1.0 Introduction ..................

1.0 Introduction ...............................................................................................................................................................1 2.0 Formulation of the Protection and Security Standard in Treaties ..........................................................2 3.0 Interpretations by Arbitral Tribunals of the Full Protection and Security Obligation ......................5 A Standard Limited to Physical Security ............................................................................................................................................6 The Consequences of Extending the Full Protection and Security Standard Beyond Physical Security .......................7 Is the Full Protection and Security Standard a Reflection of the Minimum Standard for the Treatment of Aliens in Customary International Law? ...............................................................................................................................................................9 What Standard of Liability Does the Full Protection and Security Standard Impose upon States? .............................10 4.0 Options for States .................................................................................................................................................11 5.0 References ..............................................................................................................................................................13
© 2011 The International Institute for Sustainable DevelopmentBEST PRACTICES SERIES NOVEMBER 2011 The Full Protection and Security Standard Comes of Age: Yet another challenge for states in investment treaty arbitration? 1
1.0 Introduction The full protection and security standard has maintained a low profile in international investment law circles in comparison with its more controversial sibling, the fair and equitable treatment provision. This is despite the vast number of international investment treaties that contain the protection and security provision, often in the same clause as the fair and equitable treatment guarantee. In fact, in the early 1990s, Ibrahim Shihata, World Bank senior vice president and general counsel, and Antonio Parra, legal advisor with the International Centre for Settlement of Investment Disputes, were reported as observing that there was “hardly any case law” on the full protection and security standard. However, the two predicted that “arbitrators in future cases will undoubtedly have the task of further elucidating this and other international law standards.” In view of the large number of recent cases involving this provision, in particular those that have interpreted the standard broadly to go beyond physical security, Shihata and Parra have been proven right. A review revealed that while there were only six leading awards relating to this standard from 1990 until 2004, there were 24 such awards between 2004 and 2009, and more are likely to emerge (Commission, 2009). At least 40 published investment treaty awards have considered the protection and security standard. The recent political storms in the Arab world, particularly in Libya and Egypt, will provide a fertile opportunity for more claims. These are good tidings for investors, who will herald the coming-of-age of the protection and security standard as it transforms into a swan from a humble duckling. On the other hand, it may be no fairy tale for states, but more akin to the creation of a Frankenstein requiring restraint. The stakes for developing states found liable for breach of treaty obligations are particularly high. The seemingly innocuous and obvious treaty promise to accord full protection and security to investments can impose an onerous level of liability on states with scarce resources. Investment treaties formulate the standard of full protection and security in a broad manner, and tribunals have taken this at face value, thus interpreting the obligation as imposing a duty upon states to prevent harm to the investment from the acts of government and non-government actors. The level of diligence required by states—that is, whether the standard is a strict liability1 standard or limited to the customary international standard for the treatment of aliens—has triggered much debate before investment treaty tribunals. Moreover, recent tribunals have extended this standard to accord all types of protection, including legal and physical security. For example, the tribunal in Biwater v. Tanzania (2008) stated that full protection and security “implies a State’s guarantee of stability in a secure environment, both physical, commercial and legal” (par. 729). This raises concerns for states that have limited resources to spend to ensure that investments receive international standards of protection and security. The relevance of a state’s development level in interpreting this standard has also been raised in recent cases. Tribunals have ruled upon these very issues in widely conflicting ways, making it difficult to understand precisely what this promise to provide protection can mean for developing states. It is also likely to cause concern for developed states, as they face the risks of terrorism and natural calamities. This paper traces the development of the protection and security provision as it emerges from anonymity into a potent tool for investor protection. I first identify the common formulations of this standard found in international investment treaties, then discuss the key arbitral rulings in relation to the standard. I conclude by identifying options for states in managing their exposure to liability under this standard.
1 Strict liability does not require the finding of intent, negligence or fault. Liability arises from the fact of the act or omission itself.
© 2011 The International Institute for Sustainable DevelopmentBEST PRACTICES SERIES NOVEMBER 2011 The Full Protection and Security Standard Comes of Age: Yet another challenge for states in investment treaty arbitration? 2
2.0 Formulation of the Protection and Security Standard in Treaties The most common expression of this standard is in the form of “full protection and security.” However, different variants are also found, such as “constant protection and security,” “protection and security” or “physical protection and security.” The standard can be found in the blueprint for the typical European bilateral investment treaty (BIT) template, the Abs-Shawcross Convention (1960), as follows: Article I Each Party shall at all times ensure fair and equitable treatment to the property of the nationals of the other Parties. Such property shall be accorded the most constant protection and security within the territories shall not in any way be impaired by unreasonable or discriminatory measures. (pp. 115–118) This is echoed nearly 40 years later in Article 10 of the Energy Charter Treaty (1994), whose membership is largely European, in the following terms: 10(1) Each Contracting Party shall, in accordance with the provisions of this Treaty, encourage and create stable, equitable, favourable and transparent conditions for Investors of other Contracting Parties to make Investments in its Area. Such conditions shall include a commitment to accord at all times to Investments of Investors of other Contracting Parties fair and equitable treatment. Such Investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal. In no case shall such Investments be accorded treatment less favourable than that required by international law, including treaty obligations. (Energy Charter Secretariat, 2004, p. 53) Although the “most constant protection and security” provision is found in a number of treaties, the typical language used is “full protection and security.” Article 2(2) of the United Kingdom–Vietnam BIT (UNCTAD, 2002) reflects the most common formulation of the standard: “Investments of nationals or companies of each Contracting Party shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Contracting Party.” The importance of adjectives such as “constant” or “full” in defining the scope of this standard will be seen from the discussion below of arbitral rulings. However, whether couched as “most constant” or “full protection and security,” the obligation appears in the vast majority of BITs, without any reference to the standard to be applied in interpreting it. The lack of reference to a standard has led to a debate on whether the obligation should be interpreted as reflecting the minimum standard of treatment for aliens in customary international law, or whether it is in fact a higher, independent treaty standard. The investor-state arbitrations under Chapter 11 of the North American Free Trade Agreement (NAFTA, 1992) prompted the NAFTA parties to clarify what they had meant by full protection and security in their treaty. Article 1105(1) of NAFTA (1992) contained broad language providing that the parties “shall accord to investments of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.” In 2001 the NAFTA Free Trade Commission issued an interpretive statement confirming that the concepts of fair and equitable treatment and full protection and security “do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of aliens” (NAFTA Free Trade Commission, 2001). The U.S. and Canadian model BITs now expressly define the limits of the full protection and security standard.
© 2011 The International Institute for Sustainable DevelopmentBEST PRACTICES SERIES NOVEMBER 2011 The Fu

Kết quả (Việt) 1:

1.0 Introduction ...............................................................................................................................................................1 2.0 xây dựng bảo vệ và an ninh tiêu chuẩn trong Hiệp ước...2 3.0 giải thích của Toà án trọng tài của họ và bảo vệ và nghĩa vụ bảo mật...5 A Standard Limited to Physical Security ............................................................................................................................................6 những hậu quả của mở rộng đầy đủ bảo vệ và an ninh tiêu chuẩn vượt ra ngoài bảo mật vật lý...7 là bảo vệ đầy đủ và tiêu chuẩn bảo mật là một sự phản ánh của các tiêu chuẩn tối thiểu để điều trị người ngoài hành tinh trong luật pháp quốc tế phong tục? ...............................................................................................................................................................9 những gì tiêu chuẩn của trách nhiệm pháp lý nào bảo vệ đầy đủ và tiêu chuẩn bảo mật áp đặt sau khi kỳ? .............................10 4.0 Options for States .................................................................................................................................................11 5.0 References ..............................................................................................................................................................13© 2011 các quốc tế viện bền vững DevelopmentBEST thực hành loạt tháng 11 2011 đầy đủ bảo vệ và an ninh tiêu chuẩn đi kèm của tuổi: Tuy nhiên, một thách thức cho kỳ đầu tư Hiệp ước trọng tài? 11.0 Introduction The full protection and security standard has maintained a low profile in international investment law circles in comparison with its more controversial sibling, the fair and equitable treatment provision. This is despite the vast number of international investment treaties that contain the protection and security provision, often in the same clause as the fair and equitable treatment guarantee. In fact, in the early 1990s, Ibrahim Shihata, World Bank senior vice president and general counsel, and Antonio Parra, legal advisor with the International Centre for Settlement of Investment Disputes, were reported as observing that there was “hardly any case law” on the full protection and security standard. However, the two predicted that “arbitrators in future cases will undoubtedly have the task of further elucidating this and other international law standards.” In view of the large number of recent cases involving this provision, in particular those that have interpreted the standard broadly to go beyond physical security, Shihata and Parra have been proven right. A review revealed that while there were only six leading awards relating to this standard from 1990 until 2004, there were 24 such awards between 2004 and 2009, and more are likely to emerge (Commission, 2009). At least 40 published investment treaty awards have considered the protection and security standard. The recent political storms in the Arab world, particularly in Libya and Egypt, will provide a fertile opportunity for more claims. These are good tidings for investors, who will herald the coming-of-age of the protection and security standard as it transforms into a swan from a humble duckling. On the other hand, it may be no fairy tale for states, but more akin to the creation of a Frankenstein requiring restraint. The stakes for developing states found liable for breach of treaty obligations are particularly high. The seemingly innocuous and obvious treaty promise to accord full protection and security to investments can impose an onerous level of liability on states with scarce resources. Investment treaties formulate the standard of full protection and security in a broad manner, and tribunals have taken this at face value, thus interpreting the obligation as imposing a duty upon states to prevent harm to the investment from the acts of government and non-government actors. The level of diligence required by states—that is, whether the standard is a strict liability1 standard or limited to the customary international standard for the treatment of aliens—has triggered much debate before investment treaty tribunals. Moreover, recent tribunals have extended this standard to accord all types of protection, including legal and physical security. For example, the tribunal in Biwater v. Tanzania (2008) stated that full protection and security “implies a State’s guarantee of stability in a secure environment, both physical, commercial and legal” (par. 729). This raises concerns for states that have limited resources to spend to ensure that investments receive international standards of protection and security. The relevance of a state’s development level in interpreting this standard has also been raised in recent cases. Tribunals have ruled upon these very issues in widely conflicting ways, making it difficult to understand precisely what this promise to provide protection can mean for developing states. It is also likely to cause concern for developed states, as they face the risks of terrorism and natural calamities. This paper traces the development of the protection and security provision as it emerges from anonymity into a potent tool for investor protection. I first identify the common formulations of this standard found in international investment treaties, then discuss the key arbitral rulings in relation to the standard. I conclude by identifying options for states in managing their exposure to liability under this standard.1 trách nhiệm pháp lý nghiêm ngặt không đòi hỏi việc tìm kiếm các mục đích, sơ suất hoặc lỗi. Trách nhiệm pháp lý phát sinh từ thực tế của các hành động hoặc thiếu sót chính nó.© 2011 các quốc tế viện bền vững DevelopmentBEST thực hành loạt tháng 11 2011 đầy đủ bảo vệ và an ninh tiêu chuẩn đi kèm của tuổi: Tuy nhiên, một thách thức cho kỳ đầu tư Hiệp ước trọng tài? 22.0 Formulation of the Protection and Security Standard in Treaties The most common expression of this standard is in the form of “full protection and security.” However, different variants are also found, such as “constant protection and security,” “protection and security” or “physical protection and security.” The standard can be found in the blueprint for the typical European bilateral investment treaty (BIT) template, the Abs-Shawcross Convention (1960), as follows: Article I Each Party shall at all times ensure fair and equitable treatment to the property of the nationals of the other Parties. Such property shall be accorded the most constant protection and security within the territories shall not in any way be impaired by unreasonable or discriminatory measures. (pp. 115–118) This is echoed nearly 40 years later in Article 10 of the Energy Charter Treaty (1994), whose membership is largely European, in the following terms: 10(1) Each Contracting Party shall, in accordance with the provisions of this Treaty, encourage and create stable, equitable, favourable and transparent conditions for Investors of other Contracting Parties to make Investments in its Area. Such conditions shall include a commitment to accord at all times to Investments of Investors of other Contracting Parties fair and equitable treatment. Such Investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal. In no case shall such Investments be accorded treatment less favourable than that required by international law, including treaty obligations. (Energy Charter Secretariat, 2004, p. 53) Although the “most constant protection and security” provision is found in a number of treaties, the typical language used is “full protection and security.” Article 2(2) of the United Kingdom–Vietnam BIT (UNCTAD, 2002) reflects the most common formulation of the standard: “Investments of nationals or companies of each Contracting Party shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Contracting Party.” The importance of adjectives such as “constant” or “full” in defining the scope of this standard will be seen from the discussion below of arbitral rulings. However, whether couched as “most constant” or “full protection and security,” the obligation appears in the vast majority of BITs, without any reference to the standard to be applied in interpreting it. The lack of reference to a standard has led to a debate on whether the obligation should be interpreted as reflecting the minimum standard of treatment for aliens in customary international law, or whether it is in fact a higher, independent treaty standard. The investor-state arbitrations under Chapter 11 of the North American Free Trade Agreement (NAFTA, 1992) prompted the NAFTA parties to clarify what they had meant by full protection and security in their treaty. Article 1105(1) of NAFTA (1992) contained broad language providing that the parties “shall accord to investments of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.” In 2001 the NAFTA Free Trade Commission issued an interpretive statement confirming that the concepts of fair and equitable treatment and full protection and security “do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of aliens” (NAFTA Free Trade Commission, 2001). The U.S. and Canadian model BITs now expressly define the limits of the full protection and security standard. © 2011 quốc tế viện loạt các thực hành bền vững DevelopmentBEST tháng mười một 2011 Fu