To lay the ground for the analysis of inconsistency in the sweeteners cases and of the role played by state parties’ submissions in this context, this part is divided into two sections. The first introduces the NAFTA Article 1128 process, describes the treatment Chapter 11 tribunals have given such submissions, and raises issues as to the weight they should be given in light of the VCLT. The second section provides context and facts on the sweeteners cases that allow for an understanding of the circumstances as well as stakes involved.
1. ARTICLe 1128 SUBMISSIONS PROCeSS
NAFTA state parties have made extensive use of the right provided to them individually by Article 1128 to make submissions to tribunals on questions of interpretation.24 Indeed, sub- missions have been made by one or two non-disputing states in 20 of the 28 NAFTA cases in which there was an award as of July 2013.25 At least 66 submissions have been made during this
or procedural’ (2011) 26(2) ICSID Review: Foreign Investment Law Journal 107; Anastasios Gourgourinis,
‘Investors’ rights qua human rights? revisiting the “direct”/“derivative” rights debate’ in Malgosia Fitzmaurice and Panos Merkouris (eds), The Interpretation and Application of the European Convention of Human Rights (Martinus Nijhoff 2013) 148; Martins Paparinskis, ‘Investment arbitration and the law of countermeasures’
(2008) 79 British Yearbook of International Law 227, 275, 331–343; N. Jansen Calamita, ‘Countermeasures and jurisdiction: between effectiveness and fragmentation’ (2010–2011) 42 Georgetown Journal of International Law 233, 245–252, 270–273; Jurgen Kurtz, ‘The paradoxical treatment of the ILC Articles on State Responsibility in investor-state arbitration’ (2010) 25(1) ICSID Review: Foreign Investment Law Journal 200, 214–216.
24. NAFTA art 1128 cited above (n 5).
25. The numbers were current as of July 2013. There were no art 1128 submissions in the three sweetener cases (n 7–9), nor in Robert Azinian, Kenneth Davitian, & Ellen Baca v Mexico (Award, 1 November 1999) ICSID
period and have led disputing parties to produce twenty replies.26 One case led to as many as 14 different submissions.27 They have been made before and after hearings. The vast majority of those demonstrate agreements on interpretation by the parties as opposed to disagreements.28 Not surprisingly, the legal authority of such submissions has been challenged by investors unhappy to see states sweep in to tell tribunals what the proper interpretation of different pro- visions is, especially since interpretations have most often been to the disadvantage of claim- ants in the different cases.29
a. Arguments and Holdings Related to Article 1128
The Methanex v United States30 and Canadian Cattlemen for Fair Trade v United States31 awards contain the most relevant discussions on the treatment of Article 1128 submissions.32 It is use- ful to survey them briefly, as well as the parties’ arguments, to understand some of the tensions and challenges related to Article 1128 submissions.
Case No ARB(AF)/97/2; Glamis Gold Ltd. v United States (Award, 8 June 2009) UNCITRAL; Vito G Gallo v Canada, (Award, 15 September 2011) UNCITRAL; Apotex Inc. v United States, (Award on Jurisdiction and Admissibility, 14 June 2013) UNCITRAL; Softwood consolidated cases (n 11).
26. Count based on publicly available submissions as of July 2013. Note that art 1128 submissions are available on the website of the government of Canada, <http://www.international.gc.ca/trade-agreements- accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng>; the United States, <http://www.state.
gov/s/l/c3741.htm>; and Mexico, <http://www.economia.gob.mx/files/comunidad_ne.g.,ocios/solucion_
controversias/inversionista-estado/casos_concluidos/>.
27. The Pope and Talbot case appears to have been particularly trying for states. See in particular Pope & Talbot v Canada (Award in Respect of Damages, 31 May 2002) UNCITRAL. See also Methanex v United States, (Final Award of the Tribunal on Jurisdiction and Merits, 3 August 2005) UNCITRAL (in which there were 8 submis- sions) and United Parcel Service of America Inc. v Canada (Award on the Merits, 24 May 2007) UNCITRAL (in which there were seven submissions).
28. E.g., the Methanex case, ibid, revealed differing points of view on the possibility of amicus curiae par- ticipation, with Mexico opposing while Canada and the United States did not, see Methanex v United States (Mexico submission, undated) [7] ; Methanex v United States (Canada submission, 20 November 2000) [1]–[4];
Methanex v United States (Statement of Respondent United States of America in response to Canada’s and Mexico’s submissions concerning petitions for amicus curiae status, 22 November 2000) [1]–[4]. During the proceedings leading to Marvin Feldman v Mexico (Award, 16 December 2002) ICSID Case No ARB(AF)/99/1, the United States and Mexico expressed disagreements on questions of standing for nationals (of the home state) that are permanent residents of the host state. See Feldman v Mexico (Submission of the United States of America on preliminary issues, 6 October 2000) [1]–[12]; Feldman v Mexico (Counter-Memorial on Preliminary Questions, undated) [13]–[122].
29. The parties are always careful to state that they do not take a position on the facts or merits of specific cases and only make submissions on question of interpretation, but the implications of their positions are nonetheless clear.
30. Methanex v United States (Final Award) (n 27) and Methanex v United States (Preliminary Award on Jurisdiction and Admissibility, 7 August 2002) UNCITRAL. See discussion in Weeramantry (n 6) [3.109]–
[3.110], [3.116]; Roberts (n 6) 210, 217.
31. Canadian Cattlemen for Fair Trade v Unites States (Award on Jurisdiction, 28 January 2008) UNCITRAL (CCFT v United States). See discussion in Alexander Orakhelashvili, ‘Principles of treaty interpretation in the NAFTA arbitral award on Canadian cattlemen’ (2009) 26(1) Journal of International Arbitration 159, 165–167.
32. The tribunal in ADF v United States, ICSID Case No ARB(AF)/00/1 (Award, 9 January 2003) [179] also referred to art 1128 submissions in its interpretation of art 1105 of NAFTA, but did not discuss their weight as such under the VCLT. The tribunal stated: ‘[t] he FTC Interpretation of 31 July 2001, in the view of the United States, refers to customary international law “as it exists” today. It is equally important to note that Canada and Mexico accept the view of the United States on this point even as they stress that “the threshold [for violation
In both Methanex and CCFT, the United States argued that Article 1128 submissions of Canada and Mexico that take positions which coincide with its own on the proper interpreta- tion of NAFTA would constitute a “subsequent practice”33 under Article 31(3)(b) of the VCLT.34 Mexico, in both cases, and Canada, in the Methanex case, made Article 1128 submissions which included statements regarding the weight to be given to those Article 1128 submissions.
Mexico and Canada, in line with the United States, argued that such agreements were authori- tative on points of interpretation and constituted subsequent practice within the meaning of the VCLT.35 Mexico elaborated, adding that:
3. NAFTA Chapter Eleven Tribunals should be loath to diverge from such shared inter- pretations. As drafters and signatories to the NAFTA, the Parties stand in a position to both articulate their intent, and to convey policy-based positions that will ensure its proper application, bearing in mind their shared interests in its long-term success and acceptance by the citizens of their respective nations.
4. Each Party seeks to ensure that its investors receive the appropriate level of protection in each of the other Parties as intended by Chapter Eleven. Each necessarily balances its interests (the protection of its investors vs. the level of its exposure to claims) when for- mulating its position on interpretative issues. For these reasons, where all three Parties clearly agree on a particular point, their views should be considered highly authoritative by Chapter Eleven Tribunals.36
The claimants, in both cases, presented similar lines of argument. While Methanex argued that mere litigation positions cannot constitute “subsequent practice” under the VCLT, and that “self-serving arguments proffered by a party after a dispute has arisen” do not provide the objectivity required to amount to subsequent practice,37 the claimants in CCFT argued that subsequent practice can only inform the interpretation of a treaty when the meaning of its terms are unclear or obscure. To them, the text of the treaty itself remains the best indicator of the parties’ original intent.38
of that standard] remains high.”’ The submissions are cited in fn 170–171 (omitted here). In Glamis v United States (n 25), the tribunal made a passing reference to art 1128 submissions in a discussion of evidence of ‘con- cordant practice’ as an element of customary international law (see footnote 1248).
33. Interestingly, at the hearing in Methanex, with the help of probing by the tribunal, the United States took the position that the submissions were also subsequent agreements under art 31(3)(a) VCLT (n 6). See Methanex v United States (Arbitration hearing, volume 1, 12 July 2001) [233], [238]. See also the agreement of Mexico at Methanex v United States (Arbitration hearing, volume 1, 13 July 2001) 371–372, available at <http://
www.state.gov/documents/organization/6047.pdf >.
34. See Methanex v United States (Memorial on Jurisdiction and Admissibility of the Respondent United States of America, 13 November 2000) 13; CCFT v United States (n 31) [171]–[173].
35. Methanex v United States, (Canada second submission, 30 April 2001) [8] ; Methanex v United States (Mexico submission, 15 May 2001) [1]–[2].
36. Mexico submission (n 35) [3] –[4]. Mexico in its submission went as far as to state that the Pope and Talbot tribunal’s refusal to adopt the parties’ shared views on the interpretation of art 1105 of NAFTA can only be regarded as ‘perverse’ (Mexico submission ibid para 10). See Pope & Talbot Inc. v Canada (Award on Merits of Phase 2, 10 April 2001) UNCITRAL [110]–[118] (on the interpretation of ‘including’ at art 1105).
37. Methanex v United States (Claimant Methanex Corporation’s Rejoinder to United States’ Reply Memorial on Jurisdiction, Admissibility and the Proposed Amendment, 25 May 2001) 42.
38. CCFT v United States (n 31) [178].
Further, claimants in both cases questioned the nature of the practice or agreement in question. While Methanex disagreed that the alleged practice was “concordant, common and consistent,”39 the claimants in CCFT argued that the respondent had misled the tribu- nal in claiming that there was agreement on the issue in dispute as it believed there was no direct agreement, no authentic interpretation.40 In addition, Methanex argued that the alleged interpretation was really an amendment but one which did not follow the formal procedures provided for in NAFTA.41 The claimants in CCFT also pointed to the fact that the proper mechanism for interpretations (through the FTC) had not been used in that case.42 Other argu- ments concerned the authority of state representatives making the submissions to enter into subsequent agreements,43 the formal nature of subsequent agreements,44 and the retroactive effect of subsequent agreements.45
In its preliminary award on jurisdiction and admissibility, the tribunal in Methanex was able to avoid ruling on most arguments relating to the authority of Article 1128 submissions, since the NAFTA parties had released in July 2001 an FTC Interpretation that resolved the interpretation issue.46 In its final award in August 2005, however, the tribunal made statements that could support the state parties’ positions.47 Regarding the FTC’s interpretation value under Article 31(3)(a) of the VCLT (separate from the effect of NAFTA Article 1131(2)),48 the tribunal had little difficulty in deciding that it was a subsequent agreement.49 In this context, it referred to the International Law Commission’s (ILC) Commentary to the VCLT, which states that “an agreement as to the interpretation of a provision reached after the conclusion of the treaty represents an authentic interpretation by the parties which must be read into the treaty for purposes of its interpretation.”50 It also noted that the text of Article 31(3)(a) does not envis- age that the agreement meet the same formal requirements as a treaty.51 However, it expressly declined again to rule on the weight of Article 1128 submissions as it was “unnecessary.”52
In CCFT, the tribunal, after citing Article 31(3) VCLT, stated it agreed with Sinclair that
“[t] he value and significance of subsequent practice will naturally depend on the extent to
39. Methanex v United States, Rejoinder (n 37) 43–44 (underline in original) citation from Ian Sinclair, The Vienna Convention on the Law of Treaties 137 (1984).
40. CCFT v United States (n 31) [179]–[180].
41. Methanex v United States, Rejoinder (n 37) 44–45.
42. CCFT v United States (n 31) [179]–[180].
43. Methanex v United States (Post-hearing submission of Claimant Methanex Corporation, 20 July 2001) 3–4.
See also by implication CCFT v United States (Rejoinder on the Preliminary Issue of the Canadian Cattlemen for Fair Trade, undated) [48]–[49].
44. Methanex v United States, Post-hearing submission (n 43) 10–14; CCFT v United States, Rejoinder ibid [46]–[47].
45. Methanex v United States, Post-hearing submission (n 43) 15–18.
46. Methanex v United States, Preliminary Award (n 30) [102], [130], [134], [147]. The tribunal ruled that it was bound by the FTC interpretation.
47. Methanex v United States, Final Award (n 27).
48. Article 1131(2) of NAFTA, cited at (n 18).
49. Methanex v United States, Final Award (n 27) pt II, ch B, [21].
50. ibid pt II, ch B, [19]. See also ibid pt II, ch H, [23] for a citation from Oppenheim’s International Law regarding the formal and informal ways for parties to give authentic interpretations of treaties.
51. ibid [20]. See also ILC, First report on subsequent agreements and subsequent practice (n 6) 28–29.
52. Methanex v United States, Final Award (n 27) pt II, ch B, [21].
which it is concordant, common, and consistent. A practice is a sequence of facts or acts and cannot in general be established by one isolated fact or act or even by several individual applica- tions.”53 On subsequent agreements, the tribunal stated its accord with the United States that FTC interpretations are not the only means available to parties for reaching agreements.54 However, it ruled there was no agreement reached in this case within the meaning of Article 31(3)(a) of the VCLT. It stated:
All of this [the evidence submitted by the United States] is certainly suggestive of something approaching an agreement, but, to the Tribunal, all of this does not rise to the level of a “subsequent agreement” by the NAFTA Parties. Although there is no evidence on the record that any of the NAFTA Parties has voiced a discordant view on this issue, the Tribunal is mindful that there is limited experience thus far with many of the subtleties and implications of Chapter Eleven of the NAFTA. Too, the Tribunal notes the absence of any Article 1128 submission by Canada before this Tribunal. This cannot be seen as evidence of Canadian support for the Claimants’ position on this issue, but it also cannot be seen as evidence of Canadian opposition.55
Nevertheless, the tribunal recognized in the evidence presented a subsequent practice under Article 31(3)(a) VCLT as “there is a sequence of facts and acts that amounts to a practice that is concordant, common and consistent.”56 The tribunal concluded that this practice (based on state- ments at the time of NAFTA implementation, respondent submissions, and Article 1128 submis- sions) confirms its interpretation of the ordinary meaning of the provision.57
b. Issues and Challenges Related to Article 1128 Submissions
The debates in the two NAFTA Chapter 11 cases reveal many tensions and challenges for tribu- nals faced with arguments that common positions of parties on interpretation are authoritative.
The VCLT’s Article 31(3) stipulation that such agreements “shall be taken into account” does not indicate the weight they should be given. If the Commentary of the ILC on the VCLT is followed, the agreement should be read into the treaty for purposes of its interpretation. Should tribunals then, as Mexico argued, be “loath to diverge” from shared interpretations? On the other hand, the United States acknowledged that the common interpretations are not binding as a subsequent treaty would be.58 Roberts, while advocating that treaty interpretation would benefit from invest- ment tribunals taking greater account of evidence of subsequent agreement and practice under Article 31(3) VCLT, acknowledges that “[t] he exact meanings of “authentic interpretation” and
“objective evidence” is unclear. Some conclude that such interpretations are binding, while others treat them as highly persuasive, though it is not clear that much daylight separates the two.”59 In
53. CCFT v United States (n 31) [182].
54. ibid [185].
55. ibid [187].
56. ibid [188].
57. ibid [189]. On the distinction between subsequent agreements and practice, see ILC, First report on subse- quent agreements and subsequent practice (n 6) 29–32.
58. Methanex v United States (Response of Respondent United States of America to Methanex’s Post-Hearing Submission, 27 July 2001) 2, (n 2).
59. Roberts (n 6) 200 (footnotes omitted). This uncertainty can be explained in part by the fact that even at public international law, art 31(3) VCLT evidence has been ‘somewhat underanalyzed and underutilized’
reference to subsequent practice and non-disputing treaty party submissions in particular, she states that “where interventions by all of the other party treaty parties support the interpretation by the respondent state, this subsequent practice constitutes good evidence of an agreement on interpretation and thus should be given considerable weight.”60
Many issues remain understated. As a matter of fact, it appears easier to make Article 1128 submissions parallel to another party’s submissions, than for the three NAFTA parties to agree on an FTC interpretation. Indeed, there have been over 60 Article 1128 submissions as compared to one FTC interpretation on substance since 1994 (the submissions of course do not all reflect separate or different agreements on interpretation, but the scale is revealing). FTC interpretations rise to the highest levels of government in the three NAFTA parties, while sub- missions made in the course of arbitrations do not. One is closer to the political realm than the other. The point is not so much about the authority of parties’ counsel to make submissions but rather goes to the permanence and consistency of the interpretations they contain. How should tribunals weight the fact that parties’ views evolve through time and through experience?61 While isolated acts are generally not sufficient to establish a practice, the temporal dimension does raise important questions.
Another area of tension is related to the fact that parties combine, in their arguments regarding common or shared interpretations, submissions made as respondents during arbi- tration proceedings (and in set-aside proceedings) with submissions made as non-disputing parties under Article 1128. It is hard to pretend that both have the same level of objectivity.62
(199). See also Murphy (n 6) 3. The treatment of this question has also been limited in the context of invest- ment treaty interpretation outside of NAFTA. According to Weeramantry (n 6) [3.101] ‘Rarely do [Foreign Investment Arbitral Tribunals] refer to this provision. In the study conducted for this book, of [Foreign Investment Arbitral Tribunal] awards or decisions issued from 1990 to the end of June 2011, 5 per cent (i.e., 12 out of 258) referred to Article 31(3).’ Weeramantry provides possible reasons as to why ‘State recourse to subsequent interpretative agreements is rare’ [3.105]. See also Murphy (n 6) 3; Schreuer (n 20) 18–19.
60. Roberts (n 6) 219. The ‘considerable weight’ standard has since been taken up by Canada. See e.g., Mobil Investment Canada Inc. and Murphy Oil Corporation v Canada (Reply of the Government of Canada to the July 8, 2010 Article 1128 submissions of the Government of the United States of America and the United Mexican States, 1 September 2010) [11]–[12].
61. Roberts (n 6), argues that ‘[i] nternational courts and tribunals have accepted as interpretations subse- quent agreements and practices that have departed from the treaty parties’ original intention and/or the plain words of the treaty, whether multilateral or bilateral’ (201). She also cites the International Court of Justice (ICJ) (Dispute Regarding Navigational and Related Rights (Costa Rica v Nicar), ICJ 13 July 2009, [64]) for the proposition that ‘subsequent practice … can result in a departure from the original intent on the basis of a tacit agreement between the parties.’ (Roberts ibid 221) Some investment tribunals, however, have not shared this view. See Sempra Energy International v Argentina (Award, 28 September 2007) ICSID Case No ARB/02/16 [385]–[386] and Enron Corporation Pondera Assets, LP v Argentina (Award, 22 May 2007) ICSID Case No ARB/01/3 [337] (referred to by Roberts ibid 221). See also ILC, First report on subsequent agreements and subsequent practice (n 6) 14. The view that treaty parties should not be allowed, through interpretations, to detract from their original understanding of the treaty is likely to be more prevalent amongst those that believe investors have individual, substantive rights under IIAs. More on this below in Part C. On the debate regarding the use of subsequent agreement and practice as ‘contemporaneous interpretation’ versus ‘evolutive interpretation’ see Murphy (n 6) 5–6; ILC, First report on subsequent agreements and subsequent practice (n 6) 23–27. The report includes a draft conclusion to the effect that ‘[s]ubsequent agreements and subsequent practice by the parties may guide an evolutive interpretation of a treaty’ (para 64).
62. Roberts recognizes that there are ‘good reasons for treating common pleadings of respondents states with caution’ (Roberts (n 6) 218). She argues that ‘[t] he weight to be given to pleadings will depend on their nature and context. Pleadings are likely to have the most effect when they clearly set out the state’s general interpre- tive views and are supported by, or at least do not conflict with, other subsequent practice’ (Roberts (n 6) 219).