Settlement of Investment Disputes and Provisional Measures
Protecting the right of foreign investors in a country is a significant problem both for investee country and investor. In order to solve this, an international mechanism has been brought which is called ICSID Convention (International Centre for Settlement of Investment Disputes) so that disputes between the contracting state of ICSID Convention and foreign investor can be settled before a special tribunal established according to Convention provisions conciliation commission of ICSID.
Turkey ratified the Convention on 8 May 1991 and become a contracting state so that convention is binding for Turkey as of this date. After these developments, the investors’ preference of ICSID has been rising for several years.
In a lawsuit, because respondent has always opportunity to alienate the object of litigation to third persons, claimant’s rights on that object can be imperiled. Therefore, in order to prevent this situation, there is a concept called “provisional measures” so with provisional measures; claimant preserves his rights on object of the litigation until the end of the jurisdiction.
Provisional measures can be recommended by arbitral tribunal ex officio or upon request of one of parties. In the article 47 of International Centre of Investment Disputes (ICSID) “Except as the parties otherwise agree, the Tribunal may, if it considers that the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights either party”.
Provisional measures are recommended before the jurisdiction ends but in the judgment process. However, advisory provisional measures differ from interim decisions of stay of enforcement. Pursuant to ICSID article 50/2, 51/4 and 52/4, in case of request of revision of decision and nullity of judgment, the tribunal can decide stay of the enforcement before the decision on the merits. However, these articles cannot be applied to advisory provisional measure decisions.
The provisional measure decisions are binding for parties of tribunal unless otherwise agreed. Parties could, priory, waive their right of request of provisional measure. Besides, parties could agree on which subjects that tribunal will be entitled to or agree on that all the provisional decisions made by tribunal will be binding for all parties.
So what kind of demands can a party bring before the tribunal for provisional measures?
- Measures in order to protect and capture the evidences
- Protecting of nationalized company’s documents
- Stay of enforcement of the trials that are initiated before domestic courts despite ICSID Arbitral Tribunal
- Deposit money as much as value of the claim
AGIP v. CONGO as a Case Study
After the reestablishment of the government in Republic of Congo, the government of Congo has nationalized the AGIP without compensating (Azienda Generale Italiana Petroli—General Italian Oil Company) and retained all the AGIP’s documents. During the ICSID trial, AGIP has demanded provisional measure pursuant to article 47 of the ICSID Convention, which saying that Republic of Congo must collect all of the nationalized company’s corporate documents, notify the tribunal and AGIP of the documents collected and keep them for eventual production to the tribunal. AGIP’s this request can be considered as a provisional measure in order to protect and capture the evidences.
In addition, there are many cases in which provisional measures had requested from the tribunals such as Holiday Inn v. Morocco, Amco v. Indonesia, MINE v. Guinea and so on.
In lack of a state of emergency, and necessity the tribunal cannot accept the request of provisional measure as it happens in Railroad Development Corporation (RDC) v. Guatemala. In this case, after the government reshuffle, RDC requested a provisional measure regarding protection of the company documents because of the government reshuffle. However, the tribunal did not accept the request due to lack of a state of emergency, and necessity in this case.
Failure to Abide by Provisional Measure Decision
In the first draft of the article 47 of ICSID Convention, compensation was foreseen for the party who abide by provisional measure decision of the tribunal. However, due to rejection of countries it opted out from the last version of the article.