Investment Treaty Arbitration

Investment Treaty Arbitration: Algeria

Overview of investment treaty programme

1. What are the key features of the investment treaties to which this country is a party?

Algeria

BIT Contracting Party or MIT

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

Argentina (28 January 2002)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Austria (1 January 2006)

Yes

Yes

Yes

Yes

Yes

4 months

Yes

Yes

Bahrain (16 May 2008)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Belgium – Luxembourg (13 February 1992)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Bulgaria (6 June 2002)

Yes

Yes

Yes 1

Yes

No

6 months

No

Yes

China (28 January 2003)

Yes

Yes

Yes

Yes

No

6 months

Yes

Expropriation only

Cuba (not in force)

Not publicly available

Denmark (15 July 2005)

Yes

Yes

Yes

Yes

Yes

3 months

No

Yes

Egypt (3 March 2000)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Ethiopia (1 November 2005)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Finland (25 February 2007)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

France (27 June 2000)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Germany (30 May 2002)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Greece (21 September 2007)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Indonesia (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Iran (5 December 2012)

No

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Italy (26 November 1993)

No

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Jordan (5 June 1997)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Korea (30 September 2001)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Kuwait (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Libya (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Malaysia (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Mali (16 February 1999)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Mauritania (not in force)

Not publicly available

Mozambique (25 July 2000)

Not publicly available

Netherlands (1 August 2008)

Yes

Yes

Yes

Yes

Yes

3 months

No

Yes

Niger (not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Nigeria (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Oman (22 June 2006)

Yes

Yes

Yes

Yes

No

6 months

Yes 2

Yes

Portugal (8 September 2005)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Qatar (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Romania (30 December 1995)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Russia (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Serbia (25 November 2013)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

South Africa (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Spain (17 January 1996)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Sudan (not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Sweden (1 April 2005)

Yes

Yes

No

Yes

No

6 months

No

Yes

Switzerland (15 August 2005)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Syria (not in force)

Yes

Yes

No

Yes

No

No

Limited circumstances 3

Yes

Tajikistan (not in force)

Not publicly available

Tunisia (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Turkey (not in force)

No 4

Yes

No

Yes

No

6 months

Yes

Yes

Ukraine (not in force)

Not publicly available

United Arab Emirates (3 June 2002)

Yes

Yes

No

Yes

No

6 months

No

Yes

Vietnam (not in force)

Not publicly available

MIT Contracting Party

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

European Union Association Agreement (1 September 2005)

No

No

Yes

Yes

No

No

No

No

United States TIFA (not in force)

No

No

No

No

No

No

No

No

Treaty establishing the African Economic Community (12 May 1994)

No

No

No

Yes

No

12 months

Court of Justice of the Community

No

Organisation of the Islamic Conference (23 September 1986)

No

Yes

Yes

Yes

No

No

No

Yes

Arab Investment Agreement (7 September 1981)

No

No

No

No

No

No

Arab Investment Court

Yes

Arab League Investment Agreement

Yes

Yes

No

Yes

No

No

No

No

Arab Economic Unity Agreement

No

No

No

No

No

No

No

No

Qualifying criteria - any unique or distinguishing features?

2. What are the distinguishing features of the definition of “investor” in this country’s investment treaties?

Algeria

Issue

Distinguishing features in relation to the definition of ‘investor’

Citizenship / nationality for individual investors (natural persons)

All BITs with Algeria require that a natural person have Algerian nationality in order to qualify as an investor. The BITs sometimes allow for permanent residence in a contracting state in lieu of nationality (eg, Malaysia). In addition to nationality, certain BITs also require that the investor make or carry out the investment activity in the territory of the other contracting state.

Legal persons as investors

The majority of Algerian BITs provide that an investor may be a legal entity incorporated or registered under and in conformity with the laws of a contracting party. Some BITs (eg, Denmark, Finland) provide a broad list of entities that will constitute an investor: ‘companies, firms, associations, development finance institutions, foundations or similar entities, irrespective of whether or not their liabilities are limited or not.’ The Egypt BIT requires that a company be ‘resident’ in and have its headquarters in that same state, and be managed by a national of that state. 5 France likewise requires indirect or direct management by a national of the contracting state or a company registered in a contracting state.

Economic activities

Certain BITs require corporate investors to exercise economic activities (eg, Ethiopia),’effective’ economic activities (eg, Greece), or ‘real’ economic activities in the contracting state.

Indirect investment

The direct or indirect control of a company by a national or by a company registered in a contracting state will suffice to be deemed an investor under certain BITs (eg, Netherlands, Qatar, Sweden, and Switzerland).

The Austria BIT contains a provision explicitly denying the advantages and protections of the BITs to investors or investments in cases where the investment or investor is controlled by a third party investor who carries out no substantial commercial or industrial activity in the contracting state. 6

Public entities as investors

In only limited circumstances does the definition of investor, when referring to a company or moral person, extend to encompass public or mixed public-private companies (see, eg, Sudan).

Head office or central administration

Several Algerian BITs require that for a moral person/company to qualify as an investor for the protections of the treaty, it must have its headquarters, head office, or central administration in the contracting state (eg, Belgium-Luxemburg, Ethiopia, Finland, France, Netherlands, Portugal, Qatar, Serbia, and Spain).

3. What are the distinguishing features of the definition of "investment" in this country’s investment treaties?

Algeria

Issue

Distinguishing features in relation to the concept of ‘investment’

Non-exclusive list of assets

Nearly all of the BITs with Algeria set out a broad list of assets included in the definition of ‘investment.’ An investment is, for the most part, stipulated to be ‘non-exclusive’ or ‘non-exhaustive’ or to cover ‘every kind of asset.’

Shares held indirectly or directly

Several BITs stipulate that shares that are not held directly by an investor will nevertheless qualify as an investment (see, eg, Austria, Belgium-Luxemburg, Egypt, Finland, Jordan, Kuwait, Qatar, Sudan, Sweden).

Compliance with national legislation of contracting parties

All of the Algerian BITs require an investment to be made in strict compliance with the legislation of the contracting party state in which it is made.

Change in form

The BITs with Algeria specify that a change in form of the investment, or its reinvestment, will not affect its description as an investment for the purposes of the BIT.

Extension of benefits to investments made prior to entry into force

The BIT with France provides that investments made in the territory of one of the contracting parties prior to the entry into force of the BIT will benefit from the provisions and protections of the treaty according to the provisions defined in correspondence exchanged between the parties and annexed to the BIT (see Art. 1(1)). The correspondence in question extends the treaty to Algerian investments made in France prior to the BIT's entry into force, and to French investments in Algeria made by French companies exercising an economic activity in Algeria at the date of the entry into force of the BIT. Investments made prior to the entry into force of the BIT with Mali may also benefit from the BIT's protections only once they are brought into conformity with the requirements of applicable foreign investment legislation at the date of the BIT's signing.

Leasehold goods treated as investments

The BIT between Algeria and Sweden makes special provision for leasehold goods, stipulating that goods available to a tenant under a lease in the territory of one contracting party from a lessor considered as an investor of the other contracting party will receive treatment no less favorable than that granted for investments (see Article 1).

Substantive protections - any unique or distinguishing features?

4. What are the distinguishing features of the fair and equitable treatment standard in this country’s investment treaties?

Algeria

Issue

Distinguishing features of the fair and equitable treatment standard

FET as a standard

Of all the BITs with Algeria, both in force and those not yet in force, only the treaties with Iran, Italy and Turkey do not contain a provision guaranteeing fair and equitable treatment of investors and their investments. Nevertheless, Algeria and Turkey do agree, in the preamble of their BIT, ‘that fair and equitable treatment of investments is desirable in order to maintain a stable framework for investment and maximum effective utilization of economic resources.’

FET in accordance with principles of international law

The BIT between Algeria and France explains that fair and equitable treatment is afforded to investments ‘in accordance with principles of international law, by ensuring that the exercise of the right so granted is not hindered either in law or in fact, by unreasonable or discriminatory measures that would affect the management, maintenance, use, enjoyment or liquidation of such investments.’ 7 The Algeria-Oman BIT also provides for fair and equitable treatment be accorded in conformity with principles of international law.

5. What are the distinguishing features of the protection against expropriation standard in this country’s investment treaties?

Algeria

Issue

Distinguishing features of the ‘expropriation’ standard

Conditions for lawful expropriation

The majority of Algeria's BITs prohibit nationalisation or expropriation of investments unless four conditions are met: expropriations made (i) in the public interest; (ii) on a basis of non-discrimination; (iii) carried out under due process of law; and (iv) against prompt, adequate and effective compensation. In addition to these four conditions, the Algeria-Turkey BIT adds a further requirement for lawfulness: a taking will be unlawful if it is not made in accordance with ‘the general principles of treatment provided for in Article II of this Agreement (Promotion and Protection of investments). 8

Protection against direct or indirect expropriation

Nearly a third of the BITs signed with Algeria expressly provide that the provisions on nationalisation and expropriation cover both direct and indirect takings. 9

Limited right to arbitration

The Algeria-China BIT allows an investor to commence arbitration proceedings only in respect of disputes concerning an amount of indemnity for expropriation (art. 9(3)).

6. What are the distinguishing features of the national treatment/most-favoured-nation treatment standard in this country’s investment treaties?

Algeria

Issue

Distinguishing features of the ‘national treatment’ and/or ‘most favoured nation’ standard

MFN and national treatment as a standard

All of Algeria's publicly available BITs contain most favoured nation and national treatment provisions obliging the contracting states to afford investors and their investments treatment not less favourable than that granted to its own investors, or to those of a third party. Sometimes the two standards (MFN and national treatment) are combined within the same clause.

Exceptions to the standard

Only one BIT – that with Syria – is not limited by any exceptions to the MFN standard. All others contain at a minimum an exception pertaining to the prohibition of the extension of benefits to customs and monetary unions and double-taxation agreements.

Certain BITs provide very extensive carve-outs. For example, the Finnish BIT stipulates that neither contracting party shall mandate or enforce measures concerning purchase of materials, means of production, operation, transport, marketing, or similar discriminatory effects. 10

Other BITs contain carve-outs preventing the extension of benefits under other multilateral or bilateral investment treaties. 11

The Russian BIT stipulates that the MFN provision does not oblige a contracting party to extend the benefits of agreements formed earlier as part of the Union of Soviet Socialist Republic. 12

The South African BIT excludes from MFN the benefits of any laws or other measures aimed at the establishment of equality in South Africa or for the protection or assistance of individuals or categories of individuals disadvantaged by unfair discrimination. 13

Examples of favourable and unfavourable treatment

The BITs with Mali and Niger contain examples of what amounts to less favourable treatment, including restrictions on the provision of raw materials, and any restriction on inward or outward sales and purchases. These two BITs also note that any measures taken by reasons of security, public order, health and safety, or public decency do not amount to treatment less favourable for the purposes of the treaties. 14

7. What are the distinguishing features of the obligation to provide protection and security to qualifying investments in this country’s investment treaties?

Algeria

Issue

Distinguishing features of the ‘protection and security’ standard

Scope

The majority of BITs with Algeria contain a substantive protection and security standard; only the treaties with Bulgaria, Sweden, Syria, Turkey, and Yemen do not. The scope of the protection varies extensively. For example, the BIT with Indonesia provides only for ‘adequate’ protection 15 and the treaty with Iran provides for total ‘legal’ protection, 16 while much more commonly, Algeria's treaties will provide a high standard, namely ‘fully protection and security,’ 17 ‘integral’ security, 18 complete and constant protection (eg, Greece and Belgium-Luxembourg).

Prohibitions under the standard

Often the protection and security standard is contained with or next to the fair and equitable treatment standard in Algeria's BITs. Often the standard is accompanied by wording prohibiting certain behaviours which would not meet the stated standard. For example, the Denmark-Algeria BIT specifies that ‘[n]either Contracting Party shall in any way impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment or disposal of investments in its territory of investor of the other Contracting Party.’ 19

8. What are the distinguishing features of the umbrella clauses contained within this country’s investment treaties?

Algeria

Issue

Distinguishing features of any ‘umbrella clause’

Prevalence and scope of umbrella clause

More than half of the BITs with Algeria that are publicly available contain an umbrella clause. Several BITs which do not contain a classic umbrella clause nevertheless contain provisions pertaining to investments covered by a particular commitment as per the following clause extracted from the Algeria-Ethiopia BIT: ‘Without prejudice to this Agreement, investments covered by a particular commitment between one Contracting Party and an investor of the other Contracting Party shall be governed by the terms of that particular commitment if it contains provisions more favourable than that provided in this Agreement.’ 20

9. What are the other most important substantive rights provided to qualifying investors in this country?

Algeria

Issue

Other substantive protections

Non-impairment

The majority of Algeria's BITs contain a non-impairment provision which precludes a contracting party from impairing by unreasonable or discriminatory measures the management, use, maintenance, enjoyment or disposal of investments in its territory of investors of the other contracting party. The BIT with Kuwait contains a non-impairment clause which refers specifically to the purchase of products, energy, fuel, means of production, communication or jobs. 21

Transfer of capital

All of the publicly available BITs with Algeria contain a provision allowing for the free transfer of capital in and out of the territory of the contracting parties.

Procedural rights in this country’s investment treaties

10. Are there any relevant issues related to procedural rights in this country’s investment treaties?

Algeria

Issue

Procedural rights

Arbitration as the sole dispute resolution mechanism

Certain BITs provide that after negotiations, a dispute may be resolved through arbitration only. 22 Among those, the Belgium-Luxemburg BIT provides for only ICSID arbitration, while other dispute resolution clauses give a choice of arbitration options, varying between ICSID, UNCITRAL and an Arab Investment Tribunal of the Arab Investment Convention. Of the BITs that list arbitration as the only method of resolving disputes, both the treaties with Oman and Qatar nevertheless also mention recourse to national courts in their fork-in-the-road provisions.

Arbitration as an option among others

A larger percentage of Algerian BITs provide a choice between the local courts and a selection of arbitral institutions, including ICSID, ICSID Additional Facilities, 23 other ad hoc tribunals, and a tribunal constituted under the Arab Investment Convention. Where UNCITRAL or other ad hoc tribunals are an option, it is common for the BITs to provide detailed steps for the appointment of arbitrators.

Fork in the road

Of the publically available BITs with Algeria, only a minority contain fork-in-the-road provisions. 24

Binding and undertaking to execute

Several of Algeria's BITs contain provisions stipulating that an arbitral award made by a competent court or arbitral tribunal will be final and binding on the parties to the dispute, and ensuring that each party will recognise and enforce the award in accordance with relevant laws and regulations. 25

Arbitration for limited subject matter

The BIT between Algeria and China provides that only disputes relating to indemnity for expropriation which have not been resolved within six months may be submitted to arbitration. For all other disputes arising under the BIT, the competent local courts are stipulated as the recourse to a dispute. 26

11. What is the status of this country’s investment treaties?

Algeria

There have been no recent changes to the status of Algeria’s investment treaties, and no public announcements would suggest that those BITs which are not yet in force are scheduled to come into force in the near future.

While at present there is no BIT between Algeria and the United States, in 2001 the US and Algeria signed a Trade and Investment Framework Agreement to create a platform for future bilateral treaties between the two nations. The last TIFA council meeting was held in February 2015 - the first meeting in 11 years.

Practicalities of commencing an investment treaty claim against this country

12. To which governmental entity should notice of a dispute against this country under an investment treaty be sent? Is there a particular person or office to whom a dispute notice against this country should be addressed?

Algeria

Government entity to which claim notices are sent

Algerian legislation does not make any formal requirement that a notice of dispute be addressed to a particular governmental entity nor to a particular office or person. As such, when initiating arbitration proceedings against the State, a notifying party should address both the Ministry of Justice and the Algerian Ambassador or other Algerian high dignitary in the country of the investor. In addition, a party should notify the relevant ministry with which the investment in dispute is concerned or which was involved in the execution/performance of the investment (eg, Ministry of Resources, Ministry of Mining).

13. Which government department or departments manage investment treaty arbitrations on behalf of this country?

Algeria

Government department which manages investment treaty arbitrations

In addition to external counsel, the State will use departmental lawyers from the relevant ministries concerned to oversee investment treaty arbitrations.

14. Are internal or external counsel used, or expected to be used, by the state in investment treaty arbitrations? If external counsel are used, does the state normally go through a formal public procurement process when hiring them?

Algeria

Internal/external Counsel

The State has recourse to a combination of internal and external counsel for investment treaty arbitrations. It is not clear whether a process of public procurement is followed by Algeria when appointing external counsel.

Practicalities of enforcing an investment treaty claim against this country

15. Has the country signed and ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965)? Please identify any legislation implementing the Washington Convention.

Algeria

Washington Convention implementing legislation

Algeria signed the Washington Convention on 17 April 1995. Ratification took place on 21 February 1996, before entry into force on 22 March 1996.

16. Has the country signed and ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention)? Please identify any legislation implementing the New York Convention.

Algeria

New York Convention implementing legislation

Algeria is a signatory of the New York Convention. Accession law No. 88/18 of 12 July 1988 (published in Journal Officiel de la République Algérienne No. 28 of 13 July 1988) and Ratification Decree No. 88/233 of 5 November 1988 (published in Journal Officiel de la République Algérienne No. 48 of 23 November 1988). Entry into force: 8 May 1989.

17. Does the country have legislation governing non-ICSID investment arbitrations seated within its territory?

Algeria

Legislation governing non-ICSID arbitrations

Article 17 of the Algerian Investment Code (Ordinance N°01-03 of 20 August 2001) 27 provides for arbitration as a possible means of dispute resolution for disputes arising between foreign investors and the State, and is discussed further at question 21 below.

In addition, the Algerian Code of Civil and Administrative Procedure sets out at Book V (Alternative Dispute Resolution), Title II (Arbitration) provisions relating to international commercial arbitrations (articles 1039 to 1061).

18. Does the state have a history of voluntary compliance with adverse investment treaty awards; or have additional proceedings been necessary to enforce these against the state?

Algeria

Compliance with adverse awards

Neither of the two publically available awards in cases brought against Algeria (LESI, S.p.A. and Astaldi, S.p.A. v. People's Democratic Republic of Algeria (ICSID Case No. ARB/05/3) and Consortium Groupement L.E.S.I. - DIPENTA v. People's Democratic Republic of Algeria (ICSID Case No. ARB/03/8) make an award adverse to Algeria. As such, the State's position regarding voluntary compliance with adverse arbitration awards has not yet been tested.

19. Describe the national government’s attitude towards investment treaty arbitration

Algeria

Attitude of government towards investment treaty arbitration

Arbitration is viewed in Algeria as a necessary instrument for the country to engage in international trade and to provide guarantees to foreign investors. Nevertheless, the United States Department of States reports that the resolution process for investment disputes can be slow, and that reports have indicated that investment disputes dealt with through the Algerian courts (as opposed to arbitration) may be subject to political influence and tend to favour the State's position. 28

Algeria has not given any indications of an intention to withdraw from its current BIT obligations.

20. To what extent have local courts been supportive and respectful of investment treaty arbitration, including the enforcement of awards?

Algeria

Attitude of local courts towards investment treaty arbitration

Local courts both recognize and have the authority to enforce foreign arbitral awards. Algeria has ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, meaning that national courts have been exposed to international arbitration procedures and awards. 29 They will generally grant enforcement where the arbitration agreement is valid. In order to do so, the tribunal generally requires an original copy of the award, and a signed arbitration agreement.

National legislation protecting inward investments

21. Is there any national legislation that protects inward foreign investment enacted in this country? Describe the content.

Algeria

National legislation

Substantive protections 30

Procedural rights

FET

Expropriation

Other

Local courts

Arbitration

Algerian Investment Code (Ordinance No. 01-03 of 20 August 2001, as amended)

N/A

Protection from expropriation (art. 16). Indemnification for expropriation is to be fair and equitable.

Investments benefit from full protection (art. 4)

National treatment (art. 14)

Yes - except where arbitration is provided by bilateral or multilateral treaties or by express agreement with the parties (art. 17).

Yes – only where arbitration is provided by bilateral or multilateral treaties or by express agreement with the parties (art. 17).

National legislation protecting outgoing foreign investment

22. Does the country have an investment guarantee scheme or offer political risk insurance that protects local investors when investing abroad? If so, what are the qualifying criteria, substantive protections provided and the means by which an investor can invoke the protections?

Algeria

Relevant guarantee scheme

Qualifying criteria, substantive protections provided and practical considerations

 

We are not aware of any Algerian legislation that makes special provision for outgoing foreign investments.

Awards

23. Please provide a list of any available arbitration awards or cases initiated involving this country’s investment treaties.

Algeria

Awards 31

LESI, S.p.A. and Astaldi, S.p.A. v. People’s Democratic Republic of Algeria (ICSID Case No. ARB/05/3) – Award rendered 12 November 2008

Consortium Groupement L.E.S.I. - DIPENTA v. People’s Democratic Republic of Algeria (ICSID Case No. ARB/03/8) –

Award rendered 10 January 2005

Pending Proceedings

Orascom TMT Investments S.à r.l. v. People’s Democratic Republic of Algeria (ICSID Case No. ARB/12/35)

Reading List

24. Please provide a list of any articles or books that discuss this country’s investment treaties.

Algeria

Article/Book

Arbitration with the Arab Countries , Abdul Hamid El Ahdab & Jalal El-Ahdab, Kluwer Law International 2011 (Chapter 2. Arbitration in Algeria)

International Trade and Investment in Algeria: An Overview , Omar T. Mhammedi, Michigan State Journal of International Law, Vol. 18.3, 2010

Algeria Investment Climate Statement 2015, United States Department of State

Algerian Investment Code (Consolidated, 2015), Algerian Centre of Commerce and Industry

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