Browsing by Subject "jurisdiction"

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  • Linninen, Malviina (Helsingin yliopisto, 2020)
    Contract adaptation is to a considerable extent different kind of decision-making than settling a traditional dispute. When a party requests adaptation of the contract, the tribunal is asked to reshape the parties’ future contractual relationship, which may include creating new obligations for the parties upon the tribunal’s discretion. Thus, the decision-making includes a creative or innovative element thereby denoting wider discretion and requiring high competence from the arbitrators. For these reasons, it is not self-evident that parties want arbitrators to possess the powers to adapt their contract even if they wished them to solve their disputes through traditional dispute settlement. In that light, this study evaluates the possible grounds on which a party could contest a claim requesting adaptation of the parties’ contract in arbitration. In particular, the study aims at determining how a preliminary objection to the arbitral tribunal’s procedural powers to adapt the contract ought to be classified in the obscure division between jurisdiction and admissibility. In legal literature and case law the issue has so far been by default understood as an issue pertaining to the arbitrators’ jurisdiction. This study critically considers whether such view is actually the most accurate and well-grounded perception. The first research question examines the separation between challenges to jurisdiction and challenges to admissibility. There is unfortunate inconsistency in the use of the concepts among courts and tribunals as well as legal commentators, and issues of admissibility have often been wrongly treated as jurisdictional. However, there is a substantial difference between classifying an issue as of jurisdiction or admissibility. Firstly, whereas challenging the arbitral tribunal’s jurisdiction intends to send the particular dispute to a court instead of arbitration, an admissibility challenge seeks to cease the legal processing of the case altogether. Thus, while a jurisdictional challenge attacks the tribunal, an admissibility challenge is aimed at the particular claim. The second main difference between jurisdiction and admissibility concerns the finality of the decision. While arbitrators’ decisions on jurisdiction are necessarily reviewable by courts, issues concerning admissibility fall within the scope of arbitrators’ exclusive adjudicatory powers and are thus non-reviewable. Thereby, the classification has direct effect on the length of the proceedings. In addition, arbitrators may not regard the claim’s admissibility by their own initiative, but such arguments need to be raised by the parties. Therefore, the parties should be particularly mindful of how to formulate and classify their preliminary objections. The second research question considers the appropriate nature of a preliminary objection against a claim on contract adaptation. If the question of the arbitrators’ powers to adapt the parties’ contract was regarded as jurisdictional, the tribunal’s decision could be reviewed by a court on the ground that the claim requesting adaptation was outside the scope of the arbitration agreement. Yet, what is problematic in characterizing the issue as jurisdictional is the uncertainty in the existence of the state courts’ jurisdiction to adapt the contract in case the arbitrators would be found to lack such jurisdiction. While jurisdictional issues constitute an either-or situation between litigation and arbitration, such substituting jurisdiction of the courts is indeed a necessity in order to avoid a situation where nobody would have the jurisdiction in the case. Furthermore, characterizing the issue as jurisdictional would in case of a negative decision on the tribunal’s jurisdiction cause decentralization of different claims to different forums. However, when the parties have agreed on arbitration through a general arbitration clause, they can be presumed to have intended that different disputes would not be fragmented between arbitration and litigation. Thus, such characterization would presumably contradict the parties’ intentions. The ultimate conclusion of the study is that the question of the arbitrators’ procedural powers to adapt the parties’ contract would be better characterized (as a default rule) as an issue of admissibility. Such default rule is considered to best reflect the intentions of the parties. Hence, a new plausible ground for inadmissibility of claims, i.e. inadequacy of the decision-maker’s powers, is proposed to be recognized. Indeed, it is suggested that the pro-arbitration principle and the need for promoting minimal judicial interference in arbitration to avoid multiple proceedings do not require only that the available court review is limited to jurisdictional issues but also that the users of international arbitration rethink what actually constitutes a jurisdictional issue. First and foremost, the characterization of the particular issue should be evaluated individually in each case and not labelled automatically as concerning the tribunal’s jurisdiction when the ultimate consequence is that the issue is always in the end finally decided by a court.
  • Sorvaniemi, Saara (Helsingin yliopisto, 2020)
    The Energy Charter Treaty (ECT) is one of the most frequently invoked international investment treaties. Characteristically to modern international investment law, it provides for investor-state dispute settlement (ISDS). The ECT is a multilateral treaty to which the EU, EU member states (with the exception of Italy) and several non-EU states are parties. Therefore, it entails the possibility of settling intra-EU disputes, that is disputes between EU based investors and EU member states, by international arbitration. Before the Treaty of Lisbon and the inclusion of foreign direct investment in the common commercial policy of the EU, international investment law was the main tool of investment policy in Europe. For decades, international law and EU law were able to coexist and to harmonically interact. However, since the enlargement of the EU to the East, issues between EU law and international investment law and arbitration have preoccupied investors, EU member states and the European Commission. EU member states have argued since 2007 that intra-EU bilateral investment treaties have been superseded by EU law. In 2018, the claim was partially successful when the CJEU concluded in its Achmea judgement that ISDS arbitration clauses in intra-EU bilateral investment treaties are precluded by EU law. Under the ECT, the intra-EU jurisdictional objections have also been made since 2007, but ECT tribunals have consistently rejected them. The study examines the ECT panels’ jurisdiction in investor-state arbitration in an intra-EU context. As the Achmea judgement has been the most important recent development relating to the issue of jurisdiction of investment tribunals in intra-EU cases, the thesis examines especially how arbitral tribunals under the ECT have assessed the intra-EU jurisdictional objection before and after Achmea. Because the aim of the thesis is to identify relevant legal norms and to clarify their content in the light of recent case law, a doctrinal method is assumed. The study is conducted from a public international law perspective with limited elements of EU law. Hence, the doctrine of legal sources is crucial. The most relevant sources for the study are: 1) the ECT, Article 26(1) of the treaty in particular, as the jurisdictional basis of an arbitral tribunal and 2) ECT case law relating intra-EU disputes as it is what translates treaty language into operative law. Since the power to determine the extent of jurisdiction lies with the arbitral tribunal itself, jurisdictional issues in particular should be examined in the light of case law. In addition, customary international law regarding treaty conflict and treaty interpretation are included in the study as treaty-based rules have to be understood in the context of general rules of international law. In order for an arbitral tribunal to have jurisdiction under Article 26(1) ECT, five conditions must be met: 1) there must be a dispute concerning an alleged breach of an obligation under Part III of the ECT by a contracting party; 2) the dispute must relate to an investment as defined by the ECT; 3) the investment must be in the area of a contracting party; 4) the claimant must be an investor of another contracting party; and 5) the events with which the claim is concerned must have occurred at a date such as to give the tribunal jurisdiction. In summary, EU actors have argued that as the investor in intra-EU disputes is not from another contracting party (but from the area of the EU) the investment relations are subject to the EU’s regulatory framework and that the ECT and EU law have conflicting rules warranting EU law to prevail in intra-EU relations. Based on the research, it is established that ECT panels have jurisdiction in intra-EU disputes. In terms of argumentation, the case law rejecting the intra-EU jurisdictional objection is consistent enough to form the following general level conclusions: 1) interpretation of Article 26(1) ECT in accordance with the interpretation rules of customary international law is clear in including intra-EU disputes; and 2) there is no conflict between ISDS under the ECT and EU law. What remains undecided is the potential status of EU law from the perspective of the ECT. Application of EU law could only be possible based on international law that requires it and while the tribunals have assessed applying EU law based on e.g. the lex specialis and lex posterior principles or an inter se agreement, they have not formed a single approach. In fact, by stating that the interpretation of Article 26(1) ECT is clear and that there is no conflict with EU law, the tribunals leave little chance for applying EU law and therefore, little chance for the Achmea judgement or potential future developments of EU law to have an impact on the tribunals’ jurisdiction. Consequently, for the time being, the intra-EU claims under the ECT remain arbitrable.