Arbitral Courts

Note: for information on the Court of Arbitration for Sport, see here. For information on the ICC International Court of Arbitration, see here. For information on the International Court of Environmental Arbitration and Conciliation, see here.

Court of Conciliation and Arbitration

Note: The Commonwealth Court of Conciliation and Arbitration was an Australian court that existed from 1904 to 1956.

See the entry on the Court of Conciliation and Arbitration within the OSCE.

Other Courts of Arbitration

The Permanent Court of Arbitration

The Permanent Court of Arbitration was established by the Convention for the Pacific Settlement of International Disputes, concluded at The Hague in 1899, and then revised by the second Hague Peace Conference in 1907. That makes it one of the oldest international institutions continuously in existence, and surely the oldest one in the field of international dispute settlement.

Despite its name, the PCA is neither permanent nor a proper court of justice. Indeed, unlike properly called international judicial bodies, the PCA does not have a permanent bench, made of judges which have not been selected by the parties, and who apply pre-determined rules of procedure. All it does is to provide states with a roster of potential arbitrators (each state party to the Conventions of 1899 and 1907 can designate up to four arbitrators) to form an ad hoc arbitral tribunal, and the logistic support for it, by way of the only component of the PCA which is really permanent (i.e., its secretariat, known as the International Bureau). In other words, the Hague Conventions did not create a court but rather a machinery for setting up arbitral tribunals when the need arises.

The PCA lived a golden age in the years before World War I, when several high profile cases were submitted to arbitration. Its success inspired various plans and proposals for the creation of truly permanent international judicial bodies, eventually paving the way for the establishment of the Permanent Court of International Justice. Fatally, the PCIJ and the ICJ overshadowed the PCA reducing its caseload to a trickle, first and then hibernating it completely after World War II.

It is only towards the beginning of the nineties that the PCA experienced a thaw, when it gradually diversified its services beyond the purely inter-State disputes, situating itself at the juncture between public and private international law. Nowadays, the PCA facilitates settlement of disputes involving various combinations of states, private parties and intergovernmental organizations by way of arbitration, conciliation and fact-finding. It offers flexible rules of procedure, which are based upon the widely used UNCITRAL Arbitration Rules as well as ad hoc rules for specific kinds of disputes, such as those pertaining to the environment and natural resource.

International Centre for Settlement of Investment Disputes

The International Centre for Settlement of Investment Disputes (ICSID) was established in 1965 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (which has been ratified to date by 136 states), to facilitate the settlement of disputes arising between states and foreign private investors by way of arbitration and conciliation.

Moreover, since 1978, ICSID’s reach has been extended by the Additional Facility for the Administration of Conciliation, Arbitration and Fact-Finding Procedures (Additional Facility). The Additional Facility enables utilization of ICSID arbitration and conciliation facilities by states not parties to the ICSID Convention (or nationals of such states) and in regard to disputes other than investment disputes. The Additional Facility also provides interested parties with the ability to engage in fact-finding.

ICSID operates under the institutional framework of the World Bank group in Washington, D.C. Like the Permanent Court of Arbitration or the International Chamber of Commerce, ICSID is not a standing court, but rather a permanent administrative structure supporting and facilitating ad hoc dispute settlement procedures. The Centre maintains a list of potential arbitrators and conciliators for parties to choose from; and provides a host of registry and secretariat services.

Provisions on ICSID arbitration are commonly found in investment contracts between governments of member countries and investors from other member countries. Advance consent by governments to submit investment disputes to ICSID arbitration can also be found in about twenty investment laws, and in over 900 bilateral investment treaties. Until the mid-1980s, jurisdiction of ICSID’s arbitrations was mostly founded upon a compromissory clause contained in an investment contract or similar instrument. Since then, an increasing number of cases have been arbitrated under ICSID’s aegis, on the basis of consents to ICSID arbitration contained in investment laws and treaties.

Recourse to conciliation and arbitration under the ICSID Convention is entirely voluntary. No contracting state or national of such a state is obliged to resort to conciliation or arbitration without having consented to do so. However, once the parties have consented, they are bound to carry out their undertaking and, in the case of arbitration, to abide by the award. Moreover, all contracting states, whether or not parties to the dispute, are required to recognize awards rendered pursuant to the ICSID Convention as binding and to enforce the pecuniary obligations imposed thereby. Such awards are not subject to any appeal or to any other remedy except those that, like the remedy of annulment, are provided for in the Convention itself.

In recent years the number of cases submitted to ICSID, both under the Convention and cases brought under the Additional Facility, has increased significantly. To date, more than 60 cases have been submitted to ICSID (mostly for arbitration), involving more than 30 different governments. Almost invariably the plaintiff is a foreign private investor, and the defendant a state, very often a developing country. While in the early years, most cases concerned performance of investment contracts by the state, nowadays, most concern claims over such events as civil strife, alleged expropriation or denials of justice, and actions of the state political subdivisions (e.g., regions or federated states).

North American Free Trade Area dispute settlement procedures

The North American Free Trade Area, comprising Canada, Mexico and the United States, was established in 1992 by the North American Free Trade Agreement (NAFTA). Like several other regional economic integration agreements, such as the European Communities, the EFTA, the Andean Community or the Mercosur, the objective of NAFTA is to remove trade barriers, create a common market, and promote economic cooperation between participating states. However, unlike most similar agreements, NAFTA falls significantly short of creating an integrated legal system, much less a structured dispute settlement system.

While the EC, EFTA, Andean Community and COMESA, to cite a few, are endowed with permanent international courts to settle disputes between member states, individuals and the organization’s institutions on the implementation of the basic agreements and legislation deriving therefrom, dispute settlement under NAFTA is less institutionalized and much more fragmented, relying mostly on ad hoc arbitration.

The NAFTA Secretariat, comprised of the Canadian, U.S. and Mexican Sections, is responsible for the administration of the dispute settlement provisions of the Agreement. The mandate of the NAFTA Secretariat also includes the provision of assistance to the Commission and support for various non-dispute related committees and working groups. More specifically, the NAFTA Secretariat administers the NAFTA dispute resolution processes under Chapters 14, 19 and 20 of the NAFTA and has certain responsibilities related to Chapter 11 dispute settlement provisions. Each national Section maintains a court-like registry relating to panel, committee and tribunal proceedings. The national Sections, which are mirror-images of each other, are located in Ottawa, Washington and Mexico City and are headed by the Canadian, United States and Mexican Secretaries.

Under the NAFTA, there are four main dispute resolution processes, named after corresponding chapters of the agreement: Chapter 11, 14, 19 and 20.

Chapter 20 (general dispute settlement procedure)

Chapter 20 applies to all disputes regarding the interpretation or application of the NAFTA, except for matters covered in Chapter 11 (Investment), Chapter 14 (Financial Services) and Chapter 19 (Antidumping and Countervailing Duty final determinations).
When general disputes concerning the NAFTA are not resolved through consultation within a specified period of time, the matter may be referred at the request of either Party first to the good offices of the Free Trade Commission, and, if agreement is not reached within a fixed period of time, to ad hoc arbitration. A panel comprises five independent experts (each party to select two and the chairperson by common agreement). The panels’ procedure follows closely that of WTO panels, and the awards are binding.

Chapter 20 also provides for scientific review boards which may be selected by a panel, in consultation with the disputing Party, to provide a written report on any factual issue concerning environmental, health, safety or other scientific matters to assist panels in rendering their decisions. Moreover, a third Party that believes it has a substantial interest in a disputed matter, is entitled to join consultations or a proceeding as a complaining Party on written notice. If a third Party does not join as a complainant, upon written notice, it is entitled to attend hearings, make written and oral submissions and receive written submissions of the disputing Parties.

Chapter 19 (Anti-dumping and countervailing duties)

Chapter 19 provides for a system of bi-national panel review of decisions by a Party authority on anti-dumping and countervailing duty matters. Article 1903, provides that a Party may request that amendments to the other Party’s anti-dumping or countervailing duties statutes be referred to a bi-national panel for a declaratory opinion on whether the amendment is consistent with the GATT and the NAFTA. Bi-national panels comprise five independent experts.

Panel Rules are designed to result in final panel decisions within 315 days of the date on which a request for a panel is made. Within the 315-day period, strict deadlines have been established relating to the selection of panel members, the filing of briefs and reply briefs and the setting of the date for Oral Argument.

In the event of failure to comply with decisions of a bi-national panel on statutory amendments, the complaining state is free to adopt comparable legislation or equivalent executive action to the violating amendments, or even withdraw from NAFTA.

Article 1904 also provides for a sort of appeal process ( extraordinary challenge procedure ). In certain cases, a panel’s decision can be appealed to a three-member committee of judges or former judges. Moreover, article 1905, provides a mechanism for safeguarding the panel system. Under this article, a three-member special committee may be established to review allegations of one Party that the application of another Party’s domestic law has interfered with the proper functioning of the panel system.

Chapter 14 (financial services)

Chapter 14 providing that Section B of Chapter 20 shall apply, with modifications, to the settlement of disputes on financial services. A roster of experts in financial services law or practice provides arbitrators to settle this particular kind of dispute.

To date, Chapter Fourteen procedures have not been resorted to.

Chapter 11 (Investment Disputes)

Chapter 11 provides for a mechanism for the settlement of investment disputes between one of the States party to NAFTA and investors nationals of one of the parties. In other words, while Chapters 20, 19 and 14 deal with inter-state disputes, those under Chapter 11 are disputes between a private party and a party to the NAFTA.

Investors who allege that a host government has breached its obligations under Chapter 11 may, at its option, have recourse to one of the following arbitral mechanisms:
” the World Bank’s International Center for the Settlement of Investment Disputes (ICSID);
” ICSID’s Additional Facility Rules;
” the rules of the United Nations Commission for International Trade law (UNCITRAL rules).

Alternatively, the investor may choose the remedies available in the host country’s domestic courts.

Source: pict-pcti.org