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The Guide to Construction Arbitration

Construction Arbitration and Concession Contracts

Concession contracts are considered, for present purposes, instruments for the construction, financing and management of infrastructures and services of public interest,[1] such as, for example, residential development, roads, ports, airports, mines, power plants and other energy-related projects. They are characterised by the existence of a long-term relationship between a public entity, be it a state or a state entity (the conceding entity), and a private person, usually a company (the concessionaire). Frequently, the concessionaire will either be itself a foreign company or a company set up within the jurisdiction in which the concession has been granted, and controlled, for the purposes of the concession, by another, foreign, company, thus adding an international element to the mix.

Concessions represent one way for states to obtain private financing for key public service projects, thereby reducing the strain such projects would place on public finances. Given states' interest to ensure the continuity of public services (a core principle of public administrative law in civil law jurisdictions), concessions will generally be concluded for long terms and will often be subject to state scrutiny and monitoring.

Concession contracts can well require initial construction and subsequent maintenance works, such as refurbishment and repair, or can otherwise involve the extension and upgrade of existing facilities (involving phased works, ongoing repair works and so on). In other words, construction-related obligations can extend for part or indeed the entire duration of the concession. The concession terms are intended to allow the concessionaire to recover the cost of investment, plus a reasonable return thereon, bearing in mind that such projects may well involve the participation of third-party financiers, through project finance schemes.

Construction sector concessions, given the elements described above, raise a number of issues and challenges at the level of the relationship between the conceding entity and the concessionaire. This contribution aims to briefly address such matters, and to provide suggestions and recommendations for avoiding or otherwise handling disputes that may arise therefrom.

First, this contribution considers a number of aspects that may arise at the jurisdictional stage of a dispute, and which are closely linked to the identities of the conceding entity and the concessionaire. Second, a selection of substantive issues is addressed, insofar as such issues may affect the performance of the concession contract and give rise to a dispute between the parties.

Recourse to arbitration in concession contracts

Concession contracts bring about an array of specific challenges, particularly in light of their aim to provide, or to ensure the provision of, a continuous public service. From the perspective of the foreign private entity concessionaire, it is important that such challenges may be capable of being resolved, to the extent they give rise to a dispute, through a dispute resolution mechanism offering an alternative to local courts.

This is because the latter option translates into naming the state or an entity controlled by the state as a defendant, or indeed being named as a defendant by such parties, before the courts of that very state. Foreign investors might be reluctant to do so, fearing bias on the part of the courts. Moreover, absent a choice of law provision submitting the concession contract to a foreign or international body of law (and, indeed, such provisions are often not an option in state contracts), in such proceedings, the local courts would be assessing the state or the state entity's behaviour through the lens of domestic law. Given that the state can modify that body of law (for example, by introducing new levies or by altering the zoning legal framework), local court proceedings are often not an attractive venue for foreign investors' claims. However, the state will rarely accept the jurisdiction of a foreign court.

Finally, international financial institutions might only agree to fund projects if the underlying contracts contain dispute resolution mechanisms removing such contracts from the jurisdiction of local courts. It may, therefore, also be in the interest of the state or the state entity to include such mechanisms in the concession contract, as otherwise private financing might not be forthcoming.[2]

The preferred dispute resolution mechanism in this context is international arbitration. However, the effectiveness of clauses providing for the submission of disputes to arbitration depends on a number of factors, as explained below. Such factors include, for example, whether or not a state entity has the capacity to enter into arbitration agreements, whether the resulting award can be meaningfully enforced should the state refuse to voluntarily comply, and whether the parties can agree to a neutral arbitration seat.[3]

First, local law may set out certain requirements as to the content of concession contracts. For instance, local law may prohibit certain state entities from consenting to submit disputes arising out of public sector contracts to arbitration or may require that, prior to giving their consent to arbitration, the state entities in question secure the authorisation of the parliament.[4] Another requirement may be that any such arbitration must be seated within the jurisdiction of the state, which would allow for the intervention of local courts in the proceedings (most importantly, at the annulment stage).

Accordingly, a state entity having concluded a contract containing an arbitration clause may well (self-servingly) object to the jurisdiction of the arbitral tribunal, on grounds of lack of capacity.[5] This issue is also referred to as subjective or rationae personae arbitrability.[6]

For example, a dispute arose in relation to a build-operate-transfer (BOT) contract concluded by the Lebanese state with France Télécom, for the creation and exploitation of a GSM network. Difficulties arose during the performance of the contract and ultimately such contract was terminated by the state. The concessionaire initiated an arbitration, seated in Beirut, under the auspices of the ICC, pursuant to the arbitration clause contained in the BOT contract. Subsequently, the Lebanese Ministry of Justice applied to the Lebanese Council of State to have the arbitration clause declared null and void.[7] According to the Council of State, the public law nature of that contract, together with the public policy principle prohibiting recourse to arbitration in respect of such contracts, did indeed render the clause null and void. However, the Council of State also held that the dispute in question could be resolved through investment treaty arbitration, on the basis of the French-Lebanese treaty.[8] Ultimately, the dispute was resolved in an UNCITRAL arbitration, by agreement of the parties.

If, however, the arbitration is seated in a jurisdiction different from that of the conceding entity or state, such jurisdictional objections should be dismissed pursuant to the principle of international law according to which a state cannot rely on its national law to escape its obligations arising from an arbitration agreement in an international contract.[9] However, there is some debate as to whether this is indeed an absolute principle of international law or something rather more flexible, akin to a corollary of the principle of good faith or to international public policy.[10] For example, following the suggestion of some commentators, such a jurisdictional objection by the state entity could, and should, be upheld if the private contractor knew or should have known about the limitations governing that entity's capacity to conclude an arbitration agreement.[11] In this way, the private entity's (intentionally) negligent conduct would be sanctioned, and not overlooked.

A state entity may also raise jurisdictional objections regarding the arbitrability of a dispute (also referred to as objective, or rationae materiae arbitrability). As ‘the law applicable at the seat of the arbitral tribunal is the law which, in general, determines whether the subject matter of the agreement is arbitrable or not,'[12] the seat of the arbitration is particularly relevant and should be neutral (i.e., not located within the jurisdiction of the conceding entity). Indeed, in certain jurisdictions, termination through caducidad of a concession contract is deemed not arbitrable.[13]

At the outset, prior to the conclusion of a concession contract with a state entity, it would be advisable for the private party to seek legal advice as to the capacity of that state entity to enter into arbitration agreements. If possible, the private party should also press for a neutral seat of arbitration. Absent such capacity, the private contractor should request that the state entity remedy this problem, if necessary by securing the relevant authorisations, or that the concession contract be concluded with another, duly authorised entity.

Second, local law may require that the state and state entities only enter into concession agreements with locally incorporated companies,[14] traditionally so that the conceding entity may have a party against whom to act locally, if necessary. Such companies may be mere shells, set up solely for the purposes of concluding the contract, once the bidder has successfully participated in the tender. In fact, the sole asset of the local entity will often be the concession itself.

This requirement may backfire on the conceding entity, in the event of a default of the local company, as the conceding entity will face the prospect of starting an action against an impecunious party. It would be advisable, in order to avoid such a situation, for the conceding entity to seek to obtain suitable performance and other guarantees from the mother company or another affiliate.

It will also often be the case that the entity involved in the performance of the concession (for example, by securing or providing the necessary funding or by carrying out the actual construction works) will not be the local company. Instead - at least in part - the foreign parent or another company of the same group might assume that role. Should an arbitration arise out of such a contract, the state entity might wish to join the foreign parent company in the proceedings.

Various legal theories exist that allow for the extension of an arbitration agreement to a non-signatory party. They include, inter alia, the group of companies doctrine and the piercing of the corporate veil theory, which are not the object of the present contribution. Instead, another legal foundation for the extension of an arbitration agreement to a non-signatory is considered, as it may flourish in the context of construction projects, where the local company's performance of the contract is taken over by other companies. That is the theory pursuant to which an arbitration agreement may be extended to a third party due to that party's involvement in the negotiations, signing, performance or termination of the contract.[15]

In one recent, unpublished case, a company participated in a public tender process pertaining to the upgrade and operation of a port infrastructure in a Latin American country for over US$500 million. The successful bidder was a foreign company, the credentials of which played a significant role in it being awarded the concession.

The bidder incorporated a local company in order to conclude the contract, as required by local law. The local company withdrew early from the concession, and the conceding state port authority initiated arbitration proceedings pursuant to the arbitration clause contained in the relevant contract. It named as respondents the concessionaire (the first respondent), the foreign company that had submitted the bid and another foreign company pertaining to the same group (the second and third respondents). The arbitration was seated in a neutral venue, Panama.

The second and third respondents did not, at first, participate in the proceedings and did not raise any objections to the tribunal's jurisdiction[16] - and neither did the first respondent. The tribunal therefore asserted jurisdiction over the state port authority's claims, but clarified in its decision that such a holding was without prejudice to the question of whether or not a subsequent award on the merits would extend to the second and third respondents.

The second and third respondents subsequently participated in the arbitration. They requested leave to submit objections as to the jurisdiction of the arbitral tribunal, but such leave was rejected. The arbitral tribunal held that such tardy objections were not capable of retroactively affecting in any material way the tribunal's decision on its own jurisdiction and recalled that the issue of whether an award on the merits could cover the second and third respondents was still pending.

In its award on the merits, the majority held the second and third respondents liable under the concession contract, together with the first respondent, for breach of contract (the President of the tribunal dissented). Even though they were not signatories to that contract, the second and third respondents could still be bound by it, according to the majority.

On the one hand, the second and third respondents had made certain promises during the formation phase of the contract, including to finance the project investment.

On the other hand, the second and third respondents had also been involved in the performance of the concession contract and had directly executed some of the obligations contained therein (such as approving the blueprints for the port construction, providing technical support or directing decisions). In addition, the decision to withdraw from the concession contract had been taken by the second and third respondents.

Conversely, the private entity may wish to commence arbitration proceedings in respect of a dispute arising out of the concession contract, against a non-signatory state entity or against the state itself. In that case, it would be for the concessionaire to show that the non-signatory state or state entity did in fact implicitly consent to arbitration. In other words, that party will have to prove that, rather than acting as part and parcel of the public law administrative supervision process, the non-signatory was driven by a contractual intent.[17]

One of the most significant recent examples in this regard is the Dallah case.[18] A Saudi company, Dallah, entered into an agreement with a Trust established by ordinance of the Pakistani government, for the construction of accommodations for Pakistani pilgrims visiting Mecca. Not long after the conclusion of the contract, the trust ceased to exist as a legal entity. Subsequently, Dallah commenced arbitration proceedings against the government, on the basis of the arbitration clause in the agreement, which provided for ICC arbitration seated in Paris.

The tribunal asserted jurisdiction over the Pakistani government, despite the latter party's objections that it was not a signatory, and awarded Dallah approximately US$20 million in damages plus legal costs. The government thereafter sought to set aside the ensuing award in France, while Dallah sought to have the award enforced in the United Kingdom.

The Dallah award was denied enforcement successively by the High Court, the Court of Appeal and the Supreme Court. According to the Supreme Court, it had not been the common intention of Dallah, the Trust and the Pakistani government that the latter be a party to the contract.

In reaching this decision, the English courts applied French law, as the law of the seat of the arbitration, and undertook a detailed analysis of the facts. The Supreme Court noted, for instance, that, prior to the creation of the trust, Dallah had executed a memorandum of understanding with ‘the President of the Islamic Republic of Pakistan through the Ministry of Religious Affairs'.[19] That memorandum contained a different dispute resolution clause from the one in the final agreement between Dallah and the Trust, was governed by Saudi Arabian law and contained an express waiver of sovereign immunity - unlike the agreement between Dallah and the Trust. This suggested that the parties in fact wished to exclude the government from the final agreement. In addition, the final agreement only referred to the government in its capacity as guarantor of loans to the Trust.[20]

Moreover, as regards the government's involvement in the performance of the contract (for example, through the Ministry of Religious Affairs' involvement in the appointment of a trustee bank to manage the Trust's fund and other related correspondence with Dallah), the English courts found such involvement to be ‘understandable'[21] and insufficient to make the government a party to the contract.

The Paris Court of Appeal also applied French law, but reached the opposite result and upheld the award. Analysing the same factual matrix, the French court held that the government's continuous involvement, both at the pre-contractual stage and in the performance of the contract, paired with the lack of involvement on the Trust's part, showed that such Trust had been created as a matter of formality only.[22] The Pakistani government was therefore held to have been the true other party to the contract.

This case is a testament to the subjectivity involved in such an analysis, seeing as though different fora, applying the same law to the same set of facts, reached opposite results. Such subjectivity was also evident in the much older Pyramids case,[23] involving a contract for the construction of a residential and tourism complex in the vicinity of the Gizeh Pyramids.

In that case, a foreign investor had concluded an initial, tripartite agreement with the Arab Republic of Egypt and the Egyptian General Organisation for Tourism and Hotels (EGOTH). Subsequently, a joint venture agreement had been concluded between the investor and EGOTH, bearing the words ‘approved, agreed and ratified by the Minister of Tourism', together with the Minister's signature, on the last page. The project was commenced, but the performance of the contract was impeded and ultimately prevented through acts of the Egyptian government. The investor subsequently commenced an ICC arbitration against EGOTH and the Egyptian state. In its award, the tribunal emphasised that the investor had relied on the government's approval of the project, as evidenced by the fact that it had signed the tripartite agreement and approved the joint venture agreement. Moreover, the Minister's signature on the latter agreement concerned promises that only the government was able to make to the investor and that were intended to bind that party. Accordingly, the Egyptian government was found to be a party to the joint venture agreement and was held liable on the merits.[24]

However, the Paris Court of Appeal set aside the award, on the basis that the arbitral tribunal had erred in holding that the government's actions had rendered it a party to the joint venture agreement.

Situations such as the ones described above are a common occurrence in construction projects. Several different parties, not all of which are contractually linked to one another, may be called to intervene at one or more stages in the project. Such parties should be weary of their involvement in the different phases of the concession, as this may result in their being joined in an arbitration in which they never intended to be embroiled.

Conversely, from the outset, parties should bear in mind that, if a dispute arises, they might wish to be able to name as respondent not only the party they are directly contracting with (the locally incorporated company, the government-established trust), but also a more solvent or more perennial entity (the foreign parent, the government itself). In those circumstances, demonstrating the involvement of such a third party remains a highly fact-dependent exercise[25] and it would thus be advisable for parties to keep accurate records of the pre-contractual negotiations and of the performance of the contract. However, it must also be borne in mind that different fora might interpret the same facts differently and, even applying the same law, reach different conclusions. The odds of success of such an attempt to extend an arbitration clause are thus not easy to predict.

Substantive issues

A distinction can be drawn between two types of construction-related concession contracts. On the one hand, a concessionaire might be given control of an already existing infrastructure, which it would then expand, refurbish and operate for a certain period of time, for instance under a transfer-operate-transfer (TOT) framework. On the other hand, a concession might require that the concessionaire start from scratch, by building and then subsequently operating the project. This is the case, for example, of build-operate-transfer (or BOT) projects. Selected challenges specific to these two types of projects are discussed below.

First, the scenario of an existing infrastructure that the concessionaire would operate may relate to projects such as airports, railways or ports that the conceding entity wishes to modernise or maintain, with a view to ensuring the continuity and quality of public services. For this purpose, the conceding entity will seek to incentivise the concessionaire to make substantial investments throughout the term of the concession. One way to achieve this goal is through tariff regulation mechanisms, which can be based on a rate-of-return or price cap formula.

A price cap tariff formula implies, through what is often referred to as an efficiency factor (EF), that the maximum amount of tariffs that the concessionaire may charge (by way of tolls on a highway or taxes for take-off and landing in an airport) is capped, though indexed to consider inflation. The concessionaire's ability to charge that maximum amount is conditional upon its compliance with a certain set of norms or its observance of specific milestones provided in the contract. Accordingly, the concessionaire is incentivised to invest in the concession, to expand the infrastructure and to ensure it functions at high standards of quality, as this will increase the demand for services and allow it to perceive a higher revenue by way of higher tariffs. Conversely, a concessionaire that does not maintain the concession and fails to invest in it will see its revenue diminish through the EF, as it will be forced by the conceding entity to charge lower tariffs.

Such a price cap tariff formula is one of the issues in a pending dispute that arose out of a concession for the operation, maintenance and expansion of three international airports in Bolivia.[26] The concessionaire, a locally incorporated company allegedly controlled by a Spanish entity, failed to make the necessary investments in the airports throughout its 17-year operatorship. Such failure to invest led to the deterioration of the infrastructure and ultimately to the nationalisation of the concessionaire. The Spanish entity subsequently commenced arbitration proceedings on the basis of the bilateral investment treaty between Bolivia and Spain, arguing that the state had breached its obligations under that treaty and its contractual obligations to the concessionaire.

Another case that involved price cap tariff formulas arose out of a concession for the refurbishment and operation of an international airport in Costa Rica. In that case, the consortium of foreign banks that had provided financing to the concession suspended such financing and conditioned it upon the concessionaire being allowed to charge an increased amount in tariffs from airport users. The increased tariffs would have compensated the concessionaire's operation, maintenance, financing and development costs, but such a change in the tariff scheme was rejected by the Office of the Comptroller General. As a result, the concessionaire commenced arbitration proceedings against the Civil Aviation authorities of Costa Rica (responsible for setting air traffic tariffs), seeking damages of over US$70 million.

The tribunal ultimately dismissed the claim, holding that the subject matter of the dispute was inarbitrable and should have been instead impugned before the local administrative law courts.

Tariff regulation mechanisms are thus key to the economic equilibrium of concession contracts. The concessionaire's ability to effectively operate the concession will be dependent, inter alia, on the profitability of such operation, which, in turn, is intrinsically linked to the evolution in time of the tariff scheme. It may be the case that such evolution is unfavourable to the concessionaire, to the extent of affecting the equilibrium of the contract and even suspending international financing. The concessionaire will therefore seek to charge higher tariffs. Conversely, the conceding entity will press to impose lower tariffs on the concessionaire, in order to ensure access to, and continuity of, public services. It is important that such diverging interests be conciliated by the parties, so as to avoid serious issues in the operation of the concession, which may ultimately lead to the irremediable breakdown and even the premature termination of the concession (by way of the nationalisation of the same).

Second, scenarios where the concessionaire must start from scratch, construct and operate an infrastructure project may also relate to power plants, dam structures, roads and highways. It is often the case, in such projects, that the concessionaire's contractual performance is dependent upon certain legislative or administrative measures that the conceding entity or the state itself must implement. If such measures are not implemented, the construction works may not be capable of being carried out or otherwise face significant delays. For example, a conceding entity might fail to provide to the concessionaire the land on which the latter party was due to build - either by failing to nationalise it[27] or by failing to issue necessary zoning and construction permits, or by revoking such existing permits. Given the complexity of construction projects, any such delays might well significantly impact the contemplated works and result in claims for damages from the concessionaire or other impacted third parties (such as contractors, subcontractors, and suppliers of goods or services).

By way of example, the current construction of the metropolitan railway in Peru's capital, Lima, has given rise to a potential investment arbitration. Delays in delivering the land permits necessary to commence excavations have, according to the concessionaire, significantly hampered its ability to advance the construction works in a timely manner. Moreover, they have also led to financial penalties and additional costs being supported by the concessionaire, inter alia for the storage of equipment and materials required for the excavations. A similar claim has been brought against the state, in relation to a pier concession agreement, the performance of which was affected by permitting delays.[28]

Private entities are increasingly showing a tendency to resolve such disputes through treaty-based arbitration against the state. Such a trend can be easily explained. One, claimants will seek to direct their claims for damages at a respondent which is likely to be able to satisfy a potential award on damages. Indeed, a state will be more likely to dispose of the resources necessary than a state (conceding) entity. Two, it may be the case that the dispute resolution mechanism contained in the concession contract is inadequate - either because, as discussed above, the conceding entity may not have had the capacity to enter into an arbitration agreement or because the subject matter of the dispute may be inarbitrable. That dispute resolution provision might, in some cases, also be pathological - for instance, if it provides for arbitration under the auspices of the International Centre for Settlement of Investment Disputes (ICSID), but the potential respondent state entity has not been designated by the state under Article 25(1) of the ICSID Convention. Finally, it may be, as in the Pyramids case discussed above, that the dispute truly arises out of actions or omissions of the state, and not of the state entity.

In such cases, the concessionaire resorting to treaty-based arbitration must pay particular attention to the cause of action underpinning its claims. Indeed, if such claims do not amount to breaches of treaty and are instead contractual in nature, they may be dismissed for lack of jurisdiction.

One interesting example in this regard is that of a case brought against Peru by an Argentinian investor,[29] on the basis of the Peru-Argentina investment treaty, and in relation to a concession contract by a municipal entity (containing a pathological ICSID arbitration clause) for the design, construction, and operation of a highway leading to Peru's main international airport. The claimants argued that Peru had expropriated their investment by terminating the concession contract, and that the state had acted towards the concessionaire in an arbitrary, discriminatory and unfair manner.

The respondent raised objections to the jurisdiction of the arbitral tribunal, arguing that the claims put forth were contractual in nature and thus could not be decided in a treaty arbitration.[30] This was all the more so since the treaty did not contain an umbrella clause, which would have been capable of elevating breaches of contract to the level of treaty breaches.[31]

The tribunal dismissed Peru's jurisdictional objection, holding that the investors had not limited themselves to a mere invocation of the treaty in order to dress up purely contractual claims. Instead, notably, the claimants had argued that the termination of the concession contract amounted to an act attributable to the state acting in its sovereign capacity. Moreover, the claims submitted to the tribunal were grounded in, and argued under international law.[32]

However, on the merits, the tribunal decided against the claimants and found that the state had not breached the treaty. Indeed, the concession contract contained a provision allowing for the termination of the same by the conceding authority at any time on grounds of public interest. The tribunal thus found that the concession had been terminated through the exercise of a contractual prerogative of the conceding municipal authority and not in a manner involving the state acting in its sovereign capacity.[33] In other words, though the claimants were held to have submitted treaty claims, the underlying actions of the municipal entity were of a contractual nature and therefore not sanctionable under the treaty.

Surprising as it may be, the outcome of this case illustrates one of the main challenges of treaty-based arbitration involving concession disputes, which is, for the claimant, to show that the claims are not contractual in nature and that the conduct complained of pertained to the state acting in its sovereign capacity. Such issues do not arise in contract-based arbitration and may, depending on the circumstances, weigh in on a decision as to the type of proceeding to be resorted to by the private party.

Third, private companies interested in a concession in a foreign state, as well as the state itself, should bear in mind that, though such concession may be granted by the public authorities, a social licence to operate might also be necessary. Such a licence can be deemed to exist ‘when a project has the ongoing approval within the local community and other stakeholders, [as] ongoing approval or broad social acceptance and, most frequently, as ongoing acceptance.'[34] As such, it may be the case that the performance of a concession contract is adversely impacted not by the actions or omissions of the concessionaire or the conceding entity, but by the absence of a social licence to operate from the local community. Often, such situations arise due to the foreign identity of the concessionaire, which may appear to be detracting from its legitimacy to act, or due to the environmental or social impact the concession might have. The latter is often the case in mining and large infrastructure construction projects, which generally require the nationalisation of land and the displacement of communities.

It would thus be advisable that both the potential concessionaire and the local authorities seek to gain community approval for the construction project, for example, by disseminating information, engaging in social dialogue and setting up community relations programmes as appropriate.

 

[1] R. Jaidane, ‘La gestion des contrats internationaux de concession', 3 Revue de droit des affaires internationales 289 (2005), p. 290.

[2] For example, it is worth mentioning that Egypt's recent bid to expand its renewable energy sector encountered financing difficulties when the government excluded international arbitration from its proposed contract terms for the power purchase agreement. See www.iarbafrica.com/news-list/201-egypt-
includes-mandatory-arbitration-in-cairo-in-ppa-agreements; www.thenational.ae/business/energy/egypts-renewable-energy-sector-faces-delay-to-funding (last accessed on 24 October 2016).

[3] See for instance P. Dunham, S. Greenberg, ‘Balancing Sovereignty and the Contractor's Rights in International Construction Arbitrations Involving State Entities', 23(2) The International Construction Law Review 130 (2006).

[4] For example, Article 139 of the Iranian Constitution of 1979, which reads as follows: ‘The settlement of claims relating to public and state property or the referral thereof to arbitration is in every case dependent on the approval of the Council of Ministers, and the Assembly must be informed of these matters. In cases where one party to the dispute is a foreigner, as well as in important cases that are purely domestic, the approval of the Assembly must also be obtained. Law will specify the important cases intended here.' See Iran's Constitution of 1979 with Amendments through 1989, available online at www.constituteproject.org/constitution/Iran_1989.pdf?lang=en (last visited on 24 October 2016). See also E. Silva Romero, ‘Requiem for the Rule of Article 177(2) of the Swiss Private International Law Act' in G. Aksen et al., Global Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in Honour of Robert Briner, ICC Publication No. 693 (2005), p. 827.

[5] See for instance ICC Case No. 6474, Partial Award dated March 1992, 15(2) ICC International Court of Arbitration Bulletin 102 (2004), p. 102 et seq.; ICC Case No. 4381, Award dated 1986, Collection of ICC Arbitral Awards 1986-1990, p. 361 et seq.

[6] See for instance L. Yves Fortier, ‘Arbitrability of Disputes', G. Aksen et al., Global Reflections on International Law, Commerce and Dispute Resolution. Liber Amicorum in Honour of Robert Briner, ICC Publication No. 693 (2005), pp. 269-270.

[7] See The Lebanese Republic v. France Télécom Mobiles International S.A., 4P.98/2005/svc (Lebanon v. France Télécom), Swiss Federal Tribunal, Judgment of the First Civil Chamber dated 20 December 2005, p. 3.

[8] See Lebanon v. France Télécom, Swiss Federal Tribunal, Judgment of the First Civil Chamber dated 20 December 2005, pp. 3-4.

[9] See E. Gaillard, J. Savage (eds.), Fouchard, Gaillard, Goldman on International Commercial Arbitration, Kluwer Law International (1999), p. 322. See also ICC Case No. 1939, Award dated 1971, cited in Y. Derains, ‘Le statut des usages du commerce international devant les juridictions arbitrales', Revue de l'arbitrage (1973), p. 122.

[10] See for instance C. Seraglini, J. Ortscheidt, Droit de l'arbitrage interne et international, Montchrestien (2013), Section 624, p. 527; P. Leboulanger, ‘Some Issues in ICC Awards Relating to State Contracts', 15(2) ICC International Court of Arbitration Bulletin 93 (2004), p. 93.

[11] See E. Silva Romero, ‘Some Remarks on the Contribution of ICC Arbitrators to the Development of International Commercial Arbitration Involving States and State Entities', in A. Carlevaris et al. (eds.), International Arbitration under Review: Essays in Honour of John Beechey, ICC Publication No. 772E (2015), p. 408.

[12] R. Briner, ‘The Arbitrability of Intellectual Property Disputes With Particular Emphasis on the Situation in Switzerland', Worldwide Forum on the Arbitration of Intellectual Property Disputes, 3-4 March 2002, Geneva, WIPO Publication No. 728, Paragraph 3.7, cited in L. Yves Fortier, ‘Arbitrability of Disputes', G. Aksen et al., Global Reflections on International Law, Commerce and Dispute Resolution. Liber Amicorum in Honour of Robert Briner, ICC Publication No. 693 (2005), p. 275.

[13] Such is the case, for instance, under Ecuadorian law. Article 196 of the 1998 Ecuadorian Constitution, mirrored in Article 173 of the 2008 Constitution, provides for the exclusive jurisdiction of the Ecuadorian courts in respect of claims pertaining to the legality or to the validity of administrative acts, including caducidad. pursuant to the provisions of the Constitution. See www.igm.gob.ec/work/files/Lotaip2015/Baselegal_2015/Constitucion_de_la_republica_del_Ecuador.pdf (last accessed on 24 October 2016).

[14] See for instance the Ecuadorian executive decree Reglamento Sustitutivo del Reglamento General de la Ley de Modernización del Estado, Privatizaciones y Prestación de Servicios Públicos por parte de la Iniciativa Privada, Executive Decree No. 2328, 2 December 1994, which requires, in its Article 172, that a successful bidder must, within 90 days from the date of the award to them of the bid, incorporate an Ecuadorian company, with which the Ecuadorian authorities are subsequently to conclude the concession contract.

[15] See for instance B. Hanotiau, ‘Multiple Parties and Multiple Contracts in International Arbitration', in Permanent Court of Arbitration (ed.), Multiple Party Actions in International Arbitration, Oxford University Press (2009), Paragraph 2.29.

[16] The third respondent raised concerns as to the jurisdiction of the local arbitral institution administering the case, by way of a letter addressed to that institution. Such letter did not, however, address the third respondent's non-signatory status as regards the concession contract. The third respondent's concerns were accounted for in the tribunal's analysis, but did not warrant a negative finding on jurisdiction.

[17] See G. Petrochilos, ‘Extension of the Arbitration Clause to Non-Signatory States or State Entities: Does It Raise a Difference?', Dossier of the ICC Institute of Words Business Law: Multiparty Arbitration (2010), p. 123.

[18] For a commentary of the French and English court decisions, see F.-X. Train, ‘L'affaire Dallah ou de la difficulté pour le juge anglais d'appliquer le droit français, note sous Paris, Pôle 1 - Ch. 1, 17 février 2011 et Cour suprême du Royaume-Uni, 3 novembre 2010', 2012(2) Revue de l'arbitrage 374 (2012).

[19] Dallah Real Estate and Tourism Holding Company (Appellant) v. The Ministry of Religious Affairs, Government of Pakistan (Respondent) (Dallah v. Pakistan), [2010] UKSC 46, Paragraph 134.

[20]    Dallah v. Pakistan, [2010] UKSC 46, Paragraph 136.

 

[21] Dallah v. Pakistan, [2010] UKSC 46, Paragraph 44.

[22] Cour d'appel de Paris, Pôle 1 - Chambre 1, RG No. 09/28533, 09/28535, 09/28541, Judgment of 17 February 2011, p. 6.

[23] See J. Paulsson, ‘The Pyramids Case', in The Berthold Goldman Lecture on Historic Arbitration Stories (2012), available at www.arbitrationacademy.org/wp-content/uploads/2014/01/Arbitration-Academy-Jan-Paulsson.pdf (last visited on 24 October 2016).

[24] See SPP (Middle East) Ltd, Southern Pacific Properties Ltd v. Arab Republic of Egypt General Company for Tourism and Hotels, ICC Case No. 3493, Award dated 16 February 1983, 9 Yearbook of Commercial Arbitration 111 (1984).

[25] See for instance B. Hanotiau, ‘Multiple Parties and Multiple Contracts in International Arbitration', in Permanent Court of Arbitration (ed.), Multiple Party Actions in International Arbitration, Oxford University Press (2009), Paragraph 2.25, citing ICC Case No. 9517, Partial Award dated 30 November 1998 (unpublished).

[26] Abertis Infraestructuras S.A. v. Plurinational State of Bolivia, PCA Case No. 2011-14.

[27] As argued by the claimants in Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura S.A. v. The Republic of Perú, ICSID Case No. ARB/10/2 (Convial v. Peru).

[28] APM Terminals Callao S.A. v. Republic of Peru, ICSID Case No. ARB/16/33.

[29] Convial v. Peru.

[30] Convial v. Peru, Final Award dated 21 May 2013, Paragraphs 293-297, 443.

[31] Convial v. Peru, Final Award dated 21 May 2013, Paragraph 444.

[32] Convial v. Peru, Final Award dated 21 May 2013, Paragraphs 449-450.

[33] Convial v. Peru, Final Award dated 21 May 2013, Paragraphs 504, 509, 516 et seq.

[34] http://socialicense.com/definition.html (last accessed on 24 October 2016).

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