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Recent Bit Decisions and Composite Acts Straddling the Date a Treaty Comes into Force

Published online by Cambridge University Press:  17 January 2008

Nick Gallus
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Abstract

The success of an international claim impugning a series of State acts, or a ‘composite act’, straddling the date a treaty comes into force can depend on the weight the tribunal gives to the elements of the composite act occurring before that date. Recent bilateral investment treaty decisions highlight ambiguities on this critical issue. One tribunal practically ignored State acts occurring before the treaty came into force in finding that there had been no breach of the treaty, whereas another tribunal considered those previous acts in reaching the opposite conclusion. This paper identifies steps to ensure future tribunals give consistent weight to the elements of a composite act occurring before a treaty comes into force.

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Articles
Information
International & Comparative Law Quarterly , Volume 56 , Issue 3 , July 2007 , pp. 491 - 513
Copyright
Copyright © British Institute of International and Comparative Law 2007

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References

1 Ireland v UK, Series A, No 25, 1978, para 159.Google Scholar

2 The ILC gives a similar example of State A expropriating mining concessions given to nationals of State B. The individual expropriations might breach State A's treaty obligation not to expropriate assets belonging to nationals from State B. Taken as a whole, the series of expropriations might breach State A's separate obligation to generally permit participation by nationals of State B in the exploitation of State A's mineral resources (ILC, Yearbook 1998 227).Google Scholar

3 James, Crawford, The International Law Commission's Articles on State Responsibility: Introduction, Text and Commentaries (CUP, Cambridge, 2002) 141.Google ScholarSee also Wolfram, Karl, ‘The Time Factor in the Law of State Responsibility’ in United Nations, Codification of State Responsibility, eds Marina, Spinedi and Bruno, Simma, from p 95 at n 30 at p 100Google Scholar: ‘Although expropriation of foreign property is not in itself illegal, especially if adequate compensation is paid, discriminatory expropriation based on a government's intention would seem to constitute a composite wrongful act.’

4 This is certainly a ‘composite’ act, within the ordinary meaning of that word. Some commentary suggests that it does not amount to a composite act for the purposes of international law. For example, Karl (n 3 at 100) describes composite acts as ‘a series of individual acts, of a sequence of separate courses of conduct adopted in separate cases’ (emphasis added). He goes on to explain that ‘[t]hese courses of conduct are linked by the same intention, content and effects and thereby form an aggregate whole.’ The ILC gives a similar description, describing a composite act as ‘an act consisting of a systematic repetition of actions or omissions relating to separate cases’ (‘Report of the International Law Commission on its twenty-eighth session’, Yearbook of the International Law Commission 1976, vol II, Part Two at 88, emphasis added). The ILC goes on at 93 to describe it as ‘an act made up of a series of separate actions or omissions which relate to separate situations but which, taken together, meet the conditions for a breach of a given international obligation’ (emphasis added). There is also commentary suggesting that such a composite act committed against an individual is classified as a composite act for the purposes of international law. For example, the ILC discarded the concept of complex acts because they fall within the concept of composite acts (‘Report on the ILC's 51st session in 1997’, para 211), yet complex acts are committed against the same individual. Ultimately, the classification of a series of acts as composite, or otherwise, is irrelevant. There are no legal consequences flowing from the definition alone. All that matters is that the State breaches its international law obligation, through the accumulated effect of several actions against the same individual.Google Scholar

5 Waste Management, Inc v United Mexican States, ICSID Case No ARB(AF)/00/3, Final Award, 30 04 30 2004, para 137.Google Scholar

6 ibid (n 5) paras 138–9,.

7 Jan de Nul NV and Dredging International NV v Arab Republic of Egypt, ICSID Case No ARB/04/13, Decision on Jurisdiction, 16 06 2006Google Scholar

8 ibid (n 7) para 34.

9 ibid (n 7) para 57.

10 ibid (n 7) para 122: ‘Having concluded that the dispute arose after the entry into force of the 2002 BIT, the Tribunal does not need to consider the Claimants’ fall back argument that the alleged breaches by Egypt occurred through a composite act within the meaning of Article 15 of the ILC Articles on State Responsibility…’

11 Telenor Mobile Communications AS v Republic of Hungary, ICSID Case No ARB/04/15, Award, 13 09 2006.Google Scholar

12 ibid (n 11) para 38.

13 ibid (n 11) para. 63: ‘there may be ‘creeping’ expropriation involving a series of acts over a period of time none of which is itself of sufficient gravity to constitute an expropriatory act but all of which taken together produce the effects of expropriation;’ and para 79: ‘it is evident that the effect of the measures by Hungary of which Telenor complains fall far short of the substantial economic deprivation of its investment required to constitute expropriation.’

14 Técnicas Medioambientales, TECMED S.A (‘Tecmed’) v Mexico, ICSID Case No ARB(AF)/00/2, Award, 29 05 2003, para 172.Google Scholar

15 Azurix Corp v Argentine Republic, Award, ICSID Case No ARB/01/1, 14 07 2006, para 377.Google Scholar

16 PSEG Global Inc and Konya Ilgin Elektrik Üretim ve Ticaret Limited Şirketi v Republic of Turkey, ICSID Case No ARB/02/5, Award, 19 01 2007, para 253Google Scholar: ‘the aggregate of the situations explained raise the question of the need to ensure a stable and predictable business environment for investors to operate in, as required … by the Treaty;’ Siemens AG v The Argentine Republic, ICSID Case No ARB/02/8, Award, 6 02 2007 at para 264Google Scholar: ‘We are dealing here with a composite act in the terminology of the [ILC] Draft Articles [on State Responsibility]’ and para 271: ‘The Tribunal has identified a series of measures … [that] stand as part of a gradual process which … culminated in the expropriation of Siemens' investment.’

17 Papamichalopoulos v Greece, ECHR (1993) Series A, No 260–B.Google Scholar

18 Sporrong and Lonnroth v Sweden (1983) 5 EHRR 35.Google Scholar

19 Case Concerning the Barcelona Traction, Light and Power Company, Ltd., Judgment of 5 02 1970, reprinted in (1970) 9 ILM 227.Google Scholar

20 Barcelona Traction (n 19) 244.Google Scholar

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22 Rosalyn, Higgins, ‘Time and the Law: International Perspectives on an Old Problem’ (1997) 46 ICLQ 501, at 515.Google Scholar

23 For a general discussion of the rule in international law, see Woodhouse, JT, ‘The principle of retroactivity in international law’, The Grotius Society, Transactions for the Year 1955 (London)Google Scholar; Bindschedler-Robert, , ‘De la retroactivite en droit international public,’ Melanges P Guggenheim (Geneva, 1965).Google Scholar

24 See ‘Report of the International Law Commission on its twenty-eighth session’, Yearbook of the International Law Commission 1976, vol II, Part Two, 90Google Scholar; Geraldo Eulalio do Nascimento e Silva, ‘Le Facteur Temps et les Traités,’ 154 (1977-I) Recueil des cours 215 at 271Google Scholar; Woodhouse, JT, ‘The principle of retroactivity in international law’, The Grotius Society, Transactions for the Year 1955 (London) 73.Google Scholar Also note Art 11(2) of the Universal Declaration of Human Rights and Art 7 of the European Convention on Human Rights, which both provide that ‘no one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal offence under national or international law at the time it was committed …’

25 See also Art 4 of the Vienna Convention which reinforces Art 28 by providing that the Vienna Convention will not apply retroactively: ‘Without prejudice to the application of any rules set forth in the present Convention to which treaties would be subject under international law independently of the Convention, the Convention applies only to treaties which are concluded by States after the entry into force of the present Convention with regard to such States.’

26 ILC (n 24) 90.Google Scholar

27 Feldman v United Mexican States, ICSID Case No ARB(AF)/99/1, Interim Decision on Preliminary Jurisdictional Issues, 6 Dec 2000, reprinted in (2001) 65 ILM 615 at para 62.Google Scholar While a NAFTA decision and, therefore, not technically a decision under a bilateral investment treaty, for convenience we will describe Feldman and other NAFTA decisions as BIT decisions. Also note that the Feldman Tribunal's view, that conduct occurring before the treaty came into force is irrelevant is controversial and will be addressed later in the article.

28 Mondev International Ltd v United States of America, ICSID Case No ARB(AF)/99/2, Award, 11 10 2002, para 68.Google Scholar

29 Salini Construttori SpA and Italstrade SpA v Hashemite Kingdom of Jordan, ICSID Case No ARB/02/13, Decision on Jurisdiction, 29 11 2004, para 177.Google Scholar It is important to note that the Tribunal went on to find that the alleged facts breaching the treaty arose after the entry into force of the BIT. See also Tradex Hellas SA v Albania, ICSID Case No ARB/94/2, Decision on Jurisdiction, 24 Dec 1996, 14 ICSID Review–FILJ 161 (1999)Google Scholar; Generation Ukraine, Inc v Ukraine, ICSID Case No ARB/00/9, Award, 15 09 2004, para 11.2Google Scholar: ‘The obligations assumed by the two state parties to the BIT relating to the minimum standards of investment protection (including the prohibition against expropriation) did not become binding, and hence legally enforceable, until the BIT entered into force on 16 November 1996. It follows that a cause of action based on one of the BIT standards of protection must have arisen after 16 November 1996.’

30 Note that States can waive the temporal rule. Art 25 of the Vienna Convention recognizes that a State will be bound by a treaty before it comes into force, if the treaty so provides. Art 25(1) says:

‘A treaty or a part of a treaty is applied provisionally pending its entry into force if: a. the treaty itself so provides; or b. the negotiating States have in some other manner so agreed.’

31 Ralf, Günter Wetzel, Dietrich, Rauschning, The Vienna Convention on the Law of Treaties: Travaux Préparatoires (1978) 220, para 3.Google Scholar

32 Feldman (n 27) para 62.

33 Mondev (n 28) para 58.

34 SGS Société Générale de Surveillance SA v Republic of the Philippines, ICSID Case No ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction, 29 01 2004, para 167.Google Scholar On the application of the temporal rule to continuing acts in BIT disputes, see generally Stanimir, Alexandrov, ‘The “baby boom” of treaty-based arbitrations and the jurisdiction of ICSID tribunals: shareholders as “investors” and jurisdiction ratione temporis’, (2005) 4 The Law and Practice of International Courts and Tribunals 19.Google Scholar

35 The second paragraph of Art 15 of the ILC's Articles on State Responsibility says that a State's breach of an international obligation through a composite act continues from the first of the acts and ‘lasts for as long as these actions or omissions are repeated and remain not in conformity with the international obligation’.

36 ILC (n 24) 90.Google Scholar

37 See Eric, Wyler, ‘Quelques reflexions sur la realization dans le temps du fait internationalement illicite’, 896Google Scholar: ‘Autrement dit, seules doivent entrer en ligne de compte les decisions rendues pendant que l'obligation internationale était en vigeur’; and Joost, Pauwelyn, ‘The concept of a “continuing violation” of an international obligation: selected problems’ (1995) 66 BYIL 415, 447Google Scholar: ‘if the court took into account acts prior to the date of entry into force of the obligation and found that a practice has been established, it would automatically act contrary to the principle of non-retroactivity since the breach would then start on a date at which the obligation was not yet in force …’ (emphasis in original).

38 Crawford (n 3) 144.Google Scholar

39 ibid.

40 ILC (n 24) 87, emphasis added.Google Scholar

41 ibid (n 24) 94, emphasis added. The ILC went on to say: ‘To revert to the example of an obligation which prohibits the State from engaging in a discriminatory practice with regard to the admission of foreign nationals to certain professions, it seems evident that if, during the period for which the obligation was in force, foreigners have been denied admission to those professions in only one or two cases, there can be no question of a “discriminatory practice” and, consequently, no breach of the obligation. This holds good even if a great many such cases occurred before the entry into force of the obligation for the State …’

42 See eg Pauwelyn (n 37) 426.Google Scholar

43 eg in Roy and Alice Fletcher v UK, Application No 3034/67, Decision of 19 12 1967Google Scholar, reprinted in Council of Europe, Collection of Decisions of the European Commission of Human Rights, Strasbourg, No 25 (05 1968) 76, 86Google Scholar, the Commission said: ‘insofar as the complaint relates to the period before 14th 01 1966Google Scholar, under the terms of the United Kingdom's declaration of that date recognising the Commission's competence to accept petitions under Article 25 of the Convention, the United Kingdom only recognizes the Commission's competence to accept petitions so far as they relate to acts or decisions, facts or events occurring or arising after 13th January, 1966; whereas it follows that an examination of this part of the Application is outside the competence of the Commission ratione temporis.’ See also European Commission decision in Application 342/57, Yearbook of the European Convention on Human Rights, 2 (1958–9), 455.Google Scholar

44 See eg Yagci and Sargin v Turkey (1995) 20 EHRR 505.Google ScholarIn that case, the applicants had already been in custody for two years and two months before the Convention came into force with regard to Turkey on 22 01 1990. The court said at para 525Google Scholar: ‘when determining whether the applicants’ continued detention after 12 Jan 1990 was justified under Article 5(3) of the Convention, it must take into account the fact that by that date the applicants, having been placed in detention on 16 November 1987, had already been in custody for two years and two months [emphasis added]’. See also: Kreps v Poland [2001] ECHR 34097/96, para 36Google Scholar; Kalashnikov v Russia [2002] ECHR 47095/99, para 124 and para 133Google Scholar; Mitap v Turkey (1996) 22 EHRR 209, para 31Google Scholar: ‘the Court can only consider the period of nearly six years that elapsed after 22 January 1990, the date on which the declaration whereby Turkey recognised the Court's compulsory jurisdiction was deposited. Nevertheless, it must take into account the fact that by the critical date the proceedings had already lasted nine years’; and Trzaska v Poland [2000] ECHR 25792/94, para 54.Google Scholar

45 Mitap v Turkey (n 45) paras 36–7: ‘The Court notes that the proceedings in the Military Court of Cassation, to which the case was automatically referred on 19 July 1989, and then in the Court of Cassation, ended on 28 December 1995; they thus lasted more than six years. It acknowledges that the case was complex, but has not been informed of any circumstances capable of justifying such a lengthy period, especially as account must be taken of the fact that the proceedings at first instance lasted approximately eight years and six months. In conclusion, the length of the criminal proceedings in issue contravened Article 6 para 1.’

46 Yagci v Turkey (n 45) para 49.

47 See also Kudla v Poland, Application No 30210/96, 26 10 2000, where the Court recognized at para 103 that ‘as Poland's declaration recognising the right of individual petition … took effect on 1 May 1993’ but went on to find at para 114Google Scholar: ‘given that before being redetained on 4 October 1993 the applicant had already spent nearly a year in detention. … only very compelling reasons would persuade the Court that his further detention for two years and four months was justified under Article 5(3).’

48 Motsnik v Estonia [2003] ECHR 50533/99 para 39Google Scholar: ‘As regards the conduct of the authorities, the Court notes that the preliminary investigation of the criminal case, which had been initiated on 1 June 1994, was complete on 13 January 1995. On 18 January 1995 the case was sent to the City Court where it was stalled for nearly two years–it was only on 7 January 1997 that the applicant was committed for trial. However, as stated above, by reason of its competence ratione temporis the Court can consider only the period after 16 April 1996, while the preceding stage can be taken into account as a background. Following a lack of judicial activity for nearly nine months, counting from the material date …’

49 Crawford (n 3) 144.Google Scholar

50 Agrotexim v Greece, Application No 1480/89, [1995] ECHR 42 (24 10 1995).Google Scholar

51 ibid (n 51) para 58.

52 Crawford (n 3) 144.Google Scholar

53 Mondev (n 28) para 69: ‘On the other hand, it does not follow that events prior to the entry into force of NAFTA may not be relevant to the question whether a NAFTA Party is in breach of its Chapter 11 obligations by conduct of that Party after NAFTA's entry into force.’

54 Generation Ukraine, Inc v Ukraine (n 28) para 11.4.

55 ibid (n 29) para 18.6: ‘It is important … to understand the evolution of the Claimant's activities in Ukraine. The following comments on the Protocol of Intentions and List of Potential Sites are thus significant by way of background.’ This background included events occurring before the treaty came into force on 16 November 1996. The Tribunal went on to say at para 18.9 that the documents identified in the review ‘do not purport to generate legally enforceable rights and obligations, and could not constitute an investment for the purposes of Article I(1)(a) of the BIT, and therefore could not give rise to an expropriation claim before an ICSID Tribunal’.

56 Tecmed v Mexico (n 14) para 57.

57 ibid (n 14) para 68.

58 ibid (n 14) at n 26, p 19.

59 ibid (n 14) para 172.

60 ibid (n 14) para 62: ‘The common thread weaving together each act or omission into a single conduct attributable to the Respondent is not a subjective element or intent, but a converging action towards the same result … [emphasis added]’.

61 ibid (n 14) para 68.