I N T E R N AT ION A L E C ONOM IC L AW € SE R I E S Series Editors JOHN H JACKSON ANDR EW D€MITCHELL TANIA€VOON Good Faith and International Economic€Law Good Faith and International Economic Law Edited by A N DR E W D M I TC H E L L Melbourne Law School, University of Melbourne, Australia M S OR N A R AJ A H Faculty of Law, National University of Singapore TA N I A VO ON Melbourne Law School, University of Melbourne, Australia 1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © The several contributors 2015 The moral rights of the authors have been asserted First Edition published in 2015 Impression: 1 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: Data available ISBN 978–0–19–873979–1 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work Acknowledgments This book was produced with generous support from the University of Melbourne and the National University of Singapore pursuant to an inaugural research partnership grant (2013−2014) Several of the chapters benefited from discussion at the Inaugural Symposium of the Global Economic Law Network held at the Melbourne School of Government on May 2014 and the Symposium on Good Faith in International Law held at the Faculty of Law of the National University of Singapore on October 2014, with funding from the Singapore Ministry of Education (Academic Research Fund Tier Grant€2014) The editors thank Alex Lee for his extensive editorial assistance in relation to numerous chapters Valuable research assistance in the early stages was also provided by Elizabeth Sheargold pursuant to the Australian Research Council Discovery Project scheme (project ID DP130100838) and by Caroline Henckels Finally, thanks go to Thijs de Jong for assistance in compiling the bibliography and to Jessica Casben and Irene Han for assistance at the final stages in proofreading and preparing the index and tables The opinions expressed in each chapter of this volume are those of the relevant authors and are not necessarily shared by the editors or any employer or other entity The content of the chapters was drafted and finalized between April and October€2014 Contents Table of Cases Table of Treaties List of Contributors ix xxi xxv Introduction M Sornarajah Good Faith as a General Principle of (International) Law Andreas R Ziegler and Jorun Baumgartner 2.1 Introduction 2.2 Normative Autonomy of the Principle of Good Faith? 2.3 Concretizations of the Principle of Good Faith 2.4 Conclusion Good Faith in Treaty Interpretation Eric De Brabandere and Isabelle Van€Damme 3.1 Introduction 3.2 Good Faith and Treaty Interpretation 3.3 Status of Good Faith Treaty Interpretation under International Law 3.4 Objective Function:€Giving Meaning to a Treaty Text 3.5 Subjective Function:€Assessing Behaviour of Interpreters 3.6 Conclusion Good Faith in Parallel Trade and Investment Disputes Tania Voon, Andrew D Mitchell and James€Munro 4.1 Introduction 4.2 Substantive and Jurisdictional Overlap in WTO and Investment Disputes 4.3 Good Faith and its Particularizations in Connection with Parallel Disputes 4.4 Existing Approaches to Parallel Disputes in International Economic Law 4.5 Conclusion 14 17 35 37 37 38 40 42 55 59 60 60 62 69 75 85 viii Contents Good Faith Limitations on Protected Investments and Corporate€Structuring Stephan W Schill and Heather€L€Bray 5.1 Good Faith Unbound—Good Faith Restrained 5.2 Good Faith and Compliance of Investments with Domestic and€International Law 5.3 Corporate Structuring and Good Faith 5.4 Conclusion:€Good Faith and the Rule of Law in International€Investment Relations Good Faith, Corporate Nationality, and Denial of Benefits M Sornarajah 6.1 Introduction 6.2 Corporate Nationality and Standing 6.3 The Relevance of Good Faith to Corporate Nationality 6.4 The Role of Good Faith in the Law of Treaties 6.5 Analysis of Corporate Nationality as a Basis for Jurisdiction 6.6 Revisiting the Awards 6.7 Conclusion Good Faith and Fair and Equitable Treatment in International Investment Law Martins Paparinskis 7.1 Introduction 7.2 Good Faith and Different Sources of Fair and Equitable Treatment 7.3 Good Faith and Responsibility for the Breach of Fair and Equitable Treatment 7.4 Particularization of Good Faith in the Obligation of Fair and€Equitable Treatment 7.5 Conclusion 88 88 93 105 114 117 117 120 121 123 127 131 140 143 143 146 155 158 170 Conclusion Andrew D Mitchell and Tania€Voon 173 Bibliography Index 181 189 Table of€Cases I N T E R N AT ION A L C OU RT OF€ J US T IC E Ahmadou Sadio Diallo (Republic of Guinea v Democratic Republic of the Congo) (Preliminary Objections) [2007] ICJ Rep 552 .å°“ 118 Ambatielos (Greece v UK) [1953] ICJ Pleadings 344 .å°“ 161 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia) (Judgment) [2007] ICJ Rep 43 155 Arbitral Award of 31 July 1989 (Guinea-Bissau v Senegal) (Judgment) [1991] ICJ Rep 53 174 Armed Activities on the Territory of the Congo (New Application:€2002) (Congo v Rwanda) (Jurisdiction and Admissibility) [2006] ICJ Rep 169 Arrest Warrant of 11 April 2000 (Democratic Republic of the Congo v Belgium) (Merits) [2002] ICJ Rep€3 .å°“ å°“ 29 Avena and Other Mexican Nationals (Mexico v United States) (Judgment) [2004] ICJ Rep 12 .å°“ å°“ å°“ 33 Barcelona Traction, Light and Power Co Ltd (Belgium v Spain) (Judgment) [1970] ICJ Rep å°“ å°“ 106–08, 138,€165 Barcelona Traction, Light and Power Company (Belgium v Spain) (Preliminary Objections) [1964] ICJ Rep å°“ å°“ 20, 33,€118 Border and Transborder Armed Activities (Nicaragua/Honduras) (Jurisdiction and Admissibility) [1988] ICJ Rep 69 .å°“ 14,€90 Certain Norwegian Loans (France v Norway) (Jurisdiction) [1957] ICJ Rep 41,€69,€89 Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v France) (Judgment) [2008] ICJ Rep 177 å°“ å°“ 89,€149 Continental Shelf (Libya/Malta) (Merits) [1985] ICJ Rep 13 å°“ 27–28 Continental Shelf (Tunisia/Libya) [1982] ICJ Rep 18 .å°“ 27–28 Delimitation of the Maritime Boundary in the Gulf of Maine Area (Canada v United States) (Merits) [1984] ICJ Rep 246 å°“ 19 Elettronica Sicula SpA (ELSI) (United States v Italy) (Judgment) [1989] ICJ Rep 15 .å°“ å°“ å°“ 25, 48,€159 Fisheries Case (United Kingdom v Norway) (Merits) [1951] ICJ Rep 116 24–25 Frontier Dispute (Burkina Faso/Mali) (Merits) [1986] ICJ Rep 554 .å°“ 27–8 Gabčíkovo-Nagymaros Project (Hungary/Slovakia) (Judgment) [1997] ICJ Rep 18–20,€53 Interpretation of the Agreement of 25 March 1951 between the WHO and Egypt (Advisory Opinion) [1980] ICJ Rep€3 .å°“ å°“ 89 Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v Nigeria) (Preliminary Objections) [1998] ICJ Rep 275 .å°“ 14, 43,€73,€90 182 Bibliography Fauchald OK and Nollkaemper A (eds), The Practice of International and National Courts and the (De-)Fragmentation of International Law (Hart 2012) Freeman AV, The International Responsibility of States for Denial of Justice (Longmans, Green & Co 1938) Gardiner R, Treaty Interpretation (OUP 2008) Gazzini T and De Brabandere E (eds), International Investment Law: The Sources of Rights and Obligations (Martinus Nijhoff 2012) Hartkamp A et al (eds), Towards a European Civil Code (4th rev edn, Kluwer Law International 2010) Hernández C, The International Court of Justice and the Judicial Function (OUP 2014) Hofmann R and Tams C (eds), From Clinical Isolation to Systemic Integration (Nomos 2011) Horn H and Mavroidis P (eds), The WTO Case Law of 2002 (CUP 2005) Huerta-Goldman J, Romanetti A and Stirnimann F (eds), WTO 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treaty shopping civil law╇ 128,€133 clean hands doctrinꕇ 29–30,€103–04 common law╇ 90, 118, 128,€133 compliance and good faith╇ 93–104,€110 with domestic law╇ 93–100 with international law╇ 100–104 with international standards╇ 100–4 consent, see acquiescence corporations╇ 118–9,€117–42 diplomatic protection╇ 65, 77, 85, 107, 124,€126 nationality of╇ 120–23,€127–31 restructuring of╇ 108–14,€122 see also illegality; parallel disputes; treaty shopping corruption╇ 30, 101–04,€165–7 Cottier, Thomas╇ 20 customary international law╇ 10, 14–15, 30–31, 40–42, 52–55, 89, 107,€124 damages, see remedies de Brabandere, Eric╇ 16, 37–59,€174 Declaration on Principles of International Law Concerning Friendly Relations and Co-operation Among States in Accordance with the Charter of the United Nations, see United Nations General Assembly resolutions denial of benefits╇ 106, 117–21, 141–42, 128–31,€136–38 diplomatic protection, see corporations dispute settlement: investment treaty arbitration╇ 22–23, 54–55, 90–91, 114–15,€138 under domestic law╇ 93–98 World Trade Organization╇ 15–16, 21, 25, 41, 54, 56, 62–69, 75–77,€80–81 see also arbitrators; parallel disputes; remedies; standing; treaty shopping; Table of€Cases domestic law, see compliance; illegality due process╇ 164–67 economic development╇ 118–123, 127, 129, 132,€134 effectiveness, see treaty interpretation equity╇ 26–29,€153–54 infra legem╇27 praeter legem╇27–28 estoppel╇ 20–23, 73–74, 99–100, 104,€169–70 ex aequo et bonô•‡ 27–28,€154 exceptions╇ 33,€106–08 interpretation of╇ 45–49 expectations╇ 49–51, 156–58,€168–70 expropriation╇ 68–69,€85–86 fair and equitable treatment╇ 67–68, 129–31, 143–72,€177 minimum standard╇ 145, 147, 151–53,€163 harmonization╇52–55 host state laws, see compliance; illegality ICSID╇ 25, 27, 34–35, 41, 55, 57, 102–04, 108–11, 120–25, 129,€131–35 disputes, see Table of€Cases Convention, see Table of Treaties illegality╇93–114 under domestic law╇ 93–98,€98–100 190 Index illegality (cont.): under international law 100–04 of investment 93, 95–97, 99 of investor 95–99, 104–05, 130, 176–77 in dubio mitius 45–49 see also treaty interpretation infra legem, see equity intellectual property 63–64 International Court of Justice 14, 17–21, 24–25, 27–28, 40–41, 46, 53, 57, 73, 89–90, 107, 138, 149, 155, 159, 161, 169 disputes, see Table of Cases statute, see Table of Treaties international investment agreements: agreements, see Table of Treaties disputes, see Table of Cases good faith in text 81–84 see also dispute settlement International Law Commission 44–45, 53, 99–100, 125–26 interpretation, see treaty interpretation interpreters, accountability 55-58 investment agreements, see international investment agreements definition of 63–64, 108–09 disputes, see dispute settlement judicial discretion, limits on 55–9 jurisdiction 56–57, 62–66, 72–73, 76–77, 111–13, 123, 127–31 compulsory 76–77 exercise of 83–85, 95–96, 99 exclusive 76–77 ratione temporis 104–14 ratione materiae 100, 104, 108–09 jus cogens 10, 127 Kolb, Robert 14, 19–20, 27, 32 legitimacy 2–8, 178 legitimate expectations, see expectations lex specialis 20, 155 lis pendens, see parallel disputes Manila Declaration on the Peaceful Settlement of Disputes Between States, see United Nations General Assembly resolutions McLachlan, Campbell 71, 83 minimum standard of treatment, see fair and equitable treatment most-favoured nation 667 Muller, Jörg 20 nationality of investor, see corporations nemo auditor propriam turpitudinem allegans 94, 98 non-compliance, see compliance non-discrimination 66–67, 162–64 non-violation complaints 16–17, 178 norm 10–12, 14–17, 18–19, 32, 43–44, 51, 66–69, 71–72, 91, 102 normative principle 14–17 meta-norm 43–44 pacta sunt servanda 18–19, 53 parallel disputes 60–87 identity test 72–73, 82–83 lis pendens 71–73, 79, 82–83, 85–87 see also dispute settlement Permanent Court of International Justice 19–21, 33, 45–47 disputes, see Table of Cases praeter legem, see equity procedural fairness, see due process public policy 16, 94, 98, 100–04 quantitative restrictions 67 ratione temporis, see jurisdiction remedies 65–66, 70–72 damages 65–66 specific performance 65–66 right to arbitration 124–25 rule of law, the 114–16, 159 Salini criteria 109 Schreuer, Christoph 105, 130 siège social theory 128, 133, 139–40 sovereignty 45–46 specific performance, see remedies standing 64–65, 120–21 see also dispute settlement; illegality; right to arbitration state responsibility 99–100, 124, 155–58 trade in goods 62–64, 67 trade in services 62–63, 67 transparency 167–68 treaty interpretation 37–59, 107, 125–26, 129–30 contextual 43–5, 50, 124, 147–9 effectiveness 44–45, 48–49, 125–6, 149–50 and good faith 38–42, 125–26, 147–51, 174, 178–79 strict construction 45–49 Index supplementary means 42–43, 47 see also Table of Treaties, Vienna Convention on the Law of Treaties treaty shopping 109–10, 130, 134–5 see also dispute settlement umbrella clause 47–49, 68–69, 157, 162 UNCITRAL, see United Nations Commission on International Trade Law United Nations Commission on International Trade Law disputes, see Table of Cases United Nations General Assembly resolutions: Declaration on Principles of International Law Concerning Friendly Relations and Co-operation Among States in Accordance with the Charter of the United Nations 12 191 Manila Declaration on the Peaceful Settlement of Disputes Between States 12 Articles on Responsibility of States for Internationally Wrongful Acts 54, 155 Waldock, Sir Humphrey 39 Weil, Prosper 132–34 World Trade Organization 15–16, 19, 21, 25, 28–30, 33–34, 49–51, 54, 56, 62–69, 75–77, 80–81, 85–86, 178–79 disputes, see Table of Cases good faith in text 21, 41, 52, 54, 56, 75–77, 80 treaties, see Table of Treaties see also dispute settlement ... JOHN H JACKSON ANDR EW D€MITCHELL TANIA€VOON Good Faith and International Economic Law Good Faith and International Economic Law Edited by A N DR E W D M I TC H E L L Melbourne Law School, University... Domestic and International Law 5.3 Corporate Structuring and Good Faith 5.4 Conclusion: Good Faith and the Rule of Law in International €Investment Relations Good Faith, Corporate Nationality, and. .. viii Contents Good Faith Limitations on Protected Investments and Corporate€Structuring Stephan W Schill and Heather€L€Bray 5.1 Good Faith Unbound Good Faith Restrained 5.2 Good Faith and Compliance