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Cortec Mining Kenya Limited, Cortec (Pty) Limited, and Stirling Capital Limited v. Republic of Kenya

  • Lorenzo Cotula (a1) and James T. Gathii (a2)

Extract

In Cortec v. Kenya, an investor-state arbitral tribunal established under a bilateral investment treaty (BIT) held it lacked jurisdiction to hear a dispute concerning a mining project that the tribunal found did not comply with domestic environmental law. The award raises significant issues of public international law, including how questions of investor compliance are considered in investor-state dispute settlement and the legal implications of investor noncompliance. The issues resonate with wider debates about balancing investor rights and obligations in the international investment regime.

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References

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1 Cortec Mining Kenya Ltd. v. Republic of Kenya, ICSID Case No. ARB/15/29, Award (Oct. 22, 2018). The claimants have since applied for annulment of the award.

2 Agreement for the Promotion and Protection of Investments, Sept. 13, 1999, Kenya-Ir.-U.K., Gr. Brit. TS No. 8 (2000) (Cd. 4597).

3 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, Mar. 18 1965, 575 UNTS 159.

4 Inceysa Vallisoletana, S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, paras. 190–207, 257 (Aug. 2, 2006).

5 Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, para. 101 (Apr. 15, 2009); Alasdair Ross Anderson v. Republic of Costa Rica, ICSID Case No. ARB(AF)/07/3, Award, paras. 51–59 (May 19, 2010); Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, paras. 130–31, 156 (Oct. 4, 2013). Contra Franck Charles Arif v. Republic of Moldova, ICSID Case No. ARB/11/23, Award, paras. 372–84 (Apr. 8, 2013) (where the tribunal dismissed jurisdictional objections based on a legality requirement). In Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award, paras. 132–39 (June 18, 2010), the tribunal found that Ghana had failed to discharge its burden of proof that the investor had violated the legality clause.

6 Phoenix Action, ICSID Case No. ARB/06/5, Award, at paras. 100–02.

7 Saur Int'l S.A. v. République Argentine, ICSID Case No. ARB/04/4, Award on Jurisdiction and Liability, paras. 308, 311–12 (June 6, 2012) (authors’ translation from the French original).

8 Plama Consortium Ltd. v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Decision on Jurisdiction, paras. 228–30 (Feb. 8, 2005), and Award, paras. 138–40, 143, 146 (Aug. 27, 2008).

9 Hesham Talaat M. Al-Warraq v. Republic of Indonesia, Final Award, paras. 631–48, 683 (Dec. 15, 2014).

10 Phoenix Action, ICSID Case No. ARB/06/5, Award, at paras. 100–101, 114.

11 Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, Award, para. 112 (July 14, 2010); Metal-Tech, ICSID Case No. ARB/10/3, Award, at paras. 126–27.

12 Gerold Zeiler, Jurisdiction, Competence, and Admissibility of Claims in ICSID Arbitration Proceedings, in International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer 81 (Christina Binder, Ursula Kriebaum, August Reinisch & Stephan Wittich eds., 2009).

13 Zachary Douglas, The International Law of Investment Claims 148 (2009). See also Heiskanen, Veijo, Admissibility in International Arbitration, in Elgar Encyclopedia of International Economic Law 319 (Cottier, Thomas & Schefer, Krista Nadakavukaren eds., 2017).

14 C. L. Lim, Jean Ho & Martins Paparinskis, International Investment Law and Arbitration: Commentary, Awards and Other Materials 118 (2018).

15 See, e.g., Rahim Moloo & Alex Khachaturian, The Compliance with the Law Requirement in International Investment Law, 34 Fordham Int'l L.J. 1473, 1500 (2011).

16 Saba Fakes, ICSID Case No. ARB/07/20, Award, at para. 112 (holding that to read an implied legality requirement would “do[] violence to the language of the ICSID Convention”).

17 Vladislav Kim v. Republic of Uzbekistan, ICSID Case No. ARB/13/6, Decision on Jurisdiction (Mar. 8, 2017). The tribunal did not cite other potentially relevant awards, such as Tokios Tokeles v. Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, para. 86 (Apr. 29, 2004), which found that excluding an investment from BIT protection for “minor errors” would be inconsistent with the object and purpose of the BIT.

18 In Alasdair Ross Anderson, ICSID Case No. ARB(AF)/07/3, Award, at para. 58, the tribunal held that “prudent investment practice requires that any investor exercise due diligence before committing funds to any particular investment proposal,” and that “[a]n important element of such due diligence is for investors to assure themselves that their investments comply with the law”.

19 See, e.g., Gustav F W Hamester GmbH & Co KG, ICSID Case No. ARB/07/24, Award, at paras. 127, 129 (holding that the relevant legality requirement only applied to the making of an investment).

20 See Lorenzo Cotula, Raising the Bar on Responsible Investment: What Role for Investment Treaties?, IIED Briefing (Mar. 2018), available at http://pubs.iied.org/pdfs/17454IIED.pdf; James Gathii & Sergio Puig, Introduction to the Symposium on Investor Responsibility: The Next Frontier in International Investment Law, 113 AJIL Unbound 1 (Jan. 7, 2019), at https://www.cambridge.org/core/journals/american-journal-of-international-law/volume/AED2077F3422BB3F291F651F695CD4FA.

21 Examples include the Bilateral Investment Treaty Between the Republic of Belarus and the Republic of India on Investments, Art. 11(i) (Sept. 24, 2018), and the Intra-Mercosur Investment Facilitation Protocol, Art. 13(1) (April 7, 2017). Neither treaty has entered into force. See also Netherlands Model Investment Treaty, Art. 7(1) (Mar. 22, 2019).

22 See, e.g., Reciprocal Investment Promotion and Protection Agreement, Morocco-Nigeria, Arts. 14, 18 (Dec. 3, 2016) (not yet in force).

23 Most-favored-nation clauses could create further complexities in the interpretation and application of any investor obligations determined through BITs.

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American Journal of International Law
  • ISSN: 0002-9300
  • EISSN: 2161-7953
  • URL: /core/journals/american-journal-of-international-law
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