Investment Treaty Arbitration: USA

1983 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

1984 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

1987 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

1991 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

1992 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

1994 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

1998 US Model Bilateral Investment Treaty (revised from 1994 and replaced)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

2004 US Model Bilateral Investment Treaty (replaced)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

2012 US Model Bilateral Investment Treaty

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Government of the Republic of Albania (4 January 1998)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Argentina (20 October 1994)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Armenia (29 March 1996)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Azerbaijan (2 August 2001)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Bahrain (30 May 2001)

Yes

Yes

Yes

Yes

No

90 days

Yes

Yes

People’s Republic of Bangladesh (25 July 1989)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Republic of Bolivia (6 June 2001 – Terminated as of 10 June 2012)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Bulgaria (2 June 1994)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Cameroon (6 April 1989)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Democratic Republic of the Congo (Kinshasa) (28 July 1989)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Republic of Congo (Brazzaville) (13 August 1994)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Croatia (20 June 2001)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Czech Republic (19 December 1992)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Ecuador (11 May 1997 – Terminated as of 18 May 2018)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Egypt (27 June 1992)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Estonia (16 February 1997)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Georgia (17 August 1997)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Grenada (3 March 1989)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Honduras (11 July 2001)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Jamaica (7 March 1997)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Jordan (13 June 2003)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Kazakhstan (12 January 1994)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Kyrgyzstan (12 January 1994)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Latvia (26 December 1996)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Lithuania (22 November 2001)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Moldova (25 November 1994)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Mongolia (1 January 1997)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Morocco (29 May 1991)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Mozambique (3 March 2005)

Yes

Yes

Yes

Yes

No

90 days

Yes

Yes

Panama (30 May 1991)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Poland (6 August 1994)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Romania (15 January 1994)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Rwanda (1 January 2012)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Senegal (25 October 1990)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Slovakia (19 December)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Sri Lanka (1 May 1993)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Trinidad And Tobago (26 December 1996)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Tunisia (7 February 1993)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Turkey (18 May 1990)

Yes

Yes

Yes

Yes

Yes

1 year

No

Yes

Ukraine (16 November 1996)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Uruguay (1 November 2006)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Belarus (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

El Salvador (not in force)

Yes

Yes

Yes

Yes

No

90 days

Yes

Yes

Haiti (not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Nicaragua (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Russia (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Uzbekistan (not in force)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Australia Free Trade Agreement (1 January 2005)

Yes

Yes

Yes

Yes

No

No

No

No

Central American/Dominican Republic Free Trade Agreement [CAFTA-DR] (1 January 2009)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Chile Free Trade Agreement (1 January 2004)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Colombia Trade Promotion Agreement (15 May 2012)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Korea Free Trade Agreement (15 March 2012, rev. 1 January 2019)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Morocco Free Trade Agreement (1 January 2006)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Oman Free Trade Agreement (1 January 2009)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Panama Trade Promotion Agreement (31 October 2012)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Peru Trade Promotion Agreement (1 February 2009)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Singapore Free Trade Agreement (1 January 2004)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

United States-Mexico-Canada [USMCA] (1 July 2020)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

North American Free Trade Agreement [NAFTA] (Terminated as of 1 July 2020)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Trans-Pacific Partnership [TPP] (not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Seat of the investor/place of business

In all US investment treaties, the seat of the investor is the place in which or under the laws and regulations of which the company or enterprise was incorporated, constituted or duly organised.

Control by a non-national

Each US investment treaty reserves for the parties the right to deny treaty benefits to companies or enterprises owned by nationals of a third state. US BITs based on the 1983 US Model do not specify criteria for denial of benefits and leave it to the discretion of the parties provided that they consult with each other to seek a mutually satisfactory resolution (eg, 1983 US Model BIT, Panama BIT (1991), Senegal BIT (1990) and Turkey BIT (1990).)

Treaties based on the 1984 US Model BIT reserve the parties’ right to deny treaty benefits if the denying party does not maintain normal economic relations with that third state or if the company seeking treaty protection has no substantial business activities within the territory where it was incorporated. Subsequent US investment treaties follow that pattern (eg, 1987, 1991, 1992, 1994, and 1998 US Model BITs, Bahrain BIT (2001), Honduras BIT (2001), Mozambique BIT (2005) and USMCA (2020)).

Some post-2004 treaties expanded the parties’ right to deny benefits if the denying party does not maintain diplomatic relations with the third state or if the denying party ‘adopts or maintains measures against’ that third state or a person of that third state ‘that prohibits transactions with an enterprise or that would be violated or circumvented’ if treaty benefits were accorded to the company seeking treaty protection (eg, 2004 and 2012 US Model BITs, Australia FTA (2005) and Colombia FTA (2012)).

Dual nationals

The 2004 and 2012 US Model BITs contain a provision that states: ‘a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality’. Thus, claims under treaties that follow the language noted in the 2004 and 2012 Model BITs can be defeated for lack of jurisdiction if brought by dual nationals who have dominant and effective nationality of the host state or of a third state that does not have a relevant investment treaty (eg, Uruguay BIT (2006), Rwanda BIT (2012), Australia FTA (2005) and Peru FTA (2009)). Other US Model BITs do not contain this provision.

Eligible Assets

All US BITs contain asset-based definitions of ‘investment’ that provide an illustrative list of eligible assets, including: (i) tangible and intangible property; (ii) a company (or enterprise) or securities and related interests in a company; (iii) a claim to money or a claim to performance having economic value; (iv) intellectual and industrial property rights; and (v) any right conferred by law or contract, and any licences and permits pursuant to law (eg, Panama BIT (1991), Lithuania BIT (2001) and Tunisia BIT (2001)).

Investment treaties based on the 2004 and 2012 US Model BITs expand the above categories of assets to include: (i) bonds, debentures, other debt instruments and loans; (ii) futures, options, and other derivatives; and (iii) turnkey, construction, management, production, concession, revenue-sharing and other similar contracts (eg, Rwanda BIT (2012), Colombia FTA (2012) and USMCA (2020)).

Indirect control of assets

All US Model BITs provide a definition of ‘investment’ that expressly includes assets owned or controlled indirectly by an eligible investor (such as through a locally-incorporated company in the host state that is majority-owned by the investor) (eg, Panama BIT (1991), Tunisia BIT (1993), Ukraine BIT (1996), Mozambique BIT (2005), Chile FTA (2004) and Australia FTA (2005)).

Exclusion of certain assets

Investment treaties based on the 2004 and 2012 US Model BITs expressly exclude ‘an order or judgment entered in a judicial or administrative action’ from the definition of ‘investment’ (eg, Uruguay BIT (2006), Rwanda BIT (2012), Australia FTA (2005) and Peru FTA (2009)).

Some BITs specifically exclude from a covered ‘investment’ assets that might fall within an eligible category. For example, the Uruguay BIT provides that ‘a bank account that does not have a commercial purpose and is related neither to an investment in the territory in which the bank account is located nor to an attempt to make such an investment’ will likely not have the characteristics of an ‘investment’.

Similarly, the Rwanda BIT provides that an ‘enterprise’ is an investment asset, but ‘where an enterprise does not have the characteristics of an investment, that enterprise is not an investment regardless of the form it may take’. And the Peru FTA provides that ‘[l]oans issued by one Party to another Party are not investments’.

Scope of treaty protection

The US Model BITs before 2004 provide that the treaty binds the parties as to ‘investments existing at the time of entry into force as well as to investments made or acquired thereafter’. However, the 2004 and 2012 US Model BITs expressly state that treaty obligations do ‘not bind either Party in relation to any act that took place or any situation that ceased to exist before the date of entry into force of this Treaty’ (eg, Peru FTA (2009) and Korea FTA (2019)).

Special formalities

The 1983, 1984, 1987, 1991, 1992 and 1994 US Model BITs do not preclude the parties from ‘prescribing special formalities in connection with the establishment of investments,’ unless those formalities ‘impair the substance of any of the rights set forth’ in the treaty (eg, Panama BIT (1991), Sri Lanka BIT (1993), Honduras BIT (2001) and Mozambique BIT (2005)).

The 2004 and 2012 US Model BITs are more specific about application of special formalities, providing the parties may require an investor or its company to disclose non-confidential information for statistical purposes or information, the disclosure of which is required by law (eg, Chile FTA (2004) and Australia FTA (2005)).

Scope of ‘fair and equitable treatment’

Investment treaties based on the 2004 and 2012 US Model BITs expressly include fair and equitable treatment as part of, rather than in addition to, customary international law. Fair and equitable treatment includes the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with due process (eg, Australia FTA (2005), Colombia TPA (2012), Rwanda BIT (2012). CAFTA-DR (2009) and USMCA (2020) contain similar language).

Investment treaties based on the 1983, 1987, 1991, 1992, 1994 and 1998 US Model BITs do not define ‘fair and equitable treatment,’ except to indicate that such treatment shall be no less favourable than is required by international law (eg, Argentina BIT (1994), Romania BIT (1994)).

Investment treaties based on the 1983 US Model BIT tie the concept of fair and equitable treatment to applicable national laws and prescribe that ‘in no case’ shall it be less than that required by international law (eg, Egypt BIT (1992)).

What constitutes an expropriation

Investment treaties based on the 2004 and 2012 US Model BITs provide that an action or a series of actions by a party only constitutes an expropriation if it interferes with a tangible or intangible property right or property interest in an investment (eg, Australia FTA (2005) and Colombia TPA (2012)). CAFTA-DR (2009) and USMCA (2020) contain similar language. The Singapore FTA (2004) includes this definition in a separate exchange of letters.

Investment treaties based on prior US Model BITs do not have this definition.

Judicial or administrative review

Investment treaties based on US Model BITs for 1983, 1987, 1991 and 1992 enable a national or company to pursue ‘prompt review by the appropriate judicial or administrative authorities’ to determine whether an expropriation has occurred and whether such expropriation conformed to principles of international law (eg, Grenada BIT (1989) and Turkey BIT (1990)).

Permissible expropriation conditions

CAFTA-DR (2009), USMCA (2020) and investment treaties based on US Model BITs after 1983 provide that direct or indirect expropriations are only permissible if done: (i) for a public purpose; (ii) in a non-discriminatory manner; (iii) on payment of prompt, adequate and effective compensation; and (iv) in accordance with due process of law and the minimum standard of treatment provision in the treaty (eg, Colombia TPA (2012), Bulgaria BIT (1994)). Investment treaties based on the 1983 US Model BIT require the expropriation not to violate contractual stability or expropriation provisions in an investment agreement between investor and party (eg, Senegal BIT (1990)).

Indirect expropriation requires a case-by-case, fact-based inquiry

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 2004 and 2012 US Model BITs provide that determining whether an action or series of actions by a party constitutes an indirect expropriation, requires consideration of factors such as (i) the economic impact of the government action; (ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and (iii) the character of the government action (eg, Australia FTA (2005) and Colombia TPA (2012)).

Compensation conditions

CAFTA-DR (2009), USMCA (2020) and investment treaties based on US Model BITs since 1983 provide that compensation must (i) be paid without delay; (ii) be equivalent to the fair market value of expropriated investment immediately before the expropriation took place; (iii) not reflect any change in value because the intended expropriation had become known earlier; (iv) be fully realisable and freely transferable and (e) include interest, at a commercially reasonable rate (eg, Korea FTA (2012) and Mongolia (1997)).

Intellectual property regulations allowed if consistent with TRIPS

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 2004 and 2012 US Model BITs provide that the issuance of compulsory licences, renovation, limitation or creation of intellectual property rights, to the extent these acts are consistent with the TRIPS Agreement, are not expropriations (eg, Peru TPA (2009), Singapore FTA (2004)). Investment treaties based on prior US Model BITs do not contain similar provisions.

Scope of national treatment and most favoured nation clauses

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 2004 and 2012 US Model BITs provide that investors and their ‘covered investments’ are entitled to be treated as favourably as the host party treats its own investors and their investments, or investors and investments from any third country, in like circumstances. Read together, the national treatment (NT) and most favoured nation (MFN) clauses, afford the better of NT or MFN with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments (eg, Colombia TPA (2012) and Rwanda BIT (2012)).

Investment treaties based on the 1994 and 1998 US Model BITs provide NT and MFN protections for the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of ‘covered investments’ (eg, Bahrain BIT (2001), Jordan BIT (1997) and Honduras BIT (2001)).

Investment treaties based on the 1983, 1987, 1991 and 1992 US Model BITs provide NT and MFN for investments and ‘associated activities’ by nationals and companies of the other party (eg, Romania BIT (1994) and Turkey BIT (1990)).

Meaning of ‘like circumstances’

The USMCA (2020) establishes that ‘like circumstances’ for NT and MFN ‘depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare objectives’. No international investment treaty based on a US Model BIT since 1983, or CAFTA-DR (2009) defines ‘like circumstances’.

Scope of MFN and NT regarding measures related to investment losses due to war or armed conflict, revolution, state of national emergency, insurrection, civil disturbance, etc.

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 2004 and 2012 US Model BITs establish that parties shall accord ‘non-discriminatory treatment’ to investors and covered investments over measures related to losses caused by armed conflict (eg, Colombia TPA (2012) and Singapore FTA (2004)).

Investment treaties based on the US Model BITs from 1983 to 1998 provide MFN and NT for covered investments when a party implements measures relating to investment losses caused by these types of events (eg, Georgia BIT (1997), Lithuania BIT (2001), Turkey BIT (1990)).

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 1983, 1994, 1998, 2004 and 2012 US Model BITs establish that a party is required to accord restitution or pay adequate compensation if a covered investment is requisitioned or unnecessarily fully or partially destroyed by the party’s authorities due to these types of events (eg, Colombia TPA (2012) and Senegal BIT (1990)).

Exceptions for non-conforming measures, etc

Investment treaties based on the 2004 and 2012 US Model BITs establish that NT and MFN do not apply to non-conforming measures, any measures with respect to sectors or activities carved out in an annex, exceptions to obligations under certain TRIPS articles, government procurement, subsidies or grants provided by a party. Various US treaties include some or all of these exceptions.

Investment treaties based on US Model BITs from 1983 to 1998 preserve parties’ right to carve out sectors or activities from the obligation to provide NT and MFN (eg, Bulgaria BIT (1994) and Grenada BIT (1989)).

Treaty-specific exceptions

Some treaties include express exceptions from MFN and/or NT. For example, the Colombia TPA (2012) and Peru TPA (2009) exclude dispute resolution mechanisms from the MFN provision.

Special formalities allowed

Investment treaties based on the 2004 and 2012 US Model BITs establish that NT does not prevent a party from prescribing special formalities to covered investments if such formalities ‘do not materially impair the protections afforded’ to investors and covered investments (eg, Chile (2004), Colombia TPA (2012)). CAFTA-DR (2009) and USMCA (2020) include similar language.

Investment treaties based on the 1983, 1987, 1991, 1992, 1994 and 1998 US Model BITs contain similar provisions (eg, Grenada BIT (1989) and Jordan BIT (2003)).

Information requests allowed

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 2004 and 2012 US Model BITs establish that NT and MFN do not prevent a party from requiring an investor or its covered investment to provide information for informational or statistical purposes (eg, Colombia TPA (2012), Rwanda BIT (2012)).

Investment treaties based on prior US Model BITs do not contain similar provisions.

Scope of ‘full protection and security’

CAFTA-DR (2009), USMCA (2020) and investment treaties based on US Model BITs from 2004 and 2012 expressly include ‘full protection and security’ as part of customary international law. The obligation to provide ‘full protection and security’ includes a level of police protection required under customary international law (eg, Chile FTA (2004), Colombia TPA (2012)).

Investment treaties based on the US Model BITs from 1987 to 1998 do not define ‘full protection and security’ and require it to be no less favourable than required by international law (eg, Argentina BIT (1994), Mongolia BIT (1997)).

Investment treaties based on the 1983 Model BIT require ‘full protection and security’ consistent with applicable national laws and no less than required by international law (eg, Bangladesh BIT (1989)).

Limited use of ‘umbrella clauses’ in US investment treaties

The Umbrella Clause provision was removed in the 1994 Model BIT and has not since re-appeared.

In practice, 27 US BITs currently in force contain an umbrella clause, and 6 of these were signed contemporaneous with, or after, the 1994 Model: Lithuania (2004), Jamaica (1997), Estonia (1997), Mongolia (1997), Latvia (1996) and Ukraine (1996).

Five of these post-1994 BITs contain an identical umbrella clause: ‘Each Party shall observe any obligation it may have entered into with regard to investments.’⁴

Interpretation of scope of ‘umbrella clauses’ in US investment treaties

The ICSID tribunal in Noble Ventures, Inc v Romania, Award, ICSID Case No. ARB/01/11 (2005) analysed this exact language (also found within the 1994 US–Romania BIT) after Romania failed to carry out a contractually promised restructuring of the debts of a state-owned company acquired by claimant. The tribunal (at ¶¶ 51-53) concluded that the clause’s wording – that parties ‘shall’ observe obligations ‘with regard to investments’ – provides ‘substantial support for the interpretation’ that the provision is ‘a real umbrella clause.’ Thus worded, the provision elevates contractual breaches by the state, including municipal law obligations, into ‘obligations directly cognizable in international law’.

Additional exceptions for non-conforming measures related to international agreements

Investment treaties based on the 1994 and 1998 US Model BITs establish that NT and MFN obligations do not apply to procedures provided in multilateral agreements concluded under the auspices of WIPO on the acquisition and maintenance of intellectual property (eg, Jordan BIT (2003), Trinidad and Tobago (1996)).

Investment treaties based on the 1992 US Model BIT excuse parties from according MFN treatment when an advantage originates from obligations under GATT (eg, Bulgaria BIT (1994) and Mongolia BIT (1997)).

Investment treaties based on the 1987 and 1992 US Model BITs exempt parties from providing MFN treatment when an advantage originates from a party’s membership in a free trade area (eg, Argentina BIT (1994) and Czech Republic BIT (1992)).

Foreign investors may not be required to sell or dispose of an investment based on their nationality

CAFTA-DR (2009), USMCA (2020) and investment treaties based on the 2004 and 2012 US Model BITs provide that parties may not require an investor, due to its nationality, to ‘sell or otherwise dispose of an investment’ after a treaty’s entry into force (eg, Rwanda BIT (2012), Uruguay (2006)).

National & Most-Favoured Nation Treatment Exceptions

US BITs allow for exceptions to NT and MFN treatment based on the host state’s domestic law, which apply if the parties’ domestic regimes provide for derogations from those treaty obligations or where the parties have negotiated and agreed to these exceptions in specific economic sectors and matters in other agreements.

Notwithstanding these exceptions, the parties cannot require an investor to divest of its existing investment if it was already covered by the obligations of NT and MFN treatment at the time the exception becomes effective.

Investment treaties based on the 1983, 1984, 1987, 1991, and 1992 US Model BITs contain exceptions to NT and/or MFN treatment to investments in some of the following sectors: air transportation; ocean and coastal shipping; banking, insurance, securities, and other financial services; government grants; government insurance and loan programmes; energy and power production; custom house brokers; ownership of real property; ownership, operation and control of broadcast or common carrier radio and television stations; ownership of shares in the Communications Satellite Corporation; the provision of common carrier telephone and telegraph services; the provision of submarine cable services; use of land and natural resources; mining on the public domain; maritime services and maritime-related services; control of defence industries; manufacturing and sale of narcotics, weapons and explosives; control of newspapers or news agencies; recovery of all renewable and non-renewable natural resources including resources found on the continental shelf; fishing; hunting; port management; and gambling; maritime services and maritime-related services; and primary dealership in United States government securities (eg, Panama BIT (1991), Armenia BIT (1996), Latvia BIT (1996)).

Investment treaties based on the 1994 and 1998 US Model BITs contain provisions that carve out NT and MFN obligations for investments in the following sectors: atomic energy; custom house brokers; licences for broadcast, common carrier, or aeronautical radio stations; COMSAT; subsidies or grants, including government-supported loans, guarantees and insurance; state and local measures exempt from article 1102 of the North American Free Trade Agreement pursuant to article 1108 thereof; landing of submarine cables; fisheries; air and maritime transport, and related activities; and banking, securities and other financial services (eg, Albania BIT (1995), Georgia BIT (1999) and Azerbaijan BIT (2001)).

Investment treaties based on the 2004 and 2012 Model BITS include annexed Schedules setting set out the “sectors, subsectors, or activities” that are subject to carve out from NT and MFN obligations (eg, Uruguay BIT (2006), Rwanda BIT (2012)).

Those BITs, as well as certain FTAs, also carve out “measure[s] covered by an exception to, or derogation from, the obligations under articles 3 or 4 of the [Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)], as specifically provided in those Articles and in article 5 of the TRIPS Agreement” (eg, Uruguay BIT (2006), Rwanda BIT (2012) and USCMA (2020)).

Denial of benefits

Subject-matter exclusions

Investment treaties based on the 1983, 1984, 1987, 1991, 1992, 1994 and 1998 US Model BITs expressly provide that parties shall not be precluded from applying measures necessary for the fulfilment of a party’s obligations with respect to the maintenance or restoration of international peace or security, or the protection of its essential security interests (eg, Congo (Kinshasa) BIT (1989), Panama BIT (1991), Morocco BIT (1991), Congo (Brazzaville) BIT (1994), Kazakhstan BIT (1994), Albania BIT (1995) and Mozambique BIT (2005)).

Institutional or ad hoc arbitration

Investment treaties based on the 1994, 1998, 2004, and 2012 US Model BITs provide that claimant may submit a claim to (i) ICSID arbitration; (ii) ad hoc arbitration under the UNCITRAL Arbitration Rules; or (iii) any other arbitration institution or under any other arbitration rules, as long as claimant and respondent agree (eg, Armenia BIT (1992), Kazakhstan BIT (1993), Lithuania BIT (1998), Colombia TPA (2006), Republic of Korea FTA (2007), Rwanda BIT (2012)). CAFTA-DR (2009) and USMCA (2020) contain a similar provision.

Time limits

Investment treaties based on the 2004 and 2012 US Model BITs require that a claim be submitted to arbitration within three years of the investor having first acquired knowledge or should have acquired knowledge of the breach of the treaty (eg, Uruguay BIT (2006), Rwanda BIT (2012)). CAFTA-DR (2009) contains a similar three-year limitation provision. USMCA (2020) provides that no claims shall be submitted to arbitration if more than four years have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach. Investment treaties based on the 1994 and 1998 US Model BITs are silent on time limits within which a claim may be submitted to arbitration (eg, Honduras BIT (2001) and Mozambique BIT (2005)).

‘Cooling-off’ period

Most US investment treaties contain a cooling-off period clause, which is also known as a ‘waiting period’ and provides that an investor seeking to initiate arbitration proceedings has to hold off for a specified period.

Investment treaties based on the US 1994 and 1998 US Model BITs provide for a three-month cooling-off period (eg, Azerbaijan BIT (1997)). Other US treaties (eg, Latvia BIT (1995), Lithuania BIT (1998), CAFTA-DR (2009) and USMCA (2020)) provide for six months of cooling-off time. Investment treaties based on the 2004 and 2012 US Model BITs also provide for six months of cooling-off time (eg, Uruguay BIT (2006), Rwanda BIT (2012)).

‘No U-Turn’ waiver

Investment treaties based on the 2004 and 2012 US Model BITs provide that no claim may be submitted to arbitration without the prerequisite waiver of a right to bring a claim in another forum (eg, Uruguay BIT (2006), Rwanda BIT (2012), Panama FTA (2008)). CAFTA-DR (2009) and USMCA (2020) contain a similar waiver provision.

Investment treaties based on the 1994 and 1998 US Model BITs do not have such a ‘waiver’ requirement.

Fork-in-the-road

Most US treaties contain a fork-in-the-road clause, according to which investors must choose either to pursue their claim through the local courts and administrative tribunals or through international arbitration. Under such treaties, investors may not use both options (eg, Bahrain BIT (2001), Croatia BIT (1996), Uruguay BIT (2006)). CAFTA-DR (2009) and USMCA (2020) contain a similar fork-in-the-road provision.

US Trade Agreements and most BITs provide that a claimant should serve a notice of dispute upon the United States by delivery to the US Department of State, c/o the Executive Director of the Office of the Legal Adviser.⁷

However, any variation within an investment treaty on the above standard practice should be followed instead.

The US State Department manages all representation on behalf of the United States in any international dispute (sometimes coordinating with other components of the US government). Within the US State Department, the Office of International Claims and Investment Disputes handles all international arbitrations in which the United States is a party (including investment treaty arbitrations).

The US State Department utilises internal counsel, typically from the Office of International Claims and Investment Disputes. While the State Department does often coordinate and utilise the resources of other US government components, no instances could be found (as of the time of this writing) of the State Department employing external (non-government) counsel in an investment treaty arbitration.

The United States ratified the Washington Convention on 10 June 1966, and enacted implementing legislation on 11 August 1966 (United States Code: Settlement of Investment Disputes, 22 USC. § 1650a (1966)).

Federal Arbitration Act (FAA), 9 USC. § 1, §§ 201-208 (1970)

The FAA governs arbitrations seated within the United States (see generally Chapter 1), including non-ICSID arbitrations (see generally Chapter 3, implementing the Panama Convention). However, there is currently a disagreement among US federal courts of appeal as to whether FAA Chapter 1 or FAA Chapter 2 (implementing the New York Convention) governs challenges to non-ICSID international arbitration awards rendered in the United States. See, eg, Inversiones y Procesadora Tropical INPROTSA, S.A. v Del Monte Int’l GmbH, 921 F.3d 1291 (11th Cir. 2019), contra Yusuf Ahmed Alghanim & Sons v Toys ‘R’ Us, Inc, 126 F.3d 15, 23 (2d Cir. 1997).

US voluntary compliance with adverse investment treaty awards is unknown because there have been no adverse investment treaty awards against the United States. Only one BIT case, Optima Ventures LLC, Optima 7171 LLC and Optima 55 Public Square LLC v. United States of America (ICSID Case No. ARB/21/11) (pending), has advanced past the notice stage. To date, no CAFTA-DR or USMCA notices have led to adverse awards against the United States. Of 17 US NAFTA proceedings; 7 settled or were discontinued and 10 were decided in favour of the United States. This record reflects a US tendency to settle or otherwise resolve disputes through political agreements to avoid the risk of an adverse award.

The US attitude toward investment treaty arbitration is extremely positive, as evinced by continued US participation in 39 BITs in force as well as several multilateral investment and trade agreements. The United States has fully implemented legislation, notably the FAA and 22 USC. § 1650a, that standardise the recognition and enforcement in US courts of any arbitral awards that result from these treaty (or private) agreements.

In turn, US courts routinely affirm that the FAA ‘reflects an emphatic federal policy in favor of arbitral dispute resolution’[.] See, eg, Marmet Health Care Ctr., Inc v Brown, 565 US 530, 533 (2012).

Subject to limited, narrowly construed statutory exceptions, US courts will ‘confirm’ investment treaty arbitral awards, after which they are treated as domestic US judgments. Foreign Sovereign Immunities Act (FSIA) § 1605(a)(6) authorises courts to confirm awards against ‘foreign states’. After an award is confirmed, the arbitral debtor’s (or debtor’s alter ego’s) US-located assets may be attached or garnished. FSIA § 1610(a)(6) authorises attachment of foreign sovereign assets used for commercial activity within the United States⁸ if not violative of the arbitration agreement.

No

Yes

No

Yes

No

US International Development Finance Corporation (DFC) (until 2 January 2020, known as Overseas Private Investment Corporation (OPIC))

A US government agency that offers specialist insurance, finance, and other programmes to US investors overseas to protect against acts of expropriation and other forms of unlawful interference by the host government, breach of contract, the risks of currency inconvertibility and other losses caused by host country governmental acts. Insurance is primarily available for investments in low and lower-middle income countries but may also be available for investments in certain projects in upper-middle income countries as a case-by-case basis. The investment must be medium to long term in nature and respect the environment, worker and human rights, and local communities.

Multilateral Investment Guarantee Agency (MIGA)

The United States has ratified the Convention, establishing the Multilateral Investment Guarantee Agency (MIGA). US nationals and companies are eligible to acquire risk insurance guarantees to protect against losses from, damage to, or disappearance of tangible assets caused by political acts of war or civil disturbance, breach of contract, expropriation or currency transfer. The investment must be financially viable and medium to long term in nature, promote the host country’s development goals, and comply with MIGA’s policy on social and environmental sustainability and anti-corruption and fraud standards.

ADF Group Inc v United States, ICSID Case No. ARB(AF)/00/1

AES Corporation and Tau Power BV v Republic of Kazakhstan, ICSID Case No. ARB/10/16

African Holding Company of America, Inc and Societe Africaine de Construction au Congo S.A.R.L. v Democratic Republic of the Congo, ICSID Case No. ARB/05/21

Ahmonseto, Inc and others v Arab Republic of Egypt, ICSID Case No. ARB/02/15

AIG Capital Partners, Inc and CJSC Tema Real Estate Company v Republic of Kazakhstan, ICSID Case No. ARB/01/6

Aggarwal, et al v Bosnia and Herzegovina

Apotex Holdings Inc and Apotex Inc v United States (I-III), ICSID Case No. UNCT/10/2, ICSID Case No. ARB(AF)/12/1

Al Tamini v Sultanate of Oman, ICSID Case No. ARB/11/33

American Manufacturing & Trading, Inc v Republic of Zaire, ICSID Case No. ARB/93/1

Archer Daniels Midland and Tate & Lyle Ingredients Americas, Inc v Mexico, ICSID Case No. ARB(AF)/04/5

Aven, et al v Republic of Costa Rica, ICSID Case No. UNCT/15/3

Awdi, et al v Romania, ICSID Case No. ARB/10/13

Azinian, et al v United Mexican States, ICSID Case No. ARB(AF)/97/2

Azurix Corp v Argentine Republic (I), ICSID Case No. ARB/01/12

Ballantine v Dominican Republic, PCA Case No. 2016-17

Bayview Irrigation District, et al v United Mexican States, ICSID Case No. ARB(AF)/05/1

Biedermann International, Inc v The Republic of Kazakhstan, SCC Case No. 97/1996

Bosh International, Inc and B&P, LTD Foreign Investments Enterprise v Ukraine, ICSID Case No. ARB/08/11

Bridgestone v Panama, ICSID Case No. ARB/16/34

Burlington Resources, Inc v Republic of Ecuador, ICSID Case No. ARB/08/5

Canadian Cattlemen v USA

Caratube International Oil Company LLP v Republic of Kazakhstan, ICSID Case No. ARB/08/12

Cargill, Inc v Mexico, ICSID Case No. ARB(AF)/05/2

Cargill, Inc v Poland

CCL v Republic of Kazakhstan, SCC Case No. 122/2001

Champion Trading Company and Ameritrade International, Inc v Arab Republic of Egypt, ICSID Case No. ARB/02/9

Champion Holding Company and others v Arab Republic of Egypt, ICSID Case No. ARB/16/2

Chevron Corporation and Texaco Petroleum Company v The Republic of Ecuador (I), PCA Case No. 2007-02/AA277

Clayton/Bilcon v Canada, PCA Case No. 2009-04

CMS Gas Transmission Company v Argentine Republic, ICSID Case No. ARB/01/8

Commerce Group Corp. and San Sebastian Gold Mines, Inc, v Republic of El Salvador, ICSID Case No. ARB/09/17

Continental Casualty Company v Argentine Republic, ICSID Case No. ARB/03/9

Corona Materials, LLC v Dominican Republic, ICSID Case No. ARB(AF)/14/3

Corn Products International, Inc v Mexico, ICSID Case No. ARB(AF)/04/1

Crompton (Chemtura) Corp v Canada

Detroit International Bridge Company v Canada, PCA Case No. 2012-25

Dominion Minerals v Panama, ICSID Case No. ARB/16/13

Duke Energy Electroquil Partners and Electroquil SA v Republic of Ecuador, ICSID Case No. ARB/04/19

Eli Lilly and Company v Canada, ICSID Case No. UNCT/14/2

El Paso Energy International Company v Argentine Republic, ICSID Case No. ARB/03/15

Empresa Electrica del Ecuador, Inc (EMELEC) v Republic of Ecuador, ICSID Case No. ARB/05/9

Enron Creditors Recovery Corporation and Ponderosa Assets, LP v Argentine Republic, ICSID Case No. ARB/01/3

EuroGas Inc and Belmont Resources Inc v Slovakia, ICSID Case No. ARB/14/14

Feldman v United Mexican States, ICSID Case No. ARB(AF)/99/1

Fireman’s Fund Insurance Company v United Mexican States, ICSID Case No. ARB(AF)/02/1

F-W Oil Interests, Inc v Republic of Trinidad & Tobago, ICSID Case No. ARB/01/14

Gallo v Canada, PCA Case No. 55798

GAMI Investments v Mexico

Generation Ukraine v Ukraine, ICSID Case No. ARB/00/9

Genin, et al v Republic of Estonia, ICSID Case No. ARB/99/2

Glamis Gold Ltd v United States

Global Trading Resources Corp and Globex International, Inc v Ukraine, ICSID Case No. ARB/09/11

Grand River Enterprises Six Nations, Ltd et al v United States

Grot, et al v Moldova, ICSID Case No. ARB/16/8

Guaracachi America, Inc and Rurelec PLC v The Plurinational State of Bolivia, PCA Case No. 2011-17

H&H Enterprises Investments, Inc v Arab Republic of Egypt, ICSID Case No. ARB/09/15

Italba v Uruguay, ICSID Case No. ARB/16/9

KBR v Mexico, ICSID Case No. UNCT/14/1

Lauder v The Czech Republic

Lemire v Ukraine (II), ICSID Case No. ARB/06/18

LG&E Energy Corp, et al v Argentine Republic, ICSID Case No. ARB/02/1

Link-Trading Joint Stock Company v Department of Customs Control of the Republic of Moldova

Loewen Group, Inc and Raymond L. Loewen v United States, ICISD Case No. ARB(AF)/98/3

Manchester Securities v Poland, PCA Case No. 2015-18

M.C.I. Power Group, LC and New Turbine, Inc v Republic of Ecuador, ICSID Case No. ARB/03/6

McKenzie v Vietnam

Mercer International, Inc v Canada, ICSID Case No. ARB(AF)/12/3

Merrill & Ring Forestry v Canada, ICSID Case No. UNCT/07/1

Mesa Power v Canada, PCA Case No. 2012-17

Metalclad Corporation v United Mexican States, ICSID Case No. ARB(AF)/97/1

Methanex Corp v United States

Mihaly International Corporation v Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/00/2

Minnotte and Lewis v Republic of Poland, ICSID Case No. ARB(AF)/10/1

Mitchell v Democratic Republic of the Congo, ICSID Case No. ARB/99/7

Mobil Exploration and Development Inc, et al v Argentine Republic, ICSID Case No. ARB/04/16

Mobil Investments Canada Inc and Murphy Oil Corporation v Canada (I), ICSID Case No. ARB(AF)/07/4

Mobil, et al. v Venezuela, ICSID Case No. ARB/07/27

Mondev International Ltd v United States, ICSID Case No. ARB(AF)/99/2

Murphy Exploration and Production Company International v Republic of Ecuador (I), ICSID Case No. ARB/08/4

Murphy Exploration & Production Company – International v The Republic of Ecuador (II), PCA Case No. 2012-16

SD Myers, Inc v Canada

Nations Energy v Panama, ICSID Case No. ARB/06/19

Nelson v Mexico, ICSID Case No. UNCT/17/1

Noble Ventures, Inc v Romania, ICSID Case No. ARB/01/11

Occidental Exploration and Production Company v The Republic of Ecuador (I), LCIA Case No. UN3467

Occidental Petroleum Corporation and Occidental Exploration and Production Company v Republic of Ecuador (II), ICSID Case No. ARB/06/11

Republic of Ecuador (II), ICSID Case No. ARB/06/11

Pac Rim Cayman LLC v Republic of El Salvador, ICSID Case No. ARB/09/12

Pope & Talbot v Canada

PSEG Global Inc and Konya Ilgin Elektrik Uretim ve Ticaret Limited Sirketi v Republic of Turkey, ICSID Case No. ARB/02/5

Railroad Development Corporation v Republic of Guatemala, ICSID Case No. ARB/07/23

The Renco Group, Inc v Republic of Peru (I), ICSID Case No. UNCT/13/1

RSM Production Corporation and others v Grenada, ICSID Case No. ARB/10/6

Ryan, et al v Republic of Poland, ICSID Case No. ARB(AF)/11/3

Seo v Korea, HKIAC Case No. 18117

Sempra v Argentina, ICSID Case No. ARB/02/16

TECO Guatemala Holdings, LLC v Republic of Guatemala, ICSID Case No. ARB/10/23

Transglobal Green Energy, LLC and Transglobal Green Panama, SA v Republic of Panama, ICSID Case No. ARB/13/28

TS Investment Corp. v Republic of Armenia, LCIA

Ulysseas, Inc v The Republic of Ecuador, PCA Case No. 2009-19

United Parcel Service of America, Inc (UPS) v Canada, ICSID Case No. UNCT/02/1

Vento v Mexico, ICSID Case No. ARB(AF)/17/3

Waste Management, Inc v United Mexican States (I), ICSID Case No. ARB(AF)/98/2

Waste Management, Inc v United Mexican States (II), ICSID Case No. ARB(AF)/00/3

Windstream Energy v Canada, PCA Case No. 2013-2

AES Corporation v Argentine Republic, ICSID Case No. ARB/02/17

Alicia Grace, et al v Mexico, ICSID Case No. UNCT/18/4

Amec Foster Wheeler, et al. v Colombia, ICSID Case No. ARB/19/34

Amorrortu v The Republic of Peru (PCA Case No. 2020-11)

APR Energy, et al v Australia

Arin Capital and Khudyan v Armenia, ICSID Case No. ARB/17/36

Bay View and Spalena v Rwanda, ICSID Case No. ARB/18/21

Big Sky Energy v Kazakhstan, ICSID Case No. ARB/17/22

B-Mex, et al v Mexico, ICSID Case No. ARB(AF)/16/3

Borkowski and Rasia FZE v Armenia, ICSID Case No. ARB/18/28

Carrizosa Gelzis v Colombia (I), PCA Case No. 2018-56

Carrizosa v Colombia (II), ICSID Case No. ARB/18/5

Chevron Corporation and Texaco Petroleum Corporation v The Republic of Ecuador (II), UNCITRAL, PCA Case No. 2009-23

Cosigo Resources, et al v Colombia

Durres and others v. Albania, ICSID Case No. ARB/20/37

ELA v Estonia

Elliott v.Korea, PCA Case No. 2018-51

Freeport-McMoRan Inc. v. Republic of Peru (ICSID Case No. ARB/20/8)

Gramercy v Peru, ICSID Case No. UNCT/18/2

Hope Services LLC v Republic of Cameroon, (ICSID Case No. ARB/20/2)

Hourani v Republic of Kazakhstan, ICSID Case No. ARB/15/13

IBT Group, LLC and IBT, LLC v. Republic of Panama, (ICSID Case No. ARB/20/31)

Iconia Capital LLC v Georgia

Invenergy LLC v Poland

Kappes v Guatemala, ICSID Case No. ARB/18/43

Koch Industries, Inc. and Koch Supply & Trading, LP v. Canada, (ICSID Case No. ARB/20/52)

Legacy Vulcan v Mexico, ICSID Case No. ARB/19/1

Lone Pine Resources v Canada, ICSID Case No. UNCT/15/2

Mamacocha and Latam Hydro v Peru, ICSID Case No. ARB/19/28

Mason v Korea, PCA Case No. 2018-55

Merck Sharpe & Dohme (I.A.) Corporation v The Republic of Ecuador, PCA Case No. 2012-10

MetLife v Argentina, ICSID Case No. ARB/17/17

Neustar, Inc v Republic of Colombia, (ICSID Case No. ARB/20/7)

Odyssey v Mexico

Omega Engineering and Rivera v Panama, ICSID Case No. ARB/16/42

Orlandini-Agreda and Compania Minera Orlandini v Bolivia, PCA Case No. 2018-39

Renco v Peru (II), PCA Case No. 2019-46

Resolute Forest v Canada, PCA Case No. 2016-13

RSM v Ecuador

Seda, et al v Colombia, ICSID Case No. ARB/19/6

Sukyas v Romania

Telcell Wireless, LLC and International Telcell Cellular, LLC v. Georgia, (ICSID Case No. ARB/20/5)

Tennant Energy v Canada, PCA Case No. 2018-54

The Carlyle Group, et al v Morocco, ICSID Case No. ARB/18/29

The Lopez-Goyne Family Trust, et al v Nicaragua, ICSID Case No. ARB/17/44

Unisys Corporation v Argentine Republic, ICSID Case No. ARB/03/27

Westmoreland v Canada (II)

Westwater Resources v Turkey, ICSID Case No. ARB/18/46

WorleyParsons v Ecuador

Worth Capital Holdings 27 LLC v Republic of Peru, (ICSID Case No. ARB/20/51)