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The Admissibility of Shareholder Claims: Standing, Causes of Action, and Damages
Abstract
This thesis addresses risks of multiple recovery, prejudice to legitimate interests of third parties, and inadequate consideration of the applicable law in shareholder claims in investment treaty arbitration. It challenges the application by investment tribunals of two basic premises: i) that shareholders are entitled to claim for damages vis-à-vis measures against the company in which they hold shares and ii) that ‘contract claims’ are to be distinguished from ‘treaty claims’. The central argument is that the failure to recognize substantive overlaps between shareholder treaty claims and contract claims risks more than one recovery, potentially prejudices third parties, and can lead to an incomplete application of the applicable law. The foundations of standing and the cause of action in shareholder treaty claims involve two complementary ideas of independence, i.e., independence of shareholder treaty rights vis-à-vis the local company’s contractual/national law rights and independence of treaty claims vis-à-vis contract claims. However, the substance of shareholder treaty claims, defined as the state measure and particularly the losses involved, is often identical to or at least overlaps considerably with related contract/national law claims. Prevailing ideas on shareholder standing and the cause of action in international investment law have provided useful conceptual tools for jurisdictional determinations. Yet they have not allowed tribunals and the literature to fully consider the implications of shareholder indirect claims. The thesis argues, first, that investment tribunals should acknowledge substantive overlaps between contract and treaty claims. Second, shareholder claims may be inadmissible when such overlap exists and there is a risk of double recovery or prejudice to third parties. Third, the substantive coincidence of treaty and contract claims calls for an integrated approach to the applicable law, where proper weight is given not only to IIA provisions but also to general international law and the national law governing the investment.
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Serving as a single-volume introduction to the field as a whole, Brownlie’s Principles of Public International Law seeks to present international law as a system that is based on, and helps structure, relations among states and other entities at the international level. It aims to identify the constituent elements of that system in a clear way. This ninth edition has been completely updated to take account of the many developments in international law that have occurred since the 8 th edition (2012).
Cambridge Core - International Trade Law - State Responsibility for Breaches of Investment Contracts - by Jean Ho
In a Chapter 11 reorganization, senior creditors are entitled to insist upon being paid in full before anyone junior to them receives anything. In practice, however, departures from such "absolute priority" are commonplace. Explaining these deviations has been a central preoccupation of reorganization scholars for decades. By the standard law-and-economics account, deviations from absolute priority arise because well positioned insiders take advantage of cumbersome procedures and inept judges. In this paper, we suggest that a far simpler and more benign force dominates bargaining in reorganization cases."Deviations" from absolute priority are inevitable even in a world completely committed to respecting priority as long as asset values are uncertain. Uncertainty accompanies any valuation procedure. Bargaining in corporate reorganizations takes place in the shadow of this uncertainty, and standard models of litigation and settlement show that valuation uncertainty alone can explain many of the departures from absolute priority we see in large corporate reorganizations. Even where rational and well informed senior investors expect the absolute priority rule to be strictly enforced, they must account for the uncertainty associated with any valuation. The possibility of an unexpectedly high appraisal will cause them to offer apparently out-of-the-money junior investors contingent interests in the reorganized business.The debate over absolute priority, the central principle of modern corporate reorganization law, has been misdirected for decades. It has failed to recognize that a substantive rule of absolute priority does not lead to an absolute priority outcome. A coherent account of absolute priority must incorporate relative priority. It must take account of the option value implicit in the junior investors' right to insist on an appraisal.
The purpose of the handbook is to provide practitioners and legal scholars with a comprehensive overview and a systematic assessment of the relevant cases and issues in the field of international investment law. The handbook thus aims at giving both a first overview as well as a detailed insight into all aspects of investment law. The handbook provides a thorough legal analysis of arbitral jurisprudence and identifies emerging trends and developments. This book will be of crucial importance to investors, legal practitioners, and scholars. Further, it will answer the call for a comprehensive academic study of crucial developments, such as the increasing role of European Union Law or the rising impact of multilateral approaches on the system of international investment law.
Bilateral and multilateral investment treaties, such as NAFTA, give foreign investors substantive rights - such as freedom from expropriation - as well as the right to sue host governments for violations of the substantive rights enumerated in the investment treaties. In the last five years, the number of arbitrations arising under investment treaties has skyrocketed; billions of taxpayer dollars are at stake and government conduct, which would otherwise past domestic muster, is subject to enhanced international scrutiny. The proliferation of these bilateral and multi-lateral investment treaties has led to an unprecedented increase in the number of arbitration tribunals convened to resolve investor-state disputes. Arbitral tribunals are now testing and evaluating a variety of international law rights for the first time. These private tribunals consider legal issues that impact the international economy, public policy and international relations, but they do so in a vacuum largely because of gaps in the academic literature and confidentiality obligations that prevent public decision-making. Substantive obligations in investment treaties are remarkably similar; notwithstanding these similarities, in the absence of valuable guidance from scholars or appellate bodies, arbitral tribunals have come to inconsistent decisions on the meaning of fundamental international law rights. This Article recommends a framework for analysis as well as a series of reforms designed to prevent inconsistent decisions from occurring and to correct inconsistencies when they occur. In terms of preventative measures, the article is a call to arms for academics to contribute to the literature in this emerging discipline to provide authoritative guidance for tribunals to use during the decision making process; it also recommends changes to institutional rules and treaties to enhance transparency and promote public scrutiny. In terms of corrective measures, this article rejects the treaty-by-treaty approach previously suggested within the literature. Instead, it proposes the creation of one independent and permanent appellate body with the authority to review awards rendered under the entire investment treaty network. These measures will promote the integrity and legitimacy of a private dispute resolution system with wide-ranging public implications.
The International Law of Investment Claims considers the distinct principles governing the prosecution of a claim in investment treaty arbitration. The principles are codified as 54 'rules' of general application on the juridical foundations of investment treaty arbitration, the jurisdiction of the tribunal, the admissibility of claims and the laws applicable to different aspects of the investment dispute. The commentary to each proposed rule contains a critical analysis of the investment treaty jurisprudence and makes extensive reference to the decisions of other international courts and tribunals, as well as to the relevant experience of municipal legal orders. Solutions are elaborated in respect of the most intractable problems that have arisen in the cases, including: the effect of an exclusive jurisdiction clause in an investment agreement with the host state; reliance on the MFN clause in relation to jurisdictional provisions; and, the legitimate scope of derivative claims by shareholders.
International investment law has become increasingly prominent in the international legal order, spurred on by the explosion of Bilateral Investment Treaties between States and a sharp rise in international investment disputes. This rise to prominence has, however, not always been matched by academic reflection on the content of procedure of international investment law and its role within general international law. This book seeks to remedy this situation by providing careful analysis of every area of international investment law and its relationship with other legal fields. It is written in honour of one of the leading experts in the field of investment arbitration, Christoph Schreuer. The book explores specific and topical problems of international investment law and practice in a focused way. It also provides a forum for broader theoretical reflections on international investment law and its relation to general international law. The book includes chapters on jurisdictional questions, issues of procedure in investment proceedings, the relationship between investment arbitration and other forms of investment protection, problems of substantive investment law, regional aspects, interfaces between investment law and other areas of law, as well as the future of the law of investment protection.
This book argues that the colonial confrontation was central to the formation of international law and, in particular, its founding concept, sovereignty. Traditional histories of the discipline present colonialism and non-European peoples as peripheral concerns. By contrast, Anghie argues that international law has always been animated by the ‘civilizing mission’ - the project of governing non-European peoples, and that the economic exploitation and cultural subordination that resulted were constitutively significant for the discipline. In developing these arguments, the book examines different phases of the colonial encounter, ranging from the sixteenth century to the League of Nations period and the current ‘war on terror’. Anghie provides a new approach to the history of international law, illuminating the enduring imperial character of the discipline and its continuing importance for peoples of the Third World. This book will be of interest to students of international law and relations, history, post-colonial studies and development studies.
In this study, Caroline Henckels examines how investment tribunals have balanced the competing interests of host states and foreign investors in determining state liability in disputes concerning the exercise of public power. Analyzing the concepts of proportionality and deference in investment tribunals’ decision-making in comparative perspective, the book proposes a new methodology for investment tribunals to adopt in regulatory disputes, which combines proportionality analysis with an institutionally sensitive approach to the standard of review. Henckels argues that adopting a modified form of proportionality analysis would provide a means for tribunals to decide cases in a more consistent and coherent manner leading to greater certainty for both states and investors, and that affording due deference to host states in the determination of liability would address the concern that the decisions of investment tribunals unjustifiably impact on the regulatory autonomy of states.
It has not been established with sufficient clarity and certainty whether a state commits a breach of international law by breaking a contract made by it with an alien. The question needs an answer. It is not one of an entirely theoretical nature. On the answer to it will depend many important consequences. There are four of special significance. First, if the breach of contract is characterized as a breach of international law, the final arbiter of the question whether there had been a breach of contract and of the extent of that breach would be an international court whether as a court of last resort or otherwise. This is the natural consequence of the fact that it is the organs of enforcement of international society that have the power of finally determining questions relating to the breach of legal norms belonging to that society. Municipal courts would not have the final decision. Secondly, the norms applicable by an international court in making such a decision would be the norms of international law and not necessarily the rules of a municipal system of law. International rules should, of course, be applied in determining whether there has been a breach of international law. Thirdly, questions of evidence and procedure relating to the contract would be governed by international law.
International commercial arbitration is being enthusiastically promoted throughout the international legal community. Congresses and conferences abound; over three hundred delegates attended the 1988 Tokyo conference of the International Council for Commercial Arbitration. New arbitration journals proliferate. New international arbitration centers compete for business, particularly around the Pacific Rim in such locations as Hong Kong (opened in 1985), Los Angeles (1985), Melbourne (1985) and Vancouver (1986).
This article addresses one of the most controversial issues in international investment law: the relationship between BIT claims and contractual claims. The author proposes an integrationist approach, which seeks to reconcile the opposing views and jurisprudence on the subject. This approach is developed within the framework of international law, from which the author distils five relevant principles. The arbitral and academic disagreement on the topic is discussed in the context of three different fields: contractual claims and counter-claims, umbrella clauses, and the role of legitimate expectations in the application of the fair and equitable treatment standard.
Claims by company shareholders seeking damages from governments for so-called "reflective loss" now make up a substantial part of the investor-state dispute settlement (ISDS) caseload. (Shareholders’ reflective loss is incurred as a result of injury to "their" company, typically a loss in value of the shares; it is generally contrasted with direct injury to shareholder rights, such as interference with shareholder voting rights.) This paper considers the consistency issues raised by shareholder claims for reflective loss in ISDS. The paper first compares the approach to shareholder claims in ISDS with advanced systems of national corporate law (and other international law). ISDS arbitrators have consistently found that shareholders can claim individually for reflective loss in ISDS under typical BITs. This can be seen as a success story from the point of view of consistency of legal interpretation and improves investor protection for potential claimant shareholders in many cases. In contrast, however, advanced national systems and international law generally apply what has been called a "no reflective loss" principle to shareholder claims. The second part of the paper analyses the policy issues relating to consistency that are raised by shareholder claims for reflective loss in ISDS. National and international law barring shareholder claims for reflective loss is often explicitly driven by policy considerations relating to consistency, predictability, avoidance of double recovery and judicial economy. Limiting recovery to the company is seen as both more efficient and fairer to all interested parties, including creditors and all shareholders. In contrast, ISDS tribunals and commentators have generally given limited consideration to the policy consequences of allowing shareholder claims for reflective loss. The third part of the paper addresses the issue of company recovery (including two different existing systems which expand the ability of foreign-controlled companies to recover in ISDS) and its relevance to shareholder claims for reflective loss. The paper also contains a series of questions for discussion and has been discussed by governments participating in an OECD-hosted investment roundtable.
In its Judgment of February 5, 1970, in the Case Concerning the Barcelona Traction, Light and Power Company, Limited (New Application, 1962, Belgium v. Spain, Second Phase ), the International Court of Justice, by a vote of 15 to 1, rejected, for lack of jus stanai , a Belgian claim of a right of diplomatic protection of alleged Belgian shareholders in a Canadian company allegedly victim of a series of denials of justice by Spanish authorities. Essentially, the Court’s decision denies the existence of any general rule of international law or of any special circumstances or considerations of equity which confer a right of diplomatic protection of national shareholders in a foreign company where the acts complained of were directed by authorities of a third state against the company rather than against any legal rights of the shareholders as such. The opinion of the Court is, for the most part, soundly reasoned and comes after thorough argument of the precedents and brilliant presentation of opposing contentions of law and fact by distinguished counsel. Attorneys may safely advise clients that the Court’s opinion sets forth the existing law and that any special protection of shareholders as such in a foreign company must be based on treaty stipulations or special agreements.
This contribution focuses on consolidation between arbitration and court proceedings in investment (or "investor-to-State") disputes, which are usually referred to arbitration pursuant to the forum selection clauses of the relevant Bilateral Investment Treaties ("BITS"). Before addressing consolidation in investment disputes, the experience gained in the same matter in international commercial arbitration will be considered. After a preliminary analysis, comparative observations will follow.
On 2 December 2004, the UN General Assembly adopted resolution A/Res/59/38 concerning the new United Nations Convention on Jurisdictional Immunities of States and Their Property without vote. This Convention constitutes the result of 27 years of work within the ILC and the 6th Committee of the General Assembly. It covers the immunity of foreign states and their property from the jurisdiction of the courts of a forum state. Since the evolution of the relative immunity concept in the judicial practice of states, according to which states no longer enjoy absolute, but only relative immunity for acta
jure
imperii, national courts have set up different criteria for determining the immunity of foreign states. The present Convention now aims at harmonizing state practice in this field and thus at enhancing legal certainty for both states and private contractors in their – mostly economic – relations. In the discussions during the elaboration of this text, the five most disputed issues regarding state immunity have turned out to be the notion of the state, the definition of the term ‘commercial transaction’, state enterprises, employment contracts as well as measures of constraint. This article presents the drafting history as well as the provisions of the Convention and makes the first attempt to discuss its main provisions. It provides the reader also with the necessary background information that will not easy to be found elsewhere.
Parallel investment treaty arbitrations present a demonstrated risk of inconsistent awards. This article examines several ameliorative responses to parallel investment treaty proceedings, executable by treaty-drafters, arbitrators and parties themselves. The unique jurisdiction mechanics and applicable law in investment treaty disputes frames the responses available. Despite the unique context within which parallel investment arbitrations occur, the challenges they pose to party interests, to principles including legal fairness and to the effective pursuit of dispute resolution closely resemble those posed by parallel proceedings in other domestic and international legal fora.
Parties to an ICSID arbitration are able to seek annulment of an award rendered under the ICSID Convention, but are not able to appeal the merits of the award. This control mechanism was adopted after careful consideration and negotiation as a way to monitor the integrity of ICSID Convention arbitration without imperiling the goal of achieving relatively quick and final resolution of investment disputes. Both Amco Asia v. the Republic of Indonesia and CME v. the Czech Republic raised concerns in the arbitral community; their outcomes seemed to threaten the legitimacy of investor-State arbitration. With Amco Asia the concern was that annulment proceedings might too easily become full-fledged appellate review, thereby undermining the balance between finality and correctness of awards achieved by those designing the ICSID Convention's control mechanism, whereas with CME it was the unavailability of appellate review which seemed problematic. Deciding whether establishment of an appellate mechanism is reasonable depends on the weight given to different objectives served by investor-State arbitration generally and the purpose an appellate body would serve within that framework. An appellate body would, ideally, help to establish systemic regularity and predictability for both investors and States. It is possible, however, that establishing this mechanism would undercut to a significant extent the underlying purpose of the ICSID Convention - the encouragement of foreign direct investment. Moreover, an appellate body would not necessarily be able to resolve all legitimacy issues, and its failure to do so could backfire, generating even more criticism about the integrity of investor-State arbitration. The international arbitral community would be advised to consider these questions carefully before making decisions. Festina lente.
ICSID tribunals have consistently admitted claims by foreign shareholders based on the definitions of investment in investment agreements which include shares and other forms of participation. These instruments usually limit themselves to referring to shareholdings as covered investments without further specifications. The question arises: how far does protection extend? Does this protection allow the shareholder to claim for loss incurred by the local company in which the shareholder holds shares? Evidently, the inclusion of shares in the scope of protection of an investment agreement does not grant per se the shareholder protection in its interests in the local company. However, some treaty rights, as applied by ICSID tribunals, may have this effect. Conversely, shareholders' protection could generate multiple claims and a risk of double recovery. Given that shareholders are protected indirectly through the local company's actions the shareholder would recieve double protection. This risk is further exacerbated by the fact that both direct and indirect shareholdings are protected altogether.
Thesis (Ph. D.)--Columbia University, 1914. Vita. "Consists of two studies which will be used as chapters of a larger work, The diplomatic protection of citizens abroad": Basic elements of diplomatic protection of citizens abroad. (Reprinted from the American journal of international law for July, 1913) and International contractual claims and their settlement (Judicial settlement of international disputes, no. 13).
Thesis (doctoral)--Université de Genève, 1967.
A basic question for the design of bankruptcy law concerns whether value should be divided in accordance with absolute priority. Research done in the past decade has suggested that deviations from absolute priority have beneficial ex ante effects. In contrast, this papers shoes that ex post deviations from absolute priority also have negative effects on ex ante decisions taken by shareholders. Such deviations aggravate the moral hazard problem with respect to project choice-increasing the equityholders' incentive to favor risky projects-as well as with respect to borrowing and dividend decisions.
See also Interpretation of Judgments Nos. 7 and 8 (Diss Op Anzilotti), 23. But the conditions are often not described in exactly the same terms
- Colombia Nicaragua
Nicaragua v Colombia (2016) [55]. See also Interpretation of Judgments Nos. 7 and 8 (Diss Op Anzilotti),
23. But the conditions are often not described in exactly the same terms. See e.g. Schreuer and Reinisch
(2002) [217]; Hobér (2014) 341, 360.
- Newcombe
44 Newcombe (2011) 193; Waibel (2015) 1216.
According to Witenberg, 'admissibility will have custom as the essential source
According to Witenberg, 'admissibility will have custom as the essential source'. Witenberg (1932) 15.
custom and international jurisprudence' had played and would continue to play the 'largest role' in contributing to the admissibility notion. Ibid, 123. Author's translation
- Further
Further, 'custom and international jurisprudence' had played and would continue to play the 'largest role'
in contributing to the admissibility notion. Ibid, 123. Author's translation (original French).
- See De Brabandere
See De Brabandere (2012) 621; Philip Morris v Australia (Bifurcation) [118].
Shany mentions 'preserving legality' as an admissibility consideration, referring to the PCIJ's view in Minority Schools in Upper Silesia that it should not exercise jurisdiction when doing so would violate a different jurisdictional arrangement between the parties
- A See
- Res
See A/RES/67/1. Shany mentions 'preserving legality' as an admissibility consideration, referring to the
PCIJ's view in Minority Schools in Upper Silesia that it should not exercise jurisdiction when doing so
would violate a different jurisdictional arrangement between the parties. Shany (2015) 138.
See also Douglas (2009) 141. Waibel is more cautious ('objections to admissibility can generally be waived')
- Ii Achmea
Achmea II [120]. See also Douglas (2009) 141. Waibel is more cautious ('objections to admissibility
can generally be waived'). Waibel (2015) 1274.
See also ibid, 146. On the other hand, Fitzmaurice argued that 'some pleas of inadmissibility', i.e., not all, 'relate to defects that may be cured by the subsequent action of the party concerned'. Northern Cameroons
- Ibid
Ibid, 133. See also ibid, 146. On the other hand, Fitzmaurice argued that 'some pleas of inadmissibility',
i.e., not all, 'relate to defects that may be cured by the subsequent action of the party concerned'. Northern
Cameroons, 101 (Sep Op, Fitzmaurice).
But see Douglas (2009) 141. 147 Frontier Dispute
- See Thirlway
See Thirlway (2001) 157. But see Douglas (2009) 141.
147 Frontier Dispute [45].
302 (arguing, without providing reasons, that Article 52 is inapplicable when the claim is dismissed on inadmissibility grounds) See also Wehland (2017) 233-234. De Brabandere, on whom Baumgartner relies, is less categorical
- See But
- Baumgartner
169 But see Baumgartner (2016) 302 (arguing, without providing reasons, that Article 52 is inapplicable
when the claim is dismissed on inadmissibility grounds). See also Wehland (2017) 233-234. De
Brabandere, on whom Baumgartner relies, is less categorical. De Brabandere (2012) 618 (admissibility
decisions 'are, even under the ICSID Convention, unlikely to be subjected to annulment').
Jurisdiction) [198]; Philip Morris v Australia [588]. But see Transglobal [118] (finding that an abuse of the investment treaty system affects jurisdiction)
- Tidewater
Tidewater (Jurisdiction) [198]; Philip Morris v Australia [588]. But see Transglobal [118] (finding that
an abuse of the investment treaty system affects jurisdiction).