The Power of Tribunals to Enjoin Criminal Proceedings: A Widening Power or Converging High Bar?

The Power of Tribunals to Enjoin Criminal Proceedings: A Widening Power or Converging High Bar? I. INTRODUCTION Central to the furore over the Trans-Pacific Partnership and calls for a global investment court are concerns that the investor–State dispute settlement (ISDS) system has certain legitimacy deficits.5 Sceptics have questioned the right of private investors to compel a State to modify its conduct and policy through the orders of privately constituted tribunals. This appears to contradict a State’s police powers and right to regulate under general international law.6 Situated in this context is a trilogy of recent decisions where tribunals have been asked to issue orders enjoining a respondent State from continuing criminal proceedings or investigations against a claimant or its related parties. At first blush, such orders appear to abrogate State sovereignty in a domain traditionally thought to be impenetrable.7 In Hydro, Albania had accused several of the Claimants of money laundering and tax evasion and commenced criminal proceedings against two of them. Albania also initiated extradition proceedings for these two individuals to be brought from the UK to Albania. The Claimants successfully applied to enjoin Albania from continuing both the local criminal proceedings and the extradition proceedings. In Teinver, criminal investigations were commenced by Argentina against not only the Claimants but also a court-appointed receiver in Spain, the claim funder, and the Claimants’ lawyers. Here, the injunction was refused. In Italba, the Tribunal refused to injunct Uruguay from continuing investigations against two witnesses accused of falsifying documents that were adduced as evidence in the arbitration. Requests for tribunals to enjoin States are not exactly novel. However, given the exceptional factual context in which such relief arises, there appears to be a surprising increase in such cases. About eight such cases have been reported in the last decade or so. More interestingly, the arguments raised in these cases have been progressively refined; while the earlier cases focus on the broad question of whether the applicant would meet the standard requirements for interim measures under the ICSID Convention, the recent cases focus specifically on what rights, if any, the applicant has and seeks to protect, and apply a fact-sensitive approach.8 As a result, a faint contour of applicable principles has emerged. This note discusses the Hydro, Teinver and Italba decisions against the backdrop of earlier cases and analyses how tribunals balance the competing interests of investors and States. II. APPLICATIONS TO ENJOIN STATES9 For some time now, tribunals under the International Centre for Settlement of Investment Disputes (ICSID) have faced the vexed question of whether to enjoin a State from initiating or continuing criminal proceedings against a claimant investor and related parties. Factually, these cases tend to have a similar thread: the State has argued, normally as its substantive defence, that the investment has been tainted by some form of illegality. In relation to the alleged illegality, that State would usually have commenced investigations or criminal proceedings against the claimant and some of its representatives or related parties. In some cases, these individuals could be potential witnesses. Such applications bring together a volatile mix of competing concerns. From a claimant’s perspective, such an investigation or prosecution would almost certainly be perceived as politically and tactically motivated. There is also concern about how the investigations will affect the arbitration: will witnesses be detained or intimidated; will crucial evidence obtained in the course of investigations be sequestered by the State’s authorities? On the other hand, assuming some wrong has been perpetrated, it is surely within the State’s prerogative to take action. This is axiomatic under international law; a State has prescriptive and enforcement jurisdiction for its own domain.10 As a corollary, it is a general principle that no outside party can infringe that State’s right to prescribe and enforce its own laws.11 A. The Legal Framework and Early Jurisprudence Leaving these controversies aside for a moment, under the ICSID Convention, applications for relief from impending or ongoing criminal proceedings occur within the broader context of provisional measures.12 So far as relevant, Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules13 provide: Article 47, ICSID Convention Except as the parties otherwise agree, the Tribunal may, if it considers that the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights of either party. (emphasis added) Rule 39, ICSID Rules—Provisional Measures (1) At any time after the institution of the proceeding, a party may request that provisional measures for the preservation of its rights be recommended by the Tribunal. The request shall specify the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures. (emphasis added) As is apparent, these provisions are generic rules dealing with interim measures14 and not rules dealing with the unique situation of applications to enjoin States from criminal action. Although tribunals have used different expressions and, at times, different tests, there appears to be a core set of factors that tribunals will look at in determining an interim measures application. This includes: (i) whether the applicant has the right it seeks to protect;15 (ii) whether the relief sought is urgent16 and cannot wait until the merits of the dispute are disposed of17 and (ii) whether the relief is necessary in the sense that not granting relief would cause irreparable harm or prejudice to the applicant.18 Interestingly, in some earlier cases, relief was determined almost exclusively on factors (ii) and (iii) (namely, urgency and necessity), without a thorough discussion of the right being protected. In City Oriente v Ecuador, the Claimants brought ICSID proceedings with respect to a new tax law passed by Ecuador on oil production.19 While ICSID proceedings were afoot, Ecuador took various steps, including criminal proceedings, to enforce the payment of taxes under this new law. The Tribunal found that such steps would ‘entail a violation of the principle that neither party may aggravate or extend the dispute or take justice into their own hands’.20 To prevent possible irreparable harm, it ordered that Ecuador refrain from ‘instituting or prosecuting…any judicial proceedings or action of any nature whatsoever against or involving City Oriente and/or its officers’.21 In Tokios Tokeles v Ukraine, the Tribunal rejected the Claimant’s request to reaffirm a prior interim measures order for Ukraine to refrain from, suspend and discontinue criminal proceedings brought against a founder and key manager of the Claimant’s local subsidiary.22 The measures were not found to be urgent or necessary, and there was insufficient evidence to establish any harm to the proceedings. In von Pezold v Zimbabwe, a rather extreme case, the President of the Tribunal gave urgent interim relief, ordering Zimbabwe to stop its law enforcement agencies from their proposed visit to the Claimant’s office to obtain documents.23 B. Defining Protected ‘Rights’: Quiborax, Lao Holdings and Churchill Mining What has really defined the discussion in this category of interim measures is the interpretation of the ‘right’ being protected. When an applicant argues that local criminal proceedings will affect the arbitration, this right could be formulated in various ways. The first decision to explore the point is Quiborax v Bolivia. Both Lao Holdings v Lao and Churchill Mining v Indonesia, which follow, help develop a rudimentary jurisprudence constante in this regard.24 In Quiborax, the Claimants sued Bolivia in relation to the State’s revocation of 11 mining concessions. Their ICSID claim was registered in 2006 but, in 2008, on the back of settlement discussions, the parties agreed to suspend the proceedings. From late 2008, during the agreed standstill, Bolivia initiated criminal proceedings against one of the Claimants, Allan Fosk, and other individuals related to the proceedings. The criminal proceedings related to alleged forgery of corporate documents (a list of shareholders, minutes and so on) that had a bearing on the shareholding of the operating company. The Tribunal granted the Claimant’s application for relief, ordering Bolivia to ‘take all appropriate measures to suspend the criminal proceedings identified as Case No 9394/08…and any other criminal proceedings directly related to the present arbitration, until this arbitration is completed’.25 The Claimant cited three rights that merited protection: the right to exclusivity of ICSID proceedings, the right to non-aggravation and the right to procedural integrity. On the first, the Tribunal found that the criminal proceedings did not threaten the right to exclusivity of ICSID proceedings.26 In strongly worded terms, it held: the exclusivity of the ICSID proceedings does not extend to criminal proceedings. Criminal proceedings deal with criminal liability and not with investment disputes, and fall by definition outside the scope of the Centre’s jurisdiction and the competence of this Tribunal. Neither the ICSID Convention nor the BIT contain any rule enjoining the State from exercising criminal jurisdiction, nor do they exempt suspected criminals from prosecution by virtue of their being investors.27 As regards the right to preservation of the status quo and non-aggravation, while the criminal proceedings did ‘exacerbate the climate of hostility’, because the Claimants had no further presence in Bolivia, there was insufficient evidence to suggest that the status quo of the dispute would be affected.28 However, the Tribunal found that the right to procedural integrity of the proceedings was affected and that relief against Bolivia was urgent and necessary. In this regard, the Tribunal found that the criminal proceedings would likely have an impact on potential witnesses. There was evidence that one of the witnesses, David Moscoso, was placed under undue pressure. He was detained by local authorities and only released upon giving a confession. Further, a judge who initially refused to put Moscoso under preventive detention was charged with malfeasance in office. The Tribunal found that even if ‘no undue pressure [was] exercised on potential witnesses, the very nature of these criminal proceedings is bound to reduce [witnesses’] willingness to cooperate in the ICSID proceedings’.29 More interestingly, the Tribunal made the observation that there was a direct relationship between the criminal proceedings and the ICSID arbitration. Indeed, because the persons being investigated would likely be involved in the arbitration, the Tribunal found that the situation ‘suggests that the underlying motivation to initiate criminal proceedings was their connection to this arbitration’.30 This view was corroborated by a 2004 internal memo by Bolivia’s inter-ministerial committee stating that Bolivia should find flaws in the Claimants’ mining concessions as a defence strategy for the ICSID arbitration.31 In Lao Holdings, the Claimant investor sued Laos in respect of alleged confiscatory taxation and other measures that it argued had expropriated its investments in the Laos gaming industry.32 Notably, Laos’ defence in the proceedings was that the investment was tainted by bribery, embezzlement and money laundering. Earlier in the proceedings, the Tribunal had ordered Laos not to take steps that would ‘alter the status quo ante or aggravate the dispute’. Laos then applied to amend the prohibition to allow it to investigate the alleged criminal activity by obtaining documents, interviewing witnesses and seeking assistance from other governments. The Tribunal rejected Laos’ application. Although part of the Tribunal’s decision was based on the fact that there was no change of circumstances warranting an amendment to its earlier procedural order, it devoted a substantial amount of the decision to discussing when a tribunal can enjoin criminal proceedings. It is not clear from the decision whether the Tribunal intended to protect the right to non-aggravation or the right to procedural integrity—they appeared to address both in the same breath.33 Nonetheless, their reasons for issuing the injunction were clear. To the Tribunal, the issue of criminal liability ‘by definition’ fell outside the scope of ICSID’s jurisdiction and the Tribunal’s competence. The ICSID Convention does not ‘exempt suspected criminals from investigation or prosecution by virtue of their being investors’.34 One exception to the general rule is when criminal investigations are being used to collect evidence for use in the arbitration.35 In the present case, the Tribunal found that the threatened criminal proceedings were to enable Laos to ‘develop evidence that will serve as part of its defence…As a consequence, there is no doubt that [the investigation] is directed at precisely the conduct in respect of which [Laos] requires evidence to defend its claim in the arbitration and support its counterclaim’.36 The Tribunal found that what was being sought ‘a month before the merits hearing, [was] an intrusive criminal investigation of potential witnesses during the period of final trial preparation’. The threatened investigation was found to have ‘[crossed] the line between the government’s general concern about corruption and [entered] the forbidden territory of using the process…to obtain an unfair advantage in the arbitration proceedings over the claimant, aggravating the inequality of arms between the parties’.37 Ultimately, the ‘strong linkage’ between the criminal proceedings and the dispute in the arbitration threatened the integrity of the latter process.38 The investigation would be ‘directed to the same people and the same facts at the same time’.39 This would be ‘disruptive’ and ‘divert at least some of the claimant’s resources from final preparation of the hearing’.40 The investigations would also have a ‘chilling effect’ on other Laotian witnesses who may be called upon to give evidence adverse to the State.41 In what appears (superficially) to be a U-turn from the grant of relief in Quiborax and Lao Holdings, the Tribunal in Churchill Mining rejected the Claimant’s plea to enjoin the State’s criminal investigations. In Churchill Mining, the Claimants purchased a stake in an Indonesian operating subsidiary in the coal production business in Kalimantan. The former owners of the subsidiary were the Ridlatama group. The Claimants sued Indonesia in relation to the revocation of coal mining licences held by that subsidiary.42 It turned out after the dispute began that the licences originally held by the Ridlatama group could have been forgeries or obtained illegally. The Tribunal rejected the plea for provisional measures, holding that the Claimants could not show that they had a right that needed to be preserved urgently. In particular, they rejected the view that the criminal investigations against the Ridlatama group and its employees aggravated the status quo sufficiently and infringed the right to exclusivity of ICSID proceedings. The Tribunal’s decision is noteworthy for its fine appreciation of the facts. Superficially, the facts appear to suggest that the criminal investigations were tactical. First, during an earlier jurisdictional hearing, the Counsel for Indonesia made explicit threats of possible criminal proceedings against the Claimant’s witnesses.43 Second, the Regent of East Kutai (in Kalimantan) launched criminal charges a few days after the Tribunal’s decision on jurisdiction.44 However, these were not sufficient to persuade the Tribunal that the State was doing anything untoward. The Tribunal found that to infringe the right to exclusivity of ICSID proceedings, it was necessary of have ‘identity of subject matter’.45 In this regard, the Tribunal noted that the investigations were against the Ridlatama group—former owners of the operating subsidiary—in relation to the possible forgery of mining licences and related documents.46 As the ‘Ridlatama companies are not parties to the present dispute, a criminal investigation into their conduct with respect to the alleged document forgery does not impinge on the exclusivity of the present proceedings’.47 No criminal proceedings had been instituted against the Claimants, their witnesses or potential witnesses.48 The Tribunal also rejected the argument that the investigations would aggravate the status quo. Even though the ‘threat or the initiation of criminal charges is not conducive to lowering the level of antagonism between the Parties’ because the investigations were against companies that were not parties to the dispute, it was difficult for the Tribunal to agree that the investigations would alter the status quo. III. HYDRO, TEINVER AND ITALBA The recent decisions of Hydro, Teinver and Italba are significant for a few reasons. First, they confirm the principles developed in Quiborax, Lao Holdings and Churchill Mining. Second, especially in Teinver, apart from the rights being invoked in the earlier cases, the Claimant creatively asserted other ‘new’ rights such as the right to have the dispute arbitrated in good faith. More significantly, in these decisions, the tribunals showed a consistent reticence to enjoin the State from taking action. Indeed, it appears that the starting point is that the State is presumed to have the right to investigate, and it is for the applicant claimant to displace that. A. Hydro v Albania In Hydro, the Claimants brought proceedings against Albania for actions taken that were said to undermine their investments, including the failure to grant previously agreed tax rebates, the launching of a tax audit and money-laundering proceedings and the seizure of bank accounts and sequestration of assets in the Claimant’s Albanian companies.49 The Claimant’s application sought to stop the State from instituting criminal proceedings in Albania as well as proceeding to extradite two of the Claimants from the UK to Albania. The Tribunal granted the relief, holding that the ongoing criminal actions would harm the procedural integrity of the arbitration. In particular, they found that if two of the Claimants (Mr Becchetti and Mr De Renzis) were extradited to Albania, there was a risk they could not participate in the proceedings. It therefore ordered Albania to suspend the criminal and extradition proceedings and, separately, that the parties must agree on how to preserve the companies’ assets that were sequestered by the State. The Tribunal, however, rejected the general plea for Albania to ‘refrain from any actions against the Claimants or their investment’ as this was too broad and premature.50 The Tribunal’s key findings include: (i) that any orders to enjoin a State from bringing criminal proceedings must be ‘absolutely necessary’51 and (ii) that the possible extradition and incarceration of two of the Claimants would ‘prevent them from effectively managing their businesses, and fully [participate] in [the] arbitration’52 and that this gave ‘grave concerns’ to the Tribunal.53 The Tribunal sought to mitigate the apparently exceptional result, explaining that their order to suspend criminal proceedings ‘merely postpones the eventuality’ of the two Claimants being prosecuted for criminal conduct.54 Here, the Tribunal made use of its flexible powers to fashion an order that merely required Albania to suspend the two proceedings as opposed to discontinuing them. In effect, this balanced the aggravation of the proceedings without transgressing State sovereignty. Further, the Tribunal directed the parties to confer on parts of the order and to agree to a framework to preserve the status quo. On 1 September 2016, following an order of a UK court to stay Albania’s extradition proceedings, the Tribunal issued a fresh order on the basis of the changed circumstances.55 The Tribunal revoked its earlier Provisions Measures Order of 3 March 2016 but continued to recommend that Albania ‘take no steps in the [UK extradition] proceedings … until the issuance of a Final Award in this proceeding’ and to ‘take all actions necessary to maintain the suspension of the extradition proceedings currently stayed, and not to take any steps to resume those proceedings, until the issuance of a Final Award in this proceeding’.56 B. Teinver v Argentina In Teinver, the Claimants commenced ICSID proceedings against Argentina in 2008, arguing that the State unlawfully expropriated their investment by nationalizing their airline business. The merits hearing took place in March 2014.57 In February 2015, after the merits hearing, Argentina’s Treasury Attorney General submitted a complaint to the Public Prosecutor against the Claimant and its funder, Burford Capital, in relation to alleged fraud. This fraud was said to arise from the assignment of the Claimant’s claim in the proceedings to its subsidiary, Air Comet, as well as a funding agreement with Burford. Since Air Comet was in insolvency proceedings in Spain, these agreements had the alleged effect of being a fraud on the creditors. Any potential compensation received by the Claimants from the arbitration would be excluded from the insolvency proceedings, and Argentina could be liable to pay over twice (to the Claimant and then the insolvent estate) under the principle of ‘he who pays badly pays twice’. The original complaint was then escalated to the Prosecutor for Economic Crimes and Money Laundering, and, in September 2015, the criminal investigations were said to be commenced against not only the Claimants but also the court-appointed receiver in Spain, funder Burford Capital and the Claimants’ lawyers. The Claimants’ main prayers for relief included: (i) an order prohibiting Argentina from its criminal investigations; (ii) an order prohibiting similar future conduct that would aggravate the dispute in relation to inflammatory press conferences made by Argentina. Although the Tribunal granted the order prohibiting future inflammatory public remarks, it generally refrained from enjoining Argentina from its investigations. In the main, since the arbitration proceedings were almost completed (only a final Award was pending), the criminal proceedings could not be said to aggravate the dispute, but this was with the exception of the alleged criminal proceedings against the Claimants’ lawyers and the court-appointed receiver. The Tribunal found that the investigations could impede the lawyers and receiver carrying on their roles and, therefore, aggravate the dispute. As Argentina denied that investigations were directed against these parties, and there was insufficient evidence from the Claimant to this effect, the Tribunal merely granted the Claimant liberty to re-apply for relief in respect of the lawyers and receiver. The Tribunal rejected the plea for relief in relation to the funder. It held that there was no evidence that the investigations affected the Claimant’s funding and, therefore, could not have aggravated the status quo. The Tribunal’s deferral of its decision in relation to the criminal proceedings against the Claimant’s legal representatives is intriguing. It suggests that barring clear evidence that the State’s actions would have a detrimental effect, a tribunal would refuse the exceptional relief sought. It could even be argued that the Tribunal was effectively signalling that unless the criminal proceedings had a clear and direct effect on the arbitration, it has no competence to rule over steps taken by the State, however distressing. C. Italba v Uruguay In this case, Italba Corporation brought a claim against Uruguay in relation to the State’s revocation of a telecommunications licence.58 Italba’s operating subsidiary successfully challenged the State’s decision before the Uruguayan administrative court but, following this, the communications regulatory body ignored this and transferred the licence to a competitor.59 In October 2016, shortly after the first procedural hearing, one of the Claimant’s witnesses, Mr Herbon, received a notice to appear before a criminal court in Montevideo. The investigation concerned documents filed by Mr Herbon and another witness, Mr Alberelli, in the ICSID arbitration that were alleged to be falsified.60 In November 2016, the Claimant applied for provisional measures under Article 47, seeking to enjoin the criminal prosecution in Uruguay of Mr Herbon and Mr Alberelli.61 Shortly after the Claimant’s application, Uruguay wrote to the Tribunal to confirm that it was ‘prepared to guarantee that its investigation into the circumstances of the apparently forged signatures and fraudulent documents, regardless of its course, will not prevent either Dr. Alberelli or Mr. Herbon from participating in the preparation or presentation of the remainder of [the] Claimant’s case’.62 In contrast to Hydro and Tenvier, the Tribunal’s reasons were pithy. In essence, the Claimant forcefully argued that the criminal prosecution would undermine the procedural integrity of the arbitral proceeding63 by obstructing its access to these witnesses and their documents64 and by chilling the assistance of other witnesses.65 Uruguay, on the other hand, argued that there was no evidence to suggest that the investigations were conducted in bad faith or had hampered the Claimant’s case.66 It adduced evidence that the Uruguayan Penal Code imposed strict obligations on all public officials to report unlawful activity that came to their attention.67 The Tribunal dismissed the application. It reiterated the general principle that a State is entitled to exercise its sovereign powers to investigate and prosecute criminal actions68 and, ultimately, found that there was no ‘substantive and compelling evidence of a serious risk that [the] Claimant’s rights will suffer irreparable harm as a result of the investigation’. In the absence of such evidence, the Tribunal was satisfied to rely on Uruguay’s undertaking that the investigations will not prevent both individuals from participating in the preparation or presentation of the case, including their attendance at the hearing.69 IV. A WIDENING POWER OR CONVERGING HIGH BAR? A set of principles appears to have emerged from the cases discussed above. The cases suggest that only in clear cases where the process of the arbitration is being challenged will a tribunal step in. Further, as shown in Hydro and Teinver, tribunals have exercised their flexible powers to fashion orders to ensure as little interference as possible. This suggests a converging high bar to success in such applications, which probably strikes an appropriate balance between procedural sanctity and State sovereignty. First, as is uncontroversial, the tribunals in the above cases have all recognized the sovereignty of States to initiate criminal proceedings. Accordingly, an order to enjoin the State could infringe State sovereignty and, therefore, was the exception. The Tribunal in Lao Holdings described it as requiring a ‘high threshold’,70 while the Tribunal in Quiborax described such a situation as ‘exceptional’.71 In Teinver, the Tribunal expressed unequivocally: ‘[The State] clearly has the sovereign right to conduct criminal investigations and it will usually require exceptional circumstances to justify the granting of provisional measures to suspend criminal proceedings by a state.’72 Second, as mentioned above, in applications to enjoin a State from criminal proceedings, tribunals require the applicant to show that (i) there is a right to be protected and/or preserved and (ii) the relief sought is necessary and urgent. Of these, the right to be protected plays a more prominent role in these types of applications. However, the immediacy of the impact that criminal proceedings may have on the arbitral proceedings weighs heavily. Contrast the situation in Quiborax and Italba. In Quiborax, there was evidence that one of the witnesses was put under detention, and a judge who initially refused to issue the detention orders was charged for malfeasance. The justifiable inference was that unless Bolivia was stopped from continuing the investigations, its actions would affect the giving of evidence by witnesses. In Italba, however, criminal investigations had just begun. The Claimant’s assertions were therefore founded on ‘the anticipated consequences of the investigation’;73 without evidence that the witnesses’ participation had actually been impeded, the Tribunal would have to rely on Uruguay’s undertaking made in good faith.74 Third, there are two rights that the tribunals have acknowledged as relevant in such applications: (i) the right to preservation of the status quo and non-aggravation of the dispute and (ii) the right to procedural integrity of the proceedings. In regard to the right to non-aggravation of the dispute and preservation of the status quo, the Quiborax Tribunal explained: The existence of the right to the preservation of the status quo and non-aggravation of the dispute is well-established at least since the case of the Electricity Company of Sofia and Bulgaria. In the same vein, the travaux préparatoires of the ICSID Convention refer to the need ‘to preserve the status quo between the parties pending [the] final decision on the merits’ and the commentary to the 1968 edition of the ICSID Arbitration Rules explained that Article 47 of the Convention ‘is based on the principle that once a dispute is submitted to arbitration the parties should not take steps that might aggravate or extend their dispute or prejudice the execution of the award’.75 Thus, ‘self-help’ acts that result in the aggravation of the dispute should not be condoned, and tribunals should seek to protect the right to have the status quo maintained. It has been said that even if the relief sought does not bear directly on the subject matter of the dispute, the right to non-aggravation is a ‘self-standing’ procedural right that deserves protection.76 In terms of the right to procedural integrity of the proceedings,77 while there is evidently some overlap with the right to non-aggravation and they do appear similar,78 the two can be distinguished. The right to procedural integrity appears to focus specifically on procedural aspects such as due process. Thus, matters that tend to fall within this rubric include the availability of witnesses, the interference with document production and so on. By contrast, the right to non-aggravation may include the right not to disturb the proceedings but, more typically, deals with acts and conduct affecting the wider dispute. These include the destruction of the subject matter, parallel proceedings, inflammatory press conferences and so on. In contrast, recent tribunals have rejected the right to exclusivity of ICSID proceedings,79 often holding that, in principle, criminal proceedings are separate matters that do not impinge directly on the arbitration. This right is said to derive from Article 26 of the ICSID Convention, which provides the State’s consent is ‘deemed consent to such arbitration to the exclusion of any other remedy’.80 Insofar as the State’s criminal investigations appear to mirror the questions central to the ICSID arbitration, these may be said to offend the right to exclusivity of proceedings. However, tribunals have taken the view that in most cases criminal investigations do not offend the exclusivity of the arbitration as they deal with a different subject matter. There is also the so-called ‘right to immunity’.81 Articles 21 and 22 of the ICSID Convention cloak the arbitrators, employees of the Secretariat, parties, counsel, witnesses and experts with immunity from legal process for ‘acts performed by them in exercise of their functions’. Again, the right has not been successfully invoked. For completeness, two other rights that were raised by the Claimant in the recent Teinver case bear mention: (i) the right to have ICSID arbitration conducted in good faith and (ii) the right to an enforceable award under Article 53 of the ICSID Convention.82 In regard to the first, it is not clear from the Teinver Award what article of the ICSID Convention or the relevant bilateral investment treaty the Claimant relied on to argue a right to have the arbitration conducted in good faith. Further, no authorities were cited in support. It is thought that there is no such free-standing right and that the matters the Claimant had complained of under this rubric could be (and, indeed, were) dealt with under the more established rights discussed above. In regard to the second right, the applicant unsuccessfully argued that the State’s initiation of criminal investigations close to the time an award was to be rendered was a means to obstruct enforcement of a potential award. Although the Tribunal rejected this without much explanation, it is thought that this right may be invoked in future cases where there is evidence to suggest that criminal investigations are commenced to impede a potentially adverse award. Fourth, and more interestingly, whether couched as part of the right to non-aggravation or the right to procedural integrity, tribunals’ deliberations often centre on whether the criminal investigations will directly affect the arbitration. In this regard, the recent cases suggest there are really two factors: (i) the timing of the investigations (and how this bears on the proceedings) and (ii) the extent to which the arbitration is affected (for example, whether the criminal investigations will impede the parties’ and witnesses’ participation in the arbitration) (see Table 1). Table 1: Summary of Key Cases Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Table 1: Summary of Key Cases Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Finally, in only one case was there a clear finding that the State’s criminal investigations were underpinned by tactical or political motivations—Quiborax—although Lao Holdings comes close. This is unsurprising since tribunals may refrain from making a finding on the conduct of the State in exercising its sovereignty over criminal proceedings. Second, it would be difficult to prove the State’s intentions in the absence of documentary proof such as the inter-ministerial memo in Quiborax. V. CONCLUSION It is significant that all of the tribunals in the above cases agree that an order to enjoin the State could infringe State sovereignty and is therefore ‘exceptional’. This was the description used by the Quiborax Tribunal.83 The Tribunal in Lao Holdings described it as requiring a ‘high threshold’.84 Similarly, in Teinver, the Tribunal unequivocally expressed: ‘[The State] clearly has the sovereign right to conduct criminal investigations and it will usually require exceptional circumstances to justify the granting of provisional measures to suspend criminal proceedings by a state.’85 In this context, the development of a coherent set of principles is helpful. The case law shows that such relief will normally only be granted where the touchstones of necessity and urgency are met and only if there is an appropriate right to be protected. This ‘right’ is typically the right to procedural integrity—where the relevant criminal proceedings or investigations would directly impede the arbitral process. In this regard, tribunals look closely at the timing of the criminal investigations and how direct its impact would be. Tribunals have helpfully used their flexible powers to balance the competing interests well. In Hydro, the Tribunal merely directed proceedings to be suspended, while in Teinver, although denying the application the Tribunal gave the ‘liberty to apply’ if the Claimants could show further evidence that the investigations against legal representatives would affect the proceedings. In the context where ISDS has faced criticisms for allowing the abrogation of sovereign police powers, the fact-sensitive approach shown by most tribunals is much welcomed. Footnotes 5 There is a vast bibliography on the topic of legitimacy and reform of investor–State dispute settlement (ISDS). See eg Susan Franck, ‘The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law through Inconsistent Decisions’ (2005) 73 Fordham L Rev 1521; Michael Waibel and others, The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International 2010); Stephan Schill, ‘Reforming Investor-State Dispute Settlement (ISDS): Conceptual Framework and Options for the Way Forward’ (E15 Initiative, International Centre for Trade and Sustainable Development, World Economic Forum, Geneva, 2015). For a recent, perhaps more sensational viewpoint, see Chris Hamby, ‘The Court That Rules the World’ (Buzzfeed, 29 August 2016) <https://www.buzzfeed.com/chrishamby/super-court?utm_term=.bl2AEBb2X#.shdZ8ve3L> accessed 10 January 2018. Trans-Pacific Partnership (signed 4 February 2016, not yet entered into force) <tpp.mfat.govt.nz> accessed 25 February 2016. 6 Methanex Corporation v United States of America, UNCITRAL, Final Award (3 August 2005); Sedco Inc v National Iranian Oil Company (1985) 9 Iran–USCTR 248, 275; Saluka Investments BV v Czech Republic, UNCITRAL, Partial Award (17 March 2006) paras 263, 306; LG&E Energy Corp, LG&E Capital Corp, and LG&E International, Inc v Argentine Republic, ICSID Case No ARB/02/1, Decision on Liability (3 October 2006) para 195; Técnicas Medioambientales Tecmed, SA v United Mexican States, ICSID Case No ARB(AF)/00/2, Award (29 May 2003) para 115. See generally Alain Pellet, ‘Police Power or the State’s Right to Regulate’ in Meg Kinnear and others (eds), Building International Investment Law: The First 50 Years of ICSID (Kluwer Law International 2015) 447. 7 States are generally recognized as being able to exercise unfettered jurisdiction over their territories. See eg Cedric Ryngaert, Jurisdiction in International Law (OUP 2015). 8 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (opened for signature 18 March 1965, entered into force 14 October 1966) (ICSID Convention). 9 The additional cases discussed in this note are as follows: Quiborax SA and Non-Metallic Minerals SA v Plurinational State of Bolivia, ICSID Case No ARB/06/2, Decision on Provisional Measures (26 February 2010) (Quiborax); City Oriente Limited v Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No ARB/06/21, Decision on Provisional Measures (19 November 2007) (City Oriente); Tokios Tokele˙s v Ukraine, ICSID Case No ARB/02/18, Order No 3 (18 January 2005) (Tokios); Bernhard von Pezold and others v Republic of Zimbabwe, ICSID Case No ARB/10/15, Directions Concerning Claimant’s Application for Provisional Measures (13 June 2012) (von Pezold); Churchill Mining PLC and Planet Mining Pty Ltd v Republic of Indonesia, ICSID Case No ARB/12/14 and 12/40, Procedural Order No 9 (Provisional Measures) (8 July 2014) (Churchill Mining); Lao Holdings NV v Lao People’s Democratic Republic, ICSID Case No ARB(AF)/12/6, Ruling on Motion to Amend the Provisional Order (30 May 2014) (Lao Holdings). 10 Ryngaert (n 7) 5–11; FA Mann, ‘The Doctrine of Jurisdiction Revisited after Twenty Years’ (1984) 186 Recueil de Cours 9; Michael Akehurst, ‘Jurisdiction in International Law’ (1972–3) 46 BYBIL 145; JH Beale, ‘The Jurisdiction of a Sovereign State’ (1923) 36 Harvard L Rev 241. 11 The very reason why there is general disdain for extraterritorial criminal sanctions. BJ George, ‘Extraterritorial Application of Penal Legislation’ (1966) 64 Michigan L Rev 609; CL Blakesley, ‘United States Jurisdiction over Extraterritorial Crime’ (1982) 73 J Crim L & Criminology 1109; Robert L Muse, ‘A Public International Law Critique of the Extraterritorial Jurisdiction of the Helms-Burton Act (Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996)’ (1996–7) 30 Geo Wash J Intl L & Econ 207, 241–2: ‘Because each nation possesses exclusive authority within its territory—but no authority within the territory of another—each nation is co-equal in rights and status with other nations, regardless of disparities in economic or military power’. 12 See Christoph Scheurer and others, The ICSID Convention: A Commentary (2nd edn, CUP 2009) 757–804. 13 ICSID Rules of Procedure for Arbitration Proceedings (ICSID Arbitration Rules) (April 2006). 14 See eg, Caline Mouawad and Elizabeth Silbert, ‘A Guide to Interim Measures in Investor-State Arbitration’ (2013) 29 Arb Intl 381; Schreuer and others (n 12) 757–804; Donald Francis Donovan, ‘Provisional Measures in the ICJ and ICSID: Further Dialogue and Development’ in Arthur W Rovine (ed), Contemporary Issues in International Arbitration and Mediation: The Fordham Papers (Brill 2013) 100; Philippe Pinsolle and Thomas Voisin, ‘Enforcement of Interim Relief in Investor-State Arbitration’ in Julien Fouret (ed), Enforcement of Investment Treaty Arbitration Awards: A Global Guide (Globe Business Publishing 2015). 15 Schreuer and others (n 12) 797–802. 16 ibid 775–7. 17 Quiborax (n 9) para 66. 18 Schreuer and others (n 12) 775–7. 19 City Oriente (n 9). 20 ibid para 62. 21 ibid s IV (Decision). 22 Tokios (n 9). 23 von Pezold (n 9). 24 Lao Holdings (n 9); Churchill Mining (n 9). 25 Quiborax (n 9) 46. 26 ibid para 128. 27 ibid para 129 (emphasis added). 28 ibid para 138. 29 ibid paras 139–48. 30 ibid para 164 (emphasis added). 31 ibid para 122. 32 This was a motion to amend an earlier provisional order prohibiting the parties from aggravating the status quo. Thus, while Laos applied to be allowed to initiate criminal proceedings, the claimants were the parties effectively protected from the State’s criminal proceedings. 33 Lao Holdings (n 9) para 37ff. 34 ibid para 21. 35 ibid para 26. 36 ibid para 28. 37 ibid para 32 (emphasis added). 38 ibid para 37. 39 ibid para 39. 40 ibid para 40. 41 ibid para 41. 42 The background to this case is not mentioned in the provisional measures decision but is noted in the decision on jurisdiction: Lao Holdings NV and Lao People’s Democratic Republic, ICSID Case No ARB(AF)/12/6, Decision on Jurisdiction (24 February 2014). 43 Churchill Mining (n 9) para 7. 44 ibid para 5. 45 ibid para 86. 46 ibid para 87. 47 ibid. 48 ibid para 88. 49 Hydro (n 2). 50 ibid para 4.4. 51 ibid para 3.16. 52 ibid para 3.18. 53 ibid. 54 ibid paras 3.20, 3.41. 55 Hydro Srl and others v Republic of Albania, ICSID Case No ARB/15/28, Decision on Claimants’ Request for a Partial Award and Respondent’s Application for Revocation or Modification of the Order on Provisional Measures (1 September 2016). 56 ibid para 1.31 and 5.1. 57 Teinver (n 3). 58 Italba (n 1). 59 Luke Eric Peterson and Zoe Williams, ‘Uruguay: Updates on the Philip Morris Arbitration, and a New Treaty Claim filed at ICSID’ Investment Arbitration Reporter (28 March 2016) <https://www.iareporter.com/articles/uruguay-updates-on-the-philip-morris-arbitration-and-a-new-treaty-claim-filed-at-icsid/>. 60 Italba (n 1) paras 16–17. 61 ibid para 18. 62 ibid para 25. 63 ibid para 48. 64 ibid para 53. 65 ibid para 43. 66 ibid para 76. 67 ibid. 68 ibid para 127, citing Gustav FW Hamester GmbH & Co KG v Republic of Ghana, ICSID Case No ARB/07/24, Award (18 June 2010) para 297. 69 Italba (n 1) para 119. 70 Lao Holdings (n 9) para 35. 71 Quiborax (n 9) para 164. 72 Teinver (n 3) para 190. 73 Italba (n 1) para 120. 74 ibid. 75 Quiborax (n 9) para 134 (emphasis in original). 76 Churchill Mining (n 9) para 90; Quiborax (n 9) para 117. 77 Churchill Mining (n 9) paras 55ff. 78 Indeed, the Tribunal in Lao Holdings appears to have fused the two, discussing the issue as ‘the intended criminal case [which] aggravates the dispute in that it threatens the integrity of the arbitral proceedings’. Lao Holdings (n 9) paras 37–42. 79 Churchill Mining (n 9) paras 46–49 suggests that this right does not apply to criminal proceedings: ‘[T]he exclusivity of ICSID proceedings does not extend to criminal proceedings, since the latter deal with matters outside ICSID’s jurisdiction’ [endorsing Quiborax (n 9) paras 128–29]. 80 ICSID Convention (n 8) art 26 reads: ‘Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention.’ 81 In full, the provisions read: Article 21 The Chairman, the members of the Administrative Council, persons acting as conciliators or arbitrators or members of a Committee appointed pursuant to paragraph (3) of Article 52, and the officers and employees of the Secretariat (a) shall enjoy immunity from legal process with respect to acts performed by them in the exercise of their functions, except when the Centre waives this immunity; (b) not being local nationals, shall enjoy the same immunities from immigration restrictions, alien registration requirements and national service obligations, the same facilities as regards exchange restrictions and the same treatment in respect of travelling facilities as are accorded by Contracting States to the representatives, officials and employees of comparable rank of other Contracting States. Article 22 The provisions of Article 21 shall apply to persons appearing in proceedings under this Convention as parties, agents, counsel, advocates, witnesses or experts; provided, however, that sub-paragraph (b) thereof shall apply only in connection with their travel to and from, and their stay at, the place where the proceedings are held.’ 82 ICSID Convention (n 8) art 53(1) reads: ‘The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention’ (emphasis added). 83 Quiborax (n 9) para 164. 84 Lao Holdings (n 9) para 35. 85 Teinver (n 3) para 190. © The Author(s) 2018. Published by Oxford University Press on behalf of ICSID. All rights reserved. For Permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ICSID Review: Foreign Investment Law Journal Oxford University Press

The Power of Tribunals to Enjoin Criminal Proceedings: A Widening Power or Converging High Bar?

Loading next page...
 
/lp/ou_press/the-power-of-tribunals-to-enjoin-criminal-proceedings-a-widening-power-NcbCVixG0j
Publisher
Oxford University Press
Copyright
© The Author(s) 2018. Published by Oxford University Press on behalf of ICSID. All rights reserved. For Permissions, please email: journals.permissions@oup.com
ISSN
0258-3690
eISSN
2049-1999
D.O.I.
10.1093/icsidreview/six033
Publisher site
See Article on Publisher Site

Abstract

I. INTRODUCTION Central to the furore over the Trans-Pacific Partnership and calls for a global investment court are concerns that the investor–State dispute settlement (ISDS) system has certain legitimacy deficits.5 Sceptics have questioned the right of private investors to compel a State to modify its conduct and policy through the orders of privately constituted tribunals. This appears to contradict a State’s police powers and right to regulate under general international law.6 Situated in this context is a trilogy of recent decisions where tribunals have been asked to issue orders enjoining a respondent State from continuing criminal proceedings or investigations against a claimant or its related parties. At first blush, such orders appear to abrogate State sovereignty in a domain traditionally thought to be impenetrable.7 In Hydro, Albania had accused several of the Claimants of money laundering and tax evasion and commenced criminal proceedings against two of them. Albania also initiated extradition proceedings for these two individuals to be brought from the UK to Albania. The Claimants successfully applied to enjoin Albania from continuing both the local criminal proceedings and the extradition proceedings. In Teinver, criminal investigations were commenced by Argentina against not only the Claimants but also a court-appointed receiver in Spain, the claim funder, and the Claimants’ lawyers. Here, the injunction was refused. In Italba, the Tribunal refused to injunct Uruguay from continuing investigations against two witnesses accused of falsifying documents that were adduced as evidence in the arbitration. Requests for tribunals to enjoin States are not exactly novel. However, given the exceptional factual context in which such relief arises, there appears to be a surprising increase in such cases. About eight such cases have been reported in the last decade or so. More interestingly, the arguments raised in these cases have been progressively refined; while the earlier cases focus on the broad question of whether the applicant would meet the standard requirements for interim measures under the ICSID Convention, the recent cases focus specifically on what rights, if any, the applicant has and seeks to protect, and apply a fact-sensitive approach.8 As a result, a faint contour of applicable principles has emerged. This note discusses the Hydro, Teinver and Italba decisions against the backdrop of earlier cases and analyses how tribunals balance the competing interests of investors and States. II. APPLICATIONS TO ENJOIN STATES9 For some time now, tribunals under the International Centre for Settlement of Investment Disputes (ICSID) have faced the vexed question of whether to enjoin a State from initiating or continuing criminal proceedings against a claimant investor and related parties. Factually, these cases tend to have a similar thread: the State has argued, normally as its substantive defence, that the investment has been tainted by some form of illegality. In relation to the alleged illegality, that State would usually have commenced investigations or criminal proceedings against the claimant and some of its representatives or related parties. In some cases, these individuals could be potential witnesses. Such applications bring together a volatile mix of competing concerns. From a claimant’s perspective, such an investigation or prosecution would almost certainly be perceived as politically and tactically motivated. There is also concern about how the investigations will affect the arbitration: will witnesses be detained or intimidated; will crucial evidence obtained in the course of investigations be sequestered by the State’s authorities? On the other hand, assuming some wrong has been perpetrated, it is surely within the State’s prerogative to take action. This is axiomatic under international law; a State has prescriptive and enforcement jurisdiction for its own domain.10 As a corollary, it is a general principle that no outside party can infringe that State’s right to prescribe and enforce its own laws.11 A. The Legal Framework and Early Jurisprudence Leaving these controversies aside for a moment, under the ICSID Convention, applications for relief from impending or ongoing criminal proceedings occur within the broader context of provisional measures.12 So far as relevant, Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules13 provide: Article 47, ICSID Convention Except as the parties otherwise agree, the Tribunal may, if it considers that the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights of either party. (emphasis added) Rule 39, ICSID Rules—Provisional Measures (1) At any time after the institution of the proceeding, a party may request that provisional measures for the preservation of its rights be recommended by the Tribunal. The request shall specify the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures. (emphasis added) As is apparent, these provisions are generic rules dealing with interim measures14 and not rules dealing with the unique situation of applications to enjoin States from criminal action. Although tribunals have used different expressions and, at times, different tests, there appears to be a core set of factors that tribunals will look at in determining an interim measures application. This includes: (i) whether the applicant has the right it seeks to protect;15 (ii) whether the relief sought is urgent16 and cannot wait until the merits of the dispute are disposed of17 and (ii) whether the relief is necessary in the sense that not granting relief would cause irreparable harm or prejudice to the applicant.18 Interestingly, in some earlier cases, relief was determined almost exclusively on factors (ii) and (iii) (namely, urgency and necessity), without a thorough discussion of the right being protected. In City Oriente v Ecuador, the Claimants brought ICSID proceedings with respect to a new tax law passed by Ecuador on oil production.19 While ICSID proceedings were afoot, Ecuador took various steps, including criminal proceedings, to enforce the payment of taxes under this new law. The Tribunal found that such steps would ‘entail a violation of the principle that neither party may aggravate or extend the dispute or take justice into their own hands’.20 To prevent possible irreparable harm, it ordered that Ecuador refrain from ‘instituting or prosecuting…any judicial proceedings or action of any nature whatsoever against or involving City Oriente and/or its officers’.21 In Tokios Tokeles v Ukraine, the Tribunal rejected the Claimant’s request to reaffirm a prior interim measures order for Ukraine to refrain from, suspend and discontinue criminal proceedings brought against a founder and key manager of the Claimant’s local subsidiary.22 The measures were not found to be urgent or necessary, and there was insufficient evidence to establish any harm to the proceedings. In von Pezold v Zimbabwe, a rather extreme case, the President of the Tribunal gave urgent interim relief, ordering Zimbabwe to stop its law enforcement agencies from their proposed visit to the Claimant’s office to obtain documents.23 B. Defining Protected ‘Rights’: Quiborax, Lao Holdings and Churchill Mining What has really defined the discussion in this category of interim measures is the interpretation of the ‘right’ being protected. When an applicant argues that local criminal proceedings will affect the arbitration, this right could be formulated in various ways. The first decision to explore the point is Quiborax v Bolivia. Both Lao Holdings v Lao and Churchill Mining v Indonesia, which follow, help develop a rudimentary jurisprudence constante in this regard.24 In Quiborax, the Claimants sued Bolivia in relation to the State’s revocation of 11 mining concessions. Their ICSID claim was registered in 2006 but, in 2008, on the back of settlement discussions, the parties agreed to suspend the proceedings. From late 2008, during the agreed standstill, Bolivia initiated criminal proceedings against one of the Claimants, Allan Fosk, and other individuals related to the proceedings. The criminal proceedings related to alleged forgery of corporate documents (a list of shareholders, minutes and so on) that had a bearing on the shareholding of the operating company. The Tribunal granted the Claimant’s application for relief, ordering Bolivia to ‘take all appropriate measures to suspend the criminal proceedings identified as Case No 9394/08…and any other criminal proceedings directly related to the present arbitration, until this arbitration is completed’.25 The Claimant cited three rights that merited protection: the right to exclusivity of ICSID proceedings, the right to non-aggravation and the right to procedural integrity. On the first, the Tribunal found that the criminal proceedings did not threaten the right to exclusivity of ICSID proceedings.26 In strongly worded terms, it held: the exclusivity of the ICSID proceedings does not extend to criminal proceedings. Criminal proceedings deal with criminal liability and not with investment disputes, and fall by definition outside the scope of the Centre’s jurisdiction and the competence of this Tribunal. Neither the ICSID Convention nor the BIT contain any rule enjoining the State from exercising criminal jurisdiction, nor do they exempt suspected criminals from prosecution by virtue of their being investors.27 As regards the right to preservation of the status quo and non-aggravation, while the criminal proceedings did ‘exacerbate the climate of hostility’, because the Claimants had no further presence in Bolivia, there was insufficient evidence to suggest that the status quo of the dispute would be affected.28 However, the Tribunal found that the right to procedural integrity of the proceedings was affected and that relief against Bolivia was urgent and necessary. In this regard, the Tribunal found that the criminal proceedings would likely have an impact on potential witnesses. There was evidence that one of the witnesses, David Moscoso, was placed under undue pressure. He was detained by local authorities and only released upon giving a confession. Further, a judge who initially refused to put Moscoso under preventive detention was charged with malfeasance in office. The Tribunal found that even if ‘no undue pressure [was] exercised on potential witnesses, the very nature of these criminal proceedings is bound to reduce [witnesses’] willingness to cooperate in the ICSID proceedings’.29 More interestingly, the Tribunal made the observation that there was a direct relationship between the criminal proceedings and the ICSID arbitration. Indeed, because the persons being investigated would likely be involved in the arbitration, the Tribunal found that the situation ‘suggests that the underlying motivation to initiate criminal proceedings was their connection to this arbitration’.30 This view was corroborated by a 2004 internal memo by Bolivia’s inter-ministerial committee stating that Bolivia should find flaws in the Claimants’ mining concessions as a defence strategy for the ICSID arbitration.31 In Lao Holdings, the Claimant investor sued Laos in respect of alleged confiscatory taxation and other measures that it argued had expropriated its investments in the Laos gaming industry.32 Notably, Laos’ defence in the proceedings was that the investment was tainted by bribery, embezzlement and money laundering. Earlier in the proceedings, the Tribunal had ordered Laos not to take steps that would ‘alter the status quo ante or aggravate the dispute’. Laos then applied to amend the prohibition to allow it to investigate the alleged criminal activity by obtaining documents, interviewing witnesses and seeking assistance from other governments. The Tribunal rejected Laos’ application. Although part of the Tribunal’s decision was based on the fact that there was no change of circumstances warranting an amendment to its earlier procedural order, it devoted a substantial amount of the decision to discussing when a tribunal can enjoin criminal proceedings. It is not clear from the decision whether the Tribunal intended to protect the right to non-aggravation or the right to procedural integrity—they appeared to address both in the same breath.33 Nonetheless, their reasons for issuing the injunction were clear. To the Tribunal, the issue of criminal liability ‘by definition’ fell outside the scope of ICSID’s jurisdiction and the Tribunal’s competence. The ICSID Convention does not ‘exempt suspected criminals from investigation or prosecution by virtue of their being investors’.34 One exception to the general rule is when criminal investigations are being used to collect evidence for use in the arbitration.35 In the present case, the Tribunal found that the threatened criminal proceedings were to enable Laos to ‘develop evidence that will serve as part of its defence…As a consequence, there is no doubt that [the investigation] is directed at precisely the conduct in respect of which [Laos] requires evidence to defend its claim in the arbitration and support its counterclaim’.36 The Tribunal found that what was being sought ‘a month before the merits hearing, [was] an intrusive criminal investigation of potential witnesses during the period of final trial preparation’. The threatened investigation was found to have ‘[crossed] the line between the government’s general concern about corruption and [entered] the forbidden territory of using the process…to obtain an unfair advantage in the arbitration proceedings over the claimant, aggravating the inequality of arms between the parties’.37 Ultimately, the ‘strong linkage’ between the criminal proceedings and the dispute in the arbitration threatened the integrity of the latter process.38 The investigation would be ‘directed to the same people and the same facts at the same time’.39 This would be ‘disruptive’ and ‘divert at least some of the claimant’s resources from final preparation of the hearing’.40 The investigations would also have a ‘chilling effect’ on other Laotian witnesses who may be called upon to give evidence adverse to the State.41 In what appears (superficially) to be a U-turn from the grant of relief in Quiborax and Lao Holdings, the Tribunal in Churchill Mining rejected the Claimant’s plea to enjoin the State’s criminal investigations. In Churchill Mining, the Claimants purchased a stake in an Indonesian operating subsidiary in the coal production business in Kalimantan. The former owners of the subsidiary were the Ridlatama group. The Claimants sued Indonesia in relation to the revocation of coal mining licences held by that subsidiary.42 It turned out after the dispute began that the licences originally held by the Ridlatama group could have been forgeries or obtained illegally. The Tribunal rejected the plea for provisional measures, holding that the Claimants could not show that they had a right that needed to be preserved urgently. In particular, they rejected the view that the criminal investigations against the Ridlatama group and its employees aggravated the status quo sufficiently and infringed the right to exclusivity of ICSID proceedings. The Tribunal’s decision is noteworthy for its fine appreciation of the facts. Superficially, the facts appear to suggest that the criminal investigations were tactical. First, during an earlier jurisdictional hearing, the Counsel for Indonesia made explicit threats of possible criminal proceedings against the Claimant’s witnesses.43 Second, the Regent of East Kutai (in Kalimantan) launched criminal charges a few days after the Tribunal’s decision on jurisdiction.44 However, these were not sufficient to persuade the Tribunal that the State was doing anything untoward. The Tribunal found that to infringe the right to exclusivity of ICSID proceedings, it was necessary of have ‘identity of subject matter’.45 In this regard, the Tribunal noted that the investigations were against the Ridlatama group—former owners of the operating subsidiary—in relation to the possible forgery of mining licences and related documents.46 As the ‘Ridlatama companies are not parties to the present dispute, a criminal investigation into their conduct with respect to the alleged document forgery does not impinge on the exclusivity of the present proceedings’.47 No criminal proceedings had been instituted against the Claimants, their witnesses or potential witnesses.48 The Tribunal also rejected the argument that the investigations would aggravate the status quo. Even though the ‘threat or the initiation of criminal charges is not conducive to lowering the level of antagonism between the Parties’ because the investigations were against companies that were not parties to the dispute, it was difficult for the Tribunal to agree that the investigations would alter the status quo. III. HYDRO, TEINVER AND ITALBA The recent decisions of Hydro, Teinver and Italba are significant for a few reasons. First, they confirm the principles developed in Quiborax, Lao Holdings and Churchill Mining. Second, especially in Teinver, apart from the rights being invoked in the earlier cases, the Claimant creatively asserted other ‘new’ rights such as the right to have the dispute arbitrated in good faith. More significantly, in these decisions, the tribunals showed a consistent reticence to enjoin the State from taking action. Indeed, it appears that the starting point is that the State is presumed to have the right to investigate, and it is for the applicant claimant to displace that. A. Hydro v Albania In Hydro, the Claimants brought proceedings against Albania for actions taken that were said to undermine their investments, including the failure to grant previously agreed tax rebates, the launching of a tax audit and money-laundering proceedings and the seizure of bank accounts and sequestration of assets in the Claimant’s Albanian companies.49 The Claimant’s application sought to stop the State from instituting criminal proceedings in Albania as well as proceeding to extradite two of the Claimants from the UK to Albania. The Tribunal granted the relief, holding that the ongoing criminal actions would harm the procedural integrity of the arbitration. In particular, they found that if two of the Claimants (Mr Becchetti and Mr De Renzis) were extradited to Albania, there was a risk they could not participate in the proceedings. It therefore ordered Albania to suspend the criminal and extradition proceedings and, separately, that the parties must agree on how to preserve the companies’ assets that were sequestered by the State. The Tribunal, however, rejected the general plea for Albania to ‘refrain from any actions against the Claimants or their investment’ as this was too broad and premature.50 The Tribunal’s key findings include: (i) that any orders to enjoin a State from bringing criminal proceedings must be ‘absolutely necessary’51 and (ii) that the possible extradition and incarceration of two of the Claimants would ‘prevent them from effectively managing their businesses, and fully [participate] in [the] arbitration’52 and that this gave ‘grave concerns’ to the Tribunal.53 The Tribunal sought to mitigate the apparently exceptional result, explaining that their order to suspend criminal proceedings ‘merely postpones the eventuality’ of the two Claimants being prosecuted for criminal conduct.54 Here, the Tribunal made use of its flexible powers to fashion an order that merely required Albania to suspend the two proceedings as opposed to discontinuing them. In effect, this balanced the aggravation of the proceedings without transgressing State sovereignty. Further, the Tribunal directed the parties to confer on parts of the order and to agree to a framework to preserve the status quo. On 1 September 2016, following an order of a UK court to stay Albania’s extradition proceedings, the Tribunal issued a fresh order on the basis of the changed circumstances.55 The Tribunal revoked its earlier Provisions Measures Order of 3 March 2016 but continued to recommend that Albania ‘take no steps in the [UK extradition] proceedings … until the issuance of a Final Award in this proceeding’ and to ‘take all actions necessary to maintain the suspension of the extradition proceedings currently stayed, and not to take any steps to resume those proceedings, until the issuance of a Final Award in this proceeding’.56 B. Teinver v Argentina In Teinver, the Claimants commenced ICSID proceedings against Argentina in 2008, arguing that the State unlawfully expropriated their investment by nationalizing their airline business. The merits hearing took place in March 2014.57 In February 2015, after the merits hearing, Argentina’s Treasury Attorney General submitted a complaint to the Public Prosecutor against the Claimant and its funder, Burford Capital, in relation to alleged fraud. This fraud was said to arise from the assignment of the Claimant’s claim in the proceedings to its subsidiary, Air Comet, as well as a funding agreement with Burford. Since Air Comet was in insolvency proceedings in Spain, these agreements had the alleged effect of being a fraud on the creditors. Any potential compensation received by the Claimants from the arbitration would be excluded from the insolvency proceedings, and Argentina could be liable to pay over twice (to the Claimant and then the insolvent estate) under the principle of ‘he who pays badly pays twice’. The original complaint was then escalated to the Prosecutor for Economic Crimes and Money Laundering, and, in September 2015, the criminal investigations were said to be commenced against not only the Claimants but also the court-appointed receiver in Spain, funder Burford Capital and the Claimants’ lawyers. The Claimants’ main prayers for relief included: (i) an order prohibiting Argentina from its criminal investigations; (ii) an order prohibiting similar future conduct that would aggravate the dispute in relation to inflammatory press conferences made by Argentina. Although the Tribunal granted the order prohibiting future inflammatory public remarks, it generally refrained from enjoining Argentina from its investigations. In the main, since the arbitration proceedings were almost completed (only a final Award was pending), the criminal proceedings could not be said to aggravate the dispute, but this was with the exception of the alleged criminal proceedings against the Claimants’ lawyers and the court-appointed receiver. The Tribunal found that the investigations could impede the lawyers and receiver carrying on their roles and, therefore, aggravate the dispute. As Argentina denied that investigations were directed against these parties, and there was insufficient evidence from the Claimant to this effect, the Tribunal merely granted the Claimant liberty to re-apply for relief in respect of the lawyers and receiver. The Tribunal rejected the plea for relief in relation to the funder. It held that there was no evidence that the investigations affected the Claimant’s funding and, therefore, could not have aggravated the status quo. The Tribunal’s deferral of its decision in relation to the criminal proceedings against the Claimant’s legal representatives is intriguing. It suggests that barring clear evidence that the State’s actions would have a detrimental effect, a tribunal would refuse the exceptional relief sought. It could even be argued that the Tribunal was effectively signalling that unless the criminal proceedings had a clear and direct effect on the arbitration, it has no competence to rule over steps taken by the State, however distressing. C. Italba v Uruguay In this case, Italba Corporation brought a claim against Uruguay in relation to the State’s revocation of a telecommunications licence.58 Italba’s operating subsidiary successfully challenged the State’s decision before the Uruguayan administrative court but, following this, the communications regulatory body ignored this and transferred the licence to a competitor.59 In October 2016, shortly after the first procedural hearing, one of the Claimant’s witnesses, Mr Herbon, received a notice to appear before a criminal court in Montevideo. The investigation concerned documents filed by Mr Herbon and another witness, Mr Alberelli, in the ICSID arbitration that were alleged to be falsified.60 In November 2016, the Claimant applied for provisional measures under Article 47, seeking to enjoin the criminal prosecution in Uruguay of Mr Herbon and Mr Alberelli.61 Shortly after the Claimant’s application, Uruguay wrote to the Tribunal to confirm that it was ‘prepared to guarantee that its investigation into the circumstances of the apparently forged signatures and fraudulent documents, regardless of its course, will not prevent either Dr. Alberelli or Mr. Herbon from participating in the preparation or presentation of the remainder of [the] Claimant’s case’.62 In contrast to Hydro and Tenvier, the Tribunal’s reasons were pithy. In essence, the Claimant forcefully argued that the criminal prosecution would undermine the procedural integrity of the arbitral proceeding63 by obstructing its access to these witnesses and their documents64 and by chilling the assistance of other witnesses.65 Uruguay, on the other hand, argued that there was no evidence to suggest that the investigations were conducted in bad faith or had hampered the Claimant’s case.66 It adduced evidence that the Uruguayan Penal Code imposed strict obligations on all public officials to report unlawful activity that came to their attention.67 The Tribunal dismissed the application. It reiterated the general principle that a State is entitled to exercise its sovereign powers to investigate and prosecute criminal actions68 and, ultimately, found that there was no ‘substantive and compelling evidence of a serious risk that [the] Claimant’s rights will suffer irreparable harm as a result of the investigation’. In the absence of such evidence, the Tribunal was satisfied to rely on Uruguay’s undertaking that the investigations will not prevent both individuals from participating in the preparation or presentation of the case, including their attendance at the hearing.69 IV. A WIDENING POWER OR CONVERGING HIGH BAR? A set of principles appears to have emerged from the cases discussed above. The cases suggest that only in clear cases where the process of the arbitration is being challenged will a tribunal step in. Further, as shown in Hydro and Teinver, tribunals have exercised their flexible powers to fashion orders to ensure as little interference as possible. This suggests a converging high bar to success in such applications, which probably strikes an appropriate balance between procedural sanctity and State sovereignty. First, as is uncontroversial, the tribunals in the above cases have all recognized the sovereignty of States to initiate criminal proceedings. Accordingly, an order to enjoin the State could infringe State sovereignty and, therefore, was the exception. The Tribunal in Lao Holdings described it as requiring a ‘high threshold’,70 while the Tribunal in Quiborax described such a situation as ‘exceptional’.71 In Teinver, the Tribunal expressed unequivocally: ‘[The State] clearly has the sovereign right to conduct criminal investigations and it will usually require exceptional circumstances to justify the granting of provisional measures to suspend criminal proceedings by a state.’72 Second, as mentioned above, in applications to enjoin a State from criminal proceedings, tribunals require the applicant to show that (i) there is a right to be protected and/or preserved and (ii) the relief sought is necessary and urgent. Of these, the right to be protected plays a more prominent role in these types of applications. However, the immediacy of the impact that criminal proceedings may have on the arbitral proceedings weighs heavily. Contrast the situation in Quiborax and Italba. In Quiborax, there was evidence that one of the witnesses was put under detention, and a judge who initially refused to issue the detention orders was charged for malfeasance. The justifiable inference was that unless Bolivia was stopped from continuing the investigations, its actions would affect the giving of evidence by witnesses. In Italba, however, criminal investigations had just begun. The Claimant’s assertions were therefore founded on ‘the anticipated consequences of the investigation’;73 without evidence that the witnesses’ participation had actually been impeded, the Tribunal would have to rely on Uruguay’s undertaking made in good faith.74 Third, there are two rights that the tribunals have acknowledged as relevant in such applications: (i) the right to preservation of the status quo and non-aggravation of the dispute and (ii) the right to procedural integrity of the proceedings. In regard to the right to non-aggravation of the dispute and preservation of the status quo, the Quiborax Tribunal explained: The existence of the right to the preservation of the status quo and non-aggravation of the dispute is well-established at least since the case of the Electricity Company of Sofia and Bulgaria. In the same vein, the travaux préparatoires of the ICSID Convention refer to the need ‘to preserve the status quo between the parties pending [the] final decision on the merits’ and the commentary to the 1968 edition of the ICSID Arbitration Rules explained that Article 47 of the Convention ‘is based on the principle that once a dispute is submitted to arbitration the parties should not take steps that might aggravate or extend their dispute or prejudice the execution of the award’.75 Thus, ‘self-help’ acts that result in the aggravation of the dispute should not be condoned, and tribunals should seek to protect the right to have the status quo maintained. It has been said that even if the relief sought does not bear directly on the subject matter of the dispute, the right to non-aggravation is a ‘self-standing’ procedural right that deserves protection.76 In terms of the right to procedural integrity of the proceedings,77 while there is evidently some overlap with the right to non-aggravation and they do appear similar,78 the two can be distinguished. The right to procedural integrity appears to focus specifically on procedural aspects such as due process. Thus, matters that tend to fall within this rubric include the availability of witnesses, the interference with document production and so on. By contrast, the right to non-aggravation may include the right not to disturb the proceedings but, more typically, deals with acts and conduct affecting the wider dispute. These include the destruction of the subject matter, parallel proceedings, inflammatory press conferences and so on. In contrast, recent tribunals have rejected the right to exclusivity of ICSID proceedings,79 often holding that, in principle, criminal proceedings are separate matters that do not impinge directly on the arbitration. This right is said to derive from Article 26 of the ICSID Convention, which provides the State’s consent is ‘deemed consent to such arbitration to the exclusion of any other remedy’.80 Insofar as the State’s criminal investigations appear to mirror the questions central to the ICSID arbitration, these may be said to offend the right to exclusivity of proceedings. However, tribunals have taken the view that in most cases criminal investigations do not offend the exclusivity of the arbitration as they deal with a different subject matter. There is also the so-called ‘right to immunity’.81 Articles 21 and 22 of the ICSID Convention cloak the arbitrators, employees of the Secretariat, parties, counsel, witnesses and experts with immunity from legal process for ‘acts performed by them in exercise of their functions’. Again, the right has not been successfully invoked. For completeness, two other rights that were raised by the Claimant in the recent Teinver case bear mention: (i) the right to have ICSID arbitration conducted in good faith and (ii) the right to an enforceable award under Article 53 of the ICSID Convention.82 In regard to the first, it is not clear from the Teinver Award what article of the ICSID Convention or the relevant bilateral investment treaty the Claimant relied on to argue a right to have the arbitration conducted in good faith. Further, no authorities were cited in support. It is thought that there is no such free-standing right and that the matters the Claimant had complained of under this rubric could be (and, indeed, were) dealt with under the more established rights discussed above. In regard to the second right, the applicant unsuccessfully argued that the State’s initiation of criminal investigations close to the time an award was to be rendered was a means to obstruct enforcement of a potential award. Although the Tribunal rejected this without much explanation, it is thought that this right may be invoked in future cases where there is evidence to suggest that criminal investigations are commenced to impede a potentially adverse award. Fourth, and more interestingly, whether couched as part of the right to non-aggravation or the right to procedural integrity, tribunals’ deliberations often centre on whether the criminal investigations will directly affect the arbitration. In this regard, the recent cases suggest there are really two factors: (i) the timing of the investigations (and how this bears on the proceedings) and (ii) the extent to which the arbitration is affected (for example, whether the criminal investigations will impede the parties’ and witnesses’ participation in the arbitration) (see Table 1). Table 1: Summary of Key Cases Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Table 1: Summary of Key Cases Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Case Factor 1: Timing Factor 2: Direct Interference Relief granted? Quiborax Neutral Yes. The Claimant’s witnesses would be impeded from giving evidence in the arbitration. Yes Lao Holdings One month before merits hearing. Yes. Investigations were a fact-finding exercise that would involve potential witnesses and documents on precisely the same issues in the arbitration. Yes Churchill Mining Neutral No. Investigations directed the Ridlatama companies. Even though one or two persons would be potential witnesses, the Ridlatama companies were not parties to the arbitration. No Hydro Neutral Yes. Two of the five Claimants would potentially be incarcerated and could not run the relevant companies or participate in the proceedings. Yes Teinver Not critical; after merits hearing and before final award. Not really. Tribunal was concerned that the Claimants’ lawyers (if investigated) would have impeded the Claimant’s representation. However, in regard to the funder and the Claimants, it found that the investigations did not affect the context of the arbitration. No Italba Potentially problematic; investigations commenced after the first procedural meeting. No. There was no evidence that the investigations would impede the arbitration. Further, Uruguay gave undertakings to the effect that the investigations would not hamper the two witnesses from participating in the proceedings or attending the hearing. No Finally, in only one case was there a clear finding that the State’s criminal investigations were underpinned by tactical or political motivations—Quiborax—although Lao Holdings comes close. This is unsurprising since tribunals may refrain from making a finding on the conduct of the State in exercising its sovereignty over criminal proceedings. Second, it would be difficult to prove the State’s intentions in the absence of documentary proof such as the inter-ministerial memo in Quiborax. V. CONCLUSION It is significant that all of the tribunals in the above cases agree that an order to enjoin the State could infringe State sovereignty and is therefore ‘exceptional’. This was the description used by the Quiborax Tribunal.83 The Tribunal in Lao Holdings described it as requiring a ‘high threshold’.84 Similarly, in Teinver, the Tribunal unequivocally expressed: ‘[The State] clearly has the sovereign right to conduct criminal investigations and it will usually require exceptional circumstances to justify the granting of provisional measures to suspend criminal proceedings by a state.’85 In this context, the development of a coherent set of principles is helpful. The case law shows that such relief will normally only be granted where the touchstones of necessity and urgency are met and only if there is an appropriate right to be protected. This ‘right’ is typically the right to procedural integrity—where the relevant criminal proceedings or investigations would directly impede the arbitral process. In this regard, tribunals look closely at the timing of the criminal investigations and how direct its impact would be. Tribunals have helpfully used their flexible powers to balance the competing interests well. In Hydro, the Tribunal merely directed proceedings to be suspended, while in Teinver, although denying the application the Tribunal gave the ‘liberty to apply’ if the Claimants could show further evidence that the investigations against legal representatives would affect the proceedings. In the context where ISDS has faced criticisms for allowing the abrogation of sovereign police powers, the fact-sensitive approach shown by most tribunals is much welcomed. Footnotes 5 There is a vast bibliography on the topic of legitimacy and reform of investor–State dispute settlement (ISDS). See eg Susan Franck, ‘The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law through Inconsistent Decisions’ (2005) 73 Fordham L Rev 1521; Michael Waibel and others, The Backlash against Investment Arbitration: Perceptions and Reality (Kluwer Law International 2010); Stephan Schill, ‘Reforming Investor-State Dispute Settlement (ISDS): Conceptual Framework and Options for the Way Forward’ (E15 Initiative, International Centre for Trade and Sustainable Development, World Economic Forum, Geneva, 2015). For a recent, perhaps more sensational viewpoint, see Chris Hamby, ‘The Court That Rules the World’ (Buzzfeed, 29 August 2016) <https://www.buzzfeed.com/chrishamby/super-court?utm_term=.bl2AEBb2X#.shdZ8ve3L> accessed 10 January 2018. Trans-Pacific Partnership (signed 4 February 2016, not yet entered into force) <tpp.mfat.govt.nz> accessed 25 February 2016. 6 Methanex Corporation v United States of America, UNCITRAL, Final Award (3 August 2005); Sedco Inc v National Iranian Oil Company (1985) 9 Iran–USCTR 248, 275; Saluka Investments BV v Czech Republic, UNCITRAL, Partial Award (17 March 2006) paras 263, 306; LG&E Energy Corp, LG&E Capital Corp, and LG&E International, Inc v Argentine Republic, ICSID Case No ARB/02/1, Decision on Liability (3 October 2006) para 195; Técnicas Medioambientales Tecmed, SA v United Mexican States, ICSID Case No ARB(AF)/00/2, Award (29 May 2003) para 115. See generally Alain Pellet, ‘Police Power or the State’s Right to Regulate’ in Meg Kinnear and others (eds), Building International Investment Law: The First 50 Years of ICSID (Kluwer Law International 2015) 447. 7 States are generally recognized as being able to exercise unfettered jurisdiction over their territories. See eg Cedric Ryngaert, Jurisdiction in International Law (OUP 2015). 8 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (opened for signature 18 March 1965, entered into force 14 October 1966) (ICSID Convention). 9 The additional cases discussed in this note are as follows: Quiborax SA and Non-Metallic Minerals SA v Plurinational State of Bolivia, ICSID Case No ARB/06/2, Decision on Provisional Measures (26 February 2010) (Quiborax); City Oriente Limited v Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No ARB/06/21, Decision on Provisional Measures (19 November 2007) (City Oriente); Tokios Tokele˙s v Ukraine, ICSID Case No ARB/02/18, Order No 3 (18 January 2005) (Tokios); Bernhard von Pezold and others v Republic of Zimbabwe, ICSID Case No ARB/10/15, Directions Concerning Claimant’s Application for Provisional Measures (13 June 2012) (von Pezold); Churchill Mining PLC and Planet Mining Pty Ltd v Republic of Indonesia, ICSID Case No ARB/12/14 and 12/40, Procedural Order No 9 (Provisional Measures) (8 July 2014) (Churchill Mining); Lao Holdings NV v Lao People’s Democratic Republic, ICSID Case No ARB(AF)/12/6, Ruling on Motion to Amend the Provisional Order (30 May 2014) (Lao Holdings). 10 Ryngaert (n 7) 5–11; FA Mann, ‘The Doctrine of Jurisdiction Revisited after Twenty Years’ (1984) 186 Recueil de Cours 9; Michael Akehurst, ‘Jurisdiction in International Law’ (1972–3) 46 BYBIL 145; JH Beale, ‘The Jurisdiction of a Sovereign State’ (1923) 36 Harvard L Rev 241. 11 The very reason why there is general disdain for extraterritorial criminal sanctions. BJ George, ‘Extraterritorial Application of Penal Legislation’ (1966) 64 Michigan L Rev 609; CL Blakesley, ‘United States Jurisdiction over Extraterritorial Crime’ (1982) 73 J Crim L & Criminology 1109; Robert L Muse, ‘A Public International Law Critique of the Extraterritorial Jurisdiction of the Helms-Burton Act (Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996)’ (1996–7) 30 Geo Wash J Intl L & Econ 207, 241–2: ‘Because each nation possesses exclusive authority within its territory—but no authority within the territory of another—each nation is co-equal in rights and status with other nations, regardless of disparities in economic or military power’. 12 See Christoph Scheurer and others, The ICSID Convention: A Commentary (2nd edn, CUP 2009) 757–804. 13 ICSID Rules of Procedure for Arbitration Proceedings (ICSID Arbitration Rules) (April 2006). 14 See eg, Caline Mouawad and Elizabeth Silbert, ‘A Guide to Interim Measures in Investor-State Arbitration’ (2013) 29 Arb Intl 381; Schreuer and others (n 12) 757–804; Donald Francis Donovan, ‘Provisional Measures in the ICJ and ICSID: Further Dialogue and Development’ in Arthur W Rovine (ed), Contemporary Issues in International Arbitration and Mediation: The Fordham Papers (Brill 2013) 100; Philippe Pinsolle and Thomas Voisin, ‘Enforcement of Interim Relief in Investor-State Arbitration’ in Julien Fouret (ed), Enforcement of Investment Treaty Arbitration Awards: A Global Guide (Globe Business Publishing 2015). 15 Schreuer and others (n 12) 797–802. 16 ibid 775–7. 17 Quiborax (n 9) para 66. 18 Schreuer and others (n 12) 775–7. 19 City Oriente (n 9). 20 ibid para 62. 21 ibid s IV (Decision). 22 Tokios (n 9). 23 von Pezold (n 9). 24 Lao Holdings (n 9); Churchill Mining (n 9). 25 Quiborax (n 9) 46. 26 ibid para 128. 27 ibid para 129 (emphasis added). 28 ibid para 138. 29 ibid paras 139–48. 30 ibid para 164 (emphasis added). 31 ibid para 122. 32 This was a motion to amend an earlier provisional order prohibiting the parties from aggravating the status quo. Thus, while Laos applied to be allowed to initiate criminal proceedings, the claimants were the parties effectively protected from the State’s criminal proceedings. 33 Lao Holdings (n 9) para 37ff. 34 ibid para 21. 35 ibid para 26. 36 ibid para 28. 37 ibid para 32 (emphasis added). 38 ibid para 37. 39 ibid para 39. 40 ibid para 40. 41 ibid para 41. 42 The background to this case is not mentioned in the provisional measures decision but is noted in the decision on jurisdiction: Lao Holdings NV and Lao People’s Democratic Republic, ICSID Case No ARB(AF)/12/6, Decision on Jurisdiction (24 February 2014). 43 Churchill Mining (n 9) para 7. 44 ibid para 5. 45 ibid para 86. 46 ibid para 87. 47 ibid. 48 ibid para 88. 49 Hydro (n 2). 50 ibid para 4.4. 51 ibid para 3.16. 52 ibid para 3.18. 53 ibid. 54 ibid paras 3.20, 3.41. 55 Hydro Srl and others v Republic of Albania, ICSID Case No ARB/15/28, Decision on Claimants’ Request for a Partial Award and Respondent’s Application for Revocation or Modification of the Order on Provisional Measures (1 September 2016). 56 ibid para 1.31 and 5.1. 57 Teinver (n 3). 58 Italba (n 1). 59 Luke Eric Peterson and Zoe Williams, ‘Uruguay: Updates on the Philip Morris Arbitration, and a New Treaty Claim filed at ICSID’ Investment Arbitration Reporter (28 March 2016) <https://www.iareporter.com/articles/uruguay-updates-on-the-philip-morris-arbitration-and-a-new-treaty-claim-filed-at-icsid/>. 60 Italba (n 1) paras 16–17. 61 ibid para 18. 62 ibid para 25. 63 ibid para 48. 64 ibid para 53. 65 ibid para 43. 66 ibid para 76. 67 ibid. 68 ibid para 127, citing Gustav FW Hamester GmbH & Co KG v Republic of Ghana, ICSID Case No ARB/07/24, Award (18 June 2010) para 297. 69 Italba (n 1) para 119. 70 Lao Holdings (n 9) para 35. 71 Quiborax (n 9) para 164. 72 Teinver (n 3) para 190. 73 Italba (n 1) para 120. 74 ibid. 75 Quiborax (n 9) para 134 (emphasis in original). 76 Churchill Mining (n 9) para 90; Quiborax (n 9) para 117. 77 Churchill Mining (n 9) paras 55ff. 78 Indeed, the Tribunal in Lao Holdings appears to have fused the two, discussing the issue as ‘the intended criminal case [which] aggravates the dispute in that it threatens the integrity of the arbitral proceedings’. Lao Holdings (n 9) paras 37–42. 79 Churchill Mining (n 9) paras 46–49 suggests that this right does not apply to criminal proceedings: ‘[T]he exclusivity of ICSID proceedings does not extend to criminal proceedings, since the latter deal with matters outside ICSID’s jurisdiction’ [endorsing Quiborax (n 9) paras 128–29]. 80 ICSID Convention (n 8) art 26 reads: ‘Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention.’ 81 In full, the provisions read: Article 21 The Chairman, the members of the Administrative Council, persons acting as conciliators or arbitrators or members of a Committee appointed pursuant to paragraph (3) of Article 52, and the officers and employees of the Secretariat (a) shall enjoy immunity from legal process with respect to acts performed by them in the exercise of their functions, except when the Centre waives this immunity; (b) not being local nationals, shall enjoy the same immunities from immigration restrictions, alien registration requirements and national service obligations, the same facilities as regards exchange restrictions and the same treatment in respect of travelling facilities as are accorded by Contracting States to the representatives, officials and employees of comparable rank of other Contracting States. Article 22 The provisions of Article 21 shall apply to persons appearing in proceedings under this Convention as parties, agents, counsel, advocates, witnesses or experts; provided, however, that sub-paragraph (b) thereof shall apply only in connection with their travel to and from, and their stay at, the place where the proceedings are held.’ 82 ICSID Convention (n 8) art 53(1) reads: ‘The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention’ (emphasis added). 83 Quiborax (n 9) para 164. 84 Lao Holdings (n 9) para 35. 85 Teinver (n 3) para 190. © The Author(s) 2018. Published by Oxford University Press on behalf of ICSID. All rights reserved. For Permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices)

Journal

ICSID Review: Foreign Investment Law JournalOxford University Press

Published: Apr 12, 2018

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off