ARB/03/3, Decision on jurisdiction, 22 April 2005, para. “Only the State in the exercise of… puissance publique and not as a contracting party, may breach the obligations assumed under the BIT.” (ICSID Case No. ARB/03/29, Decision on jurisdiction, 14 November 2005, para. When an investor invokes a breach of a BIT by the host State… the alleged treaty violation is by definition an act of ‘puissance publique’.” (ICSID Case No. “the test of ‘ puissance publique’ would be relevant only if Bayindir was relying upon a contractual breach… In the present case, Bayindir… pursues exclusively Treaty Claims. 4 of the ILC’s Articles on State responsibility) Notably, the tribunal in Bayindir Insaat Turizm Ticaret ve Sanayi A.Ş. In any event, international law does not distinguish for the purposes of State responsibility whether the State acted as holder of jure imperii or not. 246) On the facts, however, it seems strange to qualify the conduct of investigations and the establishment of a special Commission as ordinary commercial acts.
Thus, the BIVAC tribunal held that, in refusing to pay, Paraguay acted as mere contracting party. “a State may perform a contract badly, but this will not result in a breach of treaty provisions, unless it be proved that the state… has gone beyond its role as a mere party to the contract, and has exercised the specific functions of a sovereign.” (ICSID Case No. ARB/02/6, Decision on jurisdiction, 29 January 2004, para. ( SGS Société Générale de Surveillance S.A. enacting a law or decree attempting to expropriate or annul the debt) rather than as mere contracting party. Previous tribunals dealing with the question of whether breach of contract may amount to expropriation or breach of the FET standard have applied a test of puissance publique, that is, they have sought to satisfy themselves that the State, in breaching the contract, acted in sovereign capacity (by e.g. The test of puissance publique is irrelevant Can he succeed on a claim of expropriation or breach of the FET standard that is a treaty claim? Moreover, it turns out that under the dogmatic view, a State may escape international responsibility by merely refusing to pay under a contract instead of taking covert measures which fall squarely into the definition of expropriation.Īt the outset, we make the clarification that we are dealing here with the scenario in which the underlying contract qualifies as protected investment under the applicable BIT, the BIT does not contain an umbrella clause and the contract contains a forum selection clause referring all disputes to the host State’s courts. However, we find it more intellectually challenging to argue here for the investor who is faced with such an “ additional hurdle”. The authors do not deny the traditional view of the contract-treaty divide. Can the investor succeed on a claim for expropriation or breach of the FET standard based on the host State’s refusal to pay? “a substantial breach of a contract could, as such, give rise a breach of … even arise, the continued unhindered availability of a contractually agreed forum… would be a significant factor imposing an additional hurdle for a claimant to overcome.” (para. 95 etc.) In this regard, the BIVAC tribunal noted that it does not exclude the possibility that: ARB/97/3, Decision on annulment, 3 July 2002, para. 4 ILC’s Articles on State responsibility Compañía de Aguas del Aconquija S.A. Something further is required… such as a denial of justice by the courts of the State…” (Comm. Under the dogmatic conception of the contract-treaty divide, “the breach by a State of a contract does not as such entail a breach of international law. The traditional conception of the contract-treaty divide ARB/07/9) dismissed BIVAC’s claim based on violation of the fair and equitable standard by reasoning that the dispute relates to mere refusal to pay invoices under a pre-shipment inspection contract and that, in doing so, Paraguay has not acted “in a manner that is qualitatively different from an ordinary contracting party.” The tribunal thus upheld the traditional distinction between mere breach of contract and treaty breach stating that “omething more than mere breach of contract is needed.” (para. In the recent Further decision on objections to jurisdiction dated Octothe tribunal in Bureau Veritas, Inspection, Valuation, Assessment and Control, BIVAC B.V.
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