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Treaty Shopping by Dual Nationals Through the Use of Interposed Corporate Entities

Treaty shopping, also called corporate (re-)structuring, is most often associated with legal persons, in particular mailbox companies. Much discussed in this respect is the practice of “round-tripping” where the investor-claimant is foreign-incorporated, but majority-controlled by natural or legal persons of host State nationality (see e.g. Tokios Tokeles v Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004). In these cases, arbitral tribunals have virtually uniformly rejected Respondents´ pleas to “pierce the corporate veil” and look for the “real” (upstream) investor in the absence of a corresponding, treaty-based requirement, thus adopting a strictly f [...]

Upholding Delocalized Enforcement of ICSID Awards

In Mobil Cerro Negro, Ltd., et al v. Bolivarian Republic of Venezuela, a New York federal district court rejected Venezuela’s sovereign immunity challenge and upheld use of an ex parte procedure available under New York law to convert an ICSID award into a U.S. court judgment. The decision highlights the delocalized nature of ICSID awards and illustrates how ICSID award creditors are increasingly resorting to judicial enforcement. The decision also promotes New York’s reputation as a creditor-friendly jurisdiction at a time of controversy in Europe over the consistency of an intra-EU ICSID award with EU policy.

Typically, enforcement of an arbitration award against a foreign state is sub [...]

About the Ostrich, the Micula Brothers and other European Fables

 ‘By putting its head in the sand, the ostrich can see no problems, and if it can’t see any problems, they don’t exist”[1]

To what extent can legal systems differ? Can these differences be legitimate enough to collapse a “conflictive” legal system? These two ambitious questions are difficult to be answered in one go, and are rather susceptible to being answered differently. Regardless of the legal context and origin of the given answers, only one general rule should apply: no ostriches are allowed. And please allow me to explain what I mean by that.

By burying its head in the sand, the ostrich limits itself to internally scrutinise a broken view, this action hinders the ostrich [...]

Mass Claims in Investment Arbitration- The Need of the Hour

Mass claims proceedings have become increasingly important in the current dispute resolution scenario prevailing in the world. In international law, the role mass claims proceedings play is beyond dispute. Tribunals such as the Iran-US Claims Tribunal & United Nations Compensation Commission (UNCC) have certainly highlighted the importance which has been played by mass claims tribunals. Although these international mass claims processes are established to consider the legal claims which result from significant historical events and they mostly constitute large-scale reparation programs for victims of armed conflicts. What makes these claims commissions a great success is that they are able t [...]

Security for Costs in ICSID Arbitration

and Oleg Temnikov

Purpose of security for costs

Security for costs falls into the category of provisional measures and is regulated by Article 47 of the ICSID Convention and Arbitration Rule 39. Its purpose is, inter alia to preserve the effectiveness of the award and the integrity of the proceeding by protecting the requesting party’s potential right to reimbursement of costs. (RSM Production Corporation v. Saint Lucia, Decision on security for costs of 13 August 2014, para. 65) The present post discusses the decision on security for costs of the arbitral tribunal in RSM Production Corporation v. Saint Lucia, as well as its implications in an area inhibited by inconsistency.

Why past tri [...]

The Collateral Effect of an International Arbitration Award: A Capital Markets View

The current state of affairs of arbitration within Latin America looks challenging. Many countries are having upcoming ICSID awards which could amount to tens of billions of dollars against them. Most international bonds have a final judgment event of default (EoD), which could lead to a default bond scenario on the sovereign debt of such Republic. Some Bonds from Sovereigns list the following event of default:

“…there shall have been entered against the Republic…a final judgment, decree or order by a court of competent jurisdiction from which no appeal may be made, or is made, for the payment of money in excess of U.S.$100,000,000 or its equivalent and 30 days shall have passed since th [...]

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