Investment Treaty Arbitration: Belgium

Legal persons as “investors”

The BLEU BITs generally require that, for legal persons to be considered investors of a Contracting State, they must: (i) be constituted in accordance with the laws of the relevant Contracting State; and (ii) have their registered office in the territory of that State.  Some BITs only impose condition (i), without also imposing condition (ii).²⁸ At least one BIT also requires “business activity” in the territory of the relevant Contracting State,²⁹ and another imposes the additional requirement of “residence”.³⁰

Companies controlled by investors as “investors”

The BLEU BITs generally do not foresee the possibility of companies controlled by investors to be considered as investors themselves. There are exceptions to this rule. Some BLEU-BITs allow companies controlled by investors to be considered as investors, but only to the extent the company controlled is not located in one of the Contracting States.³¹ Other BLEU BITs do not impose such a requirement, allowing the controlled company to be located anywhere.³²  

Natural persons as “investors”

Under the BLEU BITs, physical persons usually qualify as an investor when he or she is considered a citizen under the laws of the relevant Contracting State. Only rarely do BLEU BITs impose a residence requirement.³³ 

Governments as “investors”

Three BLEU BITs have extended the definition of investor to include certain governments. The BLEU-Kuwait BIT defines “the Government of the State of Kuwait” as an investor. A similar provision can be found in the BLEU-Saudi Arabia BIT. For its part, the BLEU-UAE BIT defines the governments of both Contracting States as investors.

Investors’ rights in case of multiple applicable treaties

The BLEU’s BITs generally do not limit the ability of investors to bring claims under multiple treaties. The one exception to this appears to be the BLEU-Morocco BIT, which provides that an investor loses the right to protections under the treaty if the investor has invoked the dispute resolution provisions of another BIT “concluded by a Contracting Party on the territory on which the investment has been effected”.

Definition of investment

As set forth in the Model BIT, most BLEU BITs define investment as “every kind of asset and any direct or indirect contribution in cash, in kind or in services, invested or reinvested in any sector of economic activity”. Some older BITs simply define an investment as “any kind of asset”. The BITs then generally go on to set forth a non-exhaustive list of protected investments. One BIT has further defined investments only as those “made in view of establishing sustainable economic links with a company”.³⁴ 

Requirement for government approval

In certain countries, an investment can only benefit from the protections of the relevant BIT if the investment has “received written approval from the competent authority”.³⁵

Compliance with national law

A handful of BLEU BITs require that any investments be made in accordance with national law.³⁶ 

Exclusions

At least one BIT has limited protected investments to certain fields.³⁷  Others have excluded from the definition of investment payments or loans to a State or State-owned company.³⁸

Previous investments

As set forth in the Model BIT, most BLEU BITs provide that they “apply to investments made before [the treaty’s] entry into force by

investors of one Contracting Party in the territory of the other Contracting Party in accordance with the latter’s laws and regulations”.  At least two BITs set the prior date as of which investment protection is afforded.³⁹ 

Definition of fair and equitable treatment

As set forth in the Model BIT, most BLEU BITs provide that “[a]ll investments, whether direct or indirect, made by investors of one Contracting Party shall enjoy fair and equitable treatment in the territory of the other Contracting Party”. 

Relationship with customary international law

In most BLEU BITs, fair and equitable treatment is guaranteed as a protection that is “in no case less favorable than [that] recognized under international law”. Nearly all BLEU BITs that guarantee at least international law protection with respect to fair and equitable treatment also do so with respect to “continuous protection and security”,⁴⁰and sometimes, but less often, with respect to expropriation.

Expropriation standard

As set forth in the Model BIT, most BLEU BITs establish that “[e]ach Contracting Party undertakes not to adopt any measure of expropriation or nationalisation or any other measure having the effect of directly or indirectly dispossessing the investors of the other Contracting Party of their investments in its territory”. At least one BIT has given examples of what amounts to indirect expropriation: “freezing or blocking the investment, raising arbitrary or excessive taxes, forced sale of all or part of the investment, or other comparable actions or measures”.⁴¹

Conditions for expropriation

As set forth in the Model BIT, most BLEU BITs contain the following provision for expropriation: “If reasons of public purpose, security or national interest require a derogation from the [expropriation standard], the following conditions shall be complied with: a) the measures shall be taken under due process of law; b) the measures shall be neither discriminatory, nor contrary to any specific commitments; c) the measures shall be accompanied by provisions for the payment of an adequate and effective compensation.” There are few deviations from these conditions, although at least two BITs provide that the “public purpose” for any expropriation should simply be related to the “internal needs” of the relevant party⁴²; at least two other BITs define due process with reference to local law,⁴³ whereas another does not mention due process at all.⁴⁴

Compensation standard

As set forth in the Model BIT, most BLEU-BITs set the compensation standard for expropriation as “the actual value of the investments on the day before the measures were taken or became public”. Several BITs have nonetheless set the point in time for determining the value of the investment with reference to the day of the taking or its publication, as opposed to the day before.⁴⁵ At least one other has set the point in time with reference to the moment “immediately before the impending expropriation becomes public knowledge”, without reference to the moment of the taking itself.⁴⁶ Yet another BIT provides that the valuation of the expropriation “will not be influenced by the fluctuations in value due to the fact that the intention to expropriate was already known before the operation”.⁴⁷

Other BITs set forth rules for determining the value of the investment when the value cannot otherwise be easily ascertained, requiring the application of “generally recognized principles”.⁴⁸ At least one BIT provides that “[i]f an investment does not have a market value or when the investor concerned proves that the market value of the expropriated investments is less than the real and objective value, the compensation is fixed on the basis of this latter value”.⁴⁹

Right to review

A number of BLEU-BITs foresee the possibility of a local authority to review the conditions of the taking, the value set for compensation, or both.⁵⁰ 

General payment and standard

As set forth in the Model BIT, “compensation shall be paid in the currency of the State of which the investor is a national or in any other convertible currency. It shall be paid without delay and shall be freely transferable. It shall bear interest at the normal commercial rate from the date of the determination of its amount until the date of its payment.” Some BITs do not foresee awarding interest,⁵¹or will only award interest if “compensation is unduly delayed [...] for the period of such delay”.⁵²  At least one BIT provides that “[i]n case of unjustified delay [in payment of the compensation], a new evaluation will be done at the request of the investor with a view to correcting the effects of the situation”.53

Assets of a company

A number of BLEU BITs expressly provide that protection against expropriation shall also apply “where a Contracting Party expropriates the assets of a company which is constituted under the laws in force in any part of its own territory and in which the investors of the other Contracting Party own shares”.⁵⁴

Scope of national treatment/ MFN treatment

Most BLEU BITs contain separate articles dealing with national treatment and/or MFN treatment that apply to all protections in the treaty. Several BITs specify that national treatment/ MFN treatment only apply to certain specific protections in the treaty.⁵⁵

Limits to national treatment

Roughly half of BLEU BITs provide for national treatment. When national treatment is foreseen, such treatment is generally only guaranteed in connection with the “operation, management, maintenance, use, enjoyment, sale, or other disposal of investments”.

Limits to MFN treatment

The BLEU BITs generally provide that the obligation to provide most favoured nation treatment does not extend to the benefits of: (i) membership of a customs union, monetary union, or free trade area; and (ii) any agreements on taxation. Some BITs have only excluded MFN treatment with respect to (i), not (ii).⁵⁶ Others have not included any such exceptions.⁵⁷ In addition, one BIT provides that MFN is also excluded in the case of “any arrangement for facilitating small scale frontier trade in border areas”.⁵⁸ Another BIT provides that “most favorable national treatment shall not be applied to matters related to procedural or juridical matters”.⁵⁹

Extent of obligations

As set forth in the Model BIT, most BLEU BITs provide that “[e]xcept for measures required to maintain public order, such investments shall  enjoy continuous protection and security, i.e. excluding any unjustified or  discriminatory measure which could hinder, either in law or in practice, the management, maintenance, use, possession or liquidation thereof.”  Several BLEU BITs contain language different from the general definition, providing only for “full protection”,⁶⁰ or “full legal protection”.⁶¹

Extent of obligations

As set forth in the Model BIT, the umbrella clauses in most BLEU BITs provide that “[e]ach Contracting Party undertakes to ensure at all times that the commitments it has entered into vis-à-vis investors of the other Contracting Party shall be observed.”   One BIT contains a reciprocal umbrella clause, providing that each Contracting Party must respect its commitments in relation to the investors of the other Contracting Party, and “investors should on the other hand respect and comply with the terms and conditions of their commitments.”⁶²

Armed conflict/civil unrest

With few exceptions,⁶³ and as set forth in the Model BIT, nearly all BLEU BITs provide that “[i]nvestors of one Contracting Party whose investments suffer losses owing to war or other armed conflict, revolution, a state of national emergency or revolt in the territory of the other Contracting Party shall be granted by the latter Contracting Party a treatment, as regards restitution, indemnification, compensation or other settlement, at least equal to that which the latter Contracting Party grants to the investors of the most favoured nation.”

Transfer

All BLEU-BITs contain a provision along the lines of the following: “Each Contracting Party shall guarantee to investors of the other Contracting Party the free transfer of all payments relating to an investment.”

Subrogation

All BLEU BITs contain a provision along the lines of the following: “1. If one Contracting Party or any public institution of this Party pays compensation to its own investors pursuant to a guarantee providing coverage for an investment, the other Contracting Party shall recognise that the former Contracting Party or the public institution concerned is subrogated into the rights of the investors. 2. As far as the transferred rights are concerned, the other Contracting Party shall be entitled to invoke against the insurer who is subrogated into the rights of the indemnified investors the obligations of the latter under law or contract.”

Restrictions on right to refer to arbitration

A number of BLEU BITs foresee that the investor must first resort to local remedies first for a certain period of time before international arbitration becomes available.⁶⁴ Other BITs provide that if the investor chooses to resort to local remedies first, there is a waiting period before international arbitration becomes available.⁶⁵

National arbitration

Two BITs expressly foresee national arbitration as among the local remedies to which an investor can resort.⁶⁶

Waiver of local remedies

Some BLEU BITs expressly provide that, in the event an investor resorts to arbitration, the investor must waive any local remedies.⁶⁷

Menu of arbitral institutions

With one exception,⁶⁸ all BLEU BITs foresee the possibility of pursuing arbitration before ICSID.  In decreasing order of frequency, BLEU BITs will also add the possibility of arbitration under the UNCITRAL Rules, before the ICC, and before the SCC.

Applicable regulations

As set forth in the Model BIT, most BLEU BITs contain a provision along the lines of the following: “If an issue relating to investments is covered both by this Agreement and by the national legislation of one Contracting Party or by international conventions, existing or to be subscribed to by the Parties in the future, the investors of the other Contracting Party shall be entitled to avail themselves of the provisions that are the most favorable to them.”

Consolidation of procedures

The BLEU-Mexico BIT foresees a procedure for consolidating two or more pending arbitrations, which requires the constitution of a “consolidation tribunal”.

Government entity to which claim notices are sent

As a general rule, BLEU BITs do not specify the governmental entity to which a dispute notice should be sent. We recommend sending any notices to the Prime Minister, Ministry of Foreign Affairs and, in the case of Belgium, also to the relevant regional government (Flanders, Wallonia or Brussels-Capital).

Government department that manages investment treaty arbitrations

In the one investment arbitration filed to date against Belgium, the Ministry of Finance and the General Administration of the Treasury managed the matter. 

Internal/External Counsel

In the one investment arbitration filed to date against Belgium, external counsel acted alongside internal counsel. Belgium invited bids for this work. 

Washington Convention implementing legislation

Belgium: Loi du 17 juillet 1970 portant approbation à la Convention pour le règlement des différends aux investissements entre Etats et ressortissants d’autres Etats, Washington 18 mars 1965.

New York Convention implementing legislation

Belgium: Loi du 5 juin 1975 contenant approbation de la Convention pour la reconnaissance et l'exécution des sentences arbitrales étrangères, faite à New York, le 10 juin 1958, M.B., 15 novembre 1975.

Legislation governing non-ICSID arbitrations

Belgium has recently adopted a new arbitration law based on the UNCITRAL Model Law.⁶⁹ Pursuant to the law, no distinction is made between domestic and international arbitration; the law can apply to investment arbitrations, as well.

Compliance with adverse awards

No publicly available awards have been rendered against Belgium under the BLEU’s investment treaties.

Attitude of government towards investment treaty arbitration

The attitude of the government of Belgium towards investment arbitration is very favourable, as is evidenced by the large number of BITs it has concluded.

Attitude of local courts towards investment treaty arbitration

No publicly available awards have been rendered against Belgium under the BLEU’s investment treaties, although it can be anticipated that the local courts will adopt a pro-arbitration view, as they have done in the commercial context.

Qualifying criteria, substantive protections provided and practical considerations

Multilateral Investment Guarantee Agency

Belgium became a member of the Multilateral Investment Guarantee Agency (MIGA) on 18 September 1992. Under the MIGA, nationals and corporations from Belgium may acquire political risk insurance. This protection is available for medium- and long-term financially viable investments that comply with MIGA’s Policy on Social and Environmental Sustainability and anti-corruption standards.

Export Credit Agency

Belgium has a State-funded Export Credit Agency, which acts as the public credit insurer. The Agency insures companies and banks against political and commercial risks relating to international commercial transactions, mainly regarding capital goods and industrial projects, as well as contracted works and services. For these risks, the Agency can also work alongside banks through risk-sharing schemes. The Agency also insures against political risks relating to foreign direct investments and directly finances commercial transactions of limited proportion.

Concluded Proceedings

Antoine Goetz et consorts v République du Burundi, ICSID Case No. ARB/95/3.

Antoine Goetz & Others and S.A. Affinage des Metaux v Republic of Burundi, ICSID Case No. ARB/01/2.

Camuzzi International S.A. v Argentine Republic, ICSID Case No. ARB/03/7.

Desarrollos en Salud S.A. s/Concurso Preventivo s/Incidente de Revisión (N.V. NISSHO IWAI S.A. (BENELUX)), Juzgado Comercial No. 26 Secretaría No. 51, Argentina.

European Media Ventures SA v The Czech Republic, UNCITRAL.

EDF International S.A., SAUR International S.A. and León Participaciones Argentinas S.A. Argentine Republic, ICSID Case No. ARB/03/23

Jan de Nul N.V. and Dredging International N.V. v Arab Republic of Egypt, ICSID Case No. ARB/04/13.

Peter De Sutter, Kristof De Sutter, DS 2 S.A. and Polo Garments Majunga S.A.R.L. v. Republic of Madagascar, Cour d’appel de Paris, Judgment of 15 March 2016.

Philippe Gruslin v Malaysia, ICSID Case No. ARB/99/3.

Piero Foresti, Laura de Carli & Others v The Republic of South Africa, ICSID Case No. ARB(AF)/07/01.

Ping An Life Insurance Company of China, Limited and Ping An Insurance (Group) Company of China, Limited v Kingdom of Belgium, ICSID Case No. ARB/12/29.

Vladimir Berschader and Moïse Berschander v The Russian Federation, SCC Case No. 080/2004.

LSF-KEB Holdings SCA and others v Republic of Korea, ICSID Case No. ARB/12/37.

Lieven J. van Riet, Chantal C. van Riet and Christopher van Riet v. Republic of Croatia, ICSID Case No. ARB/13/12