The Interpretation of Investment Treaties <UN> International Litigation in Practice General Editors Loretta Malintoppi Eduardo Valencia-Ospina Advisory Board David Anderson John R. Crook Gilbert Guillaume Pieter Kooijmans Sean D. Murphy Alain Pellet Brigitte Stern Prosper Weil Rüdiger Wolfrum Sir Michael Wood VOLUME 7 The titles published in this series are listed at brill.com/inli <UN> The Interpretation of Investment Treaties By Trinh Hai Yen LEIDEN | BOSTON <UN> This publication has been typeset in the multilingual “Brill” typeface. With over 5,100 characters covering Latin, ipa, Greek, and Cyrillic, this typeface is especially suitable for use in the humanities. For more information, please see www.brill.com/brill-typeface. issn 1874-0502 isbn 978-90-04-27453-2 (hardback) isbn 978-90-04-27454-9 (e-book) Copyright 2014 by Koninklijke Brill nv, Leiden, The Netherlands. Koninklijke Brill nv incorporates the imprints Brill, Brill Nijhoff, Global Oriental and Hotei Publishing. 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This book is printed on acid-free paper. <UN> For Hieu Anh and Hieu Minh ∵ <UN> Contents Acknowledgements ix List of Abbreviations xi Table of Cases xii Introduction 1 1 Interpretive Problems of Traditional Investment Treaties and the Inconclusive Search For Causes and Solutions 8 1 Inconsistent and Unintended Interpretations of Investment Treaty Terms 9 2 Diagnosed Causes and Suggested Solutions 16 2.1 Textual Indeterminacy and Imbalance 16 2.2 Structure and Nature of Investor-State Arbitration 19 2.3 The Approaches of Arbitrators 25 Conclusion 30 2 The Neglect and Misapplication of International Rules on Treaty Interpretation in Investment Treaty Arbitrations 32 1 Legal Basis and Overview of the Arbitral Use of Interpretive Tools in Interpreting Investment Treaties 36 1.1 International Rules on Treaty Interpretation Codified under the Vienna Convention on the Law of Treaties 36 1.2 M eans of Interpretation under the General Rule 43 1.3 S upplementary Means of Interpretation 64 2 Arbitral Neglect and Misapplication of Interpretation Rules 75 2.1 D isregard of All or the Required Means of Interpretation under International Law 76 2.2 Overreliance on Judicial Decisions and Scholarly Writings 83 2.3 Liberal Reading of the Treaty Object and Purpose 91 Conclusion 98 3 Rectifying the Neglect and Misapplication of International Rules on Treaty Interpretation 101 1 Proposed Approaches to Rectify the Problematic Methodologies in Interpreting Investment Treaties 104 1.1 Adopting and Exhausting the Multiple means of Interpretation under the VCLT 104 <UN> contents vii 1.2 Identifying and Distinguishing the Role of the Interpretational means in Accordance with the VCLT Rules 107 1.3 Considering Circumstances of Treaty Conclusion 108 2 Illustrations on the Need and Possible Effects of the Proposed Approaches 115 2.1 MFN Provisions 116 2.2 Interpreting the “Fair and Equitable Treatment” Provision 129 3 R elevance of Restrictive Interpretation and the No-Restriction Presumption Principle in International Investment Law 147 Conclusion 152 4 A Preliminary Search for State Intent in the Emergence and Development of Investment Treaties 153 1 Existing International Regulation on Foreign Investment before the Emergence of Investment Treaties 154 1.1 International Documents Relating to Foreign Investment 154 1.2 Customary International Law 156 1.3 FCN Treaties 156 2 Where the Minds of Proponents and Opponents of Investment Treaties Meet 159 2.1 From the First Investment Treaties to the First Investor-state Arbitration 159 2.2 The End of 1980s-Present 164 3 A Case Study: Incorporation of the Provisions on Investor-state Arbitration in Investment Treaties 167 Conclusion 170 5 Law-Making Options to Address the Interpretive Problems of Investment Treaties 173 1 Costs and Benefits of Signing Investment Treaties 174 1.1 Inconclusive Rewards 174 1.2 Paying the Price of Signing Investment Treaties 179 2 Available Law-Making Options for States 187 2.1 Terminating Investment Treaties 187 2.2 Removing Investor-State Arbitration 189 2.3 Designing New Investment Treaties 191 3 T he ASEAN Countries’ Choice of a Renegotiated Regional Treaty 194 3.1 Overview of the Bilateral Treaties of ASEAN Countries 194 3.2 ASEAN’s Regional Investment Treaties before 2009 197 3.3 The 2009 ASEAN Comprehensive Investment Agreement 198 Conclusion 202 <UN> viii contents 6 Controlling State Commitments in the ACIA Provisions 203 1 Clarifying the Coverage of the ACIA Benefits 204 1.1 Specific Approval of Investments and Compliance with National Laws, Regulations and Policies 206 1.2 Characteristics of Investment 207 1.3 Clarifications of Investment Forms 208 1.4 Dual Nationality 209 1.5 Denial of Benefits 209 2 Controlling State Commitments in the ACIA Substantive Provisions 211 2.1 Specifying the Meanings of Substantive Standards of Treatment 214 2.2 Permissible Deviations from Substantive Standards through Provisions on Exceptions 227 2.3 Synchronizing the Interpretive Problems of Substantive Provisions under Traditional Investment Treaties through the MFN Clause 238 3 Controlling State Commitments in the ACIA Procedural Provisions 241 3.1 The Development of the ISA Provisions of the ACIA 241 3.2 Clarifications and Additions in the Provisions on Investor-State Arbitration 247 Conclusion 255 Conclusion 257 Appendix A Matrix of Means of Interpretation adopted by Arbitral Tribunals to Interpret Investment Treaties 261 Appendix B List of Decisions and Awards Not in English 332 Appendix C 2009 Asean Comprehensive Investment Agreement 334 Bibliography 367 Index 378 <UN> Acknowledgements This book is based on my PhD research that I conducted at the National University of Singapore between 2010 and 2013. I have taken an avid interest in international investment law since the first investment treaty arbitration against Vietnam was reported in 2005.1 I began work on the subject with a graduation paper on Vietnamese bilateral investment treaties in the MALD program at the Fletcher School of Law and Diplomacy in 2007. I owe special gratitude to my supervisor, Professor Sornarajah, for his con- stant guidance and warm encouragement. His insistence on an open mind while writing and our discussions on topics of investor-state arbitration have inspired me to be confident and bold in my approach to doctoral research. Likewise, I am deeply indebted to Professor Jeswald Salacuse for valuable com- ments on a paper I presented at the Asian Society of International Law 3rd Biennial Conference in Beijing, China in 2011. On the basis of his comments, I kept challenging the arguments I have put forward in this book until I was convinced that the evidence for them was solid and overwhelming. Thanks are also due to members of my examination committee, in particular Professor Stephen Girvin for chairing the committee. I am grateful for the generous President’s Graduate Fellowship I received from the NUS during my PhD study as well as to the very helpful and timely assistance from the staff of the NUS School of Law, particularly Normah Bte Mahamood and Elizabeth Chua. I also would like to thank my professors at the Fletcher School, especially Professor Joel Trachtman, Professor Jeswald Salacuse, and Professor Michael Glennon, for their excellent teaching and kind encouragement during the MALD pro- gram, which has always inspired my studies in public international law, includ- ing this book. I am grateful to Daren Tang, to officials at the ASEAN Secretariat, in particular to Pham Quynh Huong and Yap Lai Peng and to officials at the Vietnam’s Ministry of Investment and Planning, namely, Do Van Su, Vu Thi Chau Quynh, Vu Hong Nga, Nguyen Duc Anh, for interviews, discussions and materials on ASEAN negotiations of regional investment treaties. None of those mentioned above, however, bears any responsibility for any errors or omissions in this book. 1 Investment Law and Policy News Bulletin, 27 May 2005, “Businessman uses Dutch BIT to sue Vietnam for losses,” available at http://www.iisd.org/pdf/2005/investment_investsd _may27_2005.pdf. See also Thanh Nien News, Overseas Vietnamese investor sues Vietnam gov’t, available at http://www.thanhniennews.com/2005/pages/20055232229160.aspx. <UN>