Abstract
This chapter addresses the question of what happens to legal protections of foreign investors under a BIT when an armed conflict leads to a situation of State succession. It first examines the actual practice of States concerning the continuation of BITs. Such continuation depends on the express or tacit agreement of both States concerned, i.e. the successor State and the “other State Party” to the BIT which was signed by the predecessor State. The chapter also examines the question of what happens to BITs when the States concerned have not agreed on any such continuation. I will argue that BITs do not automatically continue to be in force as of the date of succession unless both States concerned have agreed to such a continuation.
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Notes
- 1.
The expression “State succession” is defined in the 1978 and 1983 Vienna Conventions as “the replacement of one State by another in the responsibility for the international relations of territory”. Article 2(1)b), Vienna Convention on Succession of States in Respect of Treaties, signed on 23 August 1978 and entered into force on 6 November 1996, 1946 UNTS 3, in: 17 I.L.M., 1978, 1488; Article 2(1)a) of the 1983 Vienna Convention on Succession of States in Respect of State Properties, Archives and Debts, in: (1983) 22 ILM 306. The same definition can also be found at Article 2 of the Draft Articles on Nationality of Natural Persons in Relation to the Succession of States, adopted by the ILC on second reading in 1999, ILC Report, U.N. Doc. A/54/10, 1999, chp. IV, paras 44-45, in: (1997) II Yearbook ILC 13.
- 2.
Dumberry (2018).
- 3.
Such changes may thus affect the identity of the respondent State in the proceedings. For example, in the context of the dissolution of a State, the respondent will cease to exist during the proceedings. An event of succession may also affect the home State of the claimant investor and result in changes of nationality during the proceedings. My book examines the approach which tribunals should adopt whenever they are faced with any such dramatic changes.
- 4.
Tams (2016), p. 315.
- 5.
- 6.
O’Connell (1967).
- 7.
It should be added that if Catalonia becomes an independent State through the process of “secession” (or “separation”), Spain will continue to exist and will therefore continue to be bound by the BITs it signed before losing part of its territory.
- 8.
Dumberry (2018).
- 9.
On 25 November 1992, the Czechoslovak Federal Assembly voted the Constitutional Act no. 542/1992 (which came into force on 8 December 1992) indicating that the Federation would cease to exist on 31 December 1992.
- 10.
See United Nations Treaty Collection, Chapter XXIII, Law of Treaties.
- 11.
- 12.
See, analysis of Tams (2016), p. 315.
- 13.
See, UNCTAD: http://investmentpolicyhub.unctad.org/IIA/CountryBits/187#iiaInnerMenu. Serbia-Montenegro had also signed 6 BITs which were however not in force at the date of succession.
- 14.
Article 3 of the Declaration of Independence. See also: Letter dated 10 October 2006, received by the UN Secretary-General on 23 October 2006.
- 15.
EU List of BIAs referred in Article 4(1) of Regulation (EU) No 1219/2012 [hereinafter “EU”, “List of BITs”]. Under Article 2 of Regulation (EU) No 1219/2012 adopted by the European Parliament and the Council on 12 December 2012, the Member States had the obligations to notify the Commission “of all bilateral investment agreements with third countries [...] that they either wish to maintain in force or permit to enter into force under this Chapter”.
- 16.
Albania, Belarus, Bosnia-Herzegovina, Bulgaria, China, Croatia, South Korea, Egypt, Ghana, Guinea, Hungary, Kuwait, Libya, Nigeria, Russia, Slovenia, Sweden, Ukraine, and Zimbabwe.
- 17.
Belgium-Luxembourg, Finland, Turkey, and North Macedonia.
- 18.
Germany, Austria, Cyprus, Spain, France, Greece, Israel, Lithuania, Netherlands, Poland, Czech Republic, Romania, Slovakia, and Switzerland. It should be added that the BIT signed with India in 2003 is not in force with Montenegro (but it is in force with Serbia since 2009). UNCTAD nevertheless lists this instrument amongst Montenegro’s BITs.
- 19.
One reliable source of information is the EU website mentioned above listing the names of the countries with which they consider having a treaty relationship regarding investment protection.
- 20.
See, exchanges of letters between Montenegro and Cyprus, the Netherlands, France, Germany, Switzerland, and Spain.
- 21.
- 22.
Kosovo’s Declaration of Independence, 17 February 2008, available at http://www.assembly-kosova.org/?cid=2,128,1635. See para. 9 indicating that the democratically-elected representatives of the people of Kosovo have: [U]ndertake[n] the international obligations of Kosovo, including […] treaty and other obligations of the former Socialist Federal Republic of Yugoslavia to which we are bound as a former constituent part, including the Vienna conventions on diplomatic and consular relations’.
- 23.
Such exchanges of notes were made with the Czech Republic, Germany, and France. Interestingly, the same type of exchange of letters was done with the United Kingdom, but the list of treaties does not include the 2002 UK-FRY BIT. This is a rather unique case where the parties have expressly agreed on the non-continuation of a BIT. It should be added that since its declaration of independence, Kosovo has signed ten BITs with other States.
- 24.
World Wide Minerals Ltd. Mr. Paul A. Carroll, QC v Kazakhstan, UNCITRAL, Award, 19 October 2015.
- 25.
Disclaimer: the present author acted as counsel for the respondent in this case.
- 26.
Declaration of Alma Ata, 21 December 1991, UN Doc. A/46/60, in (1992) 31 ILM 147.
- 27.
Spain, Ministerio de Economía, Industria y Competitividad, Secretaría De Estado De Comercio, Acuerdos De Promocion Y Proteccion Reciproca De Inversiones, available at: http://www.comercio.es/es-ES/inversiones-exteriores/acuerdos-internacionales/acuerdos-promocion-proteccion-reciproca-inversiones-appris/Paginas/lista-appri-vigor.aspx.
- 28.
Id, footnotes attached to each of the 7 BITs reads as follows: “De acuerdo con la Declaración de Alma-Ata de diciembre de 1991, los Estados sucesores de la URSS, que tras la extinción de la URSS se integraron en la Comunidad de Estados Independientes (CEI), han asumido el cumplimiento de las obligaciones internacionales derivadas de los tratados y acuerdos concluidos por la antigua Unión Soviética. En consecuencia, a excepción de Kazajstán, Ucrania, Uzbekistán y Moldavia, con los que después de 1991 España ha firmado nuevos APPRI, el APPRI con la URSS, en vigor desde el 28-11-1991, continua siendo de aplicación en Armenia, Azerbaiján, Bielorrusia, Georgia, Kirguizistán, Rusia, Tayikistán y Turkmenistán”. (translation by the present author: “According to the Declaration of Alma-Ata in December 1991, the successor States of the USSR, which after the Soviet Union had been dissolved into the Commonwealth of Independent States (CIS), have assumed compliance with international obligations arising from Treaties and agreements concluded by the former Soviet Union. As a result, with the exception of Kazakhstan, Ukraine, Uzbekistan and Moldova, with which, after 1991, Spain has signed new [BITs], [BITs] with the USSR, in force since 28-11-1991, continues to apply in Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Russia, Tajikistan and Turkmenistan”).
- 29.
The webpage of the Ministry of Foreign Affairs of the Republic of Armenia concerning the bilateral relations between Spain and Armenia refers to 7 treaties binding between the two States, but not to any agreement dealing with investment. See, document available at: http://www.mfa.am/en/country-by-country/es/. The webpage of the Ministry of Foreign Affairs of the Republic of Azerbaijan concerning the bilateral relations between Spain and Azerbaijan (available at: http://www.mfa.gov.az/files/file/Azerbaijan%20-%20Spain.pdf) refers to “2 documents” being signed by the two States, without indicating what these documents are. A similar webpage from the Ministry of Foreign Affairs of the Republic of Tajikistan (available at: http://mfa.tj/?l=en&cat=92&art=189) also refers to a Memorandum of Understanding signed between the two States, but is silent regarding any investment agreement.
- 30.
Exchange of Notes between the Government of the Kingdom of the Netherlands of the Government of the Republic of Bosnia and Herzegovina on bilateral treaty relations, signed on 21 September 1995 and 29 February 1996, entered into force on 29 February 1996, available at: https://verdragenbank.overheid.nl/en/Verdrag/Details/011803.
- 31.
On this question, see, Di Stefano (2015), p. 871, indicating that “l’acquiescement ‘passif’ peut aussi résulter de l’inaction prolongée, du silence, de l’absence de protestations ou de réactions d’un Etat vis-à-vis des positions ou prétentions manifestées par l’autre Etat”. See also: Kolliopoulos (2015), pp. 331–332.
- 32.
- 33.
Dumberry (2015b).
- 34.
The provision further indicates that there are two circumstances under which the principle of continuity will apply: when both the Newly Independent State and the “other State party” have expressly agreed that the “original treaty” continues to be force after the independence, or when both States “by reason of their conduct [...] are to be considered” as having agreed to such a continuation.
- 35.
While this provision uses the term “separation”, it is important to note that it applies to two different cases of State succession: “secession” and “dissolution” of States.
- 36.
This rule of continuity bears two exceptions. Firstly, when the implicated parties have specifically agreed upon the application of the tabula rasa rule. The second exception is when the automatic application of the treaty to the successor State would be “incompatible with the object and purpose of the treaty or would radically change the conditions for its operation”.
- 37.
Dumberry (2015b).
- 38.
ILC (1972), p. 297.
- 39.
Craven (2007), pp. 131–132.
- 40.
ILC (1972), p. 227.
- 41.
ILC (1972), p. 250.
- 42.
ILC (1971), pp. 145–146.
- 43.
ILC (1971), p. 146, para. 3.
- 44.
ILC (1974), p. 265.
- 45.
United Nations (1979), pp. 53–73, 107–114.
- 46.
ILC Report (1971), p. 146, para. 2.
- 47.
ILC Report (1974), p. 212 (emphasis in the original). See also, at 237.
- 48.
ILC Report (1974), p. 239 (emphasis added).
- 49.
- 50.
- 51.
Meriboute (1984), p. 79.
- 52.
ILC Report (1974), p. 237.
- 53.
ILC Report (1974), p. 237.
- 54.
ILC Report (1974), p. 238 (emphasis in the original).
- 55.
- 56.
ILC Report (1974), p. 239.
- 57.
Di Stefano (2015); Stern (1996), pp. 315–316; Hafner and Novak (2012), p. 414; Kolliopoulos (2015), pp. 301–302, 307et seq.; Genest (2014), pp. 9–12; Shaw (2008), p. 967; Degan (1996), p. 226; Pereira (1969), p. 149; Udokang (1972), p. 501; Zemanek (1965), p. 238; Cahier (1984), p. 72; Meriboute (1984), p. 74; Yasseen (1978), p. 108; Dupont (2009), p. 23.
- 58.
- 59.
- 60.
Mikulka (2015), pp. 1204, 1206.
- 61.
- 62.
- 63.
ILA (2002).
- 64.
Eisemann (2000), p. 53.
- 65.
- 66.
Klabbers et al. (1999), p. 116.
- 67.
Dumberry (2015a), pp. 74–96.
- 68.
Sanum Investments Limited v Laos, UNCITRAL, PCA Case No 2013-13, Award on Jurisdiction (13 December 2013).
- 69.
See: Mr. Franz Sedelmayer v Russian Federation, SCC, Award (7 July 1998), para. 17; RosInvestCo UK Ltd. v Russian Federation, SCC Case No. V079/2005, Award on Jurisdiction (1 October 2007), paras 31, 37, 42; Vladimir Berschader and Moïse Berschander v Russian Federation, SCC Case No. 080/2004, Award (21 April 2006), paras 151et seq., 161.
- 70.
Mytilineos Holdings SA v State Union of Serbia & Montenegro and Republic of Serbia, UNCITRAL, Partial Award on Jurisdiction (8 Sept. 2006), paras 7, 158.
- 71.
See: Ronald S. Lauder v Czech Republic, UNCITRAL, Final Award (3 September 2001), paras 2, 10; Frontier Petroleum Services Ltd. v Czech Republic, UNCITRAL, Final Award (12 November 2010), para. 3; InterTrade Holding GmbH v Czech Republic, UNCITRAL, PCA Case No. 2009-12, Final Award (29 May 2012), para. 5; Peter Franz Vocklinghaus v Czech Republic, UNCITRAL, Award (26 June 2009), para. 6; CME Czech Republic B.V. v Czech Republic, UNCITRAL, Partial Award (13 Sept. 2001), para. 3, and ibid, Final Award (14 March 2003), para. 3.
- 72.
See Eastern Sugar B.V. (Netherlands) v Czech Republic, SCC Case No. 088/2004, Partial Award (27 March 2007), paras 97, 141et seq., 154, 5; Binder v Czech Republic, UNCITRAL, Award on Jurisdiction (6 June 2007), paras 1, 11-12, 59-60; Eureko B.V. v Slovak Republic, UNCITRAL, PCA Case No. 2008-13, Award on Jurisdiction, Arbitrability and Suspension (26 October 2010), paras 9, 48 (This name of the case was later changed to: Achmea B.V. v Slovak Republic, UNCITRAL, PCA Case No. 2008-13, see, Final Award (7 December 2012), paras 82, 154et seq., Alps Finance and Trade AG v Slovak Republic, UNCITRAL, Award (5 March 2011), para. 1; HICEE B.V. v Slovak Republic, UNCITRAL, PCA Case No. 2009-11, Partial Award (23 May 2011), para. 3, fn 2; Jan Oostergetel and Theodora Laurentius v Slovak Republic, UNCITRAL, Decision on Jurisdiction (30 April 2010), paras 41, 65et seq., 98, 56; William Nagel v Czech Republic, SCC Case No. 049/2002, Award (9 September 2003), para. 266; European Media Ventures SA vCzech Republic, UNCITRAL, Award on Jurisdiction (15 May 2007), para. 1.
- 73.
Achmea B.V. v Slovak Republic, UNCITRAL, PCA Case No. 2008-13 (Number 2), Award on Jurisdiction and Admissibility (20 May 2014), para. 1, fn 1; Invesmart v Czech Republic, UNCITRAL, Award (26 June 2009) [8]; Austrian Airlines v Slovak Republic, UNCITRAL, Final Award (9 Oct. 2009) [8]; ECE Projektmanagement v Czech Republic, UNCITRAL, PCA Case No. 2010-5, Award (19 September 2013), para. 1.17.
- 74.
Saluka Investments B.V. v Czech Republic, UNCITRAL, Partial Award (17 March 2006) [30-31]. See also, Id., Decision on Jurisdiction over the Czech Republic’s Counterclaim (7 May 2004) [2].
- 75.
European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL, Award on Jurisdiction (22 October 2012), para. 40.
- 76.
European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL, Award on Jurisdiction (22 October 2012), para. 79.
- 77.
European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL, Award on Jurisdiction (22 October 2012), para. 79 (emphasis added).
- 78.
European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL, Award on Jurisdiction (22 October 2012), para. 81.
- 79.
European American Investment Bank AG (EURAM) v Slovak Republic, UNCITRAL, Award on Jurisdiction (22 October 2012), para. 79.
- 80.
Article 6 of the 1978 Vienna Convention indicates that its provisions “apply only to the effects of a succession of States occurring in conformity with international law and, in particular, the principles of international law embodied in the Charter of the United Nations”.
- 81.
Gagglioli (2015), pp. 193–195.
- 82.
Gagglioli (2015), p. 219.
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Dumberry, P. (2019). An Overview of State Succession Issues Arising as a cResult of an Armed Conflict. In: Fach Gómez, K., Gourgourinis, A., Titi, C. (eds) International Investment Law and the Law of Armed Conflict. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-10746-8_5
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