On 16 February 2016 Ms Claudia Helena Salgado Levy defended her PhD thesis in International Studies, entitled “The Interpretative Practice of International Investment Arbitral Tribunals”, at the Graduate Institute. The committee was presided by Associate Professor Zachary Douglas and included Honorary Professor Jean-Michel Jacquet, thesis director, as well as Professor Laurence Boisson de Chazournes, from the University of Geneva.
What drew your attention to the interpretative practice of international investment arbitral tribunals?
The proliferation of investor-state arbitration in recent years has raised some concerns related to the predictability and consistency of the investment field: How can it be explained that similar cases, with similar facts and similar applicable law, have different and even contradictory outcomes (i.e. Encana v. Ecuador and Occidental v. Ecuador; several Argentinean cases; Rosinvest v. Russia and Renta v. Russia)? And what should be done to avoid fragmentation of the field? I decided to study the interpretative practice of investment arbitral tribunals in order to find answers to these questions. In particular, I sought to explore how investment arbitral tribunals are accomplishing their task of interpreting the different rules of law within the international investment field and what are the interpretative problems that they are facing. These rules of law may belong to international law – treaties, customary international law and general principles of law – or they may originate from national laws, contracts and transnational laws.
What answers did you find?
Undoubtedly, legal interpretation has played a crucial role within the investment field: investment arbitral tribunals have been exposed to the diverse problems of legal interpretation while at the same time the nature and specificities of investment arbitration have influenced the reasoning process of investment arbitrators. Since the set of legal rules within the investment law field is incomplete and contains gaps, arbitral tribunals see the role of legal interpretation as aiming to improve the object of interpretation and not only describing the object accurately. This gives arbitral tribunals an “interpretation-law making” function. Furthermore, investment arbitral tribunals are of a hybrid nature. Contrary to other adjudicators which to a certain extent are conditioned to their belonging to a legal order, investment arbitral tribunals are anchored neither to any national legal system nor to the international legal order. Therefore, they are not bound to apply either the interpretative methods and techniques of national legal systems or the ones of the international legal order, although in general they have applied the Vienna Convention on the Law of Treaties (VCLT).
This freedom in the choice of interpretative methods and techniques is accentuated by the actual flexibility of the VCLT. Despite the fact of having been conceived as a single rule of interpretation, Article 31 contains different interpretative methods and techniques which may even result in contradictory outcomes (i.e literal meaning of the words v. the object and purpose of the treaty). Furthermore, the VCLT has not provided all the possible interpretative techniques that would be suitable for an investment law regime, which is a specialised field of international law and has its own peculiarities (i.e interpreting a treaty by taking into account other treaties on the same subject matter concluded by one or both states parties to the treaty to be interpreted with third countries).
The interpretative methods and techniques applied have favoured and strengthened the protection accorded to foreign investments and investors. However, investment tribunals have given little attention to the other aspects of the investment regime, viz. the promotion of investments in accordance with the interests of the state and the establishment of a solid regulatory framework for the effective functioning of the regime.
Finally, due to the characteristics of investment arbitral tribunals, their flexibility in the choice of interpretative methods and techniques, while very broad, is not infinite. Investment arbitral tribunals operate under both self-imposed and external limitations on their interpretative freedom. The most important self-imposed limitation consists in the use of rules formulated in prior decisions. If tribunals had not followed previous decisions, international investment law would not have been able to develop. Other possible limitations are the issuance of authoritative and binding interpretations as well as indications on interpretative methods and techniques (i.e draft Transatlantic Trade and Investment Partnership of the European Union, Art. 13).
How does your research help shed a new light on current problems of legal interpretation?
States continue negotiating and concluding bilateral, regional and multilateral investment treaties. They also conclude state contracts and adopt national laws protective of foreign investments. In any of these situations, states have to bear in mind that the interpretative power of investment arbitral tribunals derives from the parties to the dispute, and that it is therefore possible to establish in advance certain rules, methods and techniques that could assist arbitral tribunals in their interpretative reasoning. This can go from general guidance to very precise indications. In that sense, states could request that national law rules be interpreted according to the national interpretative methods and techniques, while treaty rules be interpreted with the objective method of interpretation. Likewise, states could decide whether general principles of law, the public lex mercatoria and precedents should constitute an interpretative tool.
What will you remember most of your doctoral experience?
The whole process made me grow intellectually. I will not forget the constant help and encouragement provided both by my thesis supervisor, Jean-Michel Jacquet, and my second reader, Jorge Viñuales. I will also remember and miss the Institute’s library, which has a great reading environment, countless and updated books and wonderful librarians that make our lives easier.
Full citation: Salgado Levy, Claudia Helena. “The Interpretative Practice of International Investment Arbitral Tribunals.” PhD thesis, Graduate Institute of International and Development Studies, 2016. 563 p.
Illustration: Ihardlythinkso, Brusky’s Hex Chess, Showing Pawn Moves, licensed under CC0 1.0 Universal.