CAPÍTULO II: REPRESENTACIÓN POLÍTICA EFECTIVA EN LOS CHOPCCA
2.4. Factor Institucional
83 ) The PCA was established on the basis of the 1899 Hague Convention on the Pacific Settlement of International Disputes. The efforts to encourage the court’s use have failed so far. See: Harris, Cases and Materials on Intem ational Law, 58' ed., (London: Sweet & Maxwell, 1998), 987. In 1993 the PCA also adopted optional rules for arbitrating disputes between parties of which only one is a State.
century, its work load has been very low, although there are no limitations as to the kind of conflicts It can settle
The PCA cannot be recommended as a suitable forum for disagreements arising out of a multilateral Investment treaty. First of all, the arbitration rules under the 1899 and 1907 Conventions on the Pacific Settlement of International Disputes (hereinafter the "1899 and 1907 Conventions”) suffer from significant procedural deficiencies. For example, they do not ensure that persons nominated as potential arbitrators are Individuals of known competence In International law, or specifically International Investment law. Persons selected are often chosen with a view to their function for nominating candidates for the ICJ, than to their serving as
a r b itr a to r s .85 Furthermore, the Optional Rules of Arbitrating Disputes between two States adopted
In 1992 are largely untested. States can conduct proceedings under these terms regardless of whether or not they are parties to the 1899 and 1907 C o n v e n tio n s .^ ^ However, Contracting
Parties are probably reluctant to agree upon these untested provisions, given the fact that other rules, such as the UNCITRAL Arbitration Rules, have already been successfully applied In practice.
A fourth technique of settling Inter-State conflicts would be to adopt a model of dispute resolution similar to the mechanism set forth In the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereinafter “DSU”). The DSU forms Annex 2 of the Agreement Establishing the WTO. The key features of this regime compared to traditional arbitration are: first, disputes are heard by panels whose members are nominated by a secretariat,®^ not as most arbitrators by the disputing parties. Secondly, panels prepare reports which the parties can comment on before the panel drafts Its final report.®® This limits the risk of panel reports which are unexpected or based on clear errors.®^ Thirdly, final panel reports are automatically adopted by the WTO Dispute Settlement Body (hereinafter “DSB”). A final panel report becomes legally binding upon the parties unless a party appeals against It or the DSB
84 ) Butler, “The Hague Permanent Court of Arbitration" in Janis (ed.), Intem ational Courts for the Twenty First
Century (Dordrecht, Boston, London: Martinus Nijhoff Publishers, 1992) 43 at 46.
85 ) Working Group on Improving the Functioning of the Court, The Perm anent Court o f Arbitration: N ew Directions
(The Hague: International Bureau of the Permanent Court of Arbitration, 1991), 11.
86 ) Optional Rules for Arbitrating Disputes between two States, 1992, Art. 1(1) and Art. 1(3) for States parties to the 1899 and/or 1907 Convention.
87 ) Understanding on Rules and Procedures Governing the Settlement of Disputes, Art. 8(6). 8 8 ) / M , Art. 15.
89 ) Petersmann, The G A TT/W TO Disputes Settlement System: International Law, International Organizations and Dispute Settlement {London, The Hague, Boston: Kluwer Law International, 1997), 185.
decides by consent,
i.e.,
unanimously, not to approve it.^o Fourthly, there is a possibility to appeal against a final report. Appeals are heard by a seven member standing Appellate Body.s^ Fifthly, there are strict time limits for all stages of the p ro c e d u re .^ zIn practice, certain aspects of an investment dispute,
e.g.,
disagreement under the TRIMs Agreement, may already be resolved through WTO dispute settlement.^^The draft MAI combined features of traditional
ad hoc
inter-State arbitration with the model of WTO dispute resolution. There was no appellate body because the negotiators did not expect a sufficient amount of activity to sustain such a body. A nullification procedure similar to Art. 52 of the ICSID Convention was, however, suggested.Such a procedure is unknown to traditional inter-State arbitrations. The draft MAI also permitted extensive access of third Contracting Parties to documents and proceedings of pending inter-State conflicts.^s Arbitrators, however, were to be nominated by the parties in dispute as in standard international arbitration proceedings, rather than by an institution.^6The WTO model, or the “combined” approach of the draft MAI, are unsuitable means for resolving investment conflicts at the inter-State level.
Institutional dispute settlement comparable to the WTO model on issues of FDI is still in its infancy. Before the complex and sophisticated WTO regime was set up, States had settled trade disputes under the pre-WTO GATT system. The latter also provided for the establishment of panels. But panel reports could only be adopted with the consent of the disputing parties.It
90 ) Understanding on Rules and Procedures Governing the Settlement of Disputes, Art. 16(4).
91 ) Ibid., Art. 17. The establishment of a standing Appellate Body under the DSU is the most innovative feature in the Final Act of the Uruguay Round. See: Steger and Hainsworth, “New Directions in International Trade Law: W T O Dispute Settlement” in Cameron and Cambell (eds.), Dispute Resolution in the W TO (London: Cameron May Ltd., 1998) 28 at 29 and Petersmann, “How to Promote the International Rule of Law? Contributions by the W T O Appellate Review System” in Ibid., 75 at 88.
92 ) For example, the DSB has to consider unappealed panel reports within nine months after the establishment of the panel, and Appellate Body reports within twelve month after such date. See: Understanding on Rules and Procedures Governing the Settlement of Disputes, Art. 20.
93 ) For more details on the TRIM s Agreement, see supra: chapter A IV 5b.
94 ) Small, Rem arks to the Proceedings o f the American Society o f Intem ational Law, 4 98 and Draft Multilateral Agreem ent on Investment (version: February 1 4,1 99 8), Sec. V(C )(7).
95 ) Draft Multilateral Agreem ent on Investment (version: February 1 4 ,1 9 9 8 ), Sec. V(C)(4).
95 ) Small, Remarks to the Proceedings o f the American Society o f international Law, 497 and Draft Multilateral Agreem ent on Investment (version: February 1 4,1 9 9 8 ), Sec. V(C )(2)(a).
97 ) This feature was the major weakness of the old G ATT regime and is now replaced by the system of automatic adoption of panel reports by the DSB unless there is unanimous consent not to adopt the report. See: Hogg and Nawaz, “Economic Considerations and the DSU" in Cameron and Cambell (eds ). Dispute Resolution in the W TO
seems unlikely that States will agree upon mechanisms of dispute settlement similar to the WTO model in an area of law where no practical experience with handling such disputes by means other than traditional inter-State arbitration exists. Negotiations on the draft MAI dispute settlement regime clearly demonstrated this practical problem.^®
A nullification procedure advanced for the draft MAI, modelled after Art. 52 of the ICSID Convention, is not desirable. It is likely to result in the same abuse as the annulment system under the ICSID Convention did in the past.^^ Such a procedure undermines both the finality of awards and the credibility of the entire dispute settlement regime.
Finally, the right of intervention by third Contracting Parties as set forth in the draft MAM®® contradicts one feature States favour in arbitration proceedings,
i.e.,
secrecy. They are normally reluctant to allow a third Contracting Party access to documents and pleadings of a pending conflict with another Contracting Party, particularly if politically sensitive issues,e.g.,
compensation for expropriated investments, are in dispute."'®^
The only mechanism for inter-State dispute resolution likely to be accepted by States
and
suitable for practical application is
ad hoc
arbitration. A multilateral investment treaty should encourage States to resort to the UNCITRAL Arbitration Rules, because they avoid lengthy negotiations on procedural details. However, States not wishing to use the UNCITRAL Arbitration Rules should be free to agree on their own procedural rules once a dispute has arisen. The complexity and large number of intricate regulations on procedure in a complete set of arbitration rules makes it inconvenient for Contracting Parties to agree on such special rules in the treaty. The agreement should therefore leave it to disputing parties not wishing to adopt the UNCITRAL Arbitration Rules to consent to their own procedural provisions.(London; Cameron May Ltd., 1998), 59-60 and Horlick and DeBusk, Dispute Resolution under NAFTA: Building on the U.S.-Canada FTA, G A TT and ICSID, 69.
98 ) For some controversial practical issues on setting up a dispute resolution regime under the draft MAI, see: Small,
Remarks to the Proceedings o f the American Society of Intem ational Law, 498. 99 ) For more details on the annulment of ICSID awards, see infra: chapter B V 3b(iv). 100 ) Draft Multilateral Agreement on Investment (version: February 1 4 ,1 9 9 8 ), Sec. V(C)(4).
101 ) There is a right of States to designate certain information as “confidential”, to which third parties shall not have access. See: Draft Multilateral Agreement on Investment (version: February 14, 1998), Sec. V(A)(2). However, it appears that a State may not designate all information involved in a dispute “confidential", thus preventing third parties to know that there is a conflict in the first place.