In 2009, in a case3 involving the ransacking of a contractor’s worksite in Albania following massive losses incurred by the populace in the wake of Ponzi schemes, the claimant (contractor Pantechniki) first launched local proceedings – and later ICSID proceedings – under the Greece-Albania BIT, in an effort to recoup its losses of around US$1.8 million from the Ministry of Public Works.
Jan Paulsson, as sole arbitrator, deemed certain of the claimant’s claims inadmissible on the basis they were subsumed by the claim before the Albanian courts and thus excluded from ICSID jurisdiction by the FITR clause in the BIT.
In his treatment of the arbitration law on FITR clauses, Paulsson implicitly acknowledged the continuing distinction between claims that can be brought before local courts and those that can be brought before international fora. In doing so, however, he avoided the semantics of ‘contractual’ and ‘treaty’ claims, which he suggested were simplistic and constituted ‘argument by labelling – not by analysis’.
He stated it was:
‘common ground that the relevant test is … whether or not the “fundamental basis of a claim” sought to be brought before the international forum is autonomous of claims to be heard elsewhere’.
“The arbitrator avoided the semantics of ‘contractual’ and ‘treaty’ claims, which he suggested were simplistic and constituted ‘argument by labelling – not by analysis’.”
Establishing an identical or fundamental basis requires more than a simple assertion that the factual basis and the relief claimed are the same. Equally, however, an assertion that two claims do not have the same fundamental basis requires more than mere reliance on the assumption that the claim before the tribunal is made under a treaty, while the other before a local court is made under a contract or local law, and the two are thus automatically and inherently different.
Paulsson took pains to emphasise that the ‘same facts can give rise to different legal claims. The similarity of prayers for relief does not necessarily bespeak an identity of causes of action’. However, if his line of reasoning is adopted by subsequent tribunals, claims that may previously have been characterised as ‘treaty’ claims could be rejected if there is established some normative or fundamental basis on which they are identical to claims brought locally.
A recent unpublished 2014 decision on merits indicates that this view may be finding some early support. In that case, a Californian company, H&H Investments, sued Egypt under the US-Egypt BIT for alleged mistreatment of a resort investment in the Gulf of Suez. The decision apparently involved the tribunal enforcing an FITR clause and refusing jurisdiction on the basis that the FITR provision of the US-Egypt BIT was triggered by the claimant’s previous submission of claims with ‘the same fundamental basis’ to an arbitral tribunal and to Egyptian courts. [Based on publicly available information from press releases by Egypt’s counsel.]