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Exhaustion of Local Remedies: ignored in most bilateral investment treaties

Published online by Cambridge University Press:  21 May 2009

Paul Peters
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Extract

The principle of the exhaustion of local remedies is generally considered to be firmly established in international law. States are said to be virtually unanimous in recognizing it. The International Court of Justice considers the local remedies rule an important principle of customary international law. The character of the principle as one of general international law is also recognized by virtually all the learned writers who have considered the question.

Type
Brief Report
Information
Netherlands International Law Review , Volume 44 , Issue 2 , August 1997 , pp. 233 - 243
Copyright
Copyright © T.M.C. Asser Press 1997

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Footnotes

*

Formerly legal adviser of companies of the Royal Dutch/Shell Group.

References

1. Cf, commentary para. 8 of the International Law Commission (ILC) on draft Art. 22 on State Responsibility, in ILC Yearbook 1977, Vol. II, Part Two.

2. Cf., para. 50 of the judgment in the Elsi case, ICJ Rep. (1989) p. 41.Google Scholar

3. Thus the ILC in para. 12 of its commentary on Art. 22; ILC Yearbook 1977, Vol. II.

4. Thus the ILC in paras. 7, 36 and 45 of its Commentary on Art. 22 on State responsibility, ibidem.

5. Peters, P. and Schrijver, N., ‘Latin America and International Regulation of Foreign Investment: Changing Perceptions’, 39 NILR (1992) p. 355 at p. 362CrossRefGoogle Scholar; also Schrijver, N., Sovereignty over Natural Resources: Balancing Rights and Duties, Ch. 3 (1997)CrossRefGoogle Scholar. See in particular the UNGA resolutions on a New International Economic Order and the Charter of the Economic Rights and Duties of States, both of 1974.

6. See Peters, P., ‘Dispute Settlement Arrangements in Investment Treaties’, 22 NYIL (1991) p. 133.CrossRefGoogle Scholar

7. Jamaica-Switzerland (1990), Australia-Poland (1991), Australia-Hungary (1991), Poland-UAE (1993) and Poland-Bulgaria (1994). See the text of examples 1 and 4 below (Jamaica-Switzerland and Australia-Poland). Most of the BITs analysed are included in the list published in 35ILM (1996) 1130. The others will be included in an updating of the list to be published in ILM in 1997.

8. The 18-month treaties include nine Argentinian BITs, i.e., those with BLEU, Italy and the UK (1990), Canada, Germany, Spain and Switzerland (1991), Austria and the Netherlands (1992); five Uruguayan BITs, i.e., those with Italy and Romania (1990), BLEU, Canada (1991), Spain (1992); two Peruvian BITs, i.e., those with Switzerland (1991), Germany (1995); Venezuela-Italy (1990); Chile-Germany (1991); Ecuador-Germany (1996); in addition to some outside Latin America: Jamaica with the Netherlands (1991) and Italy (1993); Hungary-Portugal (1992) and Poland-Tunisia (1993). The two 12-month treaties are those of Korea with Indonesia and Turkey (1991). The three 6-month treaties are China-Portugal, Indonesia-Sweden (1992) and Korea-Peru (1993).

9. Only Spain-Bolivia 1990 and Korea-Zaire 1990 lack such a clause.

10. See Peters, , loc. cit. n. 6, at p. 129.Google Scholar

11. See the text of example 2 (Austria-Korea) below.

12. See the text of example 6 (Germany-Hong Kong) below.

13. See the text of example 3 (Indonesia-Italy) below.

14. See the text of example 5 (Indonesia-Sweden) below.

15. Slightly paraphrased except where reference is made to local remedies. The six examples are given in chronological order.

16. This should no doubt read ‘justicial’ (the German text reads ‘Gerichtsverfahren’), even though the English text prevails.

17. See, however, Art. 22 of the ILC draft articles on State Responsibility which has been written as though the rule were jus cogens, as discussed below. In para. 6 of its Commentary to these draft articles the ILC clarifies that the rule may be extended or restricted by treaty, and ‘may even be excluded’. See also para. 36 of the Commentary.

18. See for instance the UK-Romania BIT of 1995, Art. 7. Also see the text of example 6 (Germany-Hong Kong) above.

19. Art. 10 of the Peru-Thailand BIT (1991), paraphrased.

20. Art. 9 of the Netherlands-Latvia BIT (1994). Similar clauses can be found in the Dutch BITs with Lithuania, Vietnam, Bangladesh, Peru (all 1994), Mongolia, Belarus, Moldavia (1995), Uzbekistan and Slovenia (1996). Some Swedish BITs appear to be equally vulnerable on this point, cf., those with Belarus (1994) and Albania, Russia, Oman and Korea (1995).

21. The full text reads: ‘When the conduct of a State has created a situation not in conformity with the result required of it by an international obligation concerning the treatment to be accorded to aliens, whether natural or juridical persons, but the obligation allows that this or an equivalent result may nevertheless be achieved by subsequent conduct of the State, there is a breach of the obligation only if the aliens concerned have exhausted the effective local remedies available to them without obtaining the treatment called for by the obligation or, where that is not possible, an equivalent treatment.’

22. ILC Yearbook 1977, Vol. II, Commentary paras. 54 and 56.

23. Ibid. para. 56.

24. Cf., see Peters, , loc. cit. n. 6, at p. 134.Google Scholar

25. Nor could it have taken notice of these facts, for this article and these comments were drafted prior to 1977.