Environmental Engineering Reference
In-Depth Information
3.7.6.1 Requirement as Part of Art. 25(1) of the ICSID Convention
Based on this decision, it would be part of Art. 25(1) of the ICSID Convention and
the jurisdiction of the ICSID tribunals. The
Phoenix Action Ltd. v The Czech
Republic
ICSID tribunal pointed out that the ICSID convention does not protect
investments which violate host state laws.
603
The laws of the host, which were in
force at the moment of the establishment of the investment, are relevant.
604
However, the tribunal mentions that:
[T]he State is not at liberty to modify the scope of its obligations under the international
treaties on the protection of foreign investments, by simply modifying its legislation or the
scope of what it qualifies as an investment that complies with its own laws.
605
There are also other tribunals which seem to support the approach that this is part
of jurisdiction,
606
because
'
(a) failure to comply with the national law to which a
treaty refers will have an international legal effect.
607
One ICSID tribunal denied
'
608
However, the tribunal restricted its approach. If a violation of law takes place after
the investment was initiated and the process of investing was according to the law,
this does not lead to a denial of ICSID jurisdiction.
609
To violate national law, there
must be certain prerequisites according to the ICSID tribunal.
610
Another example
is a flight terminal project in the Philippines. After a lot of complaints by local
enterprises, the government became convinced that the contract with Fraport
violated public policy.
611
In 2003, the Philippine Supreme Court concluded that
the contract did violate the public policy and therefore was nugatory
ex tunc
.
612
The
ICSID tribunal came to the decision that a project which violates national law is not
an investment according to the respective BIT.
613
jurisdiction because of a violation of the criterion
in accordance with the law.
'
'
3.7.6.2 Requirement as an Issue of the Merits
The question of whether the requirement of
'
in accordance with the laws of the host
state
'
is an issue of jurisdiction is highly disputed. The ICSID Convention is neutral
603
ICSID [2009] ARB/06/5—Award, 39 para 100.
604
ICSID [2009] ARB/06/5—Award, 40-41 para 103.
605
ICSID [2009] ARB/06/5—Award, 40-41 para 103.
606
ICSID [2010] ARB/07/20—Award, 39 para 121; Concerning violation of the BIT, in: ICSID
[2007] ARB/03/25—Award, 141 para 306 and 153 para 323.
607
ICSID [2007] ARB/03/25—Award, 187 para 394.
608
ICSID [2007] ARB/03/25—Award, 188-190 paras 396-404.
609
ICSID [2007] ARB/03/25—Award, 164-165 para 345.
610
ICSID [2007] ARB/03/25—Award, 185 para 387 and 188-189 para 396.
611
Borris and Hennecke (
2008
), 49 (51).
612
Borris and Hennecke (
2008
), 49 (51).
613
Cabrol (
2008
), 796 (798); Borris and Hennecke (
2008
), 49 (51).
