Environmental Engineering Reference
In-Depth Information
3.7.3.2
ICSID Tribunals
View on Guarantees
'
Since there is no real definition of risk, it is necessary to examine ICSID case law
concerning the question of PPA, subsidies or feed-in tariffs. In all cases, there is no
case law. Several ICSID cases encompassed PPAs; however, the PPA was never
part of the discussion.
518
As mentioned above, one tribunal assessed a PPA in more
detail, but it did not see any problems to categorize it as an investment. Thus, an
investor and Morocco/ONE should also include a section in a contract
(e.g. arbitration agreement) that the PPA is an investment or at least does not
interfere with any definition of investment. By doing this, ICSID tribunals might
not view them as infringing the requirement risk.
There are cases which deal with questions of “guarantees” of payment. Due to
the close connection, these decisions might deliver a better understanding of the
tribunals
views. First of all, one tribunal mentioned that guarantee payments do not
exclude risk if they
'
) (have) been negotiated competitively and when
unforeseen events may occur.
(
...
'
519
Concerning a payment guarantee, another tribu-
nal pointed out that there is no guarantee (but risk) if the price paid by the host state
covers the actual costs of the investor
'
s obligation of performance.
520
Furthermore,
an ICSID tribunal decided that securing first demand bank guarantees is not a risk
itself, but the danger of an unlawful call on these guarantees is a risk for the investor.
521
Secondly, in the case of
MHS v. Malaysia
, the contract between the state and the
private company contained a
'
no find - no pay
clause, making MHS
s search and
'
'
'
salvage operation only profitable if it was successful.
522
A
no find - no pay
'
'
agreement is:
(
) [A] well established practice in marine salvage and, meant that all the costs of the,
search and salvage operation (and its attendant risks) would be borne exclusively by (the
investor). It also meant that the (investor) would recover its expenditure and make a profit
only if both the salvage operation and the subsequent sale of the recovered items were
successful.
523
...
contract was not a
risk in the qualitative sense and was a mere commercial risk.
524
The tribunal did not
mention what this exactly means. The decision was annulled later on.
525
Thus, the
The tribunal mentioned in its award that the
'
no find - no pay
'
518
ICSID [2001], ARB/98/8, in: OECD (
2006
) Investor-to-state dispute settlement in infrastruc-
ture projects, 28-29; ICSID [2000], ARB/01/4, in: OECD (
2006
) Investor-to-state dispute settle-
ment in infrastructure projects, 30-31; The Dabhol Power Project, in: OECD (
2006
) Investor-to-
state dispute settlement in infrastructure projects, 31-33.
519
ICSID [2009] ARB/07/12, 26 para 29.
520
ICSID [2009] ARB/07/12, 28 para 86b).
521
ICSID [2005] ARB/03/29, 36-37 paras 135-136.
522
Andreeva (
2008
), 161 (163).
523
ICSID [2007], ARB/05/10—Award, 2 para 10.
524
ICSID [2007], ARB/05/10—Award, 38-39 para 112.
525
ICSID [2009] ARB/05/10—Annulment, 35—36 paras 80-82.
