The Ambatielos case

riae to the subject-matter of the relevant treaty. In contrast, the subject-matters of invest-ment treaties are comparable as long as the basic treaty and the third-party treaty both deal with dispute settlement. What the cases illustrate is that if the basic treaty does not at all make reference to a certain treatment standard, the application of the clause to such treaty standard is not implied from the subject-matter of the clause. The only comparable situation in which the domestic cases could offer guidance would therefore be in case of invocation of dispute settlement provisions in a third-party BIT where the basic treaty containing the MFN clause would contain no dispute settlement provisions at all.

133 could not pay the mortgage interests he had granted to the British Government on some of the ships, and the British Government initiated proceedings against him for payment of the interests. When in 1923, the Court of Admiralty and the Court of Appeal decided in favour of the United Kingdom, the Claimant did not pursue an appeal to the House of Lords. Instead he claimed that the conduct of the courts and the British government dur-ing the judicial proceeddur-ings amounted to a denial of justice and therefore to a violation of various treaties concluded between the United Kingdom and third States incorporating customary international law standards, which he could invoke by virtue of the most-favoured-nation clause contained in the 1886 Anglo-Greek treaty. Attempts of the Greek government to have the dispute settled by arbitration failed since the British government denied the applicability of the arbitral procedure in the 1886 Anglo-Greek Treaty of Commerce and Navigation. As a result, Greece requested the ICJ to adjudge and declare that the United Kingdom was under an obligation to agree to refer the dispute to arbitra-tion.

b. The Decisions by the ICJ

After the ICJ had in its first judgment of 1 July 1952 affirmed its jurisdiction under Art.

36 (1) of the ICJ Statute, it decided in its second judgment of 19 May 1953 whether the United Kingdom was obliged to submit the dispute to arbitration. The Anglo-Greek Dec-laration of 1926 provided that disputes about the validity of private claims, in so far as these claims were based on the treaty of 1886 between Greece and the United Kingdom, were to be settled in accordance with the Protocol to the 1886 Treaty, which required the submission of such disputes to a Commission of Arbitration for binding resolution. The Court thus had to decide whether the Greek claim could prima facie be based on the most-favoured-nation clause included in Article X of the 1886 Greece-United Kingdom treaty.

This clause provided:

„The Contracting Parties agree that, in all matters relating to commerce and navigation, any privilege, favour, or immunity whatever which either Contracting Party has actually granted or may hereafter grant to the subjects or citizens of any other State shall be ex-tended immediately and unconditionally to the subjects or citizens of the other

Contract-ing Party; it beContract-ing their intention that the trade and navigation of each country shall be placed, in all respects, by the other on the footing of the most favoured nation.”

The Greek Government relied on this clause to invoke inter alia the Treaties of Peace and Commerce concluded between the United Kingdom on the one hand and Denmark, Swe-den and Bolivia on the other, which provided that “justice and right” or “justice and equi-ty” should be administered to the subjects of the other party and that individuals should be treated in accordance with international law.⁵⁰⁸ They contended that a litigation arising out of a commercial contract could be considered a matter relating to commerce and thus fell within the term “all matters relating to commerce and navigation” which defined the scope of the most-favoured-nation clause in the 1886 Treaty.⁵⁰⁹ The Government of the United Kingdom objected that the most-favoured-nation clause of the 1886 Treaty, deal-ing with matters of commerce and navigation, could not be invoked to claim the benefits of provisions in other treaties concerning judicial proceedings, which formed the subject of a separate article in the 1886 treaty⁵¹⁰. Without making a final decision whether the claim could be based on the 1886 treaty, since this question fell within the competence of the Arbitral Commission⁵¹¹, the ICJ decided that the reliance by Greece on the most-favoured-nation clause in order to claim benefits involving judicial proceedings was suf-ficiently plausible to base the claim on the 1886 treaty. The Court held:

“In order to decide […] that the Hellenic Government’s claim on behalf of Mr. Am-batielos is ‘based on’ the Treaty of 1886 […] [t]he Court must determine […]

whether the arguments advanced by the Hellenic Government in respect of the trea-ty provisions on which the Ambatielos claim is said to be based, are of a sufficiently

508 See Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, pp. 20, 21.

509 See Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, p. 21.

510 See Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, p. 21. Article XV of the 1886 treaty provided for “free access to the Courts” for the subjects of both Con-tracting Parties.

511 See Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, pp. 16-19.

135 plausible character to warrant a conclusion that the claim is based on the Treaty.

[…] [T]he Hellenic Government has contended that a litigation arising out of a commercial contract may be considered as a matter relating to commerce and thus falling within the term ‘all matters relating to commerce and navigation’ to which the most-favoured-nation clause […] applies. […] Having regard to the contentions of the Parties with respect to the scope and effect of the most-favoured-nation clause […] and bearing in mind especially the interpretations of these provisions contended for by the Hellenic Government, the Court must conclude that this is a case in which the Hellenic Government is presenting a claim on behalf of a private person ‘based on the provisions of the Anglo-Greek Commercial Treaty of 1886’

[…].”⁵¹²

In the view of the four dissenting judges, the ejusdem generis principle precluded the most-favoured-nation clause from applying to judicial matters, given that the clause only referred to commerce and navigation, while the article dealing with the administration of justice did not contain a separate most-favoured-nation clause.⁵¹³

c. Decision by the Commisson of Arbitration

The merits of the case were decided by a Commission of Arbitration, which although eventually dismissing the Greek claim, still in principle affirmed the applicability of the most-favoured-nation clause to matters concerning the administration of justice. Greece argued that it was entitled to claim for its nationals treatment in accordance with justice, right, equity and the principles of international law, such treatment having been assured by the United Kingdom to a number of third States. The Arbitral Commission affirmed

512 Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, pp.

12, 22.

513 Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, p 34 (joint dissenting opinion of Judges McNair, Basdevant, Klaestad and Read). The dissenting judges held:

“[h]aving regard to its terms, Article X promises most-favoured-nation treatment only in matters of com-merce and navigation; it makes no provision concerning the administration of justice; in the whole of the Treaty this matter is the subject of only one provision, of limited scope, namely, Article XV, paragraph 3, concerning free access to the Courts, and that Article contains no reference to most-favoured-nation treat-ment. The most-favoured-nation clause in Article X cannot be extended to matters other than those in re-spect of which it has been stipulated.”

the application of the ejusdem generis principle, stating that the most-favoured-nation clause could only be applied to “matters belonging to the same category of subject as that to which the clause itself relates.”⁵¹⁴ Although the most-favoured-nation clause only re-ferred to matters relating to commerce and navigation, the Commission held that the ad-ministration of justice could be seen as a natural complementary to other treatment sub-ject to the most-favoured-nation clause since the judicial enforcement of claims concern-ing matters of commerce and navigation was a necessary corollary to the rights contained in the treaty.⁵¹⁵ The Arbitral Commission made its finding in the light of the fact that trea-ties of commerce and navigation usually contained provisions concerning the administra-tion of justice, such as the right to free access to courts, which indicated that the protec-tion of commerce and navigaprotec-tion was closely related to the settlement of traders’ claims.

This was also true for the Anglo-Greek treaty, which contained in Article XV the right of subjects to free access to court. The most-favoured-nation clause relating to commerce and navigation could therefore be read broadly.⁵¹⁶ The Commission derived further evi-dence for its interpretation from the broad formulation of the most-favoured-nation clause, which was designed by the parties to assure most-favoured-nation treatment “in all respects”.⁵¹⁷ In the words of the Commission of Arbitration,

„It is true that ‘administration of justice’, when viewed in isolation, is a subject-matter other than ‘commerce and navigation’, but this is not necessarily so when it is viewed in connection with the protection of the rights of traders. Protection of the rights of traders naturally finds a place among the matters dealt with by Treaties of commerce and navigation. Therefore it cannot be said that the administration of jus-tice, in so far as it is concerned with the protection of these rights, must necessarily

514 Ambatielos Case, Commission of Arbitration, UNRIAA XII, p. 107.

515 Ambatielos Case, Commission of Arbitration, UNRIAA XII, p. 107.

516 Ambatielos Case, Commission of Arbitration, UNRIAA XII, p. 107.

517 Ambatielos Case, Commission of Arbitration, UNRIAA XII, p. 107.

137 be excluded from the field of application of the most-favoured-nation clause when the latter includes ‘all matters relating to commerce and navigation’.”⁵¹⁸

d. Assessment

In the Ambatielos case, the ICJ ordered the United Kingdom to submit to arbitration the dispute with Greece about whether the most-favoured-nation clause in a treaty between the two States applied to matters of administration of justice, holding that it was at least prima facie possible that the most-favoured-nation clause in question could be applied to judicial matters. The Arbitral Commission then affirmed that such matters were within the scope of the most-favoured-nation clause.

Yet although the Arbitral Commission affirmed the applicability of the relevant MFN clause to provisions governing the administration of justice, investment arbitral tribunals have differed on the question whether the Ambatielos case offers a basis for the applica-bility of the most-favoured-nation clause to dispute settlement provisions. While the Maf-fezini and the Siemens tribunals have argued that the notion of administration of justice had a procedural connotation,⁵¹⁹ the Salini tribunal has tried to distinguish its case from the Ambatielos arbitration by stating that Greece had not invoked the most-favoured na-tion-clause in order to profit from more favourable dispute settlement provisions negotiat-ed with a third party, but in order to attain the application of certain substantive treatment standards requiring treatment in accordance with justice, right and equity.⁵²⁰ Although the Plama tribunal admitted that the ICJ had accepted in principle that a most-favoured-nation provision could be applied to jurisdictional matters, it still argued that the ruling did not relate to the importation of dispute settlement provisions, but of provisions

518 Ambatielos Case, Commission of Arbitration, UNRIAA XII, p. 107. Although the Commission of Arbitration affirmed the applicability of the most-favoured-nation clause to the administration of justice, it finally denied the extension of Ambatielos’s rights via the clause, arguing that there was no less favourable treatment under the treaty of 1886 since the third-party treaties invoked by Greece granted justice, right and equity only within the framework of national law and to the extent that these principles were also codified in Article XV of the treaty of 1886.

519 Maffezini v. Spain, Decision on Jurisdiction, 25 January 2000, ICSID Case No. ARB/97/7, para.

50; Siemens v. Argentina, Decision on Jurisdiction, 3 August 2004, ICSID Case No. ARB/02/8, para. 99.

520 Salini v. Jordan, Decision on Jurisdiction, 15 November 2004, ICSID Case No. ARB/02/13, para.

112.

cerning the substantive protection of traders which prohibited denial of justice in domestic courts.⁵²¹ However, the benefits invoked by Greece, which were summarised by the Arbi-tral Commission as concerning the “administration of justice”, did not only comprise the substantive protection of traders. Rather the Commission acknowledged that the admin-istration of justice encompassed the principle of free access to courts.⁵²² This right of ac-cess to courts included “the right to use the Courts fully and to avail themselves of any procedural remedies or guarantees provided by the law of the land in order that justice may be administered on a footing of equality with nationals of the country.”⁵²³ According to the tribunal, it applied both to physical access to courts and to the effective possibility for the foreigner to defend his rights, including inter alia the delivery of pleadings, the possibility of counterclaims, the right to engage Counsel, to adduce evidence, and to lodge appeals.⁵²⁴ Since one of Ambatielos’s claims was that the United Kingdom had withheld crucial documents in the judicial proceedings and refused to call a British agent as a witness, his claims related to the free access to courts as an element of the administra-tion of justice and thus had a procedural connotaadministra-tion. What was actually in quesadministra-tion was therefore not the substantive standards of justice, right and equity, but the importation of these standards into the procedures followed in the British court proceedings. The Arbitral Tribunal thus acknowledged that the administration of justice encompassed certain proce-dural standards in terms of treatment standards before courts and that these proceproce-dural treatment standards could be invoked by virtue of the most-favoured-nation clause. In or-der to make this finding, the Commission of Arbitration relied both on the broad wording of the most-favoured-nation clause, which referred to treatment “in all respects” and the fact that the treaty containing the most-favoured-nation clause comprised a provision dealing with the administration of justice, indicating that “all matters concerning com-merce and navigation” also encompassed the settlement of disputes. Transposed to the investment context, this award stands for the proposition that if an investment treaty

521 Plama v. Bulgaria, Decision on Jurisdiction, 8 February 2005, ICSID Case No. ARB/03/24, para.

215. This reasoning was endorsed by the majority in Berschader v. Russia, Award, 21 April 2006, Arbitra-tion Institute of the Stockholm Chamber of Commerce, Case No. 080/2004, para. 200.

522 Ambatielos Case, Commission of Arbitration, UNRIAA XII, 107.

523 Ambatielos Case, Commission of Arbitration, UNRIAA XII, 110.

524 Ambatielos Case, Commission of Arbitration, UNRIAA XII, 110.

139 tains a broad most-favoured-nation clause to the effect that investments and investors of each country shall be placed on the footing of the most-favoured-nation “in all respects”

and a provision concerning dispute resolution, the most-favoured-nation clause also ap-plies to provisions concerning the procedural protection of investors’ rights.