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Trending: Call for Papers Volume 3 | Issue 2: International Journal of Advanced Legal Research [ISSN: 2582-7340]

Admissibility of Investment Arbitration Claims

Introduction

When it comes to international investment arbitration, a perusal of awards and articles on the subject of jurisdiction and admissibility will lead one to the conclusion that the concept of admissibility is a fiction that has no role in this field of law,[i] that it is merely illusory. We must therefore analyze the nature of admissibility objections, contrast it with jurisdictional challenges, and see if admissibility manages to carve out a path for its own independent existence, separate from that of jurisdiction. 

In investment arbitration, the claimant is opposed by the defendant who seeks to raise the issue of admissibility so as to convince the tribunal to dismiss the claim either before the case is heard on merits, or even regardless of the merits. Procedurally, it bears resemblance to objections raised on jurisdiction. Successful admissibility arguments disallow the tribunal from going into the merits of the case, or even prevent it from exercising its jurisdiction which might otherwise be faultless. Questions of admissibility and jurisdiction are often grouped together as they relate to procedural faults in a broad sense.
One might find strong admissibility objections where parties allege corruption, forum/treaty shopping, illegalities on the part of the claimant and/or their investments, circumvention of jurisdictional limitations, and abuse of processes. The ICJ has observed that objections to admissibility attempt to prove that despite the Court possessing jurisdiction, and the claim having prima facie merit, there are still reasons due to which the Court must not proceed with the merits.[ii]

Interestingly, admissibility objections do not pertain to lack of consent of parties to the arbitration. Consider a contract formed under the provisions of the Indian Contract Act, 1872, with valid consent of parties. Despite consent being present, the contract can be void for want of other requirements – such as being against public policy (Section 23). The same analogy can be extended to that of admissibility objections in relation to consent of parties in the sense that valid consent does not negate considerations external to the parties’ intentions. In fact, an objection based purely on admissibility can even concede the existence of consent, but essentially attempts to disregard said consent. In other words, jurisdictional objections vindicate parties’ consent, while admissibility objections seek to disregard it. Essentially, we borrow the philosophy from the analogy, i.e., party autonomy, as against public goals.

This then leads one into uncharted (or uncodified) waters. Where then do we look for rules that can override parties’ intents, that are not agreed upon the parties themselves? The answer lies in gap-filling sources found in general principles of law and customary international law. Professor Abi-Saab confirms this in his dissent in the Abaclat v. Argentina case at paragraphs 18 and 19.[iii]
The defense of a claim not being admissible is thus available as a mechanism for tribunals to implement general principles of justice in a situation the parties have not foreseen or have not created a contingency where the propriety of arbitration itself is in question.

The following are some general rules of thumb that characterize and contrast an admissibility objection as against a jurisdictional objection, but these are in no way set in stone. 

  • Firstly, the latter objections relate to the powers of the tribunal itself, while the former deals with defects in the claim brought by the claimant. Secondly, the latter objections can be waived by the party, whereas the former cannot. Lastly, the latter objections are irreversible, while the former can be cured.
  • The unwritten nature of admissibility requirements leads to an interesting dynamic. While jurisdictional requirements are completely dependent of party autonomy and have no predetermined content, admissibility requirements have typified content. This is because the latter goes back to the principles of equity and justice. 
  • Another difference can be drawn based on determining what is being punished when each objection succeeds. Admissibility objections that succeed impute a fault on the part of the claimant, or the claim itself. However, jurisdictional decisions are based on mechanical checks built into the treaty or contract itself. 

The question of reviewability, especially in ICSID proceedings is somewhat of a grey area when it comes to admissibility claims. Article 52 does not distinguish between breaches of procedure, or excesses of power.[iv] ICSID ad hoc committees do not take up admissibility decisions of tribunals for review. However, jurisdictional decisions are reviewable. In non-ICSID arbitrations, this depends entirely on the domestic law being applied. 

Conclusion

In conclusion, admissibility stands as a legal mechanism barring tribunals from interfering where principles of justice outside of the parties’ stipulations have been breached. It empowers tribunals to dismiss claims where it has jurisdiction, but equity and justice considerations call for dismissal. This power is inherent and implicit within tribunals to administer justice and stems from unwritten international law, both substantive and procedural justice. It is necessary to protect public interest as it punishes blameworthy claimants or faulty claims, while disregarding the parties’ consent. 

References

[i] Christer Söderlund, Elena Burova, Is There Such a Thing as Admissibility in Investment Arbitration? , ICSID Review – Foreign Investment Law Journal, Volume 33, Issue 2, Spring 2018, Pages 525–559, https://doi.org/10.1093/icsidreview/siy009
[ii] Croatia v. Serbia, (2008), para 120. https://www.icj-cij.org/files/case-related/118/118-20081118-JUD-01-00-EN.pdf.
[iii] Abaclat v. Argentina, Dissenting opinion, paras 18-19. https://www.italaw.com/sites/default/files/case-documents/italaw4085.pdf.
[iv] Article 52, ICSID Convention, https://icsid.worldbank.org/sites/default/files/ICSID%20Convention%20English.pdf.

Author: Prahalad Sriram, School of Law, CHRIST (Deemed to be University), Bangalore. 

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