Importance of Consent to Jurisdictional as well as Substantive or Procedural

It has been suggested by tribunals and in scientific literature that MFN clauses may not be applicable to jurisdictional provisions, with MFN clauses not being able to override the lack of consent to the jurisdiction of a tribunal.⁵⁴³ Indeed the decisions of the various tri-bunals can largely be harmonized by distinguishing between jurisdictional and procedural provisions. While the Maffezini, Siemens, Camuzzi and Gas Natural tribunals gave effect to the MFN clauses in order to overcome admissibility requirements, application of MFN clauses was denied – with the exception of the decision in the RosInvest arbitration - where jurisdiction was in question. Under this interpretation, the scope of application of a substantive obligation is an entirely separate question to the conferral of jurisdiction upon an international tribunal.⁵⁴⁴ The underlying argument is that that the judicial sovereignty of the host State contradicts the operation of the clause, the consent to arbitration being a waiver of the host State’s sovereign right not to be cited before an international tribunal.

It is a fundamental principle of international law that no State can be compelled to submit its disputes to the jurisdiction of an international tribunal. The consent of the parties, as a

543 See for example Teitelbaum, Who’s afraid of Maffezini?, p. 232: “To shorten a seemingly arbitrary waiting period for the submission of a dispute affects the timing of the host state’s consent […], but does not necessarily undermine the host state’s consent as a whole.”

544 See McLachlan/Shore/Weiniger, p. 257, para. 7.168.

147 corollary of the principle of the sovereign equality of States, is the essential prerequisite for the establishment of jurisdiction.⁵⁴⁵ The PCIJ held with regard to its own jurisdiction that

"It is true that the Court's jurisdiction is always a limited one, existing only in so far as States have accepted it[.]”⁵⁴⁶

As with traditional forms of international arbitration, recourse to ICSID arbitration is en-tirely voluntary.⁵⁴⁷ The condition of consent is enshrined in Article 25 of the ICSID Con-vention, which limits ICSID jurisdiction to cases where both parties have consented in writing to submit their dispute to the ICSID Centre.⁵⁴⁸ There are two aspects to the re-quirement of consent. Since Article 25 (1) requires a dispute submitted to an ICSID Tri-bunal to be “between a Contracting State […] and a national of another Contracting State”, the first prerequisite is that the State party to the dispute and the home State must be parties to the Convention. However, the ratification of the Convention does not entail the automatic acceptation of jurisdiction, but it is necessary for both parties to additionally

545 Status of Eastern Carelia, Advisory Opinion, PCIJ Series B No. 5 (1923), p. 19; Minority Schools (Upper Silesia), PCIJ Series A, No. 15 (1928), p. 22; Mavrommatis Palestine Concessions (Greece v. U.K.), PCIJ Series B No. 3 (1924), p. 16; Corfu Channel Case, Judgment on Preliminary Objection, 25 March 1948, ICJ Reports 1948, p. 27; Anglo-Iranian Oil Company case (Jurisdiction), Judgment of 22 July 1952, ICJ Reports 1952, p. 103; Ambatielos case (merits: obligation to arbitrate), Judgment of 19 May 1953, ICJ Reports 1953, p. 19; Interpretation of Peace Treaties, Advisory Opinion of 30 March 1950, ICJ Reports 1950, p. 71; Land and Maritime Boundary between Cameroon and Nigeria Case, Preliminary Objections, Judgment of 11 June 1998, ICJ Reports 1998, p. 312. See also Rosenne, The law of treaties, pp. 549, 550;

Amerasinghe, Jurisdiction of international tribunals, p. 51; Lauterpacht, The Development of International Law, p. 338; Santulli, Droit du contentieux international, para. 179; Lauterpacht, Aspects of the Administra-tion of InternaAdministra-tional Justice, p. 23; Fitzmaurice, The Law and Procedure of the InternaAdministra-tional Court of Justice (1986), p. 492.

546 The Factory at Chorzow (Jurisdiction) (Germany v. Poland), Judgment of 26 July 1928, PCIJ Se-ries A No. 9 (1927), p. 32.

547 This has been stressed in the Report of the Executive Directors on the ICSID Convention, where consent was described as the “cornerstone” of the jurisdiction of the Centre (Report of the Executive Direc-tors on the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Report of 18 March 1965, para. 23).

548 Art. 25 (1) provides: “The jurisdiction of the Centre shall extend to any legal dispute arising direct-ly out of an investment between a Contracting State (or any constituent subdivision or agency of a Contract-ing State designated to the Centre by that State) and a national of another ContractContract-ing State, which the par-ties to the dispute consent in writing to submit to the Centre. When the parpar-ties have given their consent, no party may withdraw its consent unilaterally.”

submit disputes to ICSID arbitration.⁵⁴⁹ Thus, the jurisdiction of an ICSID arbitral tribunal requires a two-step procedure, consisting of the ratification of the Convention and an ad-ditional step by which consent to jurisdiction is given by the parties to the dispute. The parties in those two steps are not identical, since in the second step the home State’s con-sent is replaced by the investor’s. The agreement between the parties to the dispute may be expressed in various ways.⁵⁵⁰ The most common form is a direct agreement between the parties recorded in an investment contract. If the dispute has already arisen, the parties may submit the dispute by way of a compromis. Alternatively, the host State may in its national investment legislation offer to submit all or certain categories of disputes arising from investments to ICSID.⁵⁵¹ Moreover, numerous bilateral investment treaties and mul-tilateral investment agreements foresee the possibility of ICSID arbitration between either party of the treaty and a national of the other party.⁵⁵² These unilateral offers may be ac-cepted by the investor either by a written submission or by the institution of proceed-ings.⁵⁵³

The UNCITRAL Arbitration Rules also explicitly hold in Article 1 that the Rules are only applicable when the parties have agreed in writing to submit the dispute to arbitration un-der the UNCITRAL rules. The ICSID and UNCITRAL rules are thus an expression of the principle that international courts and tribunals only have jurisdiction to the extent to which States have consented to confer jurisdiction upon them.

It is also true with regard to substantive law that the rules of law binding upon states must reflect their free will, which is expressed in the following statement of the ICJ:

549 This can be derived from the last paragraph of the preamble and from Article 25 I ICSID Conven-tion.

550 On the various forms of consent see Schreuer, The Interpretation of ICSID Arbitration Agree-ments, in: Wellens (ed.), International Law: Theory and Practice, p. 719; Schreuer, The ICSID Convention:

A Commentary, Article 25, paras 241-319.

551 See eg. SPP v. Egypt, Decision on Jurisdiction, 14 April 1988, ICSID case No. ARB/84/3, paras 101, 116.

552 See eg Article 11 (2) of the German Model BIT (Model I), Article 1122 NAFTA, Article 26 ECT, Article 9 of the Investment Protocols of MERCOSUR.

553 Tradex v. Albania, Decision on Jurisdiction, 24 December 1996, ICSID case No. ARB/94/2, IC-SID Review vol. 14 (1999), pp. 186, 187.

149

“International law governs relations between independent States. The rules of law binding upon States […] emanate from their own free will as expressed in conven-tions or by usages generally accepted as expressing principles of law […].”⁵⁵⁴

Also with regard to substantive international norms, it flows from the sovereign equality of States that States have the right to determine what shall be the content of the legal rules by which they will be bound.⁵⁵⁵ The importance of consent as the basis of judicial juris-diction therefore is not a phenomenon different from the notion of consent in general, but the relevance of consent for a tribunal’s jurisdiction follows from the importance of con-sent in the creation of international obligations in general.⁵⁵⁶ It is also stated in the Vienna Convention on the Law of Treaties that treaty obligations are only binding if the State has validly consented.⁵⁵⁷ With the consent of sovereign States being decisive for the creation of the entire legal framework of international relations, the issue of consent does not only pose itself in the context of application of the most-favoured-nation clause to jurisdiction-al provisions, but comes up in the same way with regard to substantive standards of pro-tection. When a State has to grant a more favourable substantive standard, the original consent to the less favourable national treatment standard is also overridden. This does however not affect State sovereignty, with consent to that change of standard of invest-ment protection being incorporated in the most-favoured-nation clause. Therefore the MFN clause must not be interpreted as a substitute for consent to jurisdiction. It can how-ever, depending on its interpretation according to the Vienna Convention, be viewed as incorporating the consent to jurisdiction in case there is such consent in a third-party trea-ty.