreted the statement. Since de relato testimonies are considered an unreliable type of evidence, common law judges often tend to declare them directly inadmissible. This choice could become difficult when evidentiary material of a better quality is lacking. Therefore, US law allows exceptions to the production of this type of evidence, thereby helping to create a body of very complicated rules to define what exactly is hearsay evidence and to identify possible exceptions in the category.89 Since 1995, Britain has changed its approach to hearsay evidence by admitting its production without restrictions and shifting the problem to its evaluation, which means requiring judges to consider how the testimony has been taken.90 Of course, the problem of hearsay evidence in the field of arbitration can only be indirectly influenced by changes in national laws since arbitrators, as is well known, are independent from national laws. The issue of hearsay evidence is not addressed by the most important international rules or by ICSID or IBA rules91—an issue also left unresolved in the 2020 amendment and not even addressed by the Commentary on the IBA rules. Even though arbitrators enjoy great freedom in the field of evidence, the possibility of taking hearsay evidence might be contested by the opposing party with many legal arguments. The most important one might be the principle according to which atypical evidence cannot be employed to bypass the procedures for taking ordinary evidence. Moreover, the party against which an indirect testimony is produced would find itself facing the impossibility of conducting a direct examination of the witness. Since the practice of cross-examination is quite widespread, as proven above, the party would have good reasons to complain about the breach of the adversarial principle. However, this objection might be overcome by noticing that it might be very difficult for the other party to find better evidence, especially in cases concerning expropriation or loss caused by armed conflicts. The tribunal might therefore decide to accept the evidence since if it decided against it there would still be an unacceptable breach of rights because the party producing the evidence would not be allowed to present its case. It could also be observed that the parties, by agreeing to submit their dispute to international arbitration, implicitly decided in favour of a proceeding without strict rules on evidence unlike those of some national laws.

89

Strong and Dries (2005), p. 302. Civil Evidence Act 1995, s. 4. 91 Strong and Dries (2005), p. 305. 90

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The admission and taking of hearsay evidence, however, is not undisputed in doctrine: some scholars and practitioners are in favour of it,92 but the jurisprudence of some arbitration tribunals such as Iran-US Claims Tribunals is against it.93 As far as ICJ practice is concerned, the issue of hearsay evidence is far from being settled. Many authors suggest that as a rule, international law benches are composed of professional judges who do not need to be ‘protected’ as jury members in common law countries.94 It follows that hearsay evidence should in principle be deemed admissible before international jurisdictions.95 In the above-presented 2007 case Croatia v. Serbia more than in any other it is necessary to keep in mind that ‘the fact that a piece of evidence was admitted to the record did not mean that the evidence in question would be relied upon in the final judgment’.96 This approach, however, only shifts the problem of assessing hearsay evidence to a later stage in the proceedings devoted to the evaluation of proof. In the case at hand, the Court took a very prudent approach, neither adhering to the principled positive view held by Croatia on the relevance of hearsay evidence nor to the principled negative view held by Serbia. The Court recalled its previous jurisprudence, with its rule of thumb that ‘hearsay [is not] of much weight’.97 On the whole, the Court admitted the production of hearsay evidence as such but nevertheless decided not to give any evidential weight to it when coming to its evaluation.98 ICSID tribunals also had to face the thorny issue of hearsay evidence: their attitude so far has generally been in favour of its admission following the general principles of procedure in the field of international arbitration.99 In particular, in EDF v. Romania,100 the tribunal found itself in the delicate position of having to decide the value of a testimony regarding alleged corruption. The witness had initially denied all knowledge of any information; then, in his subsequent written deposition, he stated that at the time of the facts he had been

92

Böckstiegel (2001), pp. 8–9, Strong and Dries (2005), p. 312. Aldrich (1996), p. 352. 94 Sandifer (1975), p. 257. 95 Gosnell (2010), p. 396–397. 96 Dermott (2013), p. 98r. 97 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3 para. 197. The Court has thus held that it must assess “whether [such statements] were made by State officials or by private persons not interested in the outcome of the proceedings and whether a particular affidavit attests to the existence of facts or represents only an opinion as regards certain events” (ibid.). On this second point, the Court has stated that “testimony of matters not within the direct knowledge of the witness, but known to him only from hearsay, [is not] of much weight” (Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p. 42, para. 68, referring to Corfu Channel (United Kingdom v. Albania), Merits, Judgment, I.C.J. Reports 1949, p. 17). 98 Gattini and Cortesi (2015), p. 906. 99 Sandifer (1975), p. 256. 100 EDF (Services) Limited v. Romania, ICSID Case No. Arb/05/13, Award, 8 October 2009. 93

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immediately informed of a request for a $2.5 million bribe. Of course, the main problem for the tribunal was deciding which testimony was true. The tribunal observed incidentally that hearsay evidence is generally admissible in international arbitration101 but then immediately proceeded to discuss the problem of the contradiction between the two depositions, implicitly suggesting that the indirectness of the evidence was not a decisive issue. However, it is possible that the tribunal followed a pragmatic method, giving priority to the most relevant issue (in this case, the contradiction between the two statements), thus avoiding expressing a clear-cut position on such a controversial matter. However, other ICSID awards seem to confirm a rather liberal tendency towards indirect testimonies. In W. E. G. Siag and C. Vecchi v. Egypt,102 there was a problem of authenticity of some documents. The witness Souhaid declared that a public official from Sayda had informed him orally that one of Siag’s documents was not authentic because, among other things, it had no signature; for his part, the plaintiff claimed that the document had been validated and correctly signed.103 As in the case seen above, the tribunal simply did not consider the indirect nature of Souhaid’s deposition but proceeded directly to examine the issue in question, observing that the witness was probably wrong.104 The most recent arbitral award dealing with hearsay evidence was in Conocophillips v. Venezuela of 2019. The tribunal had to deal with an unusual situation of expert reports (on this matter see infra §4.3.4) which could not have direct knowledge of the facts about which their reports were made. Again, the tribunal did not take a clear-cut position on this issue, but in the end it seems that he decided that these reports were admissible and that the arbitrators attached a certain weight to them. The tribunal stressed that it made the parties aware of this problem.105

101

Ibid., para 223–224. Waguih Elie George Siag and Clorinda Vecchi v. The Arab Republic of Egypt, ICSID case No. Arb/05/15, Award, 1 June 2009. 103 Ibid., para 333. 104 Ibidem. 105 Conocophillips Petrozuata B.V. Conocophillips Hamaca B.V. Conocophillips Gulf of Paria B.V. And Conocophillips Company v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/ 30, Award, 8 March 2019 para. 269. None of the witnesses was able to testify on actual facts based on personal knowledge and covering the historical period between the expropriation up to 2015 or 2016, and in many cases, the information provided to the Tribunal is based on hearsay or documents gathered from other persons involved in the Projects who have not been asked to appear before this Tribunal. The evidentiary gaps had led some experts to take positions not reflecting the real situation of the Projects and to argue on the basis of assumptions not verified with actual facts, or not supplied with evidence on the Tribunal’s record. The Tribunal also noted that the valuation experts on several occasions insisted that their analyses was limited by the instructions provided by their respective instructing Party. The experts’ evidence, therefore, requires a close analysis as to its objectivity and reliability. 270. The Tribunal further notes that the remedy it will retain must be connected to actual facts and reflect the Tribunal’s knowledge. The Award “shall state the reasons upon which it is based” 102

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To conclude, it has been observed that there is no international rule explicitly stating that indirect testimonies should be rejected even though the value of these testimonies remains uncertain.106 One possible solution that is not always feasible is that of finding a way to obtain a first-hand report instead of simply excluding the testimony. This approach was followed by ICTY in the Kordic case, in which the Appellate Body overturned the first instance decision, showing a clear preference ‘for live, in court testimony’.107 The real difficulty, especially for an international tribunal, is when a witness refuses to cooperate.

5.3.3

Reluctant Witnesses and the Search for Evidence Abroad

If a witness whose testimony is requested by a party refuses to cooperate, the party can ask the arbitration tribunal to employ all means allowed to obtain the testimony, or it can hope that the tribunal finds the evidence on its own motion. Of course, the tribunal can exercise its discretion and refuse the request if it believes that the evidence concerned is not material or relevant. According to most arbitration rules, the party authorised by the tribunal, or the tribunal itself, can ask national courts either to force the witness to appear or to examine the witness directly.108 As a general rule, the court helping the arbitral tribunal obtain the testimony of a reluctant witness should be the national court of the country where the arbitration is held. However, in transnational proceedings, witnesses often reside in different countries than the one where the arbitration proceeding is held. For this reason, arbitral tribunals might need direct or indirect help from foreign courts. In these circumstances, the power of the tribunal is obviously limited to ‘whatever steps are legally available’.109

(Art. 48(3) of the ICSID Convention, Arbitration Rule 47(1)(i)). Members of the Tribunal must be capable of exercising independent judgment (Art. 14(1), 40(2) ICSID Convention). When reading these provisions together, it means that the opinion of experts must be capable of being translated into reasons to be provided by the Tribunal. Such reasons cannot be based, for instance, on mathematical formulae not accompanied by explanations serving as evidence or reasons of law on which an award can be based. The Tribunal cannot reach conclusions based on simple excelsheets not accompanied by explanations and incapable of being operated on an interactive mode. This is all the more difficult when the response of the experts is limited to stating that the reports have been prepared following a party’s instruction. The Tribunal has on several occasions made the Parties aware of such deficiencies. 106 Sandifer (1975), p. 257. 107 Khan et al. (2010), p. 394. 108 See, for instance, art. 27 of the UNCITRAL Rules. 109 IBA Working Party & 2010 IBA Rules of Evidence Review Subcommittee, Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration, 1999, p. 18.

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In certain cases, the tribunal may prefer to simply give the party permission to take action on its own accord. This method might be more practical and efficient if, for example, the party requesting the evidence has a subsidiary company in the country of the witness and perhaps has its own lawyer there.110 One of the problems that arises when employing this approach is that not all national rules recognise arbitration boards as jurisdictions because arbitration tribunals are not legitimated by an act of sovereign will but only by an agreement between two parties. The name ‘arbitral jurisdictions’ itself refers to their power to end a legal dispute permanently, but they do not generally have the imperium that national jurisdictions have.111 Another complication is that the remedies available in each legal system vary significantly: for example, in the US legal system it is possible to obtain a wide range of summonses and orders for the production of evidence, whereas judges of other countries may not have legal means comparable to those of the US. This problem is by definition unsolvable because no arbitral tribunal can exercise its power in a foreign country if the country’s legal system does not provide for it. However, there are still some possibilities which depend on the limits of the remedies available in each national legal system. Since the national court of the country where an arbitration is held does not have direct subpoena powers over a foreign witness, the party has two options: request a rogatory letter or follow the 1970 The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.112 Issuing a rogatory letter is bureaucratically demanding, and the results may vary depending on the court’s discretion. Moreover, the rogatory procedure may last from 3 months to 1 year.113 For these reasons, a conventional solution seems preferable. However, the issue is quite complex since according to several authors114 the English text of the 1970 Convention implies that arbitral tribunals should not be considered as jurisdictions under the Convention, whereas the French text and part of the doctrine state the opposite.115 The question has been submitted to the Bureau Permanent created at the conclusion of the Convention. The Bureau gave a negative answer in 2003, observing that ‘the arbitral tribunal cannot be considered as a jurisdiction under the Convention’.116 However, the question should still be considered unsolved because in 2008, after the Intel case117 in which a company involved in a European arbitration procedure

110

Ibidem. Ostrove and Delaffond (2013), n. 3, p. 457. 112 Concluded at The Hague on 18 March 1970; among the contracting states, which are more than sixty, are USA, Russia, China, India and many European countries, including Italy. 113 Strong and Dries (2005), p. 319. 114 Redfern and Hunter (2003), p. 322. 115 Strong and Dries (2005) p. 318. 116 http://www.hcch.net/uploadwoplse_pd04f.pdf “le tribunal arbitral ne pouvant être qualifié d’autorité judiciaire au sens de la Convention, il ne peut transmettre lui-même la demande d’obtention directement à l’État requis”. 117 Intel Corp. v. Advances Micro Devices Inc., 542 U.S. 241, 2004. 111

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managed to obtain an order of discovery from the Federal Court of Appeal in California,118 the board expressed doubts about the matter. The non-recognition of arbitration panels as jurisdictions does not concern international arbitration procedures in the field of investments, especially those before the ICSID jurisdiction, which represents an exception because of the public nature of the convention on which it is based and because of the presence of States as parties. Regarding arbitration disputes in the field of investments which were not brought before ICSID tribunals, Oxus Gold plc v. Kyrgyzstan is an interesting case.119 The dispute concerned a mining company whose head offices were located in both the United Kingdom and the former USSR. The company had a license for the development of a gold deposit in Kyrgyzstan and a joint venture created by Oxus subsidiary companies in the country. After the cancellation of the license, Oxus Gold started an arbitration procedure against Kyrgyzstan for discriminatory conduct, claiming in particular that Kyrgyzstan had breached a bilateral investment agreement with the United Kingdom. The plaintiff also asked the District Court of New Jersey to order Jack A. Barbanel, who was not part of the arbitration but lived there, to appear and testify on the subject of the dispute. The Court of New Jersey issued an order allowing the plaintiff to obtain the discovery of the documents owned by the witness and his testimony. The Court did not base its decision on the Intel case, which regarded arbitration in general, but identified a clear distinction between commercial arbitration and that of a public nature regarding investments. A decisive factor for the American court was that the arbitration procedure was conducted in accordance with the UNCITRAL rules and that its legal basis was a BIT between the United Kingdom and Kyrgyzstan.120 According to the district court, these circumstances made it possible to recognise the arbitral tribunal as a jurisdiction under §1782 of the U.S. Code, which grants American courts discretion in issuing orders of discovery or in ordering testimonies before a foreign or international tribunal. Manifestly, according to the court, arbitral tribunals in the field of investments should be considered in all respects as international tribunals.121 Regarding ICSID procedures, a similar issue arose in Caratube International OIL Company v. Kazakhstan,122 in which the claimant, after informing the tribunal about its ‘Section 1782 petition’, requested an American court to issue an order that would allow Caratube to obtain the evidence it needed to support its claim. In a letter dated 10 May 2010, the defendant asked the tribunal to order the claimant to suspend the action before the American court. The claimant asked the tribunal to reject the

118

The judgement was later confirmed by the Supreme Court of the United States. Re Oxus Gold plc, MISC No. 06-82-GEB 2007, WL 1037387 (D.N.J. April 2, 2007). 120 Re Oxus Gold plc, WL 1037387, §5. “[This BIT] specifically mandates that disputes between nationals of the two countries would be resolved by arbitration governed by International law. . .and the arbitration is thus being conducted in a framework defined by two nations”. 121 Ostrove and Delaffond (2013), p. 461. 122 Caratube International Oil Company LLP v. Republic of Kazakhstan, ICSID Case No. ARB/08/ 12, Award, 5 June 2012. 119

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defendant’s request, but the defendant, in another letter dated 24 May 2010, asked the tribunal to reject the evidence obtained through the action taken in the US.123 The tribunal postponed the decision on the evidence obtained through section 1782, particularly taking into account the necessity to preserve the rights of the defendant.124 However, the final decision on the admissibility and taking of evidence was never communicated to the parties because after the defendant’s intervention,125 the American court rejected the request; on 22 September 2010, the court rejected the claimant’s reconsideration request.126 The ICSID tribunal observed that before proceeding with the Section 1782 petition, the party ought to have informed the arbitration panel. The tribunal concluded that the petition was not a violation of the tribunal’s rules of procedure but that the party deciding to proceed with such a legal action ‘does so [. . .] at its own risk’.127 As observed by doctrine, other arbitration tribunals have adopted the same approach.128

5.3.4

Expert Testimony

Even though it is common for arbitral tribunals to consider expert opinions as evidence, the taking and evaluation of those opinions varies in practice, often depending on the common law or civil law cultural background of each arbitrator. In many arbitral awards there is a widespread use of IBA Rules; as in other cases, the rules applied in the field of expert opinions show a compromise between common law and civil law. For instance, IBA Rules allow the parties to follow the practice typical of common law countries to appoint their own experts,129 but the same rules allow the tribunal to appoint its own expert, which is an option notoriously available in civil law countries. In proceedings conducted in accordance with ICC, LCIA, ICSID, and UNCITRAL rules, experts may be present as experts of a party as well as experts of the tribunal. This means that the possibility for both parties and for the tribunal to call their own witnesses and make them interact mirrors the hybrid nature of international tribunals. An emerging practice, which accounts for a transversal interest in procedural efficiency, is the so-called ‘expert conferencing’. This practice allows the tribunal and the parties to have a sort of conference on a particular topic

123

Ibid., para 49. Caratube v. Kazakhstan, Procedural Order No. 3, para 2.7. 125 Caratube v. Kazakhstan, Award, para 54. 126 Ibid., para 58. 127 Caratube v. Kazakhstan, Procedural Order No. 3, para 2.6, in Award para 53. 128 Ostrove and Delaffond (2013), p. 461. 129 IBA Rules, art. 5. 124

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with all the experts, comparing their testimonies and asking all the necessary questions at the same time. Regarding auxiliary experts of the parties, most arbitration rules consider it a right for the party to nominate experts without previously requesting an authorisation from the tribunal. The appointing of experts is therefore left to the free discretion of each party following a common law model which, in this specific case, appears particularly suitable for international arbitration. However, after an expert has been appointed by a party, the tribunal is not obliged to follow a common law approach all the way. For instance, an expert presenting a report as direct testimony may undergo an extensive cross-examination on the part of the counsel of the counterpart; however, in other proceedings arbitrators may adopt a more questioning approach by formulating questions for the experts as occurs in some civil law countries. Of course, as has been already observed when discussing testimonial evidence, nothing prevents arbitrators from using both approaches. As previously noted, the possibility of obtaining discovery and the range of discovery in international arbitration are more limited than in a common law court; consequently, an arbitral tribunal may attribute significantly greater weight to expert opinions. Since any communication between a party and its expert should remain confidential, both the expert testimony and the expert report may be the result of extensive cooperation. In fact, it is not unusual for a party to appoint a group of experts who work as a team to examine a complex technical issue.130 In order to avoid this practice making arbitration proceedings excessively expensive, the ICC Commission on Arbitration recommends in its report Techniques for Controlling Time and Costs in Arbitration that each party should be allowed to appoint only one expert for each individual topic of investigation.131 If arbitrators are not satisfied by expert testimonies, they may reject evidence presented by both parties.132 However, instead of proceeding to reject the positions of the experts of both parties, tribunals often, patiently, compare evidence through the aforementioned practice of the conferencing of witnesses. If both parties have presented an expert testimony regarding complex technical issues, the arbitral

130

Kent (2007), p. 2. ICC Commission on Arbitration and ADR Task Force on Reducing Time and Costs in Arbitration, Techniques for Controlling Time and Costs in Arbitration, International Chamber of Commerce, 2012, §68, available online at http://www.iccwbo.org/Data/Policies/2012/ICC-ArbitrationCommission-Report-on-Techniques-for-Controlling-Time-and-Costs-in-Arbitration,-2012/. 132 Opinion of the Court of Appeal in Cemp Props. (UK) v. Dentsply Res. & Dev. Corp., 1991, 2 EGLR (civ.) 197, 200, quoted in Cato D. Mark, The Expert in Litigation and Arbitration, LLP, 1999, p. 700, and in Freyer (2008), p. 4, n. 12. “Expert Witnesses, particularly in valuation cases, instead of living evidence of their actual views as to the true position enter into the arena and as advocates put forward the maximum or minimum figures as best suited to their side’s interests. If experts do this then they must not be surprised if their views carry little weight with the judge”. 131

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tribunal may have some difficulties in deciding which witness is the most convincing. In similar circumstances, an obvious solution can be that of appointing a third, neutral expert. However, this choice might present some practical difficulties. The number of experts in certain fields is often limited, and it might be difficult to find a neutral expert who has had no professional contacts with any of the parties and who can be considered to have at least the same professional level as the top-level experts which have already been employed by the parties. In conclusion, the method of examining experts together can be very useful, but following this method does not relieve the tribunal from the difficulty of evaluating the experts’ technical reports.133 It must also be said that if the tribunal chooses to appoint its own expert, it must file their report to the parties, which will comment on it. If this procedure is not followed, a national tribunal requested to allow the exequatur of a non-ICSID investment arbitration award could reject it for breach of the adversarial principle. This is also true within the ICSID system where ICSID arbitration rules do not expressly provide the tribunal with the power to appoint its own expert. Gilles Sourgens, Duggal, and Laird’s book Evidence in International Investment Arbitration explains that ‘at times the appointment can be very contentious’134 but does not explain much more. The most recent commentary on the ICSID rules of arbitration says that ‘an emerging trend is for tribunals to nominate experts on their own motion’.135 Probably the best analysis of the problems related to tribunal-appointed experts is found in Niemoj’s article published in the ICSID Review in 2019.136 The author correctly highlights the problem of identifying the right legal basis that empowers ICSID arbitrators to appoint an expert of the tribunal. He observes: Article 43 of the ICSID Convention is not commonly used by tribunals, particularly when such use is the result of the tribunal’s own initiative. However, the ICSID case law shows that, once tribunals do invoke article 43, they err in the way in which the provision is applied. This article examined two limitations on the use of article 43. The first is the tribunal’s use of article 43 to appoint an independent expert. The conclusion of this article is that, in its current wording, article 43 does not provide such a power to tribunals and, therefore, it cannot be used by them to do so.137

The second limitation identified by the author is that through the use of experts, the tribunal shall not enlarge the scope of the dispute between the parties. It is interesting that Niemoj identifies the legal basis for the empowerment of the ICSID arbitral tribunal in the consent of the parties that it is also important to grant that the whole procedure from the appointment of the expert to the issuing of his report and the evaluation thereof is fully transparent and directed in accordance with the adversarial principle.

133

Böckstiegel (2001), pp. 8–9. Sourgens et al. (2018), p. 229 para. 10.06. 135 Fouret et al. (2019), p. 1107 para. 24.54. 136 Niemoj (2019), pp. 697–722. 137 Niemoj (2019), p. 721. 134

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Ensuring transparency in the evaluations made by tribunals is an important value which must be preserved at all stages of the proceedings. In this matter, the practice of the ICJ to make use of expert opinions without following the appropriate procedures to appoint them could be pointed out as bad practice, as lamented by Judges Al-Khasawneh and Simma in their dissenting opinion in the Pulp Mills case.138 Judges Al-Khasawneh and Simma deplored the Court’s decision to solve some technical questions based on opinions given by invisible experts (‘expert fantômes’139 in the imaginative words of the two judges) without allowing a confrontation with the parties.140 Such an approach can be a serious detriment to the credibility of the arbitral tribunal, especially in cases where problems of a technical nature play a significant role in the final decision.141

5.4

The Gathering of Documental and Testimonial Evidence: A Preliminary Conclusion

This chapter addressed many issues concerning the evidence-gathering process in investment arbitration. As already stated in the introduction, this chapter is strictly intertwined with Chaps. 4 and 6: in this conclusion, I again consider certain findings I elaborated at the end of the preceding chapter, and I anticipate some other findings related to the next chapter. It is fair to say that concerning the rules governing the admissibility of evidence, there are echoes of certain principles of public law, and the realm of the process of the taking of evidence can be shaped only keeping in mind principles of efficiency and equality between the parties. This becomes clear when examining the application of the rules on hearsay evidence or those concerning privileged documents. Even if at the national level there are quite strict rules concerning these matters, they have not become uncontested principles of international law. However, one could argue that this is still acceptable given the fact that arbitrators interpret and reinterpret these regulations on a case-by-case basis and the parties accept this lack of certainty in exchange for the inherent flexibility of international arbitration. From my personal perspective, however, detailed provision such as that

138 Joint Dissenting Opinion of Judges Al-Khasawneh and Simma in Pulp Mills on the River Uruguay (Argentina v. Uruguay), Judgment, I.C.J. Reports 2010, p. 14. 139 Ibid., para 14–15. 140 Ibidem. 141 On this issue see also Gaja (2016), p. 418. ‘However, Court-appointed experts cannot provide assistance in assessing the parties’ comments on the experts’ opinions and thus cannot help the Court when the experts’ views may be most needed. Only assessors would be able to give the Court assistance during the final stages of the deliberations. On the other hand, even if the appointment of assessors is envisaged in Article 30 of the Statute and in Article 289 of UNCLOS their role would deprive the parties of the opportunity of commenting on elements that may be important for the decision. It thus raises questions with regard to the respect of due process’.

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contained in the NAFTA which ensures the protection of legal privilege are to be welcome and expanded. In any case, the most underdeveloped area remains that concerning the issue of drawing adverse inference against a noncompliant party to an order of the arbitral tribunal. Even if the parties have accepted the devolution of the solution to their dispute to an international judge who is not provided with imperium, it is highly unlikely that they have implicitly accepted remaining undefended against the initiatives of a party that may demonstrably act in bad faith. Nevertheless, it seems that development in this field of law is still to come. According to one recent article, Whether an adverse inference is drawn from unjustified non-production is a matter of discretion for the tribunal. Cognizant of procedural and evidentiary handicaps, to state a valid claim or defence, it remains incumbent upon the party to produce actual and direct evidence. Adverse inferences may be an invaluable evidentiary crutch in international arbitration, but the importance or relative weight of indirect evidence vis-a-vis direct evidence in the record must be at the forefront of the analysis.142

References Authors Aldrich GH (1996) The Jurisprudence of the Iran-US claims tribunal. Oxford University Press, New York Blackaby N, Partasides C, Redfern A, Hunter M (2015) Redfern and hunter on international arbitration, 6th edn. Oxford University Press, New York Cheng B (1953) General principles of law as applied by International Courts and Tribunals. Stevens and Sons Limited, London Fouret J, Gerbay R, Alvarez GM (2019) The ICSID convention, regulations and rules, a practical commentary. Edward Elgar Publishing, Cheltenham Gaillard E, Savage J (1999) Fouchard, Gaillard, Goldman on international commercial arbitration. Kluwer Law International Khan KAA et al (2010) Principles of evidence in international criminal justice. Oxford University Press, New York Kurkela M, Turunen S (2010) Due process in international commercial arbitration, 2nd edn. Kurk, New York Niyungeko G (2005) La preuve devant les Juridictions Internationales. Éditions Bruylant, Bruxelles Redfern A, Hunter M (2003), Law and practice of international commercial arbitration, 3rd student edn. Sweet & Maxwell, London Sandifer DV (1975) Evidence before international tribunals. University Press of Virginia, Charlottesville Sipiorsky E (2019) Good faith in international investment arbitration. Oxford University Press, New York Sourgens FG et al (2018) Evidence in international in international investment arbitration. Oxford University Press, Oxford Zimmermann A, Tams CJ (2019) The Statute of the International Court of Justice, 3rd edn. Oxford University Press, New York

142

Solis (2018), pp. 101–102.

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Articles Amaral GR (2018) Burden of proof and adverse inferences in international arbitration: proposal for an inference chart. J Int Arbitr 35(1):1–30 Bishop RD, Childs T (2009) The Requirement of Fair and Equal Treatment with Respect to Document Production in International Arbitration, 2 February, http://www.kslaw.com/ imageserver/KSPublic/library/publication/9-10IBAChilds.pdf Böckstiegel K-H (2001) Presenting evidence in international arbitration. ICSID Rev Foreign Investment Law J 16(I) Spring, pp 1–9 Bühler M, Dorgan C (2000) Witness testimony pursuant to the 1999 IBA rules of evidence in international commercial arbitration: novel or tested standards? J Int Arbitr 17(1) Chen S (2015) Re-assessing the evidentiary regime of the International Court of Justice: a case for codifying its discretion to exclude evidence. Int Comment Evid 13(1):1–40 Dermott YM (2013) The admissibility and weight of written witness testimony in international criminal law: a socio-legal analysis. Leiden J Int Law 25:97 Freyer DH (2008) Assessing expert evidence. In: The leading arbitrators’ guide to international arbitration, 2nd edn. Juris Publishing Friedland PD (1996) A standard procedure for presenting evidence in international arbitration. Mealey’s Int Arbitr R 11 (4):25, April Gaja G (2016) Assessing expert evidence in the ICJ. Law Pract Int Courts Tribunals 15(3):409–418 Gattini A, Cortesi G (2015) Some new evidence on the ICJ’s treatment of evidence: the second genocide case. Leiden J Int Law 28(4) Gosnell C (2010) Admissibility of evidence. In: Khan K et al (eds) Principles of evidence in international criminal justice. Oxford University Press Kennedy MN (2005) Escaping the fishbowl: a proposal to fortify the deliberative process privilege. Northwest Univ Law 99(4):1769–1815 Kent R (2007) Expert witnesses in arbitration and litigation proceedings. Transnatl Disp Manage 4(3) Malintoppi L (2016) Fact finding and evidence before the international Court of Justice (Notably in scientific-related disputes). J Int Disp Settlement 7:421–444 Mclachlan C (2021) Equality of Parties before International Investment Tribunals: The Institute of International Law resolution 2019. ICSID Review Niemoj A (2019) The limitations on Article 43 ICSID Convention: an (un)limited instrument of the tribunal? ICSID Rev 34(3):697–722 Ostrove M, Delaffond C (2013) La Recherche de Preuves à l’étranger dans le cadre de procédures arbitrales. Revue Générale de Droit International Public, A. Pedone, Tome 117(3):457–468 Paulsson J (1996) Overview of methods of presenting evidence in different legal systems. in gen. In: Jan Van Den Berg A (ed) International Council for Commercial Arbitration, Congress series n. 7, Planning Efficient Arbitration Proceedings, The Law Applicable, in International Arbitration. Kluwer Law International, pp 112–130 Polkinghorne M, Rosenberg CB (2015) The adverse inference in ICSID practice. ICSID Rev 30(3): 741–751 Sharpe JK (2006) Drawing adverse inferences from the non-production of evidence. Arbitr Int 22(4):549–572 Sheppard A (2016) The approach of investment treaty tribunals to evidentiary privileges. ICSID Rev 31(3):670–689 Solis MJ (2018) Adverse inferences in investor–state arbitration. Arbitr Int 34:79–103 Strong SI, Dries JJ (2005) Witness statements under IBA rules of evidence, what to do about hearsay? Arbitr Int 21(3):302–321

Chapter 6

Evaluation of Evidence

Once the tribunal has decided on the admissibility of the evidence submitted by the parties and the evidence has been taken, the extremely delicate stage of evidence evaluation begins. As briefly mentioned in the introduction, consolidated case law1 and unanimous opinion in doctrine2 confirm that in this field, as in those discussed above, the main principle in force is the freedom of appreciation of the tribunal. International tribunals generally give great relevance to their broad discretion, and scholars agree that this is a well-established principle. A proof of it can be seen in the frequency of quotation of the sentence ‘the burden of proof is that you have to convince me’3 from the words of the President of the Iran-United States Claims Tribunal, which sounds like a sort of surrender of judicial laws in favour of the arbitrator’s subjectivity. However, this vision is at least partially exaggerated. Even though it is true that the decision of a case cannot be reduced to a mere bureaucratic or mechanical activity and that therefore any judgement has some subjectivity in it, it is also true that, examined more closely, the cluster of rules and principles which can be drawn from international jurisprudence tends to narrow and guide the decision of the 1

French - Mexican Claims Commission: Georges Pinson, 19 October 1928, R.S.A. V, pp. 412–413; “[. . .] comme principe fondamental de procédure en matière de preuve [sa] parfaite liberté [. . .] d’en apprécier [les preuves admises] souverainement la valeur dans chaque cas particulier, sans être liée en quoi que ce soit, par des disposition légale en vigueur, au Mexique”. See also Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p. 40. See also: Mavrommatis Jerusalem Concessions (Greece v. U.K.), 1925 P.C.I.J. (ser. A) No. 5 (Mar. 26), Intervention of Sir Douglas Hogg, pp. 32–33, available online at: http://www.icj-cij.org/pcij/serie_C/C_13_03/C13_03_03_ Mavrommatis_Discours.pdf. 2 See, for instance: Cheng (1953), p. 303; Niyungeko (2005), p. 322; Amerasinghe (2005), p. 187. 3 Von Mehren and Salomon (2003), p. 290, n. 20. “As stated by a former president of the IranUnited States Claims Tribunal, ‘the burden of proof is that you have to convince me’”. See also Kröll (2011), p. 505; Ripinsky and Williams (2008), p. 163. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_6

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arbitrator. There is no list of these principles; they must be searched for in judicial decisions concerning very specific cases. An example could be the different value given to affidavits depending on whether or not they are sworn. Other unwritten rules provide for the necessity of assessing pieces of evidence in different ways depending on where they come from; others state that the value of evidence depends on how it has been taken. The picture formed by this broad set of rules is generally not very clear but is usually clear enough to make the final decision quite predictable.

6.1

The Principle of Free Appreciation of Evidence

As indicated above, the practical existence of free appreciation of evidence on the part of the tribunal is unquestioned. It is interesting to note that even though scholars have no doubts in remarking that this principle is in force, very few have tried to investigate the rationale behind it. The authors who deal with this subject put special emphasis on the freedom of international tribunals from national rules. Even though this is certainly a significant remark, it is also true that it concerns the effects more than the causes of the principle. A methodical reconstruction of the limits of free appreciation of evidence must therefore be preceded by an examination of the rationale underlying the principle itself. This allows a coherent reconstruction of the field of evidence evaluation because the limits must be established logically without ignoring the reasons which brought the principle into existence in the first place and without annulling its advantages. A first possible explanation of the consolidation of the principle of free appreciation in international law could be identified in the fact that it would be very difficult for any jurist to make a synthesis of all the rules in force in different countries and different legal traditions. However, as part of the doctrine observed, the existence of different legal traditions does not necessarily imply that it would be impossible to find such a synthesis. The remarks made on this point by Judge Brower, who was an arbitrator of the Iran-U.S. State Claims Tribunal for many years, are particularly interesting. The judge, while summarising his long experience in the legal field, noted that it had been interesting to observe during his years as a referee, particularly with the Iran-U.S. State Claims Tribunal, the degree of agreement existing between arbitrators and judges of different nationalities on the validity of certain principles regarding the assessment of evidence.4 The arbitrator gave a few examples, among which are the noteworthy ideas that written correspondence between the parties before the trial constituted the most reliable source of evidence and that the conduct of the parties before the dispute arose is the best way to interpret the contract.5 He then proposed creating an uniform body of rules for the evaluation of evidence before

4 5

Brower (1992), p. 151. Brower (1992), p. 151.

6.1 The Principle of Free Appreciation of Evidence

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international tribunals.6 Indeed, a certain ‘social need’ which could trigger the coding of rules is undoubtedly present. Brower observes that the parties are often in trouble when they have to decide which evidence to present7 because of the impossibility of having a clear idea of what criteria will be used to assess it. The fact that over the years it was possible to identify some points of synthesis in significant issues concerning other areas in the field of evidence, such as admissibility, while there was no way to create a common code of good practices for what concerns evaluation, leads to the supposition that the matter of evaluation must be considered as a separate issue. It is certainly true that IBA Rules, by means of dispositions regulating the admissibility and taking of evidence, express an implicit opinion about the evidentiary value of some elements depending on whether they have been gathered following certain technical rules so that they are to be considered more significant than other elements. However, it does not appear necessary to discuss whether such essential (and also very recent) dispositions should be considered ‘the best regulation’8 synthetising the development of jurisprudence or doctrine. It therefore seems reasonable to conclude that the undisputed recognition of the principle of free appreciation of evidence must be derived from a rationale that makes this principle preferable to other possible solutions. It could be interesting to report a possible practical explanation without expecting it to be a final answer to the problem. In many cases, international tribunals are put under an enormous amount of political pressure. It is easily admitted, even by strictly legal literature, that in those cases there is a constant push towards compromise.9 This particular remark comes from an author who drafted a list of suggestions for any barrister appearing before an international tribunal. The remark on political pressure is used as a premise to discourage the use of rhetoric in those situations. The author observes that in these cases ‘the majority of the arbitrators are seeking precision of calculation and proof as a shield from the political pressures to which they are subject’,10 implicitly suggesting that arbitrators rely on facts as much as possible although they are not under an obligation to do so11 since the arbitral tribunal is

6

Brower (1992), p. 151. Brower (1992), pp. 52–53. 8 “The best regulation able to stop the development of doctrine and jurisprudence” is an expression used in literature referring to interpretative rules in criminal law. Obviously, this idea is here used in a very broad sense, referring to rules in general. On this matter see also Palazzo and Papa (2005), p. 69. 9 Belland (1984), p. 247. 10 Belland (1984), p. 247. 11 Suez, Sociedad General De Aguas De Barcelona S.A. And Interagua Servicios Integrales De Agua S.A. v. Argentine Republic ICSID Case No. Arb/03/17, Decision on Argentina’s Application for Annulment, december 14, 2018 para. 64. ‘Although a tribunal is required to decide every question put before it, there is no duty to comment on every argument raised, or piece of evidence submitted, by the parties. As the TECO committee, whose decision Argentina cites on this point, made clear a tribunal cannot be required to address within its award each and every piece of evidence in the record’. 7

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‘sovereign’ when it comes to the evaluation of evidence12 in compliance with the principle of free assessment of evidence that ICSID arbitral tribunals and annulment ad hoc committees imported from ICJ jurisprudence.13 Political or simply psychological pressure on many international tribunals may indeed be an explanation for the unchanged survival of the principle: generally, most tribunals use their powers with the purpose of assessing the value, modest as it may be, of all the evidentiary material which the parties or the tribunals managed to gather. Should tribunals reject all the evidence which, according to technical rules, has no value, the judges would apparently be protected by a body of strict rules, but their decisions would have to rely exclusively on their own interpretations of rules regarding the apportioning of the burden of proof, which in some cases can be an overwhelmingly difficult task.

6.2

Limitations of the Principle of Free Appreciation and Legal Presumptions

As seen above, legal presumptions are rules which limit the discretionary margin of judges, binding them to draw certain conclusions if certain conditions arise. It is necessary to specify immediately that this limitation itself has a limited range. For instance, some scholars have observed that in the case of presumptions causing a shift of the burden of proof (see Sect. 2.2), the existence of the fact which constitutes

12 Bolivarian Republic of Venezuela v. Tenaris S.A. & Talta – Trading E Marketing Sociedade Unipessoal LDA., ICSID Case No. ARB/12/23, Decision on Annulment, 28 December 2018 para. 240. ‘The Committee has carefully read Chapter V.2 of the Award. It disagrees with the Applicant’s reading on the burden of proof because the Tribunal did not state what the Applicant alleges. The Committee notes that the Tribunal first presented the evidence submitted by the Respondents in detail, in paragraph 195 to 203 of the Award, and did the same with Venezuela’s evidence, in paragraph 204 to 206. It then proceeded to weigh this evidence. The Tribunal found the evidence adduced by Tenaris probative and convincing, contrarily to the Applicant that found it “scant.” It is not for the Committee to question the Tribunal’s evaluation’. 13 Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Decision on Annulment. December 30, 2015, para. 219 ‘It is not unusual that in the exercise of judicial or arbitral functions a court or a tribunal finds some elements of the evidentiary record indicating one possible direction/conclusion, but other elements indicating a different direction/conclusion. It is for a court or a tribunal to weigh the evidence in accordance with the principle of free assessment of evidence in order to reach, on the balance of that evidence, its conclusions. See also footnote 202 of para 219 ‘R. Kolb, The International Court of Justice, Hart Publishing, p. 930 (2013). As the ICJ stated “within the limits of its Statute and Rules, it has freedom in estimating the value of the various elements of evidence, though it is clear that general principles of judicial procedure necessarily govern the determination of what can be regarded as proved.” Military and Paramilitary Activities in and against Nicaragua, Judgment (Nicaragua v. United States), Judgment on the Merits, I.C.J. Reports 1986, June 27, 1986, p. 40, para.60. For ICSID arbitral proceedings see Rule34(1) of the ICSID Arbitration Rules.

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the logical basis for the presumption has to be verified by the tribunal.14 Therefore, by means of the free appreciation of that piece of evidence, the tribunal can decide whether the presumption limiting its discretion may or may not be applied. However, this reasoning, albeit correct in principle, does not take into account that not all facts are necessarily contested in a trial because the parties agree on them, because they are notorious facts, or again because the proof of those facts is evident in itself. In these cases—which are not irrelevant for either quantity or quality—presumptions can play a major role. A similar observation can be made regarding the rebuttable nature of presumptions. It is certainly true that the tribunal is to evaluate the persuasiveness of contrary evidence. At the same time, it is true that in order to provide correct reasons for the award, the judge should not only identify the presumption but also find solid arguments and proofs to justify the fact that the final decision is different from what it would have been if the presumption had been applied. In conclusion, it is pretty much evident that when the applicability of a presumption is established, in order to decide on the case, the judge has to follow a logical reasoning within a narrow and predictable path.

6.3

Maxims of Experience in Evidence Evaluation

Even when no legal rules are immediately identified, there are still logical rules which constitute an important heritage of legal knowledge. These are rules which obviously do not come from a positive act of will of a legislator, nor is it possible to provide an exhaustive overview of all of them given their great variety. These rules simply emerge from practice, being legitimised by their repeated and widespread use and especially by the recognised social need of avoiding arbitrary judgements. However, some of these rules appear to have crystallised enough to deserve a brief discussion.

6.3.1

Source of Evidence

A first element that should be considered by a careful judge is the source of the evidence. In the Barcelona Traction case,15 Judge Jessup in his individual opinion deemed the argument exposed in Spain’s statement of defence—according to which ‘since the personalities acting for Sidro, Securitas and Sofina are essentially the same, their assertions supporting each other are equivalent to self-serving

14 15

Niyungeko (2005), p. 409. Barcelona Traction, Light and Power Company, Limited, Judgment, I.C.J. Reports 1970, p. 3.

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declarations which have little probative value’16—to be particularly significant. Curious cases of evidence submitted by the party in its favour have sometimes occurred in defendant countries’ arguments. In the Island of Palmas case, the Netherlands, observing that there are no formal rules concerning evidence in international law, asked that ‘statements made by a government in regard to its own acts’17 should be considered as evidence without the need to prove them through other evidence. Even though, as noticed above, international jurisprudence recognises the presumption of legitimacy and correctness of State acts, the approach of the Netherlands appears excessive. Any presumption may always be invalidated by contrary evidence; moreover, international tribunals are not obliged to accept the documents issued by national authorities or national authorities’ interpretations of those documents. In the Island of Palmas case, the tribunal observed that its job was to ascertain the value of the evidence presented. Another award following this approach of international jurisprudence is the already mentioned ICSID award in H. N. Soufraki v. The United Arab Emirates,18 in which the tribunal rejected the plaintiff’s argument according to which the best interpreters of Italian law can only be the Italian authorities. A recurrent theme in this field is the problem of the independence of witnesses and, more generally, of the value which should be given to the testimony of people from both parties who will be directly or indirectly affected by the decision of the case. It should be said that at a general level, ex parte statements are usually deemed admissible by international tribunals, which are not bound by the strict national rules on the matter. However, the main problem has consequently shifted to the value which should be given to such statements. According to authoritative literature, ‘unless the fact or state of affairs [which the party intends to prove through ex parte testimony] be within judicial notice or presumed, the mere ex parte statements of the facts by the interested party in a dispute are not considered as evidence and do not constitute sufficient proof of the facts alleged’.19 An example of this approach can be found in the Odell case20 decided by the 1926 British-Mexican Claims Commission, in which the plaintiff claimed to have been obliged to drive a military train and to have reported injuries in the derailment caused by an attack of the Mexican revolutionary forces. The plaintiff was not able to produce further proof of his claims. The Commission did not deny that the plaintiff’s description of the derailment had a certain ‘appearance of truth’, but the Commission

16

1970, I.C.J. Reports at p. 214. Island of Palmas case (Netherlands, USA), op. cit., pp. 840–841. 18 Hussein Nuaman Soufraki v. The United Arab Emirates, Case No. ARB/02/7, Award. 19 Cheng (1953), p. 309. 20 Odell, W. Allan (Great Britain) v. United Mexican States, Decision No. 39, May 13, 1931, pp. 61–64, British-Mexican Claims Commission (Convention b/w Great Britain and the United Mexican States of December 5, 1930), 24 March 1931–6 August 1932, in Reports of International Arbitral Awards, vol. V, pp. 133–306, p. 153. 17

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also observed that a judicial decision cannot be based on personal impressions only, explaining, a decision which imposes upon a state a financial liability towards another state, cannot rest solely upon the unsupported allegations of the claimant. [. . .] If an international tribunal were to accept all these allegations without evidence, it would expose itself to the non-unjustifiable criticism of placing jurisdiction as between nations below the level prevailing in all civilized states for jurisdiction as between citizens.21

A similar approach can be found in Adolph G. Studer v. Great Britain concerning a case of ante litteram expropriation of investment since the facts occurred in 1877 and 1878. The dispute was between the former American consul in Singapore (Studer) and Great Britain, which had lost its control of the territory of the former Sultanate of Johore in 1885. The claims of the plaintiff were to receive compensation for the loss of the plantations which had first been given to him and then destroyed by the Sultan of Johore. In the 1920s, the arbitral tribunal had to decide on the validity of the claim base only on an ex parte statement22 delivered by the plaintiff to the US Department of State approximately 20 years earlier. The tribunal did not hide its embarrassment, noticing that the good faith of the plaintiff was not questioned but that there was not even proof that when the Sultan of Johore had signed the deeds he could understand English, which was the language in which the consul had drafted the contract for the concession of 50,000 acres of land.23 Even though the tribunal did not hide its admiration for the commitment of Studer’s counsel, the claim had to be rejected.24 Naturally, the problem of the independence of testimonies does not only concern those of the claimant parties but also those of other persons bound to them by a subordinate or employment relationship. A significant decision on this matter is certainly that of the ICJ about testimonies of high officials of a State party. In the aforementioned Nicaragua case, the Court stated that depositions made by high officials had significant value when they reported facts or behaviours which were not in favour of the State represented by the officials since in such cases the statements could be considered as confessions. However, the Court immediately felt the need to note that those statements had to be taken with caution and that their probative value could vary depending on how they had been disclosed. The Court explained the rationale underlying this consideration by observing that a member of the government of a State engaged [. . .] in international litigation [. . .] will probably tend to identify himself with the interests of his country, and to be anxious when giving evidence to say nothing which could prove adverse to its cause. The Court this considers that it can certainly retain such parts of the evidence given by Ministers, orally or in writing, as may be regarded as contrary to the interests [. . .] of the State to which the witness owes allegiance, or as relating to matters not controverted. For the rest, while in no way impugning the honour or veracity of the Ministers of either Party who have given

21

Odell Case, p. 155. On the same topic, see also Cheng (1953), p. 309. Adolph G. Studer (United States) v. Great Britain, 19 March 1925, in Report of International Arbitral Awards, vol. VI, UN 2006, p. 151. 23 Ibid., p. 152. 24 Ibidem. 22

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evidence, the Court considers that the special circumstances of this case require it to treat such evidence with great reserve.25

It is evident that the Court chose to follow the well-established practice of international tribunals making the best use of all the gathered evidence.26 However, the decision to split the testimonies by considering only the parts which were unfavourable to the party which had produced the witnesses could be criticised. The reasoning of the Court seems to imply that no rational individual would give evidence against their own party and that they will do so only if their testimony regards facts which they believe they cannot deny. This consideration would lead to the assumption that such a testimony is true. The problem is that even though the choice of limiting the weight of the evidence given by the parties involved in the case without rejecting it is understandable, such an approach may fail to consider the evidence in its entirety. The facts which are unfavourable to the party could have been mentioned in connection with other significant favourable elements. In such a case, it would be unfair to separate the elements which are contrary to the interests of the party from the rest of the deposition without giving adequate attention to the testimony in its entirety. In conclusion, a coherent choice would seem more appropriate: either the witness is to be considered as reliable or the whole testimony has no value. Jurisprudence is also not unanimous in considering unfavourable statements as solid proof. In the Rann of Kutch case, Pakistan presented a diplomatic document from the Indian Minister for Foreign Affairs to support its claim, considering it an admission of the opposite party on the border alignment between India and Pakistan. The president of the tribunal made a different evaluation of the document and decided that considering the context of the facts disputed, it could not ‘be understood as an admission of the alignment of the boundary’.27 In particular, the tribunal observed that the document in question had been sent much later than the beginning of the dispute and that it concerned marginal questions. The tribunal stated that a simple note concerning a minor fact could not overturn the claims raised on other occasions.28 The outcome of the Rann of Kutch case was pretty much opposite to that of the dispute between Denmark and Norway decided by the PCIJ. The dispute concerned the legitimacy of a Norwegian occupation of the eastern part of Greenland which,

25

Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, §43. 26 On this subject, see Brown (2009), p. 92. 27 The Indo-Pakistan Western Boundary (Rann of Kutch) between India and Pakistan (India, Pakistan), 19 February 1968, U.N.R.I.A.A., vol. XVII, pp. 1–576. 28 “The statement cannot in the context of the related correspondence, which finally led to the present dispute, be understood as an admission of the alignment of the boundary The significance of the passage in the Note is not, in view of the letter as a whole and of the protracted diplomatic correspondence, greater than any other piece of evidence showing the extent of patrolling at any particular moment between the date of Independence and 30 June 1965. The Note by itself therefore is not of such a character as to conclusively affect the case of India”. Ibid., p. 527.

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according to Norway, was not within the area subject to Danish sovereignty. The question of the legitimacy of Norway’s occupation was strictly connected with the correct interpretation of a statement of the Norwegian Minister for Foreign Affairs, who had previously declared that Norway ‘would not make any difficulties in the settlement of this question’.29 The Court, after evaluating all the elements, believed that the statement had to be considered as a unilateral renunciation of any Norwegian claim on Greenland.30 In contrast, in the Nicaragua case, the ICJ rejected Nicaragua’s opinion that the US’s call for ‘collective self-defence’ should be considered as a major admission of American responsibility for a use of force that Nicaragua claimed to be unlawful; however, the Court concluded that the statement constituted ‘certainly a recognition as to the imputability of some of the activities complained of’.31 Additionally, in the WTO system the issue of ex parte statements arose, and the WTO panellists cited the ICJ as a possible source of guidance to support their findings and opted for a cautious but quite liberal approach,32 although indicating

29

Legal Status of Eastern Greenland, Judgment, 1933, P.C.I.J., Series A/B, No. 53, p. 37. “Ibid., p. 73 The Court is unable to read into the words of the Ihlen declaration ‘in the settlement of this question’ a condition which would render the promise to refrain from making any difficulties inoperative should a settlement not be reached. The promise was unconditional and definitive. It was so understood by the Norwegian Minister for Foreign Affairs when he told the Danish Minister at Christiania on November 7th, 1919, that ‘it was a pleasure to Norway to recognize Danish sovereignty over Greenland’”. 31 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment. I.C.J. Reports 1986, para. 126. 32 Australia - Subsidies Provided to Producers and Exporters of Automotive Leather - Report of the Panel, WT/DS126/R, 25 May 1999, note 210 ‘In this regard, we note that Australia argues that the statements of government officials reported in the press cannot be considered evidence of the intent of the Australian government in providing assistance to Howe. We are not drawing any specific conclusions concerning the intent of the Australian government – we recognize that there may have been a number of purposes, a variety of “intent”, involved in the decision to assist disinterest Howe subsequent to the removal of automotive leather from eligibility under the ICS and EFS programmes. Nonetheless, we consider the reports, both press and company, submitted by the United States as relevant to our analysis of the facts and circumstances surrounding the design and grant of that assistance. Moreover, to the extent that Australia has not specifically challenged the truth of the facts (or statements by individuals) reported, we conclude that we may consider these articles, and make our own judgment as to their appropriate weight and probative value. A commentator on the International Court of Justice’s consideration of evidence and proof of facts has stated: “It appears to be the case that press reports, when significant but not denied by the responsible state, or when reporting other events such as official statements by responsible officials and agencies of that state, are accepted; [footnote omitted] but when they are uncorroborated or do not otherwise contain material with an independent title of credibility and persuasiveness, the tendency of the Court is to discount them almost entirely”. Highet, Evidence and Proof of Facts, in Damrosch, The International Court of Justice at a Crossroads, 1987. Similarly, we take into account the circumstances in which the reported remarks were made, the source, and whether the information is corroborated elsewhere or contrary evidence is offered, in assessing the value of these exhibits as evidence’. 30

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that ‘caution is warranted’33—a tendency, as later demonstrated, that is quite common in international economic adjudication. Unlike that of the ICJ, investment arbitral jurisprudence is generally less inclined to consider only certain parts of testimonies as valuable. In the aforementioned case H. N. Soufraki v. UAE, the tribunal had to face the problem of deciding the probative value of witness statements favourable to the plaintiff. The tribunal observed that the depositions of Casini and Nicotra could not be considered reliable since they were respectively the plaintiff’s auditor and one of his receptionists. The tribunal observed that the evidence given by the two employees could not be considered as ‘disinterested and convincing evidence’;34 thus, the tribunal concluded that the plaintiff had not fulfilled the burden of proof. The problem of independence of witnesses can also arise with witnesses of the opposing party. An example of this hypothesis is the ICSID case Tradex v. Albania already mentioned above in which the value of some testimonies caused great perplexity. In this case too the tribunal, following the long-established practice of international tribunals admitting all possible proofs, did not reject dubious testimonies. In particular, both parties had lamented the lack of independence of the witnesses presented by the opposing party. Tradex had also lamented Albania’s interference with the witnesses Tradex intended to present.35 The tribunal, probably to avoid embarrassing decisions, ordered the taking of all contested evidence. However, during the stage of evaluation, it noticed that some statements were contradictory, especially those concerning certain documents produced at the time of the facts. In conclusion, the tribunal adopted a pragmatic approach, deciding to directly assess the reliability of the depositions instead of that of the witnesses. A similar quite liberal approach has been retained by the PCA, which in Mr. Kristian Almås v. Poland of 2016 decided to rely on the statement of a Polish government official, considering him neutral given the circumstance that in the meantime his relations with the Polish government had soured. In particular, the arbitrators stated the following: 246.The Tribunal heard evidence from the then regional director of ANR, Mr Marek Gil, who made the termination decision. According to Mr Gil, successive ANR inspections revealed the state of the Farm to be in ‘deplorable’ condition, causing ANR to intervene with Pol Farm on numerous occasions prior to making the determination to terminate the Lease. His testimony states that ANR issued its Notice of Termination reluctantly and in accordance with legal requirements. The Tribunal regards Mr Gil’s evidence as reliable, and

33

Argentina - Measures Affecting the Importation of Goods - Reports of the Panel WT/DS438/R; WT/DS444/R; WT/DS445/, 22 August 2014 para. 6.78. ‘In the Panel’s view, caution is warranted when assessing the probative value of any statement, including those made by public officials. Having said that, previous panels have considered that public statements of government officials, even when reported in the press, may serve as evidence to assess the facts in dispute’. 34 Hussein Nuaman Soufraki v. The United Arab Emirates, ICSID Case No. ARB/02/7, Award, 7 July 2004, para. 78. 35 Tradex Hellas S.A.v. Republic of Albania, ICSID Case No. ARB/94/2, para. 82.

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no less so because he seems subsequently to have come into conflict with ANR on unrelated issues.36

Summing up it seems that the rule outlined by the mixed-claim commission in favour of a quite liberal approach is still dominant in the field of international arbitration. As one author explained: Although the municipal law of certain states prohibits parties from appearing as witnesses, there is no general rule in international arbitration that precludes the admission of evidence of interested persons. Such evidence has long been accepted by international tribunals.37 As Commissioner Nielson explained in the Dillon case: ‘Unimpeached testimony of a person who may be the best-informed person regarding transactions and occurrences under consideration cannot properly be disregarded because such a person is interested in a case. No principle of domestic or international law would sanction such an arbitrary disregard of evidence.’38

6.3.2

Evaluation of Press Articles and Reports

An issue that must be addressed is that of press reports, which have received relatively little attention in the juridical literature but which, as I demonstrate, bear a certain importance in international general, trade, and investment adjudication. I begin my analysis with the jurisprudence of the ICJ that, as was submitted at the beginning of this book, should have a role of guidance in international adjudication. In the aforementioned 2015 case Croatia v. Serbia, the Court held the following: 190. The Court recalls that it has held, with regard to reports from official or independent bodies, that their value ‘depends, among other things, on (1) the source of the item of evidence (for instance partisan, or neutral), (2) the process by which it has been generated (for instance an anonymous press report or the product of a careful court or court-like process), and (3) the quality or character of the item (such as statements against interest, and agreed or uncontested facts)’ (I.C.J. Reports 2007 (I), p.135, para.227). 191. It will consider the probative value of the reports in question on a case-by-case basis, in accordance with these criteria, when examining the merits of the claims.39

When the Court was later in the judgment required to evaluate a television documentary, the Court recalled its previous decision in the Nicaragua case of 1986, holding the following: 239. In addition, Croatia relies on a documentary film produced by a Serbian television channel, in which individuals are interviewed and offer first-hand accounts of the ‘minefield

36

Mr. Kristian Almås And Mr. Geir Almås v. The Republic of Poland, Permanent Court of Arbitration, Award 27 June 2016, para. 246. 37 Pietrowski (2006), p. 403. 38 Dillon v. Mexico, United States and Mexico General Claims Commission, Opinions of Commissioners (1929), p. 65. 115. 39 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Croatia v. Serbia), Judgment, I.C.J. Reports 2015, p. 3, para. 190.

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massacre’. Evidence of this kind and other documentary material (such as press articles and extracts from books) are merely of a secondary nature and may only be used to confirm the existence of facts established by other evidence, as the Court has previously explained: ‘[T] he Court regards them not as evidence capable of proving facts, but as material which can nevertheless contribute, in some circumstances, to corroborating the existence of a fact, i.e., as illustrative material additional to other sources of evidence.’ (Military and Para-military Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p.40, para.62.)40

In the realm of trade adjudication, a similar view was upheld. A WTO panel stated: We do not mean to suggest that in WTO dispute settlement there are any rigid evidentiary rules regarding the admissibility of newspaper reports or the need to demonstrate factual assertions through contemporaneous source information. However, we are concerned that the complainants are asking us to resolve core issues relating to adverse trade effects on the basis of little more than general assertions. This situation is particularly disturbing, given that the affected companies certainly had at their disposal copious evidence in support of the claims of the complainants, such as the actual business plans relating to the new models, government documentation indicating approval for such plans (assuming the ‘approval’ referred to by the complainants with respect to the Optima means approval by the Indonesian government), and corporate minutes or internal decision memoranda relating both to the initial approval, and the subsequent abandonment, of the plans in question.41

A similar perspective was more recently expressed in 2015. The Panel made express reference to the judgments of the ICJ Teheran Hostages of 1980 and the above-cited Nicaragua case of 1986, thereby also confirming the role of guidance of the ICJ in the realm of international trade adjudication.42 In the area of investment arbitration, the situation is no different. ICSID ad hoc committees held that ‘newspapers articles’ can be used only as a source of 40

Ibidem., para. 239. Indonesia - Certain Measures Affecting the Automobile Industry - Report of the Panel, WT/DS54/ R; WT/DS55/R; WT/DS59/R; WT/DS64/R, 02/07/1998, para. 14.234. 42 Argentina - Measures Affecting the Importation of Goods - Reports of the Panel WT/DS438/R; WT/DS444/R; WT/DS445/R, 22/08/2014, para. 6.70. ‘Newspapers or magazine articles may sometimes be a reflection of personal opinions by their authors. However, they can be useful sources of information, particularly when dealing with unwritten measures and when corroborating facts asserted through other forms of evidence. Indeed, notwithstanding Argentina’s blanket rejection of the appropriateness of newspaper articles as evidence, Argentina has itself provided newspaper articles, including at least one article from one of the two newspaper groups it had previously objected to, as evidence of some of its own assertions. See also note 175 ‘In one case, for example, the International Court of Justice (ICJ) accorded probative value to information contained inter alia in newspaper, radio and television reports considering that the information “is wholly consistent and concordant as to the main facts and circumstances of the case”. The ICJ also took into account that the facts had not been denied or called into question by the other party. ICJ, Judgment, United States Diplomatic and Consular Staff in Tehran (United States v. Iran) (1980), para. 13. In another case, the ICJ indicated it had “been careful to treat [reports in press articles] with great caution; even if they seem to meet high standards of objectivity, the Court regards them not as evidence capable of proving facts, but as material which can nevertheless contribute, in some circumstances, to corroborating the existence of a fact, i.e., as illustrative material additional to other sources of evidence”. ICJ, Merits, Military and Paramilitary Activities In and Against Nicaragua (Nicaragua v. United States of America) (1986), para. 62.’ 41

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circumstantial evidence, and in particular, they do not amount to direct evidence.43 In conclusion, it seems fair to conclude that the principle of free evaluation of evidence has not prevented the consolidation of certain limitations that are widely accepted among international adjudicators.

6.3.3

Evaluation of Affidavits of Non-appearing Witnesses

A particular situation is the evaluation of written statements of non-appearing witnesses. It would be reasonable to imagine that this issue should be dealt with at the stage of admissibility of evidence (following the same categorisation applied in the IBA rules), but it is fair to observe that international tribunals generally refrain from deciding this issue during the phase of admission of evidence and instead prefer to qualify this problem as a matter of evidentiary weight. The reason underpinning this approach is probably to avoid the necessity of making questionable decisions and to take the opportunity to verify whether it is possible to decide the issue on other grounds such as that another piece of evidence has in fact corroborated or disproved the value of the document or the witness statement whose admissibility was challenged. Another reason is probably to protect the award from a possible request for annulment. A wrong decision on the issue of admissibility may be challenged by the losing party as ‘a serious departure’ from a rule of procedure. If, on the contrary, the tribunal admitted the contested evidence but was able to show that it was not decisive in any way for the outcome of the proceeding, it would be more difficult to challenge the award. This approach shows the wide discretion applied by international arbitrators in handling the cases before them. It is suggested that this discretionary power may lead to inconsistent practices. A good example is the evaluation of affidavits of non-appearing witnesses. This is far from being a new issue in international arbitration. In the Walfisch Bay case of 1911, the arbitrator held the following: XLVII. Considering that all the evidence alluded to has been produced out of Court, in the sense that the arbitrator has not been able to conduct any cross-examination and without being disputed, inasmuch as the party prejudiced by it has not cross-examined the witnesses

43

Eiser Infrastructure Limited and Energía Solar Luxembourg S.A.R.L. v. Kingdom of Spain, ICSID Case No. ARB/13/36, Decision on The Kingdom of Spain’s Application for Annulment, June 11, 2020 para 90. ‘According to the Eiser Parties, the Applicant only uses online articles to support its position, which are not evidence of a “manifest” lack of independence or impartiality, and of impartiality must apply’.

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either, circumstances which, though they do not deserve blame, and appear easily explicable in the present case, certainly diminish the value of the evidence.44

In the WTO system, affidavits are accepted as evidence. In the 2004 case United States v. Canada, the members of the panel held the following: 7.117 We note that the AD Agreement does not contain any guidance on this issue and that affidavits are accepted in the legal systems of many jurisdictions as evidence. In light of the explanations submitted by the United States, we therefore see no reason why affidavits regarding price information may not be considered as relevant evidence in deciding whether there is sufficient evidence to justify the initiation of the investigation.45

This matter is not expressly dealt with by the ICSID Convention nor by the ICSID arbitration rules. Even from a broader perspective, the same conclusion is valid for most arbitration rules, such as ICC and SCC rules. In contrast, the IBA rules on the taking of evidence contain an expressed provision (Article 4, §7) on this matter that shall be read as follows: 7. If a witness whose appearance has been requested pursuant to Article 8.1 fails without a valid reason to appear for testimony at an Evidentiary Hearing, the Arbitral Tribunal shall disregard any Witness Statement related to that Evidentiary Hearing by that witness unless, in exceptional circumstances, the Arbitral Tribunal decides otherwise.

Two authors46 have conducted an extensive survey of the arbitral practice on this issue. They identified six different reasons for which a witness may fail to appear at a hearing: illness, legal action taken by the other party, pressure exerted by the other party, other employment obligations, failure to make necessary travel and visa arrangements, and no reason provided. The conclusion is that it is impossible to draw a firm conclusion since given the lack of clarity in many rules of arbitration, it is perhaps unsurprising that no uniform approach to resolving this issue has emerged in arbitral practice. [. . .] It is interesting to observe that these tribunals did not consistently refer to any particular rule as a basis for their decision on the admissibility of the relevant witness statements, perhaps due to the ill health of a witness, when supported by evidence (or the witness’s death) being an unquestionably valid reason for their failure to attend a hearing.47

The most recent commentary on the ICSID Convention and ICSID arbitration rules seem to suggest that the ‘tribunal will typically only a written witness statement where there is a good reason for the relevant witness’ absence’.48 However the sole rule widely accepted is that defined by Cheng in 1953: ‘where the testimony of a witness has successfully undergone the interrogation of the Court and the

44

Walfisch Bay case of 1911, UNRIAA, available at: https://legal.un.org/riaa/dtSearch/Search_ Forms/dtSearch.html accessed on the 2nd of May 2021. 45 United States - Final Dumping Determination on Softwood Lumber from Canada - Report of the Panel, WT/DS264/R, 13 Avril 2004, para. 7.117. 46 Brown and Still (2020), pp. 1–29. 47 Brown and Still (2020), p. 14. 48 Fouret (2019), p. 1115 para. 24.70.

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cross-examination of the opposing party, its value as evidence will be considerably enhanced’.49

6.3.4

Method of Evidence Taking

According to international jurisprudence, the value of a piece of evidence may vary depending on how it has been taken. The reason for this assertion is found in the fact that the procedures established by rules on evidence are designed to ensure that the gathered material is as close to the truth as possible. This outcome is generally obtained by means of the confrontation between the parties, which makes it possible to expunge the elements which have not passed the stage of dialectical confrontation and are therefore considered less reliable. From this perspective, in can be easily imagined that the statement of a witness who remains credible after a long and complex cross-examination appears much more convincing than a simple declaration written without contradictory questions. Before proceeding to examine some practical examples of the matter, a clarification should be made. In international jurisprudence, the fact that evidence (e.g., cross-examination) is directly taken before the tribunal deciding the controversy does not appear as a fundamental value. An important example can be found in the Genocide case50 that came before the ICJ. In that case, the Court decided to consider as a basis for its decision not only an important report of the United Nations but also—and this is particularly relevant to the present discussion—some judgements of the ICTY. The Court did not explicitly clarify whether the possibility to consider as proven the statements of the decisions of the Criminal Tribunal was justified by the fact that the Tribunal had been formed under the aegis of the United Nations or, more generally, whether the reason was that the Tribunal was an international jurisdiction but stated that the high credibility of the judgements of the Tribunal were a consequence of mere technical reasons. In §220 of the Genocide award, the Court mentioned a rather complete set of rules for evidence taking which, according to the judges, accounted for the credibility of the ICTY results. In particular, the Court observed that any accused person before the ICTY was granted the presumption of innocence. This is significant not because of the libertarian nature of the principle but rather because it ensures that the prosecution, in order to obtain a conviction, fulfil a demanding burden of proof; additionally, the accused was granted other important guarantees such as the possibility to ask for the examination of witnesses against them and to obtain witnesses in their favour. In addition, before the trial there was always a long pre-trial discovery of the documents, which

49

Cheng (1953), p. 314. Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), Judgment, I.C.J. Reports 2007.

50

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included the materials gathered by the state attorney in support of the prosecution; this allowed the accused an adequate possibility to prepare their defence.51 A recurrent problem in the field of evidence evaluation is that of assessing written declarations produced by witnesses. Jurisprudence on the matter has always varied because in some cases, this kind of evidence was the only one objectively available and the tribunal was therefore faced with two opposite possibilities: to base its decision on evidence of dubious reliability or to simply apply the principle of the burden of proof, observing that in the absence of absolute proof, the claim of the plaintiff is to be rejected. As noticed at the beginning of this chapter, tribunals have always been reluctant to decide through a strict enforcement of rules on the burden of proof, trying instead to rely as much as possible on the elements gathered. However, by choosing this approach, international jurisprudence consequently had to face the problem of where to draw the line between evidence and mere declarations which, as seen above, cannot be the basis for judicial decisions. In past jurisprudence, an attempt to make a distinction between affidavits with probative value and unreliable affidavits has been that of considering whether or not they were sworn. There are plenty of examples of this approach. In the 1903 Lasry case decided by the United States-Venezuela Mixed Commission, the Commission observed that a testimony taken under an oath administered by a competent authority should certainly be considered as having a greater weight than an unsworn deposition.52 The same distinction was made in the 1922 Fouilloux case in which, lacking better evidence, the tribunal accepted a statement made by the plaintiff, as well as the fondness of his claim, after he agreed to take an oath before the tribunal.53 However, it is evident that the value of a sworn declaration, besides the aspect of personal honour, remains an uncertain solution unless the tribunal has the power to sanction false declarations. This aspect has been noticed by part of the doctrine, which observes that international tribunals have often lamented the fraudulent nature of the evidence submitted to them, highlighting their inability to sanction the responsible parties. According to doctrine, an adequate solution to this problem could be that of promulgating national laws which allow international tribunals and arbitrators to request the cooperation of local courts to discourage people from presenting false evidence. In the absence of such provisions, the truthfulness of witness depositions depends on the good will of the parties. Unsurprisingly, both recent procedural rules of international tribunals and recent jurisprudence tend to pay little attention to whether or not declarations are sworn. Regarding procedural rules, it must be mentioned that art. 34 of the ICSID Rules of Procedure54 uses the same wording 51

Ibid., para. 220. Lasry Case, in Reports of International Arbitral Awards, 1903-1905, vol. IX, pp. 147–148. 53 Fouilloux Case, 1922, (France v. Germany), Franco-German Mixed Arbitral Tribunal, 3 T.A.M. p. 110. 54 Rule 34 Examination of Witnesses and Experts (1) Witnesses and experts shall be examined before the Tribunal by the parties under the control of its President. Questions may also be put to them by any member of the Tribunal. (2) Each witness shall make the following declaration before giving his evidence: “I solemnly declare upon my honor and conscience that I shall speak the truth, 52

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as art. 64 of the ICJ Rules.55 The importance of these provisions could lead to think that the circumstance of whether a statement has been produced under oath is rather significant; however, the aforementioned impossibility to sanction false declarations considerably reduces its importance. As highlighted in the Nicaragua case, ICJ jurisprudence shows that the Court considers declarations with great caution, be they sworn or not. One last aspect which deserves to be mentioned when discussing the evaluation of evidence is linked to how the evidence is taken. In the NAFTA case Azinian v. Mexico,56 the tribunal faced the problem of the value of transcripts made by a party of the declarations of witnesses for that same party. The tribunal stated that if a party wishes to interview a potential witness, it does not have to inform the tribunal, nor does it need to ask the opposite party to be present. However, the same judges clarified that such transcripts have no probative value before the tribunal since only written depositions signed by the witnesses and oral depositions before the arbitrators can be considered testimonial evidence. This approach is a moderate but appropriate restriction of the principles of free admissibility and free appreciation of evidence since its purpose is to avoid a party submitting prefabricated, unverifiable evidence. This last case, as well as the strong preference of tribunals for cross-examination which has been discussed above, shows that there are limitations to the general principle of freedom of appreciation of evidence; some limitations come from legal presumptions while others come from the enforcement of technical rules regulating the taking of evidence.

6.4

Evaluation of Evidence: A Preliminary Conclusion

At this point, it is possible to draw a preliminary conclusion on the issue of the evaluation of evidence. There are good reasons to think that this is the most remote part of the Antarctica of international law.

the whole truth and nothing but the truth.” (3) Each expert shall make the following declaration before making his statement: “I solemnly declare upon my honor and conscience that my statement will be in accordance with my sincere belief.” 55 Rules of Court (1978) Adopted on 14 April 1978 and Entered into Force on 1 July 1978. 56 “Statements made by a witness during any such interview shall not be received into evidence. 5. The only testimony to be given probative value is that contained in signed written statements or given orally in the presence of the Arbitral Tribunal. 6. The Arbitral Tribunal does not require that any party which secures the agreement of a witness to a meeting give the other side an opportunity to be present during that meeting; whether a witness makes the presence of both sides a condition for accepting such a meeting is not a matter for the Arbitral Tribunal”. Robert Azinian, Kenneth Davitian, & Ellen Baca And The United Mexican States, Award, Case No. Arb(Af)/97/2, November 1, 1999, para 56.

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Since the very beginning of legal scholarship, the issue of judicial discretion has attracted the attention of international legal scholars, and today it is still very difficult to conduct a detailed examination of the logic proceeding used by international arbitration to perform its most important task, namely deciding a dispute. In the field of interstate dispute, the issue of evaluation of evidence has been further clarified by international judges who have possibly felt stronger pression from public opinion. However, the fact that no international document has been drafted on this matter shows a certain reluctance to define the limits of arbitrators’ discretion, and perhaps rightly so. The parties to an arbitral procedure have the important opportunity to choose the members of the adjudicatory body. As a consequence, the relation between them and the members of the arbitral panels is based on a mutual trust which renders acceptable the fact that certain aspects of the decision remain covered by judicial discretion. This approach is definitely acceptable in commercial arbitration. One may wonder if is still acceptable in investment arbitration. As previously outlined, many adjudicatory bodies such as the ICJ and the WTO panels have felt the need to identify certain limitations to their discretion to render their decisions more acceptable to the parties and to public opinion. In part, within the field of international arbitration, this aspect still needs to be improved. As the next chapter concerning the standard of proof outlines, again, this book relies more on interstate decisions rather than on investment arbitral awards because the general idea of this book is that the exercise of trying to impose a certain logic on arbitral decisions is not a ‘futile’ exercise.

References Authors Amerasinghe CF (2005) Evidence in international litigation. Martinus Nijhoff Publishers, Leiden Brown CA (2009) Common law of international adjudication. Oxford University Press, New York Cheng B (1953) General principles of law as applied by International Courts and Tribunals. Stevens and Sons Limited, London Fouret J, Gerbay R, Alvarez GM (2019) The ICSID convention, regulations and rules, a practical commentary. Edward Elgar Publishing, Cheltenham Niyungeko G (2005) La preuve devant les Juridictions Internationales. Éditions Bruylant, Bruxelles Palazzo F, Papa M (2005) Lezioni di diritto penale comparato. G. Giappichelli, Torino Ripinsky S, Williams K (2008) Damages in international investment law. British Institute of International and Comparative Law, London Kröll S (2011) International arbitration and international commercial law: synergy, convergence, and evolution, Liber Amicorum Eric Bergsten. Kluwer Law International, p 505

References

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Articles Belland SP (1984) The Iran-United States claims tribunal: some reflections on trying a claim. J Int Arbitr 1(3):237–253 Brower CN (1992) The Anatomy of fact-finding before international tribunals: an analysis and a proposal concerning the evaluation of evidence. In: Lillich RB (ed) Fact-finding before international tribunals: Eleventh Sokol Colloquium. Transnational Publishers Brown C, Still P (2020) The status of the testimony of the non-appearing witness in international arbitration. ICSID Rev:1–29 Pietrowski R (2006) Evidence in international arbitration. Arbitr Int 22(3):373–410 Von Mehren GM, Salomon CT (2003) Submitting evidence in an international arbitration: the common lawyer’s guide. J Int Arbitr 20(3), Kluwer Law International, Printed in The Netherlands, pp 285–294

Chapter 7

The Standard of Proof

The issue of the standard of proof is one of the most controversial aspects concerning evidence in international law. This issue is complementary to that of evidence evaluation discussed in the previous chapter. While the evaluation of evidence mainly concerns the assessment of each individual element (e.g., the value of a deposition made by an interested party), the standard of proof concerns the quantum of evidence which has to be submitted to the tribunal for the party to be considered winning on a particular ‘thema probandum’.1 The decision of the standard of proof comes logically after the stages concerning the gathering and use of evidentiary material. Even though in practice the distinction among the different stages of a proceeding (evaluation of the admissibility of evidence, taking of evidence, assessment of evidence, and determination of the standard of proof applicable to each case) may be unclear, from a systematic perspective, the determination of the standard of proof should be made after the judge has decided on all the other aspects. As often occurs in the field of law generally, the issue may vary significantly depending on the approach followed. The description of the standard of proof outlined so far is seen from the perspective of the judge, who searches for a criterion which is as objective as possible to decide the case. Of course, the issue is different from the point of view of the parties, which try to imagine in advance the ‘amount of evidence’ they will have to submit to the tribunal in order for it to recognise their reasons on each controversial matter. This need leads to the systematic reconstruction conducted by scholars who by analysing the tribunals’ decisions in different cases try to identify constant elements which help the parties imagine how much evidence they will need for each question before the tribunal reaches a decision. Unfortunately, the doctrine is not unanimous on this subject. An authoritative scholar in the field of international investment law observed that even though the

1

Amerasinghe (2005), p. 232.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_7

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problem of the ‘quantum of evidence’ which has to be presented to the tribunal may have a strong impact on the outcome of a case, ‘There is no clear hierarchy [. . .] among the various levels of burden of proof that the parties must discharge in international law’.2 A similar perspective has been expressed about the WTO system. In this regard, an author stated the following: 7.53 There are different approaches to the standard of proof in common law and civil law systems, and it may be for this reason that panels and the Appellate Body have been cautious in formulating a generally applicable standard of proof. However, there are multiple panel and Appellate Body statements articulating the standard of proof in terms of a ‘balance of probabilities’.3

However, the validity of this assertion may be questioned. It is certainly true that there is not a strict and unchangeable hierarchy. This can be easily recognised by observing that neither the Statute of the ICJ, the Rules of the Court, the Court’s Practice Directions, nor even the body of rules regulating procedure before ICSID tribunals explicitly address this matter. Nevertheless, it can be argued that even though the issue is relatively under-dealt with in the field of international investment law, it is still possible to outline a classification of standards; regarding the aspects which have not been treated by arbitral jurisprudence in the field of investments, the reference jurisprudence can be that of the ICJ, which has a guiding role in the interpretation of general international law. This approach makes it possible to examine cases of international investment law in which a consolidated behaviour has not yet formed and anticipate what the regulation on evidence could be. This is made possible by taking into account the phenomenon of cross-fertilisation mentioned above. It is not uncommon for judges of specialised tribunals to make use of the decisions of the ICJ to solve the difficulties of their own cases since the general nature of ICJ jurisprudence. All scholars exploring this phenomenon usually highlight that the results of such an investigation must be treated with caution since there are intrinsic limits to the reliability of purely inductive reasoning, and of course this warning should always be kept in mind.

7.1

Standard of Proof: General Features

Reconstructing the theme of the standard of proof should begin with a few general premises. In common law countries, the standard of proof applied in civil proceedings is that of a ‘preponderance of evidence’ or reasonable degree of probability. This criterion can be explained in this way: if, based on probability and the evidence

2 3

Sabahi (2011), p. 184. Cook (2015), pp. 333–335.

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produced, a reasonable person would be convinced that the case has been proven, then the case should be considered proven.4 In criminal law, the standard of proof is higher and is often described with the expression ‘proof beyond a reasonable doubt’. It has been observed that the range of the standard of proof goes from ‘preponderance of evidence’, in which the party is asked to prove that the solution of the case proposed by the party is more likely than that of the opposing party, up to proof beyond a reasonable doubt. Scholars have identified a midway standard between proof beyond a reasonable doubt and preponderance of evidence: the so-called ‘clear and convincing evidence’. Another standard which should be mentioned is so-called prima facie evidence. This expression can refer to two different ideas: according to the first meaning, the expression ‘prima facie evidence’ refers to a particularly low standard of proof, whereas the second meaning is a way to shift the burden of proof from one party to the other.5 If intended in the first sense, prima facie is very similar to the simple ‘preponderance of evidence’.6 In both cases, the evidence causes the party to win the dispute only if the opposing party is unable to produce elements supporting its own case.

7.1.1

Preponderance of Evidence

As anticipated, proof beyond a reasonable doubt is often a luxury that an actor in an international dispute cannot afford.7 In some cases, the elements which would prove the case with a very high degree of certainty may be difficult or impossible to obtain; in other cases, the time and efforts which the party would have to sustain could be unbearable. It has been observed that ‘the degree of burden of proof thus to be adduced ought not to be so stringent as to render the proof unduly exacting’.8 Consequently, international tribunals have often applied a degree of proof which has generally been called the ‘preponderance of evidence standard’. An idea of the meaning of this criterion can be found in the Combustion Engineering case in which the Iran-US Claims Tribunal concluded that The Respondents have criticized the sufficiency of the Claimants’ evidence, but they have not rebutted it with their own contemporaneous evidence [. . .] Weighing all of these factors, the Tribunal concludes that [the Claimant] has proven by a preponderance of the evidence that it paid its SIO contributions.9

4

See Miller v. Minister of Pensions, Lord Denning, quoted in Cross on evidence, 1979, p. 110, in Amerasinghe (2005), p. 233, n. 3. 5 Ripinsky and Williams (2008), p. 167. 6 Brown (2009), p. 100. 7 Amerasinghe (2005), p. 241. 8 Norwegian Loan Case, 1957, ICJ Reports pp. 39–40, Judge Lauterpacht, separate opinion. 9 Combustion Engineering Inc. v Iran, 18 February 1991, 26 Iran-US CTR 60, 79–80, §70.

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In general, the expression ‘preponderance of evidence’ should be intended to refer to a piece of evidence which, according to reasonable probability (and not a mere possibility) is more convincing than the evidence presented by the opposing party. It has been authoritatively observed that the standard of ‘preponderance of evidence is really similar to another standard of proof, that of the judge’s discretion by the parties is sufficient to satisfy the burden of proof’.10 The author who mentions this standard refers to Kazazi’s work.11 This latter standard has not been considered here as separate from the others since the work referred to does not explicitly mention it as a separate standard. Kazazi explains the ‘discretion of the tribunal’ as a possible combination of the standard of preponderance of evidence and that of proof beyond a reasonable doubt. However, this combination of the two standards simply appears as the principle of free appreciation of evidence seen from a different perspective; therefore, a discussion of this standard does not seem necessary.

7.1.2

Proof in a Convincing Manner

A high standard of proof is not necessarily that of proof beyond a reasonable doubt. An example of ‘proof in a convincing manner’ can be observed in the Velásquez Rodríguez case in which the Inter-American Court of Human Rights stated, The Court cannot ignore the special seriousness of finding that a State Party to the Convention has carried out or has tolerated a practice of disappearances in its territory. This requires the Court to apply a standard of proof which [. . .] is capable of establishing the truth of the allegations in a convincing manner.12

It has been remarked that the standard referred to in this case ‘was something intermediate between proof beyond reasonable doubt and the preponderance of evidence’.13 Tribunals should probably use this standard when they would deem proof beyond a reasonable doubt appropriate but the circumstances would cause such a request to be excessive.

10

Brown (2009), p. 101. Kazazi (1996), p. 351; on this matter, see also Brown (2009), p. 101, n. 133. 12 Velásquez Rodríguez Case, Judgment of July 29, 1988, Inter-Am.Ct.H.R. (Ser. C) No. 4 (1988), §129. 13 Amerasinghe (2005), p. 240. 11

7.2 Variation of the Standard of Proof Depending on Particular Elements

7.1.3

197

Proof Beyond a Reasonable Doubt

This expression comes from Anglo-Saxon criminal law14 and, on an imaginary scale, is the highest degree of proof that a party may be required to fulfil. For the sake of precision, it should be mentioned that proof beyond a reasonable doubt is not to be considered as proof beyond ‘any rational doubt’ or as absolute certainty. An example of this standard can be seen in the Irish case, in which the European Court of Human Rights applied the standard of proof beyond a reasonable doubt. A similar approach was also used in the well-known Corfu Channel case in which the ICJ demanded that the evidence presented should supply the Court with a high degree of certainty about the validity of the plaintiff’s claims. It must be said that in both cases the dispute concerned the breach of laws which regarded the protection of human rights and world peace. This latter consideration anticipates the topic which will be discussed in the next section: the variation of the standard of proof depending on the issue concerned.

7.2 7.2.1

Variation of the Standard of Proof Depending on Particular Elements Variation of the Standard of Proof Depending on the Stages of the Proceedings

A good way to start analysing the matter of the standard of proof and its variations could be that of examining tribunals’ decisions on jurisdiction. Jurists are not unanimous on the matter. According to the most widespread interpretation, the standard of proof, which should be applied when the tribunal must verify whether it has jurisdiction over a case, is that of ‘prima facie evidence’.15 ICSID

14 15

Brown (2009), p. 99. Vasani and Foden (2010), p. 282.

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jurisprudence has confirmed this approach in a significant number of cases—among others, Bayindir,16 Telenor,17 Impregilo,18 and Saipem.19 Jurisprudence on jurisdiction explains, The object of the investigation [at the jurisdictional stage] is to ascertain whether the claim, as presented by the Claimant, meets the jurisdictional requirements, both as to the factual subject matter at issue, as to the legal norms referred to as applicable and having been allegedly breached, and as to the relief sought.20

The limited nature21 of the investigation at the jurisdictional stage is pivotal to the determination of the standard of proof. Moreover, it is settled case law that when a tribunal issues a decision regarding jurisdiction, the decision becomes final. This is

16

Bayindir Insaat Turizm Ticaret Ve Sanayi A.Ş. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Award, 27 August 2009, para. 189. “Bayindir seems to accept that it has the burden (aa.) to demonstrate that the Tribunal has jurisdiction (C-Mem. J., p. 3, ¶ 6). As to the standard of proof (bb.), Bayindir seems to accept that in the jurisdictional phase of this arbitration it has to establish that ‘the claims it pleads are sustainable on a prima facie basis’ (C-Mem. J., p. 3, ¶ 6)”. 17 Telenor Mobile Communications A.S. v. The Republic of Hungary, ICSID Case No. ARB/04/15, Award, 13 September 2006, para. 34. “The Tribunal is currently concerned solely with the question whether it has jurisdiction. For that purpose it is not the Tribunal’s function to examine the merits of Telenor’s claim. On the other hand, unless the issue of jurisdiction is joined with the merits so that both are dealt with at the same hearing (which is not the position in the present case) there is an initial threshold that has to be crossed by any claimant resisting objections to jurisdiction in that the claimant must at least adduce facts showing a prima facie case in favor of jurisdiction if the arbitration is to proceed to a hearing on the merits. If the claimant fails to do this the Tribunal must sustain the objection to jurisdiction and make an award accordingly, thereby bringing the arbitration proceedings to an end. The question for the Tribunal to decide in the present proceedings is whether Telenor has indeed made out a prima facie case”. 18 Impregilo S.P.A. v. Islamic Republic of Pakistan, ICSID Case No. Arb/03/3 Decision on Jurisdiction, 22 April 2005, para. 79. “Impregilo adds that it has satisfied the burden of proof required at the jurisdictional phase and ‘has made the prima facie showing of Treaty breaches required by ICSID Tribunals”. 19 Saipem S.P.A. v. The People’s Republic of Bangladesh, ICSID Case No. Arb/05/07, Decision on Jurisdiction, para. 91 “To summarize, the Tribunal’s task is to determine the meaning and scope of the provisions upon which Saipem relies to assert jurisdiction and to assess whether the facts alleged by Saipem fall within those provisions or would be capable, if proven, of constituting breaches of the treaty obligations involved. In performing this task, the Tribunal will apply a prima facie standard, both to the determination of the meaning and scope of the relevant BIT provisions and to the assessment whether the facts alleged may constitute breaches of these provisions. In doing so, the Tribunal will assess whether Saipem’s case is reasonably arguable on its face. If the result is affirmative, jurisdiction will be established, but the existence of breaches will remain to be litigated on the merits”. 20 Continental Casualty Company v. Argentina, ICSID case no Arb/03/09, Decision on Jurisdiction, 22 February 2006, para. 60. 21 Ibidem. ‘The investigation must not be aimed at determining whether the claim is well founded, but whether the Tribunal is competent to pass upon it’.

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indeed true in both the ICJ jurisprudence (which has been used as guidance) and in the ICSID case law as a very recent award of 2020 attests.22 However, it should be observed that if a party also produced elements concerning the merits of the case, the evaluation of those elements in the decision on jurisdiction may still be overruled in the decision on merits; this happens if the opposing party is able to produce evidence proving that, on closer examination, the opinions expressed by the tribunal during the first stage of the proceedings were unfounded. From a prescriptive perspective, some useful considerations are those about the limits of res judicata in a different field: that of the relation between the merit decision and preliminary issues on merits. It has been noted that according to Italian and German jurisprudence, res judicata only concerns the operative part of a judgement, not its grounds. This vision is opposed to the French one, according to which l’autorité de la chose jugée includes the grounds in support of the decision. It is true that such an approach is aimed at describing the relation between the final decision and the issues on merits, which are its necessary logical premises; however, those considerations could be used to explain the possibility that the same evidentiary elements are assessed in one way during one stage of the proceedings and in another way during another stage even though the first decision is for all purposes res judicata and therefore cannot be withdrawn in any way. This last circumstance makes it acceptable for the opposing party that the standard of proof required by the tribunal may be quite low. I already examined the issue of the application of the principle Kompetenz-Kompetenz in the first chapter (see supra Sect. 2.4.4). In this paragraph, I examine the different but related issue of the quantum of evidence that should be submitted by the applicant. I recall the important finding of the arbitral tribunal Pan American Energy, LLC et al. V. The Argentina Republic according to which if everything were to depend on characterisations made by a claimant alone, the inquiry to jurisdiction and competence would be reduced to naught, and tribunals would be bereft of the compétence de la compétence enjoyed by them under Article 41(1) of the ICSID Convention.23

22

(1) Strabag SE (2) Raiffeisen Centrobank AG Syrena Immobilien Holding AG v. The Republic of Poland, ICSID Case no. ADHOC/15/1, Partial Award on Jurisdiction, 4 March 2020 5.27 ‘In the Tribunal’s view, this jurisdictional test requires a claimant to establish jurisdiction definitively (i.e. not prima facie jurisdiction), but only a prima facie case on the merits of the claimant’s claim. 5.28 This jurisdictional test is manifest from the classic statement of principle by Judge Higgins in Oil Platforms describing the test for preliminary jurisdictional objections under a treaty before the International Court of Justice: 31. Where the Court has to decide, on the basis of a treaty whose application and interpretation is contested, whether it has jurisdiction, that decision must be definitive [. . .] 5.29 Thus, the test requires a “definitive” decision on jurisdiction, but it does not require any definitive decision on disputed facts where these meet the prima facie test. [. . .]’. 23 Pan American Energy, LLC et al. V. The Argentina Republic, ICSID Case No. Arb/03/13, Decision on Preliminary Objections, July 27, 2006, para. 50.

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An important decision has been recently published, namely the decision on jurisdiction in Casinos Austria International Gmbh and Casinos Austria Aktiengesellschaft v. Argentine Republic of 201824 which duly recognised the role of ICJ jurisprudence in international investment arbitration. The tribunal held: The test for determining the existence of a prima facie claim at the jurisdictional stage is well-established in the practice of investment treaty tribunals. It follows the test applied by international courts and tribunals more generally, in particular the ICJ. Based on this jurisprudence, the Tribunal must be satisfied that the facts alleged by Claimants are plausibly capable of constituting a breach of the law applicable to the dispute, that is, in the present case, the Argentina-Austria BIT.25

More specifically, the tribunal reviewed with care the precedents of the ICJ and the PCIJ in order to outline the nature of its prima facie enquiry. The arbitral tribunal specified the following: 202. The ICJ elaborated the test to determine the existence of a prima facie claim in Ambatielos as follows: [. . .] it is not necessary for that Government [i.e., the Hellenic Government as claimant] to show, for present purposes, that an alleged treaty violation has an unassailable legal basis. [. . .] If the interpretation given by the Hellenic Government to any of the provisions relied upon appears to be one of the possible interpretations that may be placed upon it, though not necessarily the correct one, then the Ambatielos claim must be considered, for the purposes of the present proceedings, to be a claim based on the Treaty of 1886. [. . .] 203. Similarly, in Oil Platforms, the ICJ held that, in order to meet the prima facie claim, it must ascertain whether the violations of the Treaty of 1955 pleaded by Iran do or do not fall within the provisions of the Treaty and whether, as a consequence, the dispute is one which the Court has jurisdiction ratione materiae to entertain, pursuant [to that Treaty].26

The examination of the current debate on the standard of proof at the jurisdictional stage shows that most of the jurisprudence agrees in considering that prima facie evidence can be an adequate basis in order to decide whether the tribunal has jurisdiction over the case; however, it also shows that the standard of proof is a complex matter which, if not managed wisely, may conflict with other principles of international law. Casinos Austria International Gmbh And Casinos Austria Aktiengesellschaft v. Argentine Republic is also interesting for this purpose. Even if it had correctly identified the guidance in the ICJ jurisprudence, the tribunal remained silent on the issue of the burden of proof. This aspect was correctly highlighted by the dissenting arbitrator Santiago Torres Bernárdez, who held the following:

24

Casinos Austria International Gmbh And Casinos Austria Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/14/32, Decision on Jurisdiction, 29 June 2018. 25 Casinos Austria International Gmbh And Casinos Austria Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/14/32, Decision on Jurisdiction, 29 June 2018, para. 201. 26 Ibidem, para. 202-203.

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The determination of jurisdiction and competence by an ICSID arbitral tribunal as the present one is, like in the case of any international court of tribunal, an objective question which must be decided by the tribunal concerned as judge of its own competence (Article 41 of the ICSID Convention) in accordance with the elements of law and fact concurring in the particular case.27

The dissenting arbitrator further observed that the issue of the burden of proof is different in the jurisdictional phase and in the merit phase.28 I claim that the arbitrator, although correct when stating that the issue of evidence is different in the jurisdictional phase and in the merit phase, failed to mention the core principle ruling the jurisdictional phase, namely the principle Kompetenz - Kompetenz and the most important precedent of the ICJ (see supra Sect. 2.4.4) according to which there is no burden to discharge in the jurisdictional phase with jurisdiction being a point of law that must be ascertained in an objective way.29 The issue of the burden of proof regarding jurisdiction is misplaced since the procedure is governed by the tribunal, even examining issues of fact motu proprio. The question of the burden of proof is relevant only at the end of this examination to identify which is the losing party if the objective examination of the tribunal concludes in the sense that the arbiters are empowered with jurisdiction or not. The issue of the ‘quantum of evidence’ or the ‘standard of proof’ is a separate one which regulates another issue of the procedure, namely how much evidence the tribunal should ask of the parties to satisfy itself that it has jurisdiction (normally prima facie evidence).

27

Casinos Austria International Gmbh and Casinos Austria Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/14/32, Decision on Jurisdiction, 29 June 2018, Dissenting Opinion on Respondent’s Second Preliminary Objection and Declaration of Dissent concerning its First and Third Preliminary Objections of Arbitrator Santiago Torres Bernárdez, para. 54. 28 Casinos Austria International Gmbh and Casinos Austria Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/14/32, Decision on Jurisdiction, 29 June 2018, Dissenting Opinion on Respondent’s Second Preliminary Objection and Declaration of Dissent concerning its First and Third Preliminary Objections of Arbitrator Santiago Torres Bernárdez, para. 66-67. ‘66. Contrary to current practice followed generally in investment international arbitration decision and awards, the present majority decision is silent on the law applicable to this phase of the case and on the allocation of the burden of proof to the Parties. [. . .] 67. As to the allocation of the burden of proof, I have been guided by recent relevant jurisdictional decisions or awards which have distinguished rightly between different sets of facts with regard to the burden of proof at a jurisdictional phase (Decisions on Jurisdiction in the case Société Générale de Surveillance and Republic of Paraguay (2010), and Philip Morris v. Uruguay (2013); and Award on Blue Bank International v. Venezuela (2017)). As stated, for example, by the Philip Morris v. Uruguay Tribunal: “Regarding burden of proof, it is commonly accepted that at the jurisdictional stage the facts as alleged by the claimant have to be accepted when, if proven they would constitute a breach of the relevant treaty. However, if jurisdiction rests on the satisfaction of certain conditions, such as the existence of an ‘investment’ and of the parties’ consent, the Tribunal must apply the standard rule of onus of proof actori incumbit probatio, except that any party asserting a fact shall have to prove it.” (Decision on Jurisdiction of 2 July 2013, para. 29) (CL-134). 29 Fisheries Jurisdiction (Spain v. Canada), Jurisdiction of the Court, Judgment, ICJ Reports 1998, p. 432.

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It must be noted (as already observed by the most recent Commentary on the ICSID Convention) that article 41 ‘has not received particular attention in recent practice of ICSID tribunals’.30 This is probably a matter that should be addressed by future arbitral tribunals since in other recent decisions ICSID arbitral tribunals have correctly mentioned this article and the powers arising from it for the tribunal without correctly examining the issue of the burden and standard of proof related to jurisdictional matters.31

7.2.2

Variation of the Standard of Proof Depending on Judicial Function

Having examined the main features of various standards of proof as identified by doctrine, a further issue is which criterion the tribunal should follow to decide which standard is to be required. Some scholars have identified the rationale behind the tribunal’s decision in the seriousness of the claim brought against a party or in whether the function of the tribunal regarding a certain issue is ‘declarative’ or ‘determinative’. According to the latter approach, when the function of an international tribunal is declarative, a lower standard of proof is applied. To support this thesis, the author quotes some ICJ cases in which the dispute concerned the definition of boundaries between neighbouring countries. It has been observed that in those cases, the Court sometimes simply chose one of the options suggested by the parties without requiring particularly convincing elements.32 A perfectly clear example of this approach can be seen in Judge Oda’s decision in the Case concerning Sovereignty over Pulau Ligitan and Pulau Sipadan. In his decision, Judge Oda confirmed having voted in favour of the Judgment, in which the Court finds that ‘sovereignty over Pulau Ligitan and Pulau Sipadan belongs to Malaysia’ (para. 150) [although] the present case is a rather ‘weak’ one that neither Party has made a strong showing in support of its claim [. . .]. While Malaysia has made a more persuasive case on the basis of ‘effectivités’, its arguments are still not very strong in absolute terms. The Court, however, has been requested to choose between the two Parties in ‘whether sovereignty over [the two islands] belongs to [. . .]

30

Fouret et al. (2019), p. 327, para. 4.181. Cortec Mining Kenya Limited, Cortec (Pty) Limited and Stirling Capital Limited v. Republic of Kenya, ICSID Case No. ARB/15/29, Award, 22 October 2018, para. 254. ‘It is common ground that the jurisdiction of the Tribunal is contingent upon the fulfilment of the jurisdictional requirements of both the ICSID Convention and the relevant text providing for consent to arbitration. 255. Article 41 of the ICSID Convention makes plain that the Tribunal is the judge of the Centre’s jurisdiction and its own competence. In order to determine the existence of its jurisdiction in any given case, an ICSID tribunal has to analyse the fulfilment of the requirements of the Washington Convention, and the requirements of the contract, the national law, the BIT or the multilateral treaty providing for the submission of investment disputes to ICSID arbitration’. 32 Del Mar (2012), p. 102. 31

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Indonesia or to Malaysia’ [. . .] and, given that choice, the Court has come to a reasonable decision.33

The Court did not always choose the most plausible reconstruction between those presented by the parties but sometimes made compromise decisions; however, scholars think that in general the Court always applied a relatively low standard of proof. A higher standard has been required by the ICJ when the function of the Court is ‘determinative’,34 which means that the Court had to ‘decide disputes of fact which have to be resolved in determining whether a party to the proceeding has breached its legal obligations’.35 The Court has a determinative function mainly in disputes concerning state responsibility. The classification of the possible standards of proof based on the two judicial functions is not directly applicable to international trade law or to international investment law. With regard to the WTO system, panels were unable to define which is the standard of proof applicable in WTO case law. By contrast, they were able to define what it is not, namely proof ‘beyond a reasonable doubt’.36 If this classification were applied tout court, all cases involving state responsibility in expropriation acts would inevitably be part of the second category. This would mean that an ICSID tribunal, or any other international tribunal in the field of investments, could never apply as low a standard of proof as the ICJ does when exercising a determinative function—an opinion that has been upheld by certain investment ICSID tribunals.37 33

ICJ, Case concerning Sovereignity over Pulau Ligitan e Pulau Sipadan, Declaration of Judge Oda, p. 687. 34 Del Mar (2012), p. 104. 35 Case Concerning Pulp Mills on the River Uruguay, Argentina v. Uruguay, Judgment of 20 April 2010, Separate opinion of Judge Keith, p. 3, para. 8. 36 Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products Second Recourse to Article 21.5 of the DSU by New Zealand and the[. . .]ed States - Report of the Panel WT/DS103/RW2; WT/DS113/RW2, 26/07/2002, para. 5.67 ‘First, we consider that Canada’s proposed focus on the cost of production of individual producers would require a government to have access to, and make available, information on the cost of production of each producer and on whether or not the individual producer participates in the CEM market. It seems to us that only on rare occasion would a government have record-keeping of this magnitude. Quite apart from the administrative cost and unworkability of this approach, we note that even Canada has expressed doubts that the Appellate Body could have intended a benchmark for determining the existence of payments that entails a standard of proof akin to the “beyond a reasonable doubt” standard under criminal law’. 37 Metal-Tech Ltd. v. The Republic of Uzbekistan ICSID Case No. ARB/10/3, Award, 4 October 2013 para. 237. ‘As a general matter, since the claims brought in this arbitration seek to establish the responsibility of a State for breach of the latter’s international obligations, it is appropriate to apply international law to the burden of proof. The principle that each party has the burden of proving the facts on which it relies is widely recognised and applied by international courts and tribunals. The International Court of Justice as well as arbitral tribunals constituted under the ICSID Convention and under the NAFTA have characterized this rule as a general principle of law. Consequently, as

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In fact, legal practice shows a different situation: in many cases, if it was reasonable to believe that the plaintiff would not be able to gather better evidence, the investment arbitral tribunals applied rather low standards, such as ‘a balance of probabilities’ that according to the PCA is a standard more demanding compared to that of prima facie.38 This consideration suggests that in order to examine the matter of applicable standards before international jurisdictions, it is preferable to use another classification proposed by doctrine: that according to which the standard of proof should vary depending on the issue concerned. It is clear that this second classification and the previous one can partially overlap, but the second one is more specific and can thus highlight differences which could not be noticed through other classifications.

7.2.3

Variation of the Standard of Proof Depending on the Content of the Breached Rule

Another option different from those examined above is to base the standard of proof on the content of the rule that has allegedly been breached.39 This is a widespread approach in doctrine even though every author presents his or her opinions in a slightly different way. A scholar examined this matter in the ICJ jurisprudence and observed that the request for a particularly high standard of proof depends on the importance of the values protected by the breached rule and therefore on the seriousness of the breach of law.40 Such an approach can be seen in the Genocide case (Bosnia v. Serbia) in which the Court stated that to find a state guilty of a serious breach of imperative rules it was necessary to be ‘fully convinced’ of the evidence submitted.41 A similar approach is the one adopted by international investment arbitral tribunals when called to decide the standard of proof applicable to serious breach of international legal obligation. A good example is the case of denial of justice. In recent case law, ICSID and non-ICSID international investment tribunals set out a high burden of proof for the claimant to discharge. Starting with ICSID jurisprudence, the arbitrators held the following:

reflected in the maxim actori incumbat probatio, each party has the burden of proving the facts on which it relies’. 38 Copper Mesa Mining Corporation (Canada) v. The Republic of Ecuador PCA Case No. 2012-2 Award, 15 March 2016 para. 6.3.[. . .]. For both Parties, the standard of proof for their factual allegations requires the Tribunal to be satisfied on a balance of probabilities: it is not sufficient at this stage of the proceedings to prove only a prima facie case. 39 Del Mar (2012), p. 107. 40 Gattini (2007), p. 894. 41 Ibidem.

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535. Professor Paulsson cites in support of this proposition a passage from the award in Vanessa Ventures: ‘Allegations of a lack of independence and impartiality are more difficult to deal with. They often amount to allegations of violations of professional rules, or even of criminal laws, and it is not to be expected that evidence will be readily available. Such allegations would, if proven, constitute very serious violations of the State’s treaty obligations. But they must be properly proved; and the proof must, at least ordinarily, relate to the specific cases in which the impropriety is alleged to have occurred. Inferences of a serious and endemic lack of independence and impartiality in the judiciary drawn from an examination of other cases or from anecdotal or circumstantial evidence, will not ordinarily suffice to prove an allegation of impropriety in a particular case.’42

Furthermore, the PCA examined the similar issue of denial of justice in the above cited Chevron v. Ecuador case of 2018 and in this case also required a high standard of proof.43 A similar approach is the one suggested by some scholars when discussing the matter of evidence in international investment arbitration cases concerning corruption. Corruption is regarded as a very serious matter in international investment law. Part of the doctrine44 describes in detail the convergence between national policies and international law in sanctioning corruption.45 International arbitration jurisprudence confirms this convergence: for instance, it has been observed that in international commercial arbitration, [w]hether one is taking the point of view of good government or that of commercial ethics it is impossible to close one’s eyes to the probable destination of amounts of this magnitude, and to the destructive effect thereof on the business pattern with consequent impairment of industrial progress. Such corruption is an international evil; it is contrary to good morals and to an international public policy common to the community of nations.46

According to the reasoning requiring a higher standard of proof in the case of charges of serious breach of international public order, part of the doctrine requires a rather high standard to prove corruption.47

42

Bridgestone licensing services, inc. and Bridgestone Americas, inc. v. Republic of panama, ICSID case no. Arb/16/34 award, 14 august 2020, para. 535. 43 1. Chevron Corporation (“Chevron”) 2. Texaco Petroleum Company (“TexPet”) v. The Republic of Ecuador, PCA Case No. 2009-23 Second Partial Award on Track II dated 30 August 2018 para. 8.42 ‘This general principle subsumes a second principle, namely that a court is permitted a margin of appreciation before the threshold of a denial of justice can be met. Nonetheless, the balance of probabilities remains the standard of proof, with the claimant bearing the overall legal burden of proof’. 44 Lamm et al. (2010), p. 712. 45 Lamm et al. (2010), p. 713. 46 ICC Case n. 1110, Judge Lagergren, in C. B. Lamm, H. T. Pham, R. Moloo, op. cit., p. 714. 47 Wilske and Fox (2011), p. 469.

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An example of this line of thinking can be seen in ICC case no. 6401 (Westinghouse)48 in which the tribunal observed that the ‘preponderance of the evidence’ standard had to be applied to the plaintiff’s claims, while the standard of ‘clear and convincing evidence’ had to be applied to the allegation of corruption because ‘fraud is never to be taken lightly’.49 Regarding what concerns ICSID jurisprudence, the approach requiring a high standard of proof can be found in EDF (Services) Ltd. v. Romania in which the tribunal claimed that there is ‘general consensus’ among international tribunals and among scholars regarding the need for a very high standard of proof in cases of corruption.50 However, part of the doctrine does not seem to be so of one mind. According to some authors, the reason for requiring a very high standard of proof lies in tribunals’ embarrassment about confirming a case of corruption, especially when high state officials are involved.51 Moreover, some scholars noticed that a high standard of proof may often be unrealistic for arbitral tribunals which, as seen above, lack the power to conduct adequate investigations. This consideration led scholars to look for a more flexible standard, which is the object of the next section.

7.2.4

Variation of the Standard of Proof Depending on the Difficulty for a Party to Gather the Necessary Evidence

As has been mentioned in brief in the previous section, part of the doctrine called for a lower standard of proof of corruption. An opinion which has been largely quoted is that of judge Karen Mills, who suggested that in case of impossibility to ‘prove’ corruption, where there is a reasonable indication of corruption, an appropriate way to make a determination may be to shift the burden of proof to the allegedly corrupt party to establish that the legal and good faith requirements were in fact duly met.52

This interpretation was well received in jurisprudence. An example is Rumeli Telekom A.S. v. Republic of Kazakhstan in which two telecommunications companies incorporated under the laws of Turkey, having signed an investment agreement with the Kazakhstan investment committee, claimed that their local investment partners (with which they had created a joint venture) were ‘members of the empire of the President of Kazakhstan’, Nursultan Äbişulı Nazarbaev, and had conspired to

48

ICC Case no. 6401, Westinghouse and Burns & Roe (USA) v. National Power Company and the Republic of Philippines, Award of 19 December 1991, Mealey’s International Arbitration report, 7(1), 1991, para 31. 49 Ibidem, para 31, 34. 50 EDF (Services) Ltd. V. Romania, ICSID case no Arb/05/13, 8 October 2009, para 221. 51 Reiner (1994), pp. 335–336. 52 Mills (2003), p. 295.

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expel them from the joint venture.53 The two companies alleged the collusion of Kazakhstan with the investment committee and claimed that international law had been breached because the investment agreement had been unjustly terminated, the companies themselves had been denied the possibility to contest the termination, and they had not been compensated for the expropriation. The tribunal accepted international reports and widely published articles about the Nazarbaev regime as ‘circumstantial evidence’ sufficient to prove the lack of impartiality of Kazakh authorities.54 The part of the doctrine which is open to this new way of considering evidence in the field of corruption showed great appreciation for this ICSID decision. The same doctrine observed that the decision highlighted the ‘endemic nature’ of corruption in some countries and quoted some cases in which US courts in their decisions took into account the corruption of another country to lighten the standard of proof of investors. Even though from a general perspective the idea of finding adequate ways to fight international corruption is fascinating, the solutions here examined do not seem to be very satisfying. If the need to provide convincing proof that a case of corruption has indeed occurred were eliminated, this could lead to considering corruption proven on the basis of simple hearsay; in some cases, corruption could even be presumed. It is not clear why an international actor who decided to invest in a country where corruption is so evident should deserve such strong protection without regard for judicial guarantees. In conclusion, a system is not satisfactory which requires a standard beyond a reasonable doubt when judging the corruption of a single person, thus considering corruption a crime, but which in arbitration proceedings considers corruption as a mere tort that can be proved by prima facie evidence. The most recent ICSID jurisprudence such as, for example, the 2019 case Lao Holdings v. Laos seems quite cautious in assessing the charge of corruption. In this case, the tribunal held the following: 109. The Tribunal acknowledges the difficulty of proving corruption as well as the importance of exposing corruption where it exists. In the nature of the offence, the person offering the bribe and the person accepting it will take care to cover their tracks. Nevertheless, given the seriousness of the charge, and the severity of the consequences to the individuals concerned, procedural fairness requires that there be proof rather than conjecture. The standard of ‘probabilities’ requires the trier of fact to stand back and make an overall assessment. The requirement of ‘clear and convincing’ evidence puts the focus more closely on the building blocks of the evidence to ensure a rigorous testing.

53

Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008, para 10. 54 Ibidem, para. 446. “Furthermore, in some circumstances, the endemic nature of a fact alleged in certain countries has been considered to be circumstantial evidence of the facts alleged. For instance, in ICC arbitration No. 3916, the widespread nature of corruption in Iran was considered to be circumstantial evidence for the existence of corrupt practices. Similarly, in the case at hand, the international reports and widely published articles submitted prove the two points on which circumstantial evidence is most relevant, namely general lack of impartiality of the organs of Respondent and collusion between powerful groups of the ruling family in Kazakhstan”.

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110. In the Tribunal’s view there need not be ‘clear and convincing evidence’ of every element of every allegation of corruption, but such ‘clear and convincing evidence’ as exists must point clearly to corruption. An assessment must therefore be made of which elements of the alleged act of corruption have been established by clear and convincing evidence, and which elements are left to reasonable inference, and on the whole whether the alleged act of corruption is established to a standard higher than the balance of probabilities but less than the criminal standard of beyond reasonable doubt, although of course proof beyond a reasonable doubt would be conclusive. This approach reflects the general proposition that the graver the charge, the more confidence there must be in the evidence relied on.55

A similar position was approved by the ad hoc Committee in the Glencore case of 2021. The ad hoc Committee held: The question, therefore, was whether corruption had been proved. The Tribunal considered that the burden of proving that Mr Ballesteros had been bribed was on Colombia and the standard of proof was the preponderance of the evidence.56

7.2.5

The Standard of Proof Concerning Damages

The function of burden of proof at the remedies stage, according to the most recent publication on evidence in international investment arbitration, is ‘slightly different from the function of the burden of proof in the context of establishing a merit claim’.57 According to the authors, it should work as they suggest it should work in the jurisdiction on a balance of probabilities in order to prevent overcompensation or under-compensation. I suggest that the jurisdictional phase should be governed by an inquisitory model which mirrors the power of the tribunal to ascertain its own jurisdiction following the teachings of the ICJ and the PCIJ. The most recent arbitral jurisprudence and literature, such as Cox in 2019, confirm ‘Chorzów Factory may be almost 100 years old but its enduring legacy in investment treaty arbitration is clear’.58 The central issue in this phase is the causal link between the injury proved by the investor and the action attributable to the host State. In other words, the investor is required to demonstrate to the tribunal that the disruption of its business (or its diminution) occurred as a direct consequence of the State action and is not due to another cause. Regarding this point, I highlight a very interesting recent case decided by the PCA in 2019 that should also inspire ICSID arbitrators. The arbitral court held the following:

55

Lao Holdings N.V. v. The Lao People’s Democratic Republic, ICSID Case No. ARB(AF)/12/6, Award, 6 August 2019, para. 109-110. 56 Glencore International Ag & Ci Prodeco Sa v. Republic of Colombia, ICSID Case No. ARB/16/6 Decision on Annulment, 22 September 2021, para. 173. 57 Sourgens (2018) para. 2.74. 58 Cox (2019), p. 284, para. 11.14.

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There is no substantive disagreement between the Parties as to the applicability, under NAFTA Chapter Eleven and in the present case, of the standard of full reparation set out by the PCIJ in its 1928 judgment in Chorzów. The same standard has been laid down in Article 31 of the ILC Articles and adopted by NAFTA tribunals. [. . .] 110. Authorities in public international law require a high standard of factual certainty to prove a causal link between breach and injury: the alleged injury must ‘in all probability’ have been caused by the breach (as in Chorzów), or a conclusion with a ‘sufficient degree of certainty’ is required that, absent a breach, the injury would have been avoided (as in Genocide). While the facts of the Genocide case were of course markedly different from those underlying the present arbitration, there is an important similarity: the ICJ, as the Tribunal in the present case, was confronted with a situation of factual uncertainty, where in the view of one of the parties, the same injury would have occurred even in the absence of unlawful conduct.59

The ruling of the PCA seems to set a high standard of proof, not simply prima facie evidence, and not surprisingly so since even in the damage phase the international arbitral tribunal is not exercising a declarative function but a determinative one. It may be suggested that in principle the standard of proof should be higher than a simple ‘balance of probability’, but in exceptional circumstances a tribunal may decide to rely on circumstantial evidence if the arbitrators deem this appropriate. A similar position was stated by the PCA in the 2018 case Silver Limited v. Bolivia.60 The most recent ICSID award on this issue, B3 Croatian Courier Coöperatief U.A. v. Croatia of 2019, seems quite similar in demanding (and not simply suggesting) that the claimant demonstrate the existence of a causal link between the injury and the damage with ‘reasonable certainty’. In fact, the arbitrators specified the following: 1121. The Tribunal also considers that Claimant has not succeeded in its attempt to establish a causal link between, on the one hand, HAKOM’s conduct and, on the other hand, the losses allegedly incurred by [. . .]. As pointed out by Respondent, ‘Claimant [was . . .] 59

William Richard Clayton, Douglas Clayton, Daniel Clayton, and Bilcon of Delaware, Inc. v. The Government of Canada, Award on Damages, Permanent Court of Arbitration (PCA) Case No. 2009-04, 10 January 2019, Para. 108 - 110. 60 South American Silver Limited (Bermuda) v. The Plurinational State of Bolivia PCA Case No. 2013-15, Award, November 22, 2018, para. 824 ‘As a starting point to decide on the determination of compensation, the Tribunal notes that an accepted principle for assigning the burden of proof is that the party which alleges damage should establish its quantum. The Respondent is correct that the damage needs to be certain although the Tribunal notes that mathematical or absolute certainty is not required. In particular, when it comes to estimating future damages, it is impossible to achieve total certainty and what the Tribunal requires is evidence that establishes with a particular degree of certainty that, on the one hand, the variables on which a calculation is based have a solid foundation and a reasonable probability of occurrence, and, on the other hand, that the combination of such variables yields a high level of probability that the result would actually correspond to the damage suffered by the investor. 825.The foregoing rules out calculations based on premises or variables that do not produce a reliable degree of certainty, and, obviously, variables that are merely speculative, that yield unpredictable results, or that ultimately do not convince the adjudicator that, absent the State’s conduct in question, it is highly probable that the investor would have received the amount it alleges to have suffered in damages’.

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required to prove with reasonable certainty, on the basis of sufficient and cogent evidence, that Respondent actually caused [. . .]’s financial performance to decline, and to exclude from its damages claim losses resulting from any other likely cause’.61

The most recent literature agrees with this perspective. One author argues as follows: the standard of proof requires the investor to discharge their burden of proof. This standard amounts to ‘sufficient certainty’. According to the Genplus case, ‘Under international law and the BITs, the Claimant bears the overall burden of proving the loss founding their claims for compensation. If that loss is found to be too uncertain or speculative or otherwise unproven, the Tribunal must reject these claims, even if liability is established against the Respondent’. The tribunal considered that the investors ‘must prove the existence of damage with sufficient certainty and then provide a reasonable basis for the tribunal to determine the amount of loss. The tribunal considers this a fair outcome considering that any difficulty that [investors] may face in providing the amount of loss will have flowed from the [host State]’s wrongdoing.’62

7.3

Standard of Proof: A Preliminary Conclusion

The issue of the standard of proof applicable to investment arbitration has been discussed by the authors analysing this field in an uneven manner. Possibly two matters have been discussed at length: the standard of proof concerning jurisdictional issues and the standard of proof concerning corruption. I disagree with most of the authors who have written about the first issue, because retaining the approach of the ICJ in the matters pertaining to jurisdiction, I suggest that there is no burden of proof in the preliminary phase to discharge, being a point of law that is for the tribunal to solve. Concerning the issue of corruption, I share the concern that a high burden of proof might be in practice to meet. However, at the same time, the degradation of the issue of corruption to a sort of ‘tort’ that may be proven on the simple basis of a preponderance of evidence would be unacceptable. The best possible solution may be to prefer a higher standard of proof, allowing the tribunal to be more proactive in the research of the truth when it is needed. A similar conclusion is expressed by V. Khvalei, who states, the only logical conclusion in a situation is that the classical approach of the adversarial system, with its placement of the burden of proof on the parties and a ‘balance of probabilities’ standard of proof should not be applied in situations when the arbitrators decide sua sponte to raise an issue of public interest.63

61

B3 Croatian Courier Coöperatief U.A. v. Republic of Croatia (ICSID Case No. ARB/15/5), Award, 5 April 2019, para. 1121. 62 Block (2020). 63 Khvalei (2015), p. 75.

References

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Other matters concerning the standard of proof are still to be clearly defined by the jurisprudence. The other issues concerning the standard of proof have been organised in this chapter following the divisions created by the ICJ jurisprudence, keeping the future in mind. One main aspect which makes it difficult to systematise the issue of the burden of proof concerning an alleged act is that so far, the jurisprudence has been unable to classify this issue as a matter of jurisdiction, admissibility of merit. As Sourgens, Duggal and Laird state, ‘What appears unsatisfactory at this stage is allegations of wrongdoings are often invoked at all three stages which increases the costs and reduce efficiency of the process. It is hoped that tribunals will devise techniques to deal with the consequences of wrongful acts in a manner that balances the significant issues at stake but also preserves the integrity of the arbitral process’.64 I think this passage shall be quoted with approval.

References Authors Amerasinghe CF (2005) Evidence in international litigation. Martinus Nijhoff Publishers, Leiden Block G (2020) Arbitration and protection of investments in energy and infrastructure sectors. Éditions Bruylant, Bruxelles Brown CA (2009) Common law of international adjudication. Oxford University Press, New York Cook G (2015) A digest of WTO Jurisprudence on public international concepts and principles. Cambridge University Press, Cambridge, e-book Cox JM (2019) Expropriation in investment treaty arbitration. Oxford University Press, New York Fouret J, Gerbay R, Alvarez GM (2019) The ICSID convention, regulations and rules, a practical commentary. Edward Elgar Publishing, Cheltenham Kazazi M (1996) Burden of proof and related issues. Kluwer International, De Hague Ripinsky S, Williams K (2008) Damages in international investment law. British Institute of International and Comparative Law, London Sabahi B (2011) Compensation and restitution in investor-state arbitration, Principles and Practice, Oxford University Press, New York Sourgens FG et al (2018) Evidence in international investment arbitration. Oxford University Press, Oxford

64

Sourgens et al. (2018), p. 105.

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Articles Del Mar K (2012) The ICJ and the standard of proof, in the ICJ and the evolution of international law. In: Bannelier K et al (eds) The ICJ and the evolution of international law, the enduring impact of the Corfù Channel Case, Routlege, Suffolk, pp 99–123 Gattini A (2007) Evidentiary issues in the ICJ’s genocide case. J Int Crim Law:889–904 Khvalei V (2015) Standard of proof for allegation of corruption in international arbitration. In: Baizeau D, Kreindler R (eds) Addressing issues of corruption in commercial and investment arbitration. ICC, Paris Lamm CB et al (2010) Fraud and corruption in international arbitration. In: Fernández-Ballestreros MÁ, Arias D (eds) Liber Amicorum, Bernardo Cremades, La Ley, Madrid Mills K (2003) Corruption and other illegality in the formation and the performance of contracts and in the conduct of arbitration relating thereto. In: Jan Van Den Berg A (ed) ICCA Congress Series no. 11, international commercial arbitration: important contemporary questions. Kluwer Law International, The Hague, pp 288–295 Reiner A (1994) Burden and general standard of proof. In: Reiner A et al (ed) The standard and the Burden of proof in international arbitration. Arbitr Int 10(3):317–363 Vasani BS, Foden TL (2010) Burden of proof regarding jurisdiction. In Jannaca-Small K (ed) Arbitration under international law. Oxford University Press, pp 271–286 Wilske S, Fox TJ (2011) Corruption and problems with standard of proof. In: Kröll S, Mistelis LA et al (eds) International arbitration and international commercial law: synergy convergence and evolution. Liber Amicorum Eric Bergsten, pp 489–505

Chapter 8

Conclusion

The analysis of the rules of evidence in the field of international investment law shows that this field is strongly dependent on principles and rules coming from general international law. Clear examples of this practice can be seen in the many cases quoted here that were decided by mixed commissions at the beginning of the twentieth century and most of all in the jurisprudence of the ICJ. The latter, being aware of its own prestige, usually ignores the jurisprudence of other international tribunals. Since the ICJ considers itself to be the most important international jurisdiction, its decisions are rarely modelled—at least explicitly—after opinions expressed by other tribunals.1 The Court is rather inclined to find the sources of its decisions in customary law or in general principles of law. On the contrary, the ICSID tribunal, which is the main jurisdiction in the field of international investments, very often examines the jurisprudence of the Court to fill the gaps in the legal texts on which its jurisdiction is based. ICSID tribunals are not alone in looking to ICJ jurisprudence. The same approach is cultivated in the realm of investment arbitration by the PCA that is another, although less commented on by academic scholars, of the most important centres for the development of international investment law. Even to address a minor issue such as the weight to be attributed to certain pieces of evidence, the jurisprudence of the ICJ is always regarded as a source of legitimisation for international adjudicative bodies in the field of economic law as has been shown by an occasional but reasoned comparison with WTO jurisprudence. However, the investigation conducted here shows that the choice of ICSID tribunals to base part of their decisions on principles inferred from the decisions of the Court is not only due to the ICSID being quite a young jurisdiction which therefore could not base itself on its own precedents to solve the issues arising in the

1

Pellet (2013), p. 225.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9_8

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field of evidence but is also due to the rationality of the Court’s decisions, which meet the social need for predictability and harmony of judgements in international law.2 As is evident in the first chapter of the present book on the burden of proof, the ICSID tribunal considers the intrinsic rationality in the decisions of other tribunals rather than their prestige to decide which conclusions should be adapted to the issues arising in its own cases. Even though every tribunal has its specific field of action, the needs to regulate certain situations are very similar in different fields. In particular, a common social need in all areas is that of ensuring the right to be heard and that of equality of the parties, which are fundamental and inalienable values in international law, while facing the countless situations that may arise in very different cases. The need to enforce these rights may lead to major practical difficulties. A clear example is that of default of a party: an overview of jurisprudence on the matter has clearly shown how difficult it is for tribunals to find the elusive balance among different needs. However, a closer examination has shown that the success of the legal provision contained in the Statute of the ICJ has influenced the drafting of the ICSID Convention in which similar provisions are contained. This means that it is possible for a legal solution to be first transversally recognised as effective and then adequately codified in international law. Other principles of law, such as jura novit curia, simply reflect what can be called ‘a general law of evidence in international law’. Through my eclectic approach, I have demonstrated that this principle is undisputedly observed by the ICJ and reflected in all adjudicatory bodies active in the field of international trade and investment adjudication. The same observation can be applied to certain presumptions, especially the longstanding ones omnia rite esse acta presumuntur and ‘the responsibility of the State is not to be presumed’, which have recently been recalled by the jurisprudence of the PCA. This is not a simple matter of procedural law. As can be easily perceived, some international values, like that of respect for national sovereignty, have become presumptions in the procedural system, like the one stating that the compliance of state acts with international law is presumed, whereas the responsibility of the state is not to be presumed. This is a presumption I have examined at a great length because in the same area there is a growing tendency to use rules of attribution to decide issues of jurisdiction ratione personae when a state company is involved in the procedure. Certain authors have criticised this approach because it may lead to an expansion of arbitral tribunal jurisdiction through the application of international legal rules that were originally designed only for the specific purpose of ascertaining State liability. It is probably necessary that ICJ take an authoritative position on this issue of ‘attribution for other purposes’. In any case, it would be a great occasion to foster 2

Gazzini (2009), p. 119.

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a sort of reverse cross-fertilisation (from ICSID tribunals to the ICJ) on such a theoretical and complex matter. This enquiry has shown that there are certain areas in which the situation is more confused. As I outlined in the introduction, investment law is a hybrid system that is under the influence of two older systems: general international public adjudication (mainly represented by ICJ jurisprudence) and that of commercial arbitration. De iure condendo, I suggest that since States are party to the procedure and tribunals are mainly established on the basis of international conventions, general international public law should with all its rules have primacy over the practices and principles arising from commercial arbitration. This is particularly true when it comes to the principle governing the power of the tribunal to ascertain its own jurisdiction. The cornerstone of international adjudication is always state consent that was and remains exceptional as a principle, notwithstanding the proliferation of international BITs. The main consequence at the procedural level should be that the tribunals should be more active in conducting enquiries motu proprio at the jurisdictional phase as did the recent ICSID arbitral tribunal in Oded Besserglik v. Mozambique.3 At present, that remains quite an insulated decision. Similar considerations should be developed with regard to the issue of bifurcation. As explained by Georges Abi-Saab, the technique of bifurcation has been developed not only to save some costs but also at a theoretical level to ensure the proper administration of justice, including the protection of the interest of the respondent state that the case should not be discussed at all if the tribunal lacks jurisdiction. Moving to the most practical aspects, I can only conclude that the deference of arbitrators towards the ICJ is, generally speaking, quite satisfactorily. This approach may also find application beyond the field of legal rules, be they based on agreements or on jurisprudence, up to the simple good practice. This can be clearly seen in the fact that tribunals usually prefer to conduct documentary discovery rather than hear witnesses. However, there are areas in which the alleged uniformity has not yet been reached. I suggest that the arbitral jurisprudence is generally more obscure where the ICJ has not yet reached a clear-cut position. One issue in which this happens is that of admissibility of illegally obtained evidence. In the Corfu Channel case, in fact, the Court avoided taking a clear position, and as a consequence, the matter is still a subject of debate for scholars and practitioners. A similar observation could be formulated concerning the issue of false evidence, where it is regrettable that the Court did not go any further than simply accepting the apologies of Qatar v. Bahrein. Applying the eclectic approach suggested in the introduction, I have filled this gap by drawing inspiration from the WTO jurisprudence which clearly sets out a

3

Oded Besserglik v. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, award, October 28, 2019.

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presumption of veracity of the evidence emanating from a sovereign entity. It is submitted that it could also be applied in investment dispute settlement as a corollary of the already mentioned presumption omnia rite esse acta presumuntur. However, it must be noticed that an investment arbitral tribunal should be careful in applying this presumption in a mixed dispute settlement system since it may alter the principle of equality between the parties. Continuing with the matter of admissibility, an extraordinarily good example of cross-fertilisation is the success of the settlement privilege. Well identified by the jurisprudence of the ICJ, the settlement privilege has made its way into arbitral practice and has been codified in the IBA rules on the taking of evidence. The rules concerning other privileges are less straightforward. Concerning the protection of professional secrecy, I consider that reverse crossfertilisation would greatly benefit the jurisprudence of the ICJ. In this field, the ICSID took a rather firm position in the Libananco case, whereas in Timor-Leste v. Australia the ICJ avoided expressing an outspoken perspective on the importance of the value of professional privilege. In other areas, the uniformity of rules of evidence is more apparent than real. In the field of evidence evaluation, for example, the principle of free appreciation is essentially undisputed and is widely referred to by all international jurisdictions. If it is true that this approach originally contributed to establishing the independence of international law from the limits and preclusions of internal laws, it would probably be advisable to start gathering a set of good practices to be adopted in all international proceedings.4 The same could be said of the field of the standard of proof, in which even though the most painstaking scholars have already identified some general criteria, which are mostly aimed at preserving the rationality of the judicial system,5 these criteria are nevertheless still an object of controversy and general perplexity.6 Despite these latter considerations, it cannot be ignored that many solutions adopted in international law, such as those concerning the burden of proof, were eventually recognised by many specialised jurisdictions even when there were no provisions explicitly referring to those solutions. This can encourage the discussion of one critique advanced by some authors, according to whom the plurality of international jurisdictions may lead to a fragmentation of international law. On the contrary, it seems reasonable to conclude that the unity of international law is rather well preserved by the wisdom of the content of its rules, which are able to enforce themselves even in the absence of constrictive tools. 4

This idea has already been advanced by the most thorough doctrine: see, for instance, Brower (1992), p. 151. 5 Gattini (2007), p. 893. “So, one does not really see the reason why the same fact and the same wrong should be proved with a more severe standard when attributed to an individual in an International criminal case, and more lightly when it comes to their attribution to a state in an inter-state case. This double standard would bring about the curious and undesirable result of having at the same time in international law a ‘crime’ of genocide alongside a ‘tort’ of genocide”. 6 Sabahi (2011), p. 184.

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Going back to the research questions raised at the beginning of the book, one may wonder if the research can contribute to defining the shape of investment arbitration. According to one author, The ICSID arbitration is by and large a self-contained procedural system, safeguarded by exclusive remedy rules under article 26 of the ICSID Convention.7 The need for ensuring the proper administration of international justice by arbitrators and protecting their judicial integrity is therefore imperative. Article 44 of the ICSID Convention8 responds precisely to this concern.9

Answers to these concerns cannot generally be found in the realm of investment arbitration, but on the contrary, arbitrators must look for possible answers in the jurisprudence of the ICJ or, more rarely, in WTO jurisprudence. What at first glance may seem a contradiction is on the contrary one of the most interesting aspects of investor-State arbitration: the need for a solution to be found in the realm of international public law pushes arbitrators to go beyond the limits fixed by the ICSID Convention and other instruments conferring jurisdiction upon them, while the need to build a coherent body of jurisprudence creates the exigency of a form of systematisation to which I have made my small contribution.

References Authors Sabahi B (2011) Compensation and restitution in investor-state arbitration, Principles and Practice, Oxford University Press, New York

7

Article 26 Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention. 8 Article 44 Any arbitration proceeding shall be conducted in accordance with the provisions of this Section and, except as the parties otherwise agree, in accordance with the Arbitration Rules in effect on the date on which the parties consented to arbitration. If any question of procedure arises which is not covered by this Section or the Arbitration Rules or any rules agreed by the parties, the Tribunal shall decide the question. 9 Salonidis (2012), p. 51.

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Articles Brower CN (1992) The Anatomy of fact-finding before international tribunals: an analysis and a proposal concerning the evaluation of evidence. In: Lillich RB (ed) Fact-finding before international tribunals: Eleventh Sokol Colloquium. Transnational Publishers Gattini A (2007) Evidentiary issues in the ICJ’s genocide case. J Int Crim Law:889–904 Gazzini T (2009) General principles of law in the field of foreign investment. J World Investment Trade 10(1):104–119 Pellet A., (2013), The case law of the ICJ in investment arbitration. ICSID Rev. Oxford University Press 2:223–240 Salonidis C (2012) Inherent powers in ICSID arbitration. In: Laird IA, Weiler TJ (eds) Investment treaty arbitration and international law. JurisNet, New York

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Cases

225

Interocean Oil Development Company and Interocean Oil Exploration Company v. Federal Republic of Nigeria, ICSID Case No. ARB/13/20, Award, 6 October 2020 Klökner Industrie–Anlagen GmbH and others v. Republic of Cameroon and Société Camerounaise des Engrais, ICSID Case Arb./81/2, ad hoc Annulment Committee decision, 3 May 1985. Lao Holdings N.V. v. The Lao People’s Democratic Republic, ICSID Case No. ARB (AF)/12/6, Award, 6 August 2019 Libananco Holdings Co. v. Turkey, ICSID Case no. ARB/06/8, Decision on preliminary issues, 23 June 2008. Liberian Eastern Timber Corporation (LETCO) v. Republic of Liberia, ICSID Case No. ARB/83/2, Award. Lupaka Gold Corp. v. Republic of Peru, ICSID Case No. ARB/20/46, Procedural Order No. 1, 16 April 2021, para 15.1. Maritime International Nominees Establishment v. Guinea, ICSID Case No. Arb/84/ 4, Decision of the ad hoc Committee, December 22, 1989. Merrill & Ring Forestry LP v Government of Canada, UNCITRAL, Amended Confidentiality Order, 18 February2008 Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award 4 October 2013 Michael Anthony Lee-Chin v. The Dominican Republic, ICSID Case No. UNCT/18/ 3, Partial Award on Jurisdiction, July 15, 2020 Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt ICSID ARB/99/6 12 April 2002 Mr. Joshua Dean Nelson v. The United Mexican States, ICSID Case No. UNCT/17/1 Final Award, 5 June 2020 MTD Equity Sdn Bhd and MTD Chile SA v. Chile, ICSID Case No ARB/01/7, Decision on the Application t for Annulment of the Republic of Chile, 21 March, 2007. Oded Besserglik V. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, award, October 28, 2019 Odyssey Marine Exploration, Inc. (USA) v. United Mexican States (ICSID Case No. UNCT/20/1) Procedural Order No. 1, 23 April 2020. Oko Pankki Oyj (Formerly Called: Oko Osuuspankkien Keskuspankki Oyj), Vtb Bank Deutschland Ag (Formerly Called: Ost-West Handelsbank Ag), Sampo Bank Plc v. The Republic of Estonia, ICSID CASE NO. ARB/04/6, procedural order no. 2, 15 July 2005. Orascom Tmt Investments S.À R.L. V. People’s Democratic Republic Of Algeria, ICSID Case No. ARB/12/35 Decision On Annulment September 17, 2020 Pan American Energy, LLC et al. v. The Argentina Republic, ICSID Case No. ARB/03/13, Decision on Preliminary Objections, July 27, 2006. Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No Arb. 99/7, Decision on The Application for Annulment of the Award, 1 November 2006. Phoenix Action, Ltd. v. The Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009.

226

Cases

Posˇtova’banka, as and ISTROKAPITAL SE v Hellenic Republic, ICSID Case No ARB/13/8, Procedural Order No 1 (20 December 2013) para 15.3 RSM Production v. Grenada, ICSID case No ARB/05/14 (Annulment Proceeding), Decision on RSM Production Corporation’s Application for a Preliminary Ruling, 29 October 2009 Rumeli Telekom A.S. And Telsim Mobil Telekomikasyon Hizmetleri A.S. V. Republic of Kazakhstan, ICSID Case No. ARB/05/16, Award of July 29, 2008. RWE Innogy GMBH and RWE Innogy AERSA S.A.U. v. Kingdom of Spain, ICSID Case No. ARB/14/34, Award, 18 December 2020 Saipem S.P.A. v. The People’s Republic of Bangladesh, ICSID Case No. ARB/05/ 07, Decision on Jurisdiction, 22 April 2005. Salini Costruttori S.P.A. And Italstrade S.P.A. v. The Hashemite Kingdom f Jordan, ICSID Case No. ARB/02/13, Award, 31 January 2006. SARL Benvenuti & Bonfant v People’s Republic of the Congo, ICSID Case No. ARB/77/2, Award, 8 August 1990. SARL Benvenuti & Bonfant v People’s Republic of the Congo, ICSID Case No. ARB/77/2, Award of 8 August 1980, ICSID Report Vol. I, 1993 Sempra Energy International v. Argentine Republic, ICSID Case No ARB/00/4, Decision on the Argentine Republic’s Request for Annulment of the Award, 29 June 2010. Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. The Government of Mongolia, UNCITRAL, Decision on Interim Measures, 2 September 2008, SGS Société Générale de Surveillance S.A. v. The Republic of Paraguay, ICSID Case No. ARB/07/29, Award, 10 February 2012 Silver Ridge Power BV v. Italian Republic, ICSID Case No. ARB/15/37, Award, February 26, 2021 Société Ouest-Africaine des Bétons Industriels (SOABI) contre La République du Sénégal, ICSID Affaire ARB/82/1, Fond, 9 février, 1988. Suez, Sociedad General De Aguas De Barcelona S.A. And Interagua Servicios Integrales De Agua S.A. v. Argentine Republic ICSID Case No. Arb/03/17, Decision on Argentina’s Application for Annulment, december 14, 2018 Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic, ICSID Case No. ARB/09/1, Decision on Jurisdiction, December 21, 2012 Telenor Mobile Communications A.S. v. The Republic of Hungary, ICSID Case No. ARB/04/15, Award 13 September 2006. Tidewater Inc. v. The Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5, Procedural Order No. 1, on Production of Documents, 29 March 2011. Tokios Tokelės v. Ukraine, ICSID Case No. ARB/02/18, ord. Proc. 2, 1 July 2003. Toto Costruzioni Generali S.p.A. v. The Republic of Lebanon, ICSID Case No. ARB/07112, Decision on Jurisdiction, September 11, 2009. Tradex Hellas S.A. v. Republic of Albania, ICSID case ARB/94/2, Award, 29 April 1999. Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Award, March 10, 2014

Cases

227

Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Decision on Annulment. December 30, 2015. Vattenfall AB; 2. Vattenfall GMBH; 3. Vattenfall Europe Nuclear Energy GMBH; 4. Kernkraftwerk Krümmel GMBH & CO. OHG; 5. Kernkraftwerk Brunsbüttel GMBH & CO. OHG v. Federal Republic of Germany, ICSID Case No. ARB/12/ 12, Decision on The Achmea Issue, 31 August 2018, para. 19 Waguih Elie George Siag and Clorinda Vecchi v. The Arab Republic of Egypt, ICSID case No. ARB/05/15, Award, 1 June 2009. Waste Management, Inc. v. Mexico, ICSID Case No. ARB (af)00/3, Procedural Order Concerning Disclosure of Documents, 1 October, 2002. Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on Annulment Proceeding, 5 february 2002. Wena Hotels Limited v. Egypt, ICSID Case No. ARB/98/4, on the Arab Republic of Egypt Request for Annulment of the Award, 8 December 2000. Glencore International Ag & Ci Prodeco Sa v. Republic of Colombia, ICSID Case No. ARB/16/6 Decision on Annulment, 22 September 2021

PCA Chevron Corporation (“Chevron”) Texaco Petroleum Company (“TexPet”) v. The Republic of Ecuador, PCA Case No. 2009-23 Second Partial Award on Track II dated 30 August 2018 Copper Mesa Mining Corporation (Canada) v. The Republic of Ecuador PCA Case No. 2012-2 Award, 15 March 2016 Glencore Finance (Bermuda) Limited v. The Plurinational State of Bolivia, PCA Case No. 2016-39, Procedural Order No. 2: Decision on Bifurcation, 31 January 2018 Mesa Power Group LLC v. Government of Canada, Award PCA Case No. 2012-17, 24 March 2016, para. 234. Michael Ballantine And Lisa Ballantine v. The Dominican Republic Final Award, PCA Case No. 2016-17, Permanent Court of Arbitration 3 September 2019 Mr. Kristian Almås and Mr. Geir Almås v. The Republic of Poland Permanent Court of Arbitration, Award 27 June 2016 OOO Manolium-Processing v. The Republic of Belarus, Decision On Bifurcation, August 1, 2018 Philip Morris Asia Limited v. The Commonwealth of Australia PCA Case No. 201212, Award on Jurisdiction and Admissibility, 17 December 2015 South American Silver Limited (Bermuda) v. The Plurinational State of Bolivia PCA Case No. 2013-15, Award, November 22, 2018 The Estate of Julio Miguel Orlandini-Agreda and Compañía Minera Orlandini LTDA. v. The Plurinational State of Bolivia, PCA Case No. 2018-39 1., Decision

228

Cases

on The Respondent’s Application For Termination, Trifurcation And Security For Costs July 9, 2019 The PV Investors v. The Kingdom of Spain, Final Award, PCA Case No. 2012-14, 28 February 2020, para.519 Venezuela US, S.R.L. v. The Bolivarian Republic of Venezuela, PCA Case No. 201334, Partial Award, (Jurisdiction and Liability) 5 February 2021 William Richard Clayton, Douglas Clayton, Daniel Clayton, And Bilcon Of Delaware, Inc. v. The Government of Canada, Award on Damages, Permanent Court of Arbitration (PCA) Case No. 2009-04, 10 January 2019, Para. 108-110. Windstream Energy LLC v. Government of Canada, Permanent Court of Arbitration, Award, 27 September 2016

SCC CME Czech Republic B.V. v. The Czech Republic, SCC, UNCITRAL Final Award, 14 Mars 2003 Petrobart Limited v. The Kyrgyz Republic, SCC, Award, issued in Stockholm, Sweden, on 13 February 2003.

WTO Argentina - Measures Affecting the Importation of Goods - Reports of the Panel WT/DS438/R; WT/DS444/R; WT/DS445/, 22 August 2014 Australia - Subsidies Provided to Producers and Exporters of Automotive Leather Report of the Panel, WT/DS126/R, 25 May 1999 Brazil - Export Financing Programme for Aircraft - Recourse to Arbitration by Brazil under Article 22.6 of the DSU and Article 4.11 of the SCM Agreement Decision by the Arbitrator, WT/DS46/ARB, 28/08/2000 Brazil - Export Financing Programme for Aircraft - Recourse to Arbitration by Brazil under Article 22.6 of the DSU and Article 4.11 of the SCM Agreement Decision by the Arbitrator, WT/DS46/ARB, 28/08/2000 Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products - Second Recourse to Article 21.5 of the DSU by New Zealand and the [. . .]ed States - Report of the Panel WT/DS103/RW2; WT/DS113/RW2, 26/07/ 2002 Canada – Measures Affecting The Importation Of Milk And The Exportation Of Dairy Products Second Recourse To Article 21.5 of the DSU by New Zealand and the United States, Report of the Appellate Body (AB-2002-6), 20 December 2002, WT/DS103/AB/RW2 WT/DS113/AB/RW2 Egypt – Definitive Anti-Dumping Measures on Steel Rebar From Turkey, Report of the Panel, WT/DS211/R, 8 August 2002

Cases

229

European Communities - Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India - Report of the Panel, WT/DS141/R European Communities - EC Measures Concerning Meat and Meat Products (Hormones) - AB-1997-4 - Report of the Appellate Body WT/DS26/AB/R WT/DS48/AB/R, European Communities – Conditions for The Granting of Tariff Preferences to Developing Countries, AB-2004-1, Report of the Appellate Body, WT/DS246/ AB/R, 7 April 2004, European Communities and Certain Member States - Measures Affecting Trade in Large Civil Aircraft - Recourse to article 21.5 of the DSU by the United States [. . .]- Report of the Appellate Body, 15/05/2018, WT/DS316/AB/RW Indonesia - Certain Measures Affecting the Automobile Industry - Report of the Panel, WT/DS54/R; WT/DS55/R; WT/DS59/R; WT/DS64/R, 02/07/1998 Thailand - Customs and Fiscal Measures on Cigarettes from the Philippines Recourse to article 21.5 of the DSU by the Philippines - Report of the Panel, 12/11/2018, WT/DS371/RW, United States - Anti-Dumping Act of 1916 - AB-2000-5 - AB-2000-6 - Report of the Appellate Body, WT/DS136/AB/R; WT/DS162/AB/R, 28/08/2000 United States - Final Dumping Determination on Softwood Lumber from Canada Report of the Panel, WT/DS264/R, 13 Avril 2004 United States - Section 110(5) of the US Copyright Act - Recourse to Arbitration under Article 25 of the DSU - Award of the Arbitrator WT/DS160/ARB25/1 09/11/2001

Cases Decided by Other International Tribunals

Dillon v. Mexico, United States and Mexico General Claims Commission, Opinions of Commissioners (1929), p. 65. Adolph G. Studer (United States) v. Great Britain, 19 March 1925, in Report of International Arbitral Award, Volume VI, UN 2006. Affaire des propriété religieuses (France, Royaume-Uni, Espagne c. Portugal), Court permanent d’arbitrage, Réclamatione espagnole en faveur de Dona Conception Barranechea y Manterola, Reports Of International Arbitral Awards, 4 Septembre 1920, vol. I, pp. 7-57, pp. 22-23 Arbitration under the Timor Sea Treaty (Timor-Leste v. Australia), pending since 23 April 2013, Permanent Court of Arbitration, details available online at Bogdanov v. Moldova, SCC Case, 93/2004, http://ita.law.uvic.ca/documents/ Bogdanov–Moldova-22September2005.pdf. Eastern Extension, Australasia and China Telegraph Co. Ltd., Case 1923, Reports Of International Arbitral Awards, (U.N.R.I.A.A.), volume VI, pp. 112-118. http://legal.un.org/riaa/cases/vol_VI/112-118_Eastern_Extension.pdf. Flutie, in Reports of International Arbitral Awards, 1903-1905, Volume IX p. 148-155. Fouilloux Case, 1922, (France v. Germany), Franco-German Mixed Arbitral Tribunal, 3 T.A.M. p. 110. Francisco Mallén (United Mexican States) v. U.S.A., 27 April 1927 Reports of International Arbitral Awards, vol. IV, pp. 173-190. Franqui Case, 1903, U.N.R.I.A.A. volume X, pp. 751-753. Frierdich and Company Case, in Reports of International Arbitral Awards, Mixed Claims Commission (France-Venezuela) 1903-1905, vol. X, pp. 9-355, p. 53. Haji Mohamend Harrej (Tanger Horses), 1924, 2 UNRIAA, p. 615, at. p.699. http://www.pca-cpa.org/showpage.asp?pag_id¼1403. http://www.state.gov/documents/organization/51052.pdf. International Thunderbird v. Mexico, UNCITRAL, Procedural Order No. 2, 31/07/ 2003. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 G. A. Cortesi, Proof and the Burden of Proof in International Investment Law, EYIEL Monographs - Studies in European and International Economic Law 24, https://doi.org/10.1007/978-3-030-96343-9

231

232

Cases Decided by Other International Tribunals

Islamic Republic of Iran v. United States of America (1986), 11 Iran-U.S. CTR Island of Palmas Case, 2 U.N. Rep. Int’l Arb. Awards 829 (1928). Lasry Case, in Reports of International Arbitral Awards,1903-1905, vol. IX, pp. 147-148. Lehigh Valley Railroad Company Agency of Canadian Car and Foundry Company, Limited and Various Underwrites case, Docket Nos. 8103, 8117 et alt. (Sometimes known as the Black Tom and Kingsland cases). Lozano Case, Mixed Claims Commission (Spain-Venezuela)1903, vol. X, pp. 735-759. Lynch, Robert John (Great Britain) v. United Mexican States, Decision No. 1, 8 November, 1929, dissenting opinion by Mexican Commissioner. Methanex Corporation v. United States, 3 August 2005, available at: Odell, W. Allan (Great Britain) v. United Mexican States (Decision No. 39, May 13, 1931. Pages 61-64.), British-Mexican Claims Commission (Convention b/w Great Britain and the United Mexican States of December 5, 1930) (Great Britain, United Mexican States) (24 March 1931 - 6 August 1932) in Reports Of International Arbitral Awards, vol. V, pp. 133-306, p. 153. Parker, William A (United States.) v. United Mexican States, 2 March 1926 in Reports of International Arbitral Awards, vol. IV, p. 21. Pinson, Georges, French-Mexican Claim Commission, 19 April 1928, R.S.A. V, p. 372. S.D. Myers v. Canada, UNCITRAL, Procedural order no. 1; 28 May 1999. Shufeldt claim (Guatemala v. USA), arbitral decision 24 July 1930, vol. II, pp. 1079-1102. Stockholm Arb. Rep. CME v. Czech Republic, T 8735-01, RH 2003:55, (2) (2003). The Indo-Pakistan Western Boundary (Rann of Kutch) between India and Pakistan (India, Pakistan), 19 February 1968, U.N.R.I.A.A., vol. XVII, pp. 1-576. The Netherlands v. The Czech Republic, UNCITRAL partial award 13 September 2001. Westinghouse and Burns & Roe (USA) v. National Power Company and the Republic of Philippines, ICC Case no. 6401, Award of 19 December 1991.

National Tribunals

Denis v. Mercelis and Crts., Bruxelles, in Journal des Tribunaux, 312 (1998), with note Bernard Hanotiau. In re Oxus Gold plc, MISC No. 06-82-GEB 2007, WL 1037387 (D.N.J. Apr. 2, 2007). Intel Corp. v. Advances Micro Devices Inc., 542 U.S. 241, 2004. N.V. Belgische Scheepvaartmaatschappij – Compagnie Maritime Belge v. N.V. Distrigas, ATF 4P.114/2001 Swiss Supreme Court, 19 December 2001. Raesche-Kessler, Recht und Praxis des Schiedsverfahrens, Köln, 156 (1999). Societé VRV v. Pharmachin, in Rev. Arb, 684 ff, 687 (1998) Cour d’Appel de Paris, 25 November 1997. Wm. Passalacqua Builders, Inc. v Resnick Developers S, Inc., F. 2nd 131, 139 (2nd Circ. 1991).

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Other Documents

1999 IBA Working Party & 2010 IBA Rules of Evidence Review Subcommittee, Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration. Aegean Sea Continental Shelf, Oral Arguments on Jurisdiction minutes of the public sittings, held at the Peace Palace. The Hague, from 9 to 17 October and on 19 December 1978, President Jiménez de Aréchaga presiding, see http://www.icjcij.org/docket/files/62/9491.pdf. ALI / UNIDROIT Principles of Transnational Civil Procedure, available at https:// www.unidroit.org/instruments/civil-procedure/ali-unidroit-principles accessed on the 1st of May 2021. Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration https://www.ibanet.org/Document/Default.aspx? DocumentUid¼4F797338-693E-47C7-A92A-1509790ECC9D accessed on the 27 of April 2021 http://www.icj-cij.org/pcij/serie_C/C_13_03/C13_03_03_Mavrommatis_Discours. pdf. IBA Rules on the Taking of Evidence in International Arbitration Adopted by a resolution of the IBA Council, 17 December 2020 International Bar Association. ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), 4 Int'l Tax & Bus. Law. 362 (1986). Available at: http://scholarship.law.berkeley.edu/ bjil/vol4/iss2/15. Mavrommatis Jerusalem Concessions (Greece v. U.K.), 1925 P.C.I.J. (ser. A) No. 5 (Mar. 26), Intervention of Sir Douglas Hogg, pag. 32-33, available at: P.C.I.J., Series D, Addendum No. 2, Revision of the Rules of Court of June 26th, 1926, p. 89

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P.C.I.J., Series D, Elaboration of the Rules of Court of March 11th, 1936, Third Addendum to No. 2, 1936, Plaidoiries Dans La Deuxieme Phase de l'Affaire, Audiences Publiques tenues du 10 au 24 février, du 2 au 8 mars, et le 6 avril 1955, sous la présidence de M. Hackworth, Président., p.77, in Affaire Nottebohm (Liechtenstein C. Guatemala), C. I. J. Recueil 1955.