Jonathan C. Hamilton, “A Decade of Latin American Investment Arbitration,” Latin American Investment Treaty Arbitration: The Conflicts and Controversies (2008)

After an explosion of treaties in the 1990s, and of disputes in the early 2000s, Latin American investment treaty arbitration came under significant scrutiny. These developments echo historical Latin American hostility towards foreign investment and recourse to international arbitration. Indeed, some observers emphasize that until little more than a decade ago, the prevailing policy across the region was that, as a general rule, jurisdiction over investment disputes remained with the country in which the investment was located. Are the latest developments harbingers of a return to the past or divergent paths into the future?

Recent developments in Latin America have been interpreted by some observers as seeming to suggest that investment arbitration is at a crossroads, as some States have taken steps to extract themselves in whole or in part from the legal framework that provides for investment arbitration, and others have threatened to do so. Bolivia denounced its ratification of the International Centre for Settlement of Investment Disputes (ICSID) Convention.[1]  Ecuador notified the ICSID (or the ‘Centre’) that ‘it will not accept to submit to the jurisdiction of the Centre disputes related to the management of its non-renewable natural resources, understanding as such (but not limited to) mining resources and hydrocarbons’.[2] Venezuela has threatened to denounce the ICSID Convention.[3] Bolivia, Ecuador and Venezuela aim to terminate or renegotiate certain bilateral investment treaties.[4]

These developments echo historical Latin American hostility towards foreign investment and recourse to international arbitration. Indeed, some observers emphasize that until little more than a decade ago, the prevailing policy across the region was that, as a general rule, jurisdiction over investment disputes remained with the country in which the investment was located. Are the latest developments harbingers of a return to the past or divergent paths into the future?

This chapter discusses the current state of investment arbitration in Latin America by considering the results in investment arbitrations against Latin American States during the decade since the first ICSID case was registered against a Latin American State. Section I summarizes the legal framework for investment arbitration in Latin America, in particular the numerous bilateral and multi-lateral treaties ratified by Latin American States, particularly during the 1990s. Section II then surveys forty-three ICSID cases concluded against Latin American States through May 2008. Section III focuses on cases dismissed on jurisdictional grounds.

I.           THE LEGAL FRAMEWORK FOR LATIN AMERICAN INVESTMENT ARBITRATION

The traditional Latin American hostility to arbitration dramatically changed in the 1990s as the region’s economies liberalized and States agreed to new mechanisms for dispute resolution. Collectively they ratified almost four hundred bilateral investment treaties (BITs), multi-lateral agreements and free-trade agreements with investment chapters, including the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA).[5] Most of them also ratified the ICSID Convention. In addition, numerous concession agreements and other contracts providing for arbitration of disputes were concluded. These treaties and contracts typically provide more than one option for arbitration, including resort not only to ICSID itself, but also to the Centre’s Additional Facility (available for the resolution of disputes falling outside the scope of the ICSID Convention) as well as ad hoc proceedings under the United Nations Commission on International Trade Law (UNCITRAL) Rules.[6]

These changes in the legal framework created the foundation for a significant increase in the volume of arbitrations in Latin America.[7]  The combination of a legal framework for investment disputes and the subsequent frustration of foreign investors led to an explosion in Latin American investment arbitration. Out of 264 ICSID arbitrations filed in four decades, only 27%, or a little less than a third, of the concluded cases were brought against Latin American States; now 54%, or more than half, of ICSID cases are pending against Latin American States.

A closer examination of these Latin American treaty cases before ICSID is thus warranted. Although arbitrations have proceeded against Latin American States in the some of the alternative venues previously noted, ICSID provides a useful sample for purposes of assessment, given the public nature of the cases there. In the following section, we take a closer look at the forty-three ICSID cases concluded to date against Latin American States.

II.         A SURVEY OF CONCLUDED ICSID CASES AGAINST LATIN AMERICAN STATES

A total of forty-three ICSID arbitrations against Latin American States have reached a definitive conclusion, and these States are participating in many other cases that are still pending. A survey of this forty-three case sample illustrates the results being obtained by States in the region.[8]

The first ICSID case brought against a Latin American State was Santa Elena v. Costa Rica in 1996. The issue under consideration was the amount owed as compensation for an expropriation conducted by Costa Rica in 1978. Costa Rica agreed to arbitrate the dispute and was successful in having the Tribunal reduce to a third the Claimant’s request for compensation.[9] More recently, in Sempra v. Argentina, the tribunal held that Argentina had breached the standard of fair and equitable treatment and the umbrella clause under the relevant BIT and awarded USD 128.25 million in damages.[10] In the most recent decision considered in this survey, a tribunal resolved the long-running case of Victor Pey Casado and President Allende Foundation v. Republic of Chile.[11]

As set forth in Table 1, of the forty-three concluded ICSID cases against Latin American States (which includes cases that are subject to ongoing annulment or rectification proceedings), seventeen were settled or discontinued at the request of one of the parties, five were dismissed on grounds of lack of jurisdiction, and twenty-one reached a decision on the merits. Additional cases may have been suspended or settled that have not yet been made public.

Table 1 Results of Concluded ICSID Arbitrations against Latin American States

Total Cases Concluded/Settled: 43

Settled or Discontinued: 17

Award on Jurisdiction : 5

Award on the Merits: 21

All Claims Failed: 5

Some Claims Granted: 16

As noted, five cases were dismissed on jurisdictional grounds: Waste Management v. Mexico, Lucchetti v. Peru, Inceysa Vallisoletana v. El Salvador, Sociedad Anónima Eduardo Vieira v. Chile and Bayview Irrigation District v. Mexico.[12] These cases are discussed in Section III below.

Twenty-one cases reached an award on the merits. The first ICSID case against a Latin American State decided on the merits was Azinian v. Mexico[13] in 1999. Thereafter, twenty cases arising out of disputes in the region have reached an award on the merits. As mentioned above, in Sempra v. Argentina – a case involving a gas supply and distribution enterprise – the tribunal held that Argentina breached its obligations to provide fair and equitable treatment and the umbrella clause incorporated in the US-Argentina BIT.[14]

In five of the twenty-one cases that were resolved on the merits, including  Azinian,  Eudoro  Olguín  v.  Paraguay,  Waste  Management  v.  Mexico (No. 2),[15]  Fireman’s Fund v. Mexico, and, most recently, M.C.I. v. Ecuador,[16] the Tribunal dismissed the entirety of the claims. In remaining 76% (sixteen) of ICSID cases resolved on the merits the Tribunal granted at least some of the claims alleged.

With respect to the claims alleged, tribunals have admitted the claim of ‘fair and equitable treatment’ approximately 70% of the time. For example, in Tecmed v. Mexico, an ICSID tribunal considered that the respondent had breached the standard of fair and equitable treatment, understanding it to mean the duty ‘to provide to international investments treatment that does not affect the basic expectations that were taken into account by the foreign investor [in] mak[ing] the investment’, closely linked to the general principle of good faith in international law.[17] In that case, the valid expectations of the claimant operating a landfill in Mexico were not met, as the relevant authorities backtracked on previously entered agreements, including an undertaking that prior to a definitive relocation of the landfill the site would continue to operate; it was instead closed down.

A further example of the application of this standard may be found in MTD v. Chile, where the tribunal adopted a similar definition of fair and equitable treatment. There, the arbitral tribunal held that approval of an investment made by a foreign investment commission in a project that was against the government’s urban policy constituted a breach of the obligation to treat an investor fairly and equitably.[18]

By way of comparison, expropriation claims were successful in 28% of the cases where expropriation was alleged, for example, in Metalclad v. Mexico, Siemens v. Argentina, and Tecmed.[19] Expropriation, as understood by ICSID tribunals, may be of a direct or indirect nature. An example of the latter may be found in the Compañía de Aguas del Aconquija and Vivendi Universal v. Argentina case.[20]  After a drawn out process that took nearly ten years, an ICSID tribunal concluded in August 2007 that while there had been no actual taking or dispossession, as such, of the claimant’s investment, ‘the actions taken by the provincial authorities against the concession and its “foreign” investors had a devastating effect on the economic viability of the concession’, rendering it valueless.[21] The tribunal thus found that the respondent had breached the relevant treaty by unlawfully expropriating the claimant’s investment.

Additional data points relate to allegations that the host State breached its obligation to provide ‘full protection and security’ and not to adopt ‘arbitrary and/ or discriminatory measures’; both have been successful in 40% of the cases where claimed, such as in Vivendi, Azurix and Siemens, all against Argentina.[22]

This survey of forty-three cases reveals that States and claimants have obtained mixed results so far in ICSID investment arbitration. On the one hand, 12% of the cases analyzed have been dismissed on jurisdictional grounds, and in 24% of those cases with an award on the merits, the claims were dismissed in their entirety. On the other hand, in sixteen cases out of forty-three, claimants obtained a favourable decision on at least some of their claims.

III.        CASES DISMISSED FOR LACK OF JURISDICTION

As noted, approximately 12% of the ICSID cases concluded against Latin American States have resulted in dismissals on jurisdictional grounds. The precise grounds warranting these dismissals have varied from case to case.

In Waste Management, for example, the claimant argued that its rights under a concession contract for waste disposal services in Acapulco, Mexico had been effectively expropriated by the city’s refusal to enforce certain contractual exclusivity provisions and its actions to frustrate the construction and operation of a landfill. The tribunal held, however, that the claimant had failed to establish one of the prerequisites to NAFTA jurisdiction, namely, that it had waived its domestic remedies, and declined jurisdiction.[23]

In Bayview v. Mexico, another NAFTA case, a group of Texas irrigation districts brought an action against Mexico after the latter diverted water from the Rio Grande for use by Mexican farmers. Claimants alleged that they qualified as ‘investors’ under NAFTA because they had invested extensive funds for the storage and conveyance of water to their farms in the Rio Grande Valley of Texas and that their property rights in the river waters were in Mexican territory when the water was seized and diverted.[24] Both of these contentions were rejected by the tribunal, which concluded that ‘investors’ under NAFTA needed to be foreign investors and that their qualifying ‘investment’ (their farms and irrigation equipment) were located solely within Texas.[25] Moreover, although recognizing that the claimants’ water rights could constitute an ‘investment’, the tribunal concluded that investment was not ‘in the territory of Mexico’ because the claimants could not own the physical waters of a river flowing in Mexican territory as one could own a bottle of water.[26]

Two other cases were dismissed after the tribunals determined that the disputes in question preceded the entry into force of the relevant BITs. In Lucchetti v. Peru – a case involving the construction of a pasta factory near a protected wetland in Peru – the tribunal acknowledged allegations of irregularities by the claimant during Peruvian judicial proceedings authorizing the factory’s operation but dismissed the action on the basis of the non-retroactive nature of a BIT, without considering in its rationale the purportedly illegal conduct.[27]  Concluding that the ‘dispute’ between the parties regarding the issuance and subsequent annulment of the requisite permits for the factory commenced prior to the entry into force of the Peru-Chile BIT, the tribunal thus dismissed the claims for lack of jurisdiction ratione temporis.[28]

In Vieira v. Chile, a Spanish investor brought claims under the Chile-Spain BIT alleging inequitable treatment and the indirect expropriation of its investment in a Chilean fishing company after the government rescinded certain fishing permits on ecological grounds. Rejecting these claims, the tribunal concluded that the dispute between Vieira and Chile regarding the fishing rights in question had already arisen by the time the BIT entered into force.[29]

In Inceysa Vallisoletana v. El Salvador, the tribunal concluded that it lacked jurisdiction where Inceysa’s underlying investment was not made ‘in accordance with law’, a decision that is believed to be the first case where a tribunal declined jurisdiction on account of an ‘accord with law’ clause.[30] There, the Spanish investor commenced arbitration proceedings in July 2003, following the decision of El Salvador’s Ministry of the Environment and Natural Resources (‘MARN’) to reverse its prior decision to award it a concession for the operation of vehicle inspection services in that country. According to Inceysa, in addition to breaching the concession contract, MARN had violated both a bilateral investment treaty between Spain and El Salvador[31] and El Salvador’s national investment law. Inceysa sought more than USD 120 million in damages.[32]

El Salvador responded by objecting to the tribunal’s jurisdiction. El Salvador contended that the ‘Investment Treaty by its terms and intent extend[ed] protection only to investments made in El Salvador in accordance with its laws’ and that its national investment law similarly excluded ‘fraudulent investments’ from the scope of its protections.[33] The heart of El Salvador’s jurisdictional objection was its assertion that Inceysa had obtained the concession by defrauding the public bidding process, including by submitting false financial documentation, deliberately misrepresenting its experience and concealing its relationship with another bidder.[34] According to El Salvador, because its consent to ICSID jurisdiction was expressly limited to ‘disputes involving investments otherwise entitled to protection under the Treaty, i.e., investments made in accordance with Salvadoran law’, Inceysa could not invoke the protections of the BIT.[35]

Ultimately, the tribunal concurred, finding that ‘because Inceysa’s investment was made in a manner that was clearly illegal, it [wa]s not included within the scope of consent expressed by Spain and the Republic of El Salvador in the BIT’, and thus ‘the disputes arising from it [we]re not subject to the jurisdiction of the Centre’.[36] In order to arrive at this conclusion, the tribunal considered whether El Salvador had limited its consent in the BIT to disputes concerning investments made legally and, if so, whether Inceysa’s investment was made in accordance with Salvadoran law.[37] After noting that so-called ‘accordance with law’ clauses were among the most common mechanisms employed by States to limit the scope of investment protection obligations,[38] the tribunal examined the express language of the treaty itself. Although the clause did not appear in the treaty’s definition of ‘investment’, the parties included such a qualification in two other articles regulating the ‘Protection’ and ‘Promotion and Admission’ of that investment.[39]

[There was a finding that] that El Salvador had sufficiently substantiated its allegations that Inceysa acted fraudulently during the bidding process and that, consequently, Inceysa’s investment failed to comply with Salvadoran law. The tribunal further concluded that it could not square jurisdiction under the BIT with international public policy barring parties from benefiting from their own fraud, declaring that it would not permit Inceysa to seek the protections granted by the host State in the BIT for ‘an investment effectuated by means of one or several illegal acts’.[40] It dismissed Inceysa’s remaining claims on similar grounds.[41]

Although it was not reached on jurisdictional grounds, a similar result occurred in Azinian, where a NAFTA tribunal rejected allegations that a Mexican city’s annulment of a concession contract for waste collection and disposal services constituted an expropriation or failure to treat the claimant’s investment in accordance with international law.[42]  The tribunal concluded that the claimants ‘entered into the Concession Contract on false pretences, and lacked the capacity to perform it’.[43]  Moreover, the tribunal found ‘significant evidence of misrepresentation’ by the claimants to the local Mexican authorities; among other things, the claimants misrepresented their experience as well as their financial and technological resources and failed to disclose the withdrawal of a key partner prior to the conclusion of the contract.[44] Accordingly, the tribunal found that the city’s decision to terminate the contract as a result of its invalidity under Mexican law did not constitute a NAFTA violation.

Some commentators have noted a connection between the Inceysa tribunal’s decision to decline jurisdiction and a similar conclusion reached in World Duty Free v. Kenya.[45] There, the claimant acknowledged making a ‘personal donation’ of USD 2 million to the then-Kenyan President in order to secure the necessary licenses and authorization for the construction of certain duty free complexes at the Nairobi and Mombassa airports.[46]  After a dispute arose between the parties, the claimant filed a request for arbitration with ICSID alleging that Kenya had expropriated its property and seeking damages of approximately USD 500 million.

Notwithstanding the claimant’s argument that the USD 2 million payment was both legally and routinely sanctioned in Kenya, the tribunal concluded that it could not be considered a donation for public purposes but was specifically intended as a bribe to secure the agreement.[47] The tribunal then examined the consequences of that bribe, both under international public policy and under English  and  Kenyan  law.  Characterizing  international  public  policy  as  an ‘international consensus as to universal standards and accepted norms of conduct’,[48] the tribunal observed that bribery and corruption have been widely criminalized, including in Kenya. It took note of the numerous international conventions and judicial and arbitral decisions condemning corruption as being contrary to public policy, even in the face of allegations that corruption was wide- spread in the particular industrial sector or country concerned. The tribunal concluded that it was ‘convinced that bribery is contrary to the international public policy of most, if not all, States or, to use another formula, to transnational public policy’ and that ‘claims based on contracts of corruption or on contracts obtained by corruption [could not] be upheld by this Arbitral Tribunal’.[49] The tribunal came to a similar conclusion after examining English and Kenyan law.[50]

The range of outcomes in ICSID cases against Latin American States, including those decided on jurisdictional grounds, illustrates the evolution of a system that aims to facilitate legal certainty for foreign investment. As that system confronts certain stresses, it is important to recall the complexities of the era that lacked such a system and the fact that the legal framework for investment disputes put into place over many years is not likely to be quickly deconstructed.[51]

[1]             Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 Mar. 1965, 575 U.N.T.S. 159 (‘ICSID Convention’). On 2 May 2007, the World Bank received Bolivia’s written notice of denunciation of the ICSID Convention pursuant to Art. 71 of the Convention.

[2]             On 4 Dec. 2007, the Secretary General of ICSID received a notification by Ecuador under Art. 25(4) of the ICSID Convention.

[3]             Alejandro Hinds, R., ‘Asamblea Nacional solicitará al Ejecutivo retirar al país del Ciadi’, El Universal, 12 Feb. 2008.

[4]             Marianna Párraga, ‘Venezuela denuncia tratado de inversiones con Holanda’, El Universal, 1 May 2008; Damon Vis-Dunbar, et al., ‘Bolivia Notifies World Bank of Withdrawal from ICSID, Pursues BIT Revisions,’ Investment Treaty News, 9 May 2007; Luke Eric Peterson, ‘Ecuador Announces That It Wants Out of US Investment Treaty’, Investment Treaty News, 9 May 2007.

[5]             NAFTA, U.S. – Can. – Mex., 17 Dec. 1992, 32 I.L.M. 289 (1993); Dominican Republic – Central America – United States Free Trade Agreement (CAFTA – DR), 5 Aug. 2004, available at <http://www.ustr.gov/Trade_Agreements/Regional/CAFTA/Section_Index.html>.

[6]             United Nations Commission on International Trade Law (UNCITRAL), UNCITRAL Arbitration Rules, U.N. G.A. Res. 31/98, adopted 15 Dec. 1976.

[7]             See  Compendium  of  Latin  American  Arbitration  Law,  International  Disputes  Quarterly (Fall 2007) (edited by the author; as of 15 Aug. 2007).

[8]             The forty-three cases are listed in Appendix A to this chapter.

[9]             Compañia del Desarrollo de Santa Elena S.A. v. Republic of Costa Rica, ICSID Case No. ARB/96/1, Award of 17 Feb. 2000, 15 ICSID Rev. – FILJ 169 (2000).

[10]            Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16, Award of 28 Sep. 2007, available at <http://ita.law.uvic.ca/documents/SempraAward.pdf>.

[11]            Victor Pey Casado and President Allende Foundation v. Republic of Chile, ICSID Case No. ARB/98/2.

[12]            Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/98/2, Award on Jurisdiction of 2 Jun. 2000, available at <http://ita.law.uvic.ca/documents/WasteMgmt- Jurisdiction.pdf> (‘Waste Management I’); Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru, ICSID Case No. ARB/03/4, Award dated 7 Feb. 2005, available at <http:// ita.law.uvic.ca/documents/luchetti.pdf>; Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award of 2 Aug. 2006, available at <http://ita.law.uvic.ca/docu- ments/Inceysa_Vallisoletana_en_002.pdf>; Sociedad Anónima Eduardo Vieira v. Republic of Chile, ICSID Case No. ARB/04/7, Award of 21 Aug. 2007, available at <http://ita.law.uvic.ca/ documents/VieiraAward.pdf>; Bayview Irrigation District et al. v. United Mexican States, ICSID Case No. ARB(AF)/05/1, Award dated 19 Jun. 2007, available at <http://ita.law.uvic. ca/documents/bayview.pdf>.

[13]            Robert Azinian and others v. United Mexican States, ICSID Case No. ARB(AF)/97/2, Award of 1 Nov. 1999, available at <http://ita.law.uvic.ca/documents/Azinian-English.pdf>.

[14]            Sempra, at 139.

[15]            Having had its original NAFTA claims dismissed on jurisdictional grounds, Waste Management commenced a second arbitration in Sep. 2000 after litigation proceedings brought by its Mexican subsidiary were dismissed by the Mexican courts.

[16]            Azinian, supra; Eudoro A. Olguín v. Republic of Paraguay, ICSID Case No. ARB/98/5, Award of 26 Jul. 2001, available at <http://ita.law.uvic.ca/documents/Olgun-award-en.pdf>; Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Award dated 30 Apr. 2004, available at <http://ita.law.uvic.ca/documents/WastMgmt2-Jurisdiction.pdf> (‘Waste Management II’); Fireman’s Fund Insurance Company v. United Mexican States, ICSID Case No. ARB(AF)/02/1, Award dated 17 Jul. 2006, available at <http://ita.law.uvic.ca/ documents/FiremansFinalAwardRedacted.pdf>; M.C.I. Power Group, L.C. and New Turbine, Inc. v. Republic of Ecuador, ICSID Case No. ARB/03/6, Award of 31 Jul. 2007, available at <http://ita.law.uvic.ca/documents/MCIEcuador.pdf>.

[17]            Técnicas  Medioambientales  Tecmed,  S.A.  v.  United  Mexican  States,  ICSID  Case  No. ARB(AF)/00/2, Award of 29 May 2003, at para. 154, available at <http://ita.law.uvic.ca/docu- ments/Tecnicas_001.pdf>.

[18]            MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award of 25 May 2004, available at <http://ita.law.uvic.ca/documents/MTD-Award_000. pdf>.

[19]            Metalclad Corporation v. United Mexican States, ICSID Case No. ARB(AF)/97/1, Award of 30 Aug. 2000, available at <http://ita.law.uvic.ca/documents/MetacladAward-English.pdf>; Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/8, Award of 6 Feb. 2007, avail- able at <http://ita.law.uvic.ca/documents/Siemens-Argentina-Award.pdf>; Tecmed, supra. Expropriation was a foundation for an assessment of damages in the Santa Elena case.

[20]            Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic, ICSID Case No. ARB/97/3, Award of 20 Aug. 2007, available at <http://ita.law.uvic.ca/documents/ VivendiAwardEnglish.pdf>.

[21]            Id., at para. 7.5.26.

[22]            Vivendi,  at  paras  7.4.15–7.4.1.7;  Azurix  Corp.  v.  Argentine  Republic,  ICSID  Case  No. ARB/01/12, Award of Jul. 14, 2006, paras 390–393, 406–408, available at <http://ita.law.uvic. ca/documents/AzurixAwardJuly2006.pdf>; Siemens, at paras 289-309, 318-321.

[23]            Waste Management I, at 21–23.

[24]            Bayview, at paras 40–51, 62–70.

[25]            Id., at paras 87–108.

[26]            Id., at paras 109–24.

[27]            Lucchetti, at paras 25, 48–62.

[28]            Id., at paras 48–59.

[29]            Vieira, at paras 266–303.

[30]            United Nations Conference on Trade and Development, ‘Latest Developments in Investor- State Dispute Settlement,’ IIA Monitor No. 4, (2006) at 6. Peru had also argued in Lucchetti that the claimants had not made a protected ‘investment’ as defined in the BIT in light of numerous purported violations of Peruvian laws and regulations governing the construction and operation of the pasta factory. However the tribunal ultimately did not address this contention, instead, as noted earlier, dismissing all claims on account of the non-retroactive nature of the BIT. Lucchetti, at para. 25(3).

[31]            Agreement for the Reciprocal Promotion and Protection of Investments signed between the Republic of El Salvador and the Kingdom of Spain (Feb. 1995). Among other claims, Inceysa had argued that El Salvador’s actions deprived it of all economic rights under the contract, giving rise to an expropriation. Inceysa, at para. 42.

[32]            Inceysa, at para. 44.

[33]            Id., at paras 45–52 (emphasis added).

[34]            Id., at paras 53–61.

[35]            Id., at para. 141.

[36]            Id., at para. 257.

[37]            Id., at paras 207–208.

[38]            Id., at paras 185-87 (citing Tokios Tokele·s v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction of 29 Apr. 2004, at para. 84, available at <http://ita.law.uvic.ca/documents/ Tokios-Jurisdiction_000.pdf>; Salini Costruttori S.p.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction of 23 Jul. 2001, para. 46, available at <http://ita.law. uvic.ca/documents/Salini-English.pdf>).

[39]            Id., at paras 201, 204 (noting BIT’s stipulation that ‘Each Contracting Party shall protect in its territory the investments made, in accordance with its legislation ...’ and that the treaty ‘will also apply to investments made before its entry into force by the investors of a Contracting Party in accordance with the laws of the other Contracting Party in the territory of the latter....’) (emphasis in Award).

[40]            Id., at paras 242, 252.

[41]            Id., at paras 258–64, 302–30.

[42]            Azinian, at paras 95–124.

[43]            Id., at para. 33.

[44]            Id., at para. 104.

[45]            World Duty Free Company Limited v. Republic of Kenya, ICSID Case No. ARB/00/7, Award dated 4 Oct. 2006, available at <http://ita.law.uvic.ca/documents/WDFv.KenyaAward.pdf>.

[46]            Id., at paras 66, 133, 135.

[47]            Id., at paras 136, 166.

[48]            Id., at para. 139.

[49]            Id., at paras 148, 157.

[50]            Id., at paras 158–159. See also Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Award dated 16 Aug. 2007, available at <http://ita.law.uvic.ca/documents/FraportAward.pdf> (tribunal declining jurisdiction under the Germany-Philippines BIT after concluding that the German investor had intentionally structured its investment in violation of Philippine law).

[51]            This chapter does not reflect the views or positions of the author, White & Case LLP or any clients thereof with respect to any particular matter.

The range of outcomes in cases against Latin American States illustrates the evolution of a system that aims to facilitate legal certainty for foreign investment. As that system confronts certain stresses, it is important to recall the complexities of the era that lacked such a system and the fact that the legal framework for investment disputes put into place over many years is not likely to be quickly deconstructed.

Jonathan C. Hamilton