Consent is often said to be the cornerstone of a tribunal’s jurisdiction.1Ambatielos Case (Merits: Obligation to Arbitrate) (Greece v. United Kingdom of Great Britain and Northern Ireland), `1953 I.C.J. 19 (Judgment May 19). 1 Fernando Tupa’s book explores the application of this fundamental principle when the dispute settlement provisions of an investment agreement are silent on the arbitral forum.2FERNANDO TUPA, THE DILEMMA OF CONSENT TO INTERNATIONAL ARBITRATION IN INVESTMENT AGREEMENTS WITHOUT A FORUM (Ian A. Laird et al. eds., 2023).2
Tupa’s central thesis is that consent to international arbitration is forum-specific. Without a specified forum and arbitral seat, a foreign investor has no means of exercising a general expression of consent. The legal consequence, according to Tupa, is that consent to international arbitration exists “in principle” but is essentially inoperative. Tupa builds on this by exploring the significance and practical consequences of these principles.
Early on, Tupa observes that international investment cases are particularly susceptible to this dilemma because the arbitral seat is not typically set out in investment agreements (as compared to international commercial arbitration) so there would be no domestic court to fill in the gaps.3Id. at 10, et seq.3 In addition, he explains that institutional arbitral rules (e.g., ICSID, ICC, SCC, etc.) contain requirements for the submission of a dispute to that specific forum.4Id. at 13.4
So what are we to make of dispute settlement provisions lacking a forum? Tupa initially establishes that international law should govern the interpretation of such provisions.5Id. at 17-18, 26. Specifically, Tupa argues that treaty provisions should be interpreted objectively based on the text in accordance with the Vienna Convention on the Law of Treaties and that the standard of proof for the existence of state consent is “clear and unequivocal” evidence.5 He then analyzes the two main types of investor-state dispute settlement provisions that do not constitute enforceable and effective state consent to arbitration: (i) when no arbitral forum (i.e., arbitral institution or arbitration rules) is specified or when subsequent agreement on the forum between the disputing parties is required and no default or fallback option is provided, and (ii) when the arbitral forum set out has become unavailable (e.g., only ICSID arbitration is permitted but one of the contracting parties has withdrawn from the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention)). Relatedly, Tupa asserts that even use of the word “shall” in a dispute settlement provision should not automatically be interpreted as a “complete” offer of consent but could also refer to future action.6Id. at 38.6
Tupa then takes stock of the case law interpreting non-forum-specific dispute settlement provisions, favoring the line which adopts the principle that consent is forum-specific.7Id. at 40-58.7 Afterwards, he specifically examines cases in which the most favored nation (MFN) clause was invoked to get around the absence of a forum. Tupa criticizes this approach due to what he terms a “sequential issue”8Id. at 59 (that is, an arbitral tribunal must have jurisdiction ratione voluntatis before it can apply the MFN clause).8 and the “fundamental limitation” on using an MFN clause to import consent when none exists.9Id. at 60, et seq.9
Finally, Tupa deals with the practical consequence of non-forum-specific provisions. Tupa recognizes that the lack of forum is dependent on parties (albeit unlikely) agreeing to a forum to which to submit a dispute after the dispute has arisen.10Id. at 81.10 To address unfair outcomes, he points to various avenues potentially open to a foreign investor such as availing itself of another bilateral investment treaty or other dispute settlement mechanisms contemplated in the investment agreement (e.g., national arbitration, domestic courts, or diplomatic protection).
Tupa’s book offers a thoughtful and detailed examination of a subject that may be overlooked by practitioners and arbitrators alike. Tupa’s study is well-researched and compels a closer and more critical reading of dispute settlement provisions to ensure their meaning and scope are properly interpreted.
