Lawyer Monthly - December 2021 Edition

o give a general overview, what is investment arbitration and what parties does it concern? Investment arbitration is a dispute resolution mechanism for disputes that arise between an investor and the state that hosted its investment. The jurisdiction of the tribunal arises from an international treaty concluded between the host state and the state of which the investor is a national. Very often, investment arbitrations are brought under a Bilateral Investment Treaty (“BIT”), which not only obligate host countries to provide certain protections for foreign investments, but also create a private right of action for investors against a host government if it falls short of those obligations. Investment arbitrations can also rise out of a multilateral treaty, like the now almost defunct North American Free Trade Agreement or the controversial Energy Charter Treaty. All in all, the idea is that the foreign investor can bypass the national jurisdictions, which might be perceived to be biased, and resolve the dispute in accordance t A Guide to Investment Arbitration Several articles in this edition of the magazine focus on dispute resolution between individuals or organisations. Investment arbitration, however, takes place on a different scale from traditional ADR, tackling disputes between individuals or organisations and the states that host their investments. Lawyer Monthly has spoken with Teynier Pic partner and international arbitration specialist Sara Nadeau-Séguin to learn more about investment arbitration, its purpose and the process involved. EXPERT INSIGHT 59 DEC 2021 | WWW.LAWYER-MONTHLY.COM to the different protections afforded under the applicable treaty. What is the typical process involved? The specific process, or indeed the procedural rules that will apply to a dispute depend on the forum of the arbitration. The leading institution in terms of international investment dispute settlement is the International Centre for Settlement of Investment Disputes (“ICSID”), an institution which is part of and funded by the World Bank. The most frequent alternative to ICSID proceedings is “ad hoc” (or non-administered) arbitration in accordance with the stand- alone set of arbitration rules drafted by the United Nations Commission for International Trade Law (“UNCITRAL”), which can allow greater flexibility to the parties and tribunal. The main procedural steps are the following: The arbitration is commenced by the filing of a request for arbitration by the investor. Then the next stage is the nomination of the arbitral tribunal: in most cases, each party appoints one arbitrator and the arbitrators nominated by the parties then designate a president of the arbitral tribunal. Once the arbitral tribunal has been constituted, the proceedings can begin. In some cases, there will be a separate jurisdictional and merits phase. These are what we call bifurcated proceedings, in which the arbitral tribunal will first rule on its jurisdiction before turning to the merits and the quantum. During the proceedings, the parties will exchange memorials containing their legal and factual arguments. There are typically two exchanges of briefs, the memorial, the counter memorial, the reply and the rejoinder, all accompanied by witness statements, expert reports and documentary evidence. In addition, the parties commonly agree to have a document disclosure phase during which each party may make a request for documents. Most investment treaties will require compensation to be paid in the event an investment is being expropriated.