The Tribunal’s approach to the BIT jurisdiction clause casts light on a crucial aspect of bilingual BITs and the wide discretion tribunals draw from customary international law in construing ‘true’ meanings of treaties amid the potential subjectivity inherent to translation.
The Tribunal’s formulation of abuse of process is also of interest. Approving a line of ICSID cases, it found that a finding of formal jurisdiction alone is insufficient to sustain a challenge if the investor is abusing the investment treaty dispute resolution process. It is now clear that a restructuring intended solely to internationalise a dispute constitutes such an abuse, and the test for establishing such an intention would be if the restructuring was carried out when the dispute was foreseen as a ‘high probability’.
The Tribunal also left open the question of whether abuse of process was a question of jurisdiction or merit, deeming it a ‘distinction without a difference’. The ambiguity as to the characterisation of the objection might produce difficulties in bifurcated proceedings where tribunals split proceedings to issue a jurisdictional decision before a final decision based on merits.
Investors and clients are advised to approach prospective investorstate actions involving multilingual investment treaties with caution. Proper due diligence on material provisions of all the language versions of the treaties may be required when contemplating investment treaty arbitration. This is particularly true where there is no provision which expressly states which version will prevail if there is a conflict of meaning, or there is a provision (as in this case) expressly providing that both are equal.
Investors undertaking corporate restructurings to obtain investment treaty protection should do so at the soonest opportunity, ideally before correspondence on permits, licences and various other local approvals begins. Hard-nosed commercial negotiations are often entered into with local regulators or authorities once a project commences, and it is not possible to say with certainty what a tribunal down the line might construe as normal negotiation or a highly probable or foreseeable dispute. Such restructurings should be executed with due attention to constitutional requirements under local law and accompanied by written records (e.g. notices and board resolutions) evincing clear and defined commercial objectives for said restructuring.
Conversely, for commercial parties which have ongoing disagreements with authorities, a restructuring to include a foreign element carries a risk of being deemed an ‘abuse of process’ and rejected if such disagreements subsequently escalate to international treaty arbitration. Adverse costs may also follow such a finding. Parties in such a position should seek legal advice if either international restructuring or arbitration is contemplated. This is further underlined by the fact that foreseeable disputes only constitute one test for abuse of process, and the Tribunal left open the possibility of other classes of abuse which are ‘to be determined in each case, taking into account all the circumstances of the case’.