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Good Faith (lack Of) in Investment Arbitration and the Conduct of the Ethiopian Government in the Salini Case: Exercise of Legitimate Right or “exhibit A” for Guerrilla Tactics?

Paper by Hailu, Martha Belete, Addis Ababa University, 2012

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This article looks at tactics that may frustrate investor-state arbitration, using arguments from the principles of good faith and equality of arms, and describing the case of Salini Consoruttori SPA Vs The FDRE Addis Ababa Water and Sewage Authority (ICC Arbitration No 10623/AER/ACS).

Good Faith (Lack of) in Investment Arbitration and the Conduct of the Ethiopian Government in the Salini Case: Exercise of Legitimate Right or “Exhibit A” for Guerrilla Tactics?

Martha Belete Hailu†

  1. Investment Dispute Resolution: an Introduction

Foreign investment involves a medium to long term financial engagement of the investor in another country. This will expose the investor to the different and less known environment of the host country with its different culture and traditions, mentalities, bureaucracy, legal system and political infrastructures, as well as a specific vulnerability to the interference by the host state.1 The strong drive by nationals and companies of certain states to undertake direct foreign investments in other countries coupled with fear of less known environment of the host state has resulted in the introduction of certain systems aimed at protecting those investments. These include diplomatic protection by the home state of the investor, the obligation under customary international law of host states to respect foreign investment, the settlement of investment disputes as provided in multilateral and bilateral investment treaties, in national investment laws as well as enforcement procedures before state courts.2 As foreign investments are mainly made through contracts with an entity of the host state, such contracts also give protection to the foreign investments by laying down obligations undertaken by the host state entity.

Bilateral investment treaties (BITs) and other international investment agreements (IIAs) as well as domestic investment laws of host states extend protection to foreign investment by providing for different systems of dispute settlement, which in turn, enclose certain principles. One such principle is the principle of peaceful settlement of international disputes. This principle applies to all types of international disputes, is incorporated in various conventions3and is also recognized as a customary law principle.4 This principle is also central to the UN system.5 There are two groups of pacific dispute settlement mechanisms available for disputants: the diplomatic channel6 and the adjudicational channel7.

In international investment disputes, short of diplomatic protection through espousal of the claims of the investor by the home state, there was no direct right of recourse by foreign nationals against host states for violations of their rights.8 Disputes between host states and foreign investors would, by and large, be settled by the host states’ courts. However, these host country courts are not attractive venue for settling investment disputes from the perspective of foreign investors. Rightly or wrongly, investors will fear a lack of impartiality from the courts of the state against whom they wish to pursue their claims.9 The independence of the judiciary is also questioned in different occasions especially in disputes involving the host states. Executive interventions have also been witnessed in some instances. Domestic courts, again, are bound to apply domestic law even if that law should fail to protect the investor’s right under international law.10 As succinctly put by Dolzer and Schreuer, in many countries an independent judiciary cannot be taken for granted and executive interventions in court proceedings or a sense of judicial loyalty to the forum state are likely to influence the outcome of the proceedings.11

Apart from the concerns of impartiality and independence of the judiciary of host states, the lack of expertise on the part of local judges to deal with technical questions of international investment law, the rigidity of the judicial system and other factors contributed to the unpopularity of the use of host country courts to settle investor-state disputes. Diplomatic protection given to the foreign investor by the home state has also failed to satisfactorily address the concerns of the injured foreign investor. These gaps left by the traditional methods of dispute settlement has led to the idea of granting direct access for the investors concerned to effective international procedures, especially arbitration.12 In recent years, arbitration has replaced the traditional methods of dispute settlement as most parties seem to resort to it as their preferred means of resolving their dispute.13

Arbitration between a host state and a foreign investor may take place in the framework of a variety of institutions or rules14 as well as without particular institution, in the case of ad hoc arbitration. Settlement of investor-state disputes through arbitration has gained wider acceptance over the years. The increase in the number of international investment agreements and other legal instruments having a clause on investor-state arbitration is followed by an increase in the number of investor-state dispute arbitration cases. In 2010, for instance, the number of known treaty-based investor-state dispute settlement cases filed under IIAs grew by at least 25, bringing the total number of known treaty-based cases to 390 by the end of 2010.15 However, despite the wider acceptance of investment arbitration by states and the rise in the number of investment arbitration disputes over the years, at times, some host state respondents use unscrupulous tactics to frustrate the process and gain a litigation advantage over their opponents.16 This article will look into some of these unscrupulous tactics used by states to frustrate the arbitration process. To that end, a review of two important principles in state-investor arbitration-the principle of good faith and principle of equality of arms-will be made in the next section. The third section will look into the different tactics used by states to disrupt the equality of arms between the parties to the dispute and lead to absence of good faith in the arbitration process. In the fourth section, the case between Salini Consoruttori SPA Vs The FDRE Addis Ababa Water and Sewage Authority (ICC Arbitration No 10623/AER/ACS) will be discussed in light of the principles of equality of arms and good faith in arbitration. The article will finalize by making some concluding observations.

  1. Good Faith and Equality of Arms as Important Principles in Arbitration Proceedings

Different international treaties and documents provide for the general obligation of states to cooperate in the disposal of disputes. One such international treaty is the Manila Declaration on the Peaceful Settlement of International Disputes which was adopted by the UN in 1982 and annexed to the General Assembly Resolution 37/10 of 15 November. The Declaration under article 5 requires states to:


seek in good faith and in a spirit of cooperation an early and equitable settlement of their international disputes by any of the following means: negotiation, inquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional arrangements or agencies or other peaceful means of their own choice, including good offices. 17



This duty to cooperate in dispute settlement is not only a matter of conventional law, but shares, by force of necessity, the customary law quality of a general obligation to settle disputes peacefully.18 In order to solve disputes between parties, some degree of cooperation is required from both parties. One intrinsic element of international cooperation in general, as recognized by the ICJ, is the principle of good faith.19 The UN Charter as well as other documents refers to the principle of good faith as one principle to be observed by disputants and tribunals.20

It is also a basic principle of international commercial arbitration that the parties have the duty to cooperate in good faith in the performance of their agreement as well as in the arbitral proceedings.21 In the area of investment dispute arbitration, the obligation of the parties to arbitrate in good faith is reflected in different legal documents and decisions of tribunals. This duty to arbitrate in good faith can be inferred from the preamble as well as Article 26 of the Vienna Convention on the Law of Treaties, which states; “Every treaty in force is binding upon the parties to it and must be performed in good faith.” Accordingly, the performance of an investment treaty, including its dispute settlement provision, must be in good faith. This obligation is also reflected in the 1958 International Law Commission (ILC) Model Rules on Arbitral Procedure, which under its first paragraph of the preamble states: “Any undertaking to have a recourse to arbitration …constitutes a legal obligation which must be carried out in good faith.” The Manila Declaration also requires good faith from parties to a dispute. Paragraph 11 reads: “States shall in accordance with international law implement in good faith all the provisions of agreements concluded by them for the settlement of their disputes.”

Article 23 of the International Centre for Settlement of Investment Disputes (ICSID) Conciliation Rules establishes an express duty to resolve disputes in good faith22 while Article 11 of the 1996 Permanent Court of Arbitration Optional Conciliation Rules holds states engaging in arbitration proceedings to cooperate in good faith.23

Apart from the recognition of the principle in these documents, different tribunals in investment and other cases have asserted the observance of the principle in dispute settlement proceedings. For example, the ICJ in Anglo-Norwegian Fisheries case24 stated that:

“… The principle of good faith requires that every right be exercised honestly and legally. Any fictitious exercise of a right for the purpose of evading either a rule of law or a contractual obligation will not be tolerated. Such an exercise constitutes abuse of the right, prohibited by law.”

Within the framework of arbitration, the obligation of the parties to the dispute pertains to that of cooperation with the tribunal and each other. It also requires the parties to refrain from perusing any activity which would frustrate the arbitration process. In this regard, the tribunal on Methanex v. U.S., an investment arbitration tribunal constituted under NAFTA25, had observed that26

“… the Disputing Parties each owed in this arbitration a general legal duty to the other and to the tribunal to conduct themselves in good faith during these arbitration proceedings and to respect the equality of arms between them, the principles of equal treatment and procedural fairness being also required by Article 15(1) of the UNCITRAL Rules”



Another investment tribunal in the Libananco case noted that the ‘parties have an obligation to arbitrate in good faith’ and that ‘this principle applies in all arbitration, including investment arbitration, and all parties, including states (even in the exercise of their sovereign powers)’27. Hence, a government which is sued on the basis of an investment treaty or investment contract needs to observe the principle of good faith.28 In general, when a party consents to arbitrate any investment dispute whether arising from an investment treaty, legislation or an investment contract, such undertaking is not a mere formality but rather a functional obligation and it obliges the parties to actively participate and cooperate with each other and the tribunal throughout the arbitration process.29

The term ‘good faith’, though referenced to by different international documents, has long escaped precise definition. The difficulty in providing a precise definition of the term is related to the fact that the legal concept of good faith is based upon the moral concept of fairness; which varies depending on one’s perception. Some actually argue that the principle of good faith is a moral principle without any normative content.30 While others, including the International Law Commission, assert that the obligation is not only of moral but also a legal one.31 The International Court in the Nuclear Tests case32 pointed out that good faith as a concept is ‘not in itself a source of obligation where none otherwise exist.’ This tells us that the principle of good faith is a background principle informing and shaping the observance of existing rules of international law and constraining the manner in which those rules may legitimately be exercised.33 Hence, to determine whether or not a party acts in good faith, what one would do is assess the manner in which a particular legal obligation is observed. In cases of arbitration, we may identify some exemplary activities which would be considered as either constituting or violating good faith. According to Peters, for instance, some of the concrete consequences of the recognition of good faith in arbitration proceeding includes: the obligation to embark with sincerity on one dispute settlement procedure, the obligation to negotiate meaningfully so as to reach an agreement, the obligation not to prematurely abandon the chosen procedure and not to abuse the court procedure.34 Moreover, the principle also requires complete cooperation of states with tribunals.35 Accordingly, refusal to participate in an arbitration proceeding either by failing to appoint an arbitrator or withdrawing from the proceeding will render the party in bad faith. Apart from such direct actions, parties may also indirectly seek to undermine the integrity of the tribunal through tactics such as obtaining inappropriate court injunctions, witness intimidation or other forms of non-cooperative behavior, 36which indicate that they are acting in bad faith.


Another fundamental principle of judicial procedure is due process. In international adjudication, due process involves the right of the parties to be treated equally and the right in general to be heard by the arbitrators, and specifically to put forward their case and their evidence and to comment upon what the other puts forward.37 The due process principle tries to create equality of arms between the parties to a dispute. This equality of arms would require that the same rights are granted to all parties, and that there is a constant drive to equalize eventual unevenness among the parties. Though ‘equality of arms’ is said to be a foundation principle of investment arbitration38, ensuring its observance is difficult in investment and other arbitration procedures involving states. To begin with, any arbitration, regardless of whether or not it involves a state, inevitably involves the risk of a party attempting to circumvent the terms of the agreement to arbitrate with a view to frustrating the arbitration process and, ultimately, preventing a tribunal from rendering an award.39 And again, such maneuvering will be more pronounced when the state is a party to the arbitration proceeding. International commercial arbitration is developed for the use of commercial operators in international transaction as the parties to this transaction come from different countries. Since the arbitration will take place in a neutral forum rather than the home ground of one of the parties,40 there will be a room to ensure equality of the parties before the arbitral tribunal. The fundamental assumption here is that each party submits to the arbitration procedures, institutional rules and powers of the arbitral tribunal, without being able to claim a one-sided privilege.41 However, this notion of ‘equality of parties’ is difficult to achieve in arbitration processes to which the state is a party, including investor-state arbitration. From the very outset, investor-state arbitration is asymmetrical.42 Though in theory the private investor and the host state arbitrate on equal footing, the reality is quite different. This asymmetrical nature of investor-state arbitration arises from the notion of sovereignty of the state.


The state, being sovereign, is considered supreme in its territory. With its supremacy comes its tendency to act as it wishes and override private interests, legitimated by the presumption that the state expresses the public interest of the nation.43 This notion of state supremacy or sovereignty is reflected in the reactions of the state to challenges by investors in international arbitrations. Parallel to this notion of sovereignty of the state is equality of arms in adjudication processes. Equality of arms is one of the fundamental concepts of adjudication and is recognized as a key component of the principle of ‘procedural fairness’, ‘integrity of process’ or ‘good administration of justice’ which tribunals have to apply.44



The principle of equality of arms has been developed in the jurisprudence of the European Court of Human Rights (ECtHR), which is the most extensive jurisprudence of non-state actor complaints against a state.45 This principle, which is generally perceived as the most fundamental element of a fair trial, requires a fair balance between the parties. It requires that each party be afforded a reasonable opportunity to present his case under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent.46 As this principle is developed in relation to criminal proceedings, one thing that was taken into account was the fact that the starting point of the two parties was unequal by the very nature of criminal proceeding. Thus, formal equality of the parties, i.e. equality before the law, will not change the imbalance as granting equal rights to unequal parties may result in a great disparity between them.47 Instead substantive equality of arms, which requires affirmative action including assistance of the court, is needed to create balance between the unequal parties. This way of interpreting the principle of equality of arms was adopted in the Tadic48 case.

The fact that a tribunal cannot rely on the cooperation of the respondent state when that state is exercising its sovereign power to hinder claimant’s requests has necessitated the Tadic tribunal to expand the duty of the tribunal under the ‘equality of arms’ principle. The situation in which the appellant in the Tadic case was in at that time is similar to an investor claimant in investor-state arbitration. The investor that instituted claim against the host state would rely on witnesses and evidence found around the place where the investment is located, within the territories of the host state. Securing evidence and witness testimony will be difficult for the foreign investor if the host state is uncooperative and witnesses are being intimidated. This in turn makes the investor to be in a hostage like position subjected to the government control of the process. Hence the broad interpretation of the notion of equality of arms adopted in the Tadic case is also relevant for investor-state disputes. The arbitration process balances both interests and the arbitral tribunal is required to act as guarantor and guardian of the parties’ fundamental procedural right for equal treatment.49 Thus, the arbitral tribunal is required to do everything within its power to eliminate or minimize the disadvantages faced by one of the parties vis-à-vis the other regarding time and opportunity to present the party’s case.50

  1. Conducts of Governments Likely to Undermine the Principles of Good Faith and Equality of Arms

International institutions that facilitate the arbitration of disputes have developed their own operating rules. However, the success of these institutions depends heavily on the cooperation of the parties as they are private institutions.51 The principles of ‘good faith’ and ‘equality of arms’, both of which contain an obligation to cooperate, are important principles to be observed by parties in an arbitration proceeding. Though these principles are foundation principles of investment arbitration procedure, parties to the dispute, especially states in investor-state arbitration, find it hard to exercise self restrain and observe these principles. Parties who voluntarily agreed to and entered into arbitration are subsequently witnessed to have chosen not to cooperate in the conduct of the arbitration.52 This is more apparent in disputes to which states are parties. Many cases indicate that different deceitful tactics are employed by states to disrupt the equality of arms and contrary to the requirement to act in good faith. According to one research, these deceitful tactics, also known as guerilla tactics have been experienced by about 2/3rds of international arbitration practitioners and they seem to be on the rise.53


In international investment or commercial arbitration, there is no single set of “hard” ethical rules that applies to the conduct of parties and counsel which makes any definition of what is acceptable conduct and what is not dependent on the subjective notion of individual lawyers.54 With this comes the difficulty of defining what a guerilla tactic means. For the purpose of this paper the definition given by Shai Wade, who defined a guerrilla tactic as “tactic that tend to frustrate the equal handed, fair, swift and thorough assessment by the tribunal of the substantive arguments advanced by the parties” is adopted. Important common element that we can draw from this definition and other definitions is the inappropriateness or undesirable nature of the action. As one can imagine, a range of measures or actions may be taken by one party which may be of undesirable nature. Some of such actions include:


  1. Pressure on Arbitral Appointees

The classic method of undue influence in arbitration is putting pressure on arbitral appointees either through corruption or intimidation. While there have been persistent rumors of corruption with international courts composed of ‘tenured judges’, there has so far been no known case of corruption of an investment tribunal.55 It is said that in investment arbitration the reputation of the arbitrators, which is their essential professional capital, is at stake, acting as a powerful incentive against corruption.56 What is frequently used to put pressure on arbitrators is direct and indirect pressure on the arbitrators. Many practitioners report that the co-arbitrators (particularly but not exclusively) if appointed by government, seem to take instructions, report back and feel obliged, at least in public, to take positions intended to please their appointing party.57 Some states, however, went beyond informal pressure and persuasion. In the famous Himpurna case58, the state’s co-arbitrator tried to participate in the arbitration, against warnings given to him at home, only to be met at the airport by the government’s security services and compelled to return.59 In this case the Indonesian government was trying to compel its own arbitrator to undermine the arbitration by withdrawing, and at the end of the day, the arbitrator withdrew leaving a truncated tribunal to decide. There are also subtle forms of intimidating arbitrators. These subtle forms include ‘systematically debriefing the arbitrator when he returned home, monitoring his communications with his fellow arbitrators and coercing him to share with counsel his knowledge of internal discussions of the arbitral tribunal.’60 The use of court injunction enjoining the arbitral tribunal falls into this category as such injunction has the effect of intimidating arbitrators and advocates who hail from the same state as the court.61


  1. Intimidation of Party Representatives, Local and International Counsels, Experts and Witnesses

Respondent states use different means like harassment and intimidation through tax auditing and prosecution, or refusal to renew work or residence permit or visa to frighten the other party’s counsel and witnesses. Such states threaten or induce witnesses so that the latter should not give evidence. Intimidation of witnesses occurs far more often than intimidation of arbitrators in international arbitration as a witness is far more vulnerable to pressure.62 Some means of witness intimidation include arrest and detention on trumped up charges, confiscation of passport or travel documents on national security grounds, denial of promotion for academics, minor forms of bureaucratic harassment and others.63


Witness and counsel intimidation become more acute in investment disputes wherein claims are made by an offshore holding company owned or controlled beneficially, in full or in part, by nationals of the host state.64 In such circumstances, as the beneficiaries are nationals/residents of the host state, they will be subject to the host state’s power.


By intimidating a counsel, the respondent state is obstructing legal representation; a right recognized by different international instruments as a fundamental part of ‘due process’ and ‘fair administration of justice’.65 The equality of arms will be seriously impaired if there is substantial interference by the host state with a claimant’s domestic and international counsel.66 The different forms in which this interference may take place include denial of access to clients, physical attacks as well as expulsion from the country, as occurred with the counsel for Mr Khordovdki in Russia where some of Mr Khordovdki’s foreign defence lawyers and experts were expelled from Russia or denied entry visa.67


Intimidation of counsel may also be through telephone surveillance, wiretapping and interception of communications (mails, emails, messengers) with the client. This can be done under the guise of fighting organized crime or protecting national security.68 This intimidates the lawyer, client and potential witnesses. The Libananco case is a very good example of such form of intimidation. In that case, the claimant contended that the Turkish authorities secretly intercepted electronic communications between the claimant, its counsel and some potential witnesses, part of which was leaked to the media. As a result of the media report, one of the claimant’s expert witnesses declined to give testimony for fear of retaliation by the Turkish authorities.69


  1. Unwarranted Challenges Against the Tribunal

Sometimes, it is the arbitral institutions that could be the targets of guerrilla drills. Attacks on the arbitral institution in the form of domestic court injunctions purporting to terminate or suspend the arbitration and to restrain the tribunal from proceeding to the case is one prime example.70 There are also attempts to challenge the legitimacy of the arbitral proceeding by raising jurisdictional challenge.


It is generally accepted that an arbitral tribunal has power to decide on its own jurisdiction. Usually, international and institutional rules of arbitration spell out in express terms the power of an arbitral tribunal to decide upon its own jurisdiction, as it is often put, its competence to decide upon its own competence,71and hence the ‘competence-competence’ theory. National laws governing international arbitration also spell out the power of an arbitral tribunal to rule on its own jurisdiction. 72 This doctrine provides that parties who wish to challenge the jurisdiction of an arbitrator must initially submit such challenges to the arbitrator or arbitration panel itself.73 Most international arbitration rules, including ICSID74 and ICC75 follow this doctrine. Despite the acceptance of the competence-competence doctrine, states are known for seeking assistance from their local courts at the beginning of the arbitral proceedings, thus precluding the arbitral tribunal from the opportunity of first making its own determination of the issue in accordance with the doctrine.76


Another act that can be regarded as guerrilla tactic is challenge to arbitrators. Artificial challenges against arbitrators filed for dilatory or other destructive purposes are popular guerrilla tactics.77 Challenges to arbitrators will put the deciding organ in a difficult position as the challenge might be legitimate. Challenges to arbitrators may be on grounds of lack of independence and/or impartiality. Unfortunately, it is only the applying party who knows the legitimacy or otherwise of the challenge and care needs to be taken in deciding on the challenge. In this regard, it is pointed out that the moment in the arbitration procedure at which the party challenges the arbitrator could suggest whether the challenge is a genuine one or a dilatory tactic.78 A challenge filed right before a substantive hearing causing adjournment of the hearing dates would lead one to raise eye brows on the motive of the applicant. Apart from the timing, a question mark over the real motive for a challenge might also arise on the basis of the ‘apparently bogus or far-fetched nature of the grounds forming its basis.’79


Another action considered as guerrilla tactic by arbitrators and researchers on the area is ex-parte communications. A party that secured an anti-arbitration injunction would send a letter directly to the arbitrators instructing them not to proceed with the arbitration or they would face contempt proceedings before domestic courts.80 This will intimidate the arbitrators especially if they have property or plan to travel to the country where the domestic court issuing such injunction is found.

  1. The Salini Case81 and the Conduct of the Ethiopian Government

  1. The Case

Claimant (Salini Construttori S.P.A) and Respondent (Federal Democratic Republic of Ethiopia Addis Ababa Water and Sewerage Authority) entered into a contract for the construction of an emergency raw water sewerage reservoir for the city of Addis Ababa. The contract contained two parts, “General Conditions”, which were taken from the 4th edition of the conditions of Contracts for Works of Civil Engineering Construction as published by the Federation Internationale des Ingenieurs-Conseils (“FIDIC”) and supplemented in part 2 by “Special Conditions” specifically negotiated by the parties.82 One of the FIDIC’s general conditions that was adopted was a standard ICC arbitration clause providing for ICC arbitration in Addis Ababa, while one of the parties’ special conditions was a separate arbitration clause that provided for arbitration in Addis Ababa pursuant to the Civil Code of Ethiopia.83 Certain disputes arose between the parties in relation to the contract, following which the Claimant commenced arbitral proceedings at the International Court of Arbitration of the International Chamber of Commerce (ICC) seeking commpensation for breach of contract. In a letter to the secretariat of the ICC Court, the Respondent acknowledged receipt of Claimant’s request for arbitration but objected to the request saying that the parties had agreed to an ad hoc arbitration under the rules of the Ethiopian Civil Code and not to institutional arbitration under the ICC rules. Despite the jursidictional objections of the Respondent, the ICC Court decided to set the arbitration in motion and set a time limit for the Respondent to submit its answers to the Claimant’s request for arbitration. The Respondent replied that its answer, for the time being, was confined to the jurisdictional objections set forth in its earlier correspondence and denied the substance of Claimant’s claims, notwithstanding jurisidictional objections. The Respondent also nominated a co arbitrator. Subsequently, the file was transmitted to the duly consitiuted Arbitral Tribunal and the parties began to exchange correspondence regarding the contents of the Terms of Reference, which was latter signed by the parties and the three arbitrators. A section of the Terms of Reference states that the Arbitral Tribunal may, after consultation of the parties, decide to conduct hearings or meetings at any other appropriate place, and that, neither such decision nor the participation of the parties in any such hearing shall be construed as a departure from the choice of Addis Ababa as the place of arbitration under the contract. In the meeting where the Terms of Reference was signed, the Tribunal also decided that the jurisdiction issue would not be considered as a preliminary issue but would be decided with the merits.

Soon after, the tribunal issued procedural order setting forth the procedural timetable for the parties’ written submissions regarding both the jurisdiction issues and the merit as well as the dates fixed for the hearing. In the procedural order, the tribunal also decided that it is more appropriate to hold the scheduled hearings, including the separate hearing on jurisdiction, in Paris, taking particular account of the fact that the majority of the participants in the hearings are based in Europe.


The Respondent strongly criticized this decision of the tribunal in its letter addressed to the latter. It asserted that the decision to hold the first hearing in Paris and its decision not to hear jurisdiction as a preliminary issue indicates lack of impariality on the part of the tribunal. The respondent then submitted to the ICC Court a challenge of all three members of the tribunal seeking their removal and replacement on the grounds that they failed to act “fairly and impartially” in violation of Article 15(1) of the ICC Rules.


The respondent’s challenge was rejected by the ICC Court following which the Respondent informed the Secretariat of the Court that it had initiated appeal proceedings before the Federal Supreme Court of Ethiopia in response to the ICC Court’s decision rejecting the challenge. Soon after, the Respondet informed the Secretariat of the ICC Court that the Federal Supreme Court of Ethiopia has issued a temporary injunction against the Arbitral Tribunal ordering the suspension of the arbitral proceedings with immediate effect pending its determination of the Respondent’s appeal. It further informed the Secretariat that it had commenced a separate action before the Federal First Instance Court of Ethiopia for the purpose of obtaining a judgment that the Arbitral Tribunal lacks jurisdiction to arbitrate the dispute. The respondent has also informed the Tribunal of the temporary injunction issued by the Supreme Court asserting that the hearing scheduled to begin shortly has to be adjourned. It also threatened that under the Ethiopian Civil Procedure Code a court could attach the property of, or sentence for contempt of court, any person breaching such a temporary injunction. Sometime latter, the Respondent informed the Tribunal, in a letter, that the Federal First Instance Court had issued an order enjoining the Claimant from proceeding with the arbitration pending its decision on the Tribunal’s jurisdition and that it (the Respondent) will not attend the hearing. In a separate letter to the Claimant, the Respondent threatened that the Claimant would be in contempt of court if it attended the hearing.


  1. Conducts of the Ethiopian Government: Excersice of Legitmate Right?

So far, we have seen some of the most important principles emanating from international documents and customary international law that need to be observed by parties to an international arbitration proceeding and what conducts could constitute violation of these fundamental principles. Let us now assess the conducts of the Ethiopian Government in the Salini Case in light of conducts of states discribed above in a bid to determine whether the Government was exercising its legitimate right or simply engaged in guerrila tactics to frustrate the arbitration process.


    1. Challenging the Arbitrators

One fundamental principle in international commercial arbitration is that an arbitrator must be and remain independent and impartial.84 Accordingly, there should not be any relationship between the parties and the arbitrators. With the requirment of independence and impartiality on the part of the arbitrators comes the right of each party, excersicable within a limited timeframe, to challenge an arbitrator for an alleged lack of independence or otherwise.85 Under the ICC Rules of arbitration, challenge to arbitrators must be submitted to the ICC Court. Article 11(3) of the Rule clearly stipulates that any challenge of arbitrator will be decided by the ICC Court. And according to Article 7(4) of the Rule the decision of the Court as to the appointment, confirmation as well as challenge of arbitrators is final. One question that needs to be addressed here is whether finality under Article 7(4) means that the party whose challenge was rejected by the ICC Court cannot bring an appeal to a judicial organ. What if the lex arbitrii of the seat of arbitration allows appeal from such decisions? Gaillard and Savage have the following to say on this86

[Article 7(4)] must not be misunderstood. First, there is no doubt that it prohibits any form of appeal within ICC arbitration. Second, because the ICC rules are merely contractual, the fact that the court’s decision is “final” simply means that by agreeing to submit disputes to arbitration under the ICC rules the parties waive their right to bring any available appeal, to the extent that such a waiver is valid.

This provision sends two messages. Firstly, it informs the parties that there will not be any appeal within the ICC. And secondly, if another applicable law (lex arbitrii of the seat, for example) allows appeal from such decisions, the fact that the parties submitted their dispute to arbitration under ICC would mean that the parties have waived their right of appeal. But this point must be observed with caution. It has been indicated that once a place of arbitration has been chosen, it brings with it its own law and if that law contains provisions that are mandatory, those provisions must be observed.87 That is why prior to the entry into force of the Swiss Private International Law Statute, the Swiss courts did not consider the waiver to be valid one.88 The Swiss courts, relying on the mandatory nature of Article 21 of the international Concordat on Arbitration, held that when a decision of the court of arbitration was contested, the Swiss courts had exclusive jurisdiction.89 But following the adoption of the Swiss Private International Law Statute, things have taken a different direction. The courts apply Article 7(4) of ICC Rules because Article 180 paragraph 3 of the Swiss Private International Law statute provides that the Swiss courts shall only intervene “to the extent to which the parties have not determined the procedure for the challenge.”90 If the parties chose the ICC Rules as applicable law, they determined the procedure for such challenge and hence the courts will not have power to intervene in the matter.


Coming to the Salini case, the parties have agreed to submit their dispute to arbitration under ICC Rules as well as under the Ethiopian Civil Code.91 The questions we need to see here are, first, whether the Civil Code recognizes right of appeal from such decisions and, second, if it does, whether this right can be considered as waived. According to Article 3342(1) of the Civil Code, an application to disqualification of an arbitrator can be made to the arbitral tribunal itself. And when the application is rejected by the tribunal, the party may appeal from this decision in court within ten days.92 Both of the applicable procedural laws of arbitration, the ICC Rules and the Civil Code, govern a similar matter but in an inconsistent manner. So, the next step would be to see if the parties can be considered as waiving their right under the Civil Code by chosing ICC Rules. As discussed in the previous paragraphs, although the procedural law of the arbitration is almost always the arbitration legislation of the arbitral seat, (in our case, it is also the chosen law by the parties), the parties can also agree on a different procedural law. The application of a different procedural law to an arbitration can have significant consequences altering the legal standnards applicable to internal and external aspects of the arbitral process on matters such as challenge of arbitrators.93 In such circumstances, if the lex arbitrii of the seat contains non mandatory provisions, the parties can exclude them, and it must be presumed that they intended to do so by subjecting their arbitration agreement to a law which provides for a different solution.94 That is to say, in cases where the lex arbitrii of the seat contains non mandatory provision, the law chosen by the parties to govern the agreement shall prevail. In the case at hand, the provision of the Civil Code on appeal from decision of an arbitral tribunal challenging arbitrators is written in a non mandatory language, hence, it can be construed that the parties, by chosing the ICC rules, have waived their right of appeal under the Civil Code. Hence, appeal and resort by the Respondent to its own courts in a situation where it has waived its right to do so constitutes a guerilla tactic.


    1. Challenging Jurisdiction in Domestic Court

The competence-competence doctrine allows the arbitral tribunal to determine its own jurisdiction. Ethiopian law recognizes freedom of parties to an arbitration agreement when it allows parties to authorise, in their arbitral submission, arbitrators to decide on disputes relating to their jurisdiction.95 But the Ethiopian law provides for one limitation on the competence competence doctrine: the arbitral tribunal may not determine the validity or otherwise of the arbitral submission.96 The implication of this mandatory provision is that if any jurisdictional objection based on the invalidity of an arbitral submission is raised, the tribunal will not have the power to decide on such issue.97 When we come to the case at hand, the respondent challenged the jurisdiction of the arbitral tribunal by saying that it has submitted to an ad hoc arbitration, and not to ICC institutional arbitration. Wheter such challenge is to be entertained by the tribunal itself or not depends on whether we categorize it as a question of validity. Arbitration agreement is a contract98 between the parties submitting for arbitration and as such there are certain requirments that it needs to fulfill on pain of invalidity. One such requirment is consent of the parties. When the Respondent in this case asserted that it had not agreed tor institutional arbitration under ICC, it was saying that it did not give its consent to the institutional arbitration, hence attacking the validity of the arbitration agreement. In cases where the validity of the arbitral submission is questioned by one of the parties, the matter is not to be decided by the arbitral tribunal. Article 3330(3) of the Civil Code is drafted in a mandatory langauge and any arbitrator is bound by the mandatory provisions of the lex arbitri of the seat, particularly by those of which the violation can result in the setting aside of the award.99 On top of this, the parties have specifically chosen the Ethiopia law as applicable law. The Arbitral Tribunal in the Salini case, should have declined to entertain the jurisdictional challenge posed agaist itself as doing so was contrary to the chioice of the parties as well as the mandatory provisions of the place of arbitration, Ethiopia, and such action is one of the grounds for setting aside of an arbitral award under Article 356(a) of the Civil Procedure Code of Ethiopia, possible place for enforcement of the award.


But the fact that the Tribunal erred in deciding to address the jurisdictional challenge posed against itself does not give green light for the Respondent to take the actions that it took subsequently. In general, there are different options open for respondents in challenging the jurisdiction of arbitral tribunals. One of such options is raising objection with the tribunal itself. Another option available is ignoring the arbitral tribunal and go to the courts of seat of arbitration to resolve the issue of jurisdiction.100 The availability of the second option depends on whether or not the courts have power to intervene in an international arbitration during the course of proceedings.101 Hence, before indulging into such action, the respondent has to consult the law of seat of arbitration. Yet another option open is for the respondent to participate in the arbitration and to remain passive until after the final award is issued by the arbitral tribunal and then challenge the award in the courts of the country in which the arbitration took place.102 Combining two of the options is also another possibility. As indicated by Redfern and Hunter, rasing objection with the tribunal at the early stages of the arbitration and if the tribunal upholds its own jurisdiction, continue with the process and challenge the award either at the place of arbitration or at the place of enforcement, is yet another option. In deciding which options to take the respondent has to see what the law of the seat of arbitration says on the matter. Coming to the case at hand, what the Respondent did when the Tribunal decided to entertain the jurisdictional challenge was seek help from its domestic court for intervention. In a letter dated May 4, 2001, the Respondent communcated to the Secretariat of the ICC Court that it had initiated suit at the Federal First Instance Court in order to obtain a judgment that the Tribunal has no jurisdiction over the arbitration.103. Unfortunately, this option is not available either under the Civil Procedure or Civil Codes of Ethiopia. The remedy the Respondent had under Articles 355(1)104 and 356(a) of the Civil Procedure Code was the third option, which is to wait until the final award is rendered by the Tribunal and apply for the setting aside of the award on the ground that the Tribunal decided matters pursuant to a submission which was invalid. Instead, the Respondent chose to use a means that would renege its agreement for arbitration and frustrate the arbitration proceeding.


    1. The Use of Anti Arbitration Injunction and Ex-parte Communication

Another interesting event in the Salini case, which triggered much academic debate105, was the issuance of an anti-arbitration injunction by the Federal Supreme and Federal First Instance Courts of Ethiopia. Anti-suit injunctions, in the case of arbitration, are issued either during the arbitral process to prevent the arbitral tribunal from hearing the claim, or at the end of the arbitral process to obstruct the enforcement of the arbitral award.106 In the case at hand, the Respondent requested the courts to stay the arbitration proceeding until a final decision is rendered on the appeal regarding disqualification of arbitrators and the jurisdictional challenge. The application was accepted and the courts issued anti-suit injunctions. The Arbitral Tribunal declined to suspend the proceeding on grounds of its purported duties it owed to the parties in the arbitration, its duty to make every effort to render an enforceable award and the theory that a state or state entity cannot resort to the state’s courts to frustrate arbitration agreement.107


Some applauded the decision of the tribunal to continue the hearing despite the courts’ injunctions. According to them, the responsibility for ensuring that arbitration remains a flexible and effective dispute resolution mechanism is shared among the courts, arbitral tribunals and parties and as such courts and tribunals should not afford a relief to a party that tries to escape its undertaking to arbitrate.108 Bachand also argues that the tribunal’s jurisdiction is ultimately derived from the parties’ agreement rather than the legal order of the seat of arbitration and hence the tribunal would be under no obligation to comply with the injunction.109 Professor Gilliard, who was the chairman of the tribunal in the Salini case, also argued that arbitral tribunals should be given the opportunity to fully exercise their power to rule on the issue of whether an anti-suit injunction should be given effect as regards the tribunal’s jurisdiction to rule on its own jurisdiction.110


On the other hand, there are also others who argue that such injunction orders must be honored by the tribunal. As shown in the previous section, tribunals have an obligation to observe the mandatory provisions of the lex arbitri of the seat to avoid the setting aside of award. This follows that arbitrators are in principle bound by orders or injunctions issued by the courts at the seat of arbitration,111 unless such order is given in an arbitrary and unjustifiable manner. The lex arbitri constitutes the primary legal basis for the effectiveness of the arbitration agreement and that arbitrators do not have the discretionary power to disregard injunctions issued by the courts at the seat of arbitration.112 This view is also reflected by Eric Schwartz, who was the representative of the Respondent in the Salini case. He asserted that:

In order to establish the illegality of a local court’s order, it therefore cannot suffice to observe that the order has the effect of blocking or interfering with arbitration. It is not the blocking of arbitration that in and of itself constitutes a ‘denial of justice’ but rather the blocking of arbitration in a manner that is manifestly arbitrary and improper. This might be the case where there is manifestly no factual or legal basis for a court’s action…. 113


The Ethiopian Civil Code and Civil Procedure Code recognize the right of parties to arbitration to seek assistance of the court when appropriate.114 And the courts have the power to give the relief sought. The cumulative reading of Articles 155(1) and 317(1) of the Civil Procedure Code shows us that the Federal First Instance Court has the power to issue temporary injunction enjoining an arbitration. A similar power can be seen under Articles 332 et seq. of the Civil Procedure Code as far as the power of the Federal Supreme Court is concerned.115 The granting of such relief by the courts, however, should be in line with Article 154 of the Civil Procedure Code. This provision basically lays down a guiding principle for the courts at the time of issuing injunctions. Accordingly, it requires that an injunction shall be granted only when it is proved by affidavit or otherwise that an act prejudicial and causing irreparable damage to the plaintiff is likely to be carried out.. . In the Salini case also the court has to determine the fulfillment of these conditions. With regard to the relief sought from the Federal First Instance Court, the merit of the case relates to challenging of jurisdiction of the arbitral award. In the discussion above, it is shown that the relief available for the Respondent under the Civil Procedure Code was to wait until the arbitral tribunal gave its award and challenge the award in the local courts. This means, the continuance of the arbitral proceeding cannot be considered as causing an irreparable injury/damage within the meaning of article 154 of the Civil Procedure Code. If the respondent in the Salini case sustained any injury as a result of the arbitration process, it could have been redressed through challenging the arbitral award. Hence the granting of the relief was improper. But does this action of the court constitute a guerilla tactic? As a matter of customary international law, on the basis of which the actions or inactions of state courts is measured, the obligation of states is to maintain and make available to aliens a fair and effective system of justice.116 Decisions of courts that are given in violation of this minimum standard would constitute ‘denial of justice’, a doctrine whose exact delineation is not settled. According to Schwartz, while the precise contours of ‘denial of justice’ may not be entirely settled in international law, it is nevertheless ordinarily considered that ‘what is required is ‘manifest injustice’ or ‘gross unfairness’… or ‘palpable violation’ in which ‘bad faith’ not judicial error seems to be the heart of the matter.’117 In the case at hand, there are no facts to indicate that the measures taken by the courts were manifestly arbitrary and improper. Rather, it can only be considered as a judicial error, not constituting denial of justice.

The acts undertaken by the Respondent after securing the injunction orders should also be frowned at. In a letter dated May 4, 2001, the Respondent informed the Tribunal of the decision of the Federal Supreme Court to suspend the arbitration proceeding and that breach of this injunction would allow the court to attach the property of, or hold for contempt of court, any person breaching the injunction.118 The Respondent also dispatched letters dated May 16, addressed to the Tribunal and the Claimant, informing them that it would not attend the hearing and it threatened that any such hearing would be a contempt of court and illegal.119 Under normal circumstances, a party that benefits from an order of the court takes appropriate measures to secure compliance with the order and there is nothing wrong with that. In the case at hand, the merits on the basis of which the Respondent instituted a fresh suit and an appeal in the local courts are not in line with its agreement to arbitrate and are a dilatory tactics. And again, securing an injunction enjoining the arbitration in a situation where the continuance of the proceeding would not have caused an injury which cannot be redressed can only be categorized as bad faith. And sending out letter to the Tribunal and the Claimant threatening them that they will be in contempt of court if they violate the court’s order, which was secured in bad faith, cannot be considered as a proper act. Here it is not the single act of sending out letters to the Tribunal and the Claimant that led to such conclusion. Rather, the sum of the different actions taken by the Respondent prior to sending out the letters gives any reasonable man an understanding of the mental state in which the Respondent was at the time of sending out the letters, which is bad faith.


  1. Was there Violation of International Obligation by the Ethiopian State?

Foreign investments are often made through a contract between a foreign investor and an entity or instrumentality of the state.120 As such, disputes between the foreign investor and the host state arise as a result of breach of such contracts. Though some aregue that a succesful contract claim will result in state responsibiity under the rules of its domestic law121, others support the view that the breach of contract by the state can in certain circumstances create a direct international responsibility.122 The issue of whether breach of a contract could lead to breach of treaty has been raised and entertained in different investment disputes, leading to contracdictory outcomes.123


There are at least four reasons invoked for an investment tribunal to assume jurisdiction over contract claims asserting breach of a treaty. First, most BITs protect contract as a form of investment. This is reflected in the definition part of the BITs which define ‘investment’ to include contractual rights. The BITs between Ethiopia and Israel124, Ethiopia and Denmark125, Ethiopia and Russia126, Ethiopia and Italy127 are some of the bilateral investment treaites that define investment to include concessions or other rights conferred by law or under contract. When investment is defined under a BIT to include contractual rights, infringement of such contractual right amounts to infringement of a protected investment under the BIT and hence the claim can be elevated to treaty claim. Secondly, many, if not all, BITs provide a clause on the fair and equitable treatment of foreign investment.128 This standard of treatment is said to encompass various investment protection principles, including the observance of undertakings.129 The United Nations Conference on Trade and Development (UNCTAD) also asserted that the standard includes the legal rules of pacta sunt servanda and respect for contractual obligations.130 Hence, the failure of a state to observe its obligation under an investment contract can comprise a violation of the BIT standard of Fair and Equitable Treatment (FET). The third reason is connected to the first one. If a BIT defines investment to include contractual rights, then it follows that there is a possibility of expropriating these contractual rights. An ICSID tribunal in SPP v. Egypt noted that ‘it has long been recognized that contractual rights may be indirectly expropriated.’131 BITs as well as customary international law allow expropriation of property only against payment of compensation and after observing due process of law, the failure of which entails international responsibility. The Iran-United States Claims Tribunal in Philips v. Iran:132 has asserted that expropriation of the property of an alien, whether the expropriation is formal or de facto and whether the property is tangible or intangible such as contractual rights, will give rise, under international law, to liability for compensation.


In addition to these three reasons, we can also find clauses in BITs that equate contract breaches with treaty breaches, what are called ‘Umbrella clauses’. Umbrella clauses create a reciprocal international obligation owed by the contracting states to each other that requires them, as host states, to observe obligations they have entered into with investors of the other contracting state or with regard to their investment.133 Umbrella clauses provide that a contracting state has to respect the commitment it has undertaken towards the foreign investor. The BIT between Ethiopia and Denmark under Article 2(3) states that “Each Contracting Party shall observe any commitment it may have entered into with regard to investments of investors of the other Contracting Party.” Article 3(3) of the BIT between Ethiopia and Kuwait contains identical statement.134 The inclusion of such provisions means any commitment, including contractual commitment, entered with regard to investment of the foreign investor must be honored on pain of infringing treaty obligation. Such clauses, in the words of Schreuer,135

“…have been added to some BITs to provide additional protection to investors beyond the traditional international standards. They are often referred to as umbrella clauses because they put contractual commitments under the BIT’s protective umbrella. They add the compliance with investment contracts, or other undertakings of the host state, to the BIT’s substantive standards. In this way, a violation of such a contract becomes a violation of the BIT.”


In general, on the basis of the above mentioned four grounds, it has been held that violations of contractual obligations by a state can amount to violation of its treaty obligation. Then the subsequent question will be ‘would the use of guerilla tactics by states in investment arbitration proceedings amount to violation of the BIT?’ It is clear that the use of guerilla tactics by one of the parties will inhibit the other party from using the contractually agreed dispute settlement mechanism. In this regard, both the SGS v. Pakistan and SGS v. Philippines tribunals agreed that there would be a viable treaty breach claim if the investor was prevented from submitting disputes to the contractual dispute settlement mechanism.136 That means, the state that employed a guerilla tactic will be liable for breach of its treaty obligation. In addition, it is generally agreed that the foreign investors suffer a denial of justice in cases where there is negation of arbitration by the state respondent.137 Such negation or repudiation of the arbitration process can be manifested by refusing to participate in the arbitration process.138 Hence, when a host state refuses to participate in the hearing or other process of the arbitration proceeding, there will be a denial of justice suffered by the claimant investor. And this will enliven the right of the home state to exercise diplomatic protection on the individual’s behalf.139 Alternatively, where the host state’s conduct did not reach the level of a denial of justice but still amounted to a breach of the rules of public international law, for example for violation of a treaty obligation, then the injured state would have a direct claim against the offending state.140

When we come to the case at hand, the analysis made in the previous sections has shown that the Respondent made it impossible for the Claimant to make use of the agreed dispute settlement mechanism. This by itself constitutes a treaty breach as confirmed by the SGS Tribunals. And again the use of such guerilla tactic is a violation of the FET provision of the Ethio-Italy BIT.141 The FET standard, which includes respect for contractual obligations, is violated as the Respondent made it impossible for the Claimant to use the contractually agreed mechanism of dispute settlement. And again, the Respondent in the Salini case decided to boycott the arbitration process and also directed the Claimant to do the same. This is negation of the arbitration process and hence considered as denial of justice, in which case the Claimant or its home state will have a right of recourse. Even if one argues that the action of the Respondent in the case does not amount to denial of justice, it still amounts to violation of its treaty obligation entitling the Claimant and its home state a direct claim.


  1. Concluding Remarks

Through time, an increase in the use of arbitration as a preferred method of settling investment disputes is witnessed. Associated with this rise of investment arbitration is the increased use of guerrilla tactics. Such tactics are more often used by states than private parties. As investor-state arbitrations are asymmetrical, there is always a risk of undue interference of states in the arbitration process. Different factors, including the complex political, social and cultural issues involved in many investment cases coupled with the huge amount of money involved in the cases might have led to the desire of parties, especially the state, to resort to guerrilla tactics. The use of the guerrilla tactics goes against the principles of good faith and equality of arms which need to be observed in arbitration proceedings. Failure to observe these principles raises international responsibility of a state. In today’s world where global economic slowdown and fierce struggle to attract foreign direct investment is witnessed, every step that a state or its organs take must be cautiously thought of as it will give a wrong signal and scare potential foreign investors off.


1LL.B (AAU), LL.M (UWC), PhD candidate (Martin Luther University, Germany) Lecturer, Addis Ababa University, School of Law. I am very grateful for the insightful comments I received from the editor on previous drafts. All errors remain mine. E-mail: martha.b.hailu@gmail.com.

Norbert Horn, “Arbitration and the Protection of Foreign Investment: Concepts and Means”, in Norbert Horn and Stefan Kroll, (eds.), Arbitrating Foreign Investment Disputes, (Kluwer Law International, The Netherlands, 2004), p.7.

2 Ibid

3 Some examples include the UN Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti Personal Mines and on their Destruction of 18 September 1997, The 1970 Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States, General Assembly resolution 2625. See also the Manila Declaration on the Peaceful Settlement of International Disputes, General Assembly resolution, the Declaration on the Prevention and Removal of Disputes and Situations which may Threaten International Peace and Security, resolution 43151 and the Declaration on Fact-finding, resolution 46159. The various bilateral investment treaties to which Ethiopia is a party also provide for the pacific settlement of disputes.

4 The International Court of Justice (ICJ) Case Concerning Military and Paramilitary Activities in and Against Nicaragua, Merits, (Nicaragua Vs USA), ICJ Report (1986), 14, paragraph 290.

5 Ann Peters, “International Dispute Settlement: A Network of Co operational Duties”, European Journal of International Law, Vol.14. No.1 (2003), p.3

6 This involves an attempt to resolve differences or reconcile interests either by the contending parties themselves or with the aid of other entities. Included in this group are negotiation, mediation and conciliation. Malcolm N. Shaw, International Law, (5th Ed, Cambridge University Press, 2003), p. 914.

7 Adjudication procedures involve the determination by a disinterested third party of the legal and factual issues involved, either by arbitration or by the decision of judicial organs. Id. p.914 Adjudication processes determine rights and, unlike diplomatic solution, they result in binding decisions which cannot be unilaterally evaded by one party. See Ann Peters, supra note 5, p. 4.

8 August Reinisch and Loretta Malintoppi, “Methods of Dispute Resolution”, in P. Muchlinski, F. Ortino and C. Schreuer (eds.), The Oxford Handbook of International Investment Law, (Oxford Univ. Press, 2008), p.692

9 R. Dolzer and C. Schreuer, Principles of International Investment Law, (Oxford Univ. Press, 2008), p.214.

10 Won Mog Choi, “The Present and Future of the Investor-State Dispute Settlement Paradigm,” Journal of International Economic Law, Vol. 10. No. 3 (2007), p.735

11 Dolzer and Schreuer, Supra note 9, p.214.

12 Id., p.220

13 Aba Kolo, “Witness Intimidation, Tampering and Other Related Abuses of Process in Investment Arbitration: Possible Remedies Available to the Arbitral Tribunal,” Arbitration International, Vol. 26, No. 1 (2010), p.45.

14 Some of the main arbitration institutions that supervise and monitor investment arbitration proceedings include International Centre for the Settlement of Investment Disputes (ICSID), International Court of Arbitration of the International Chamber of Commerce (ICC), and the London Court of International Arbitration (LCIA).

15 UNCTAD, Latest Development in Investor-State Dispute Settlement, IIA Issue Note No 1, (March 2011),p. 1.

16 Aba Kolo, Supra note 13, p. 47.

17 Another UN document which requires cooperation of states in dispute settlement is the Anti-Mines Convention of 1997, which under its Article 10 paragraph1 reads “The states parties shall consult and cooperate with each other to settle any dispute that may arise with regard to the application or the interpretation of this convention.”

18 Ann Peters, Supra note 5, p.9.

19 ICJ Nuclear Tests case (Australia Vs France), ICJ Report, (December 1974), 268 paragraph 46.

20 See for example, article 2 paragraph 2 of the UN Charter, Article 34 of the ICSID convention, Article 26 of the Vienna Convention on the Law of Treaties

21V.V Veeder, “The Lawyer’s Duty to Arbitrate in Good Faith,” Arbitration International, Vol.18, No.4 (2002), p.439.

22 Article 23/1 of the ICSID Conciliation Rules states: “The parties shall cooperate in good faith with the Commission and, in particular, at its request furnish all relevant documents, information and explanations as well as use the means at their disposal to enable the Commission to hear witnesses and experts whom it desires to call…”

23 Art 11 of the permanent court of arbitration optional conciliation rules states: ‘The parties will in good faith cooperate with the conciliator and, in particular, will endeavor to comply with requests by the conciliator to submit written materials, provide evidence and attend meetings’,

24 ICJ Report, (1951), 116, at 142 as cited by Aba Kolo, Supra note 13, p.55.

25 North America Free Trade Area Agreement

26 Methanex v. U.S, Final Award of the Tribunal on Jurisdiction and Merits, (August 2005), Paragraph 54

The investor, Methanex, is a Canadian producer and marketer of methanol. Methanex US and Methanex Fortier are investments in the United States wholly owned by Methanex. Methanex US purchases methanol from Methanex for marketing in the North American market. Methanex Fortier is a methanol production facility located in Fortier, Louisiana. The government of California decided to ban the use of Methyl tert-butyl ether (MTBE) in gasoline on the basis of environmental concerns. Methanex claims, inter alia, that the measures taken by the State of California constitute a substantial interference and taking of the business of Methanex US and Fortier, and a substantial interference and taking of Methanex's investment in Methanex US and Fortier

27 Libananco Holdings Co Vs The Republic of Turkey, Decision on Preliminary Issues, (23 June 2008), ICSID Case No. ABR/06/8, paragraph 78. See also Infra section III(ii) for discussion on the case.

28 Mainly foreign investments are made through contracts with an entity of the state. Investment disputes may be treaty claims or contract claims. Some of the distinctive features between the two include:1) Source of the right:- the basis of a treaty claim is a right established and defined in an investment treaty while the basis of a contract claim is right created and defined in a contract. 2) Content of the right: most treaty rights established by BITs are of generic nature and defined by international law while contract rights are specific to the investment and defined by the domestic law of the host state. 3) Parties to the claim: the parties to a treaty claim are always the investor of the home state and the host state. The state party is the state itself, not the federal or regional unit or any state entity or agency while the parties to a contract claim are the parties to the contract which may mean a regional unit or state entity. 4) Applicable Law: the applicable law under a BIT normally includes the provisions of the BIT, the domestic law of the host state and the general principle of international law while contract claim is likely to be determined according to the host state’s law. 5) Liability of the host state: a successful treaty claim results in state responsibility under international law while a successful contract claim results in state responsibility under the rules of its domestic law. See Bernardo M Cremades and David A Cairns, “Contract and Treaty Claims and Choice of forum in Foreign Investment Disputes”, in Norbert Horn (ed.), Arbitrating Foreign Investment Disputes: Procedural and Substantive Legal Aspects, Vol. 19, (Kluwer Law International, 2004), pp.327-331. Regarding the last distinctive feature, recent developments in investment arbitration cases indicate that violation of contractual obligation by the host state entity could amount to violation of treaty obligation. For further discussion on this, see Infra section IV(iii).

29 Aba Kolo, Supra note 13,p. 54

30 Marion Panizzon, Good Faith in the Jurisprudence of the WTO: The Protection of Legitimate Expectation, Good Faith Interpretation and Fair Dispute Settlement, (Hart Publishing, 2006), P.11.

31 See Year Book of the International Law Commission, Vol. I, (1964), cited by Panizzon, Id.p. 12

32 Nuclear tests case, Supra note 19

33 Malcolm N Shaw, Supra note 6, p.98.

34 Ann Peters, Supra note 5, p.16.

35 Id., p.17.

36 Abo Kolo, Supra note 13, p.56.

37 See A. Philip, ‘The Duties of an Arbitrator’ in L. Newman and R. Hill (eds.), The Leading Arbitrator’s Guide to International Arbitration (2nd ed, Juris Publishing, 2008),p.75 (as cited by Aba Kolo, Id. p.57).

38 Thomas Walde, “Equality of Arms in Investment Arbitration: Procedural Challenges”, in Katia Yananca-Small (ed.), Arbitration under International Investment Agreements: A Guide to the Key Issues (Oxford Univ. Press, 2010), p.161.

39 Richard Boivin, “International Arbitration with States: An overview of the Risks,” Journal of International Arbitration Vol. 19, No. 14, (2002), p.286.

40 Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration, (Sweet and Maxwell, London, 2004), p.22.

41 Thomas Walde, “Procedural Challenges in Investment Arbitration under the Shadow of the Dual Role of the State: Asymmetries and Tribunals’ Duty to Ensure, Pro-actively, the Equality of Arms,” Arbitration International, Vol. 26, No.1, (2010), p.6.

42 Investor-state arbitrations are said to be lopsided as only the investor can sue a government and not vice versa except for counter claims. But this, according to Walde, is a necessary consequence of the basic purpose of investment arbitration which looks into the fact that the investor is in an unequal position subject to the domestic law and government control over the judicial process. For more on asymmetrical nature of investor-state arbitration, see Walde Supra note 41.

43 Walde, Supra note 41, p.6.

44 Id.,p. 11

45 Id., p.12

46 Julian Nicholls, Supranational Criminal Law: A System Sui Generis, (Intersentia, USA, 2003), p.218.

47 Ibid

48 Tadic Vs Prosecutor, Appeals Chamber of the International Tribunal for Human Rights Violations in the Former Yugoslavia, Judgment of 15 July 1999, paragraph 30 ff. In that case, the appellant claimed that the uncooperative stances of the authorities had the effect of denying the appellant adequate time and facilities for fair trial and that inequality of arms persisted as the trial chamber was unable to help him to identify and trace relevant and material witnesses and potential witnesses that had been identified refused to testify out of fear. The Appeals Chamber concluded that a liberal interpretation of ‘equality of arms’ has to be adopted by international tribunals, as opposed to domestic courts, which follows that the tribunal shall provide every practicable facility it is capable of granting under the Rules and Statute when faced with a request by a party for assistance in presenting its case. This case develops the ECtHR jurisprudence on the role of courts and tribunals by requiring them to go beyond a passive, essentially procedural umpire role and engage pro-actively with the parties to create a situation of material equality. See Id., paragraphs 30, 32 and 52 and Walde, supra note 41, p.13

49 Klaus Peter Berger, “Evidentiary Privileges: Best Practice Standards Versus /and Arbitral Discretion,” Arbitration International, Vol. 22, No. 4, (2006), p. 516

50Aba Kolo Supra note 13, p.57. Drawing adverse inference against the party that attempts to subvert the arbitration process, issuing an interim measure of protection directing the disputing parties to cease and desist from intimidating witnesses, awarding monetary damages and moving the seat of arbitration are some of the solutions provided by authors for arbitral tribunal to ensure equality of arms. See Kolo Supra 13, and Walde, Supra note 38, p.188

51 Edward R Leahy, Kenneth J Pierce, “Sanctions to Control Party Misbehavior in International Arbitration,” Virginia Journal of International Law, Vol. 26 (1985-1986), p.292

52 Id., p.292

53 Barbara Helene Steindl, “Procedural Tactics of a Guerrilla Nature and Suggestions for Counsel How to Counter and Employ (From the Perspective of Counsel Before Commercial Tribunals),” Transnational Dispute Management Journal, Vol. 7, No. 2 (2010),

54 Shai Wade, “Guerrilla Tactics Before Investment Tribunals: from Counsel's Point of View, Speaker's Note,” Transnational Dispute Management Journal, Vol. 7, No.2 (2010),

55 Walde, Supra note 41, p.21.

56 Walde, Supra note 38, p.164.

57 Walde, Supra note 41, 22

58 Himpurna California Energy Ltd. Vs Republic of Indonesia (Final Award October 1999). The dispute in this case originally arose from an Energy Sales Contract by which the claimant was to develop and exploit geothermal resources in Indonesia and sell it to PLN, the Indonesian State Electricity Corporation. Following the Asian financial crisis and collapse of the Indonesian Rupiah, PLN defaulted on its payment and the claimant obtained an arbitral award in its favor. When PLN defaults to honor the arbitral award, the claimant commenced further arbitral proceeding. It was in this second proceeding that the national oil company of Indonesia, Pertamia which was not a party to the first proceeding, obtained a court injunction suspending the arbitral proceeding on grounds that Petramia’s right as third party would be affected by the arbitration. The Tribunal declined to suspend the arbitration and convened witness hearing in The Hague. One of the arbitrators, an Indonesian national, was reportedly intercepted by agents of the government at Schipol airport on the eve of the witness hearing in The Hague and was accompanied back to Jakarta.

59 Walde, Supra note 41, 23

60 J Werner, “The Frailty of the Arbitral Process in Cases Involving Authoritarian States and other Pitfalls of Investment Arbitration,” Journal of World Investment and Trade, Vol. 1(2000), p.325.

61 M Goldhaber, “Arbitral Terrorism,” Transnational Dispute Management, Vol.1, No.3 (2004) as cited by Aba Kolo Supra note 13

62 Kolo Supra note 13, 50

63 Walde, Supra note 38, 169

64 Id.p.168.

65 Article 14 of the International Covenant on Civil and Political Rights (ICCPR), article 7/ of the African (Banjul) Charter on Human and Peoples’ Right (ACHPR) as well as article 6/3 of the European Charter on Human Right (ECHR) recognize the right of legal representation of accused persons

66 Walde, Supra note 41,p.30

67 Kolo, Supra note 13, p.51

68 Id.,p. 52

69 Libananco Holdings Vs Republic of Turkey, Paragraph 79

70 Simon Greenberg, “Tackling Guerrilla Challenges Against Arbitrators: Institutional Perspective,” Transnational Dispute Management Journal, Vol.7, No. 2(2010).

71 Redfern and Hunter, Supra note 40, p.252

72 Id., 253. Another, yet interlinked theory on determination of arbitral jurisdiction is the Theory of Separability. This theory treats an arbitration clause in an underlying contract as distinct from the contract, allowing the clause, and therefore jurisdiction, to survive invalidity or termination of the contract. Accordingly, the independent existence of the arbitration agreement maintains the tribunal’s jurisdiction to render a valid award even if that award finds the underlying contract to be invalid for some reason. See Amakura Kawharu, “Arbitral Jurisdiction,” New Zealand University Law Review, Vol.23 (December 2008), p.240. The two theories are interlinked as they share a common goal of preventing early judicial intervention from obstructing the arbitration process. John J. Barceló III, “Who Decides the Arbitrators’ Jurisdiction? Separability and Competence-Competence in Transnational Perspective, Vanderbilt Journal of Transnational Law, Vol. 36, (2003), p. 1116.

73 Edward R. Leahy and Carlos J. Bianch, “The Changing Face of International Arbitration,” Journal of International Arbitration, Vol. 17, No. 4(2000), p.20.

74 Article 41 Paragraph 1 of the ICSID convention states ‘The Tribunal shall be the judge of its own competence’ while the second paragraph states ‘Any objection by a party to the dispute that the dispute is not within the jurisdiction of the Centre, or for other reasons is not within the competence of the Tribunal, shall be considered by the Tribunal which shall determine whether to deal with it as a preliminary question or to join it to the merits of the dispute’

75 Article 6.2 of the ICC rule provides: “If the Respondent does not file an Answer, as provided by Article 5, or if any party raises one or more pleas concerning the existence, validity or scope of the arbitration agreement, the Court may decide, without prejudice to the admissibility or merits of the plea or pleas, that the arbitration shall proceed if it is prima facie satisfied that an arbitration agreement under the Rules may exist. In such a case, any decision as to the jurisdiction of the Arbitral Tribunal shall be taken by the Arbitral Tribunal itself. If the Court is not so satisfied, the parties shall be notified that the arbitration cannot proceed. In such a case, any party retains the right to ask any court having jurisdiction whether or not there is a binding arbitration agreement.” Accordingly, issues of arbitral jurisdiction under the ICC rule are entertained slightly differently as the determination passes through two stages. Unlike the ICSID convention, here it is after the ICC court satisfies itself of the possible existence of a valid agreement that the Tribunal chips in to decide on its own jurisdiction.

76 Boivin, Supra note 39, pp.286-287

77 Greenberg, Supra note 70

78Ibid

79 Ibid

80 Edna Sussman, All's Fair in Love and War - Or Is It? The Call for Ethical Standards for Counsel in International Arbitration, 7(2) Transnational Dispute Management Journal, (2010) and Edna Sussman and Solomon Ebere, “All's Fair in Love and War - Or Is It? The Call for Ethical Standards for Counsel in International Arbitration,” The American Review of International Arbitration, Vol. 22, No. 4 (2011), p.614.

81 The case brief published by Ethiopian Arbitration and Conciliation Centre on Report of Arbitral Awards, Volume 2 (2002 E.C) is adopted with slight modification.

82 Paragraph 9 of the Salini Award

83 Article 67.3 of the contract Any dispute in respect of which the decision, if any, of the Engineer has not become final and binding pursuant to sub clause 67.1, and amicable settlement has not been reached within the period stated in sub clause 67.2shall be finally settled, unless otherwise specified in the contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed under such rules. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute. Neither party shall be limited in the proceedings before such arbitrator/s to the evidence nor did arguments put before the Engineer for the purpose of obtaining his said decision pursuant to sub clause 67.1. No such decision shall disqualify the engineer from being called as a witness and giving evidence before the arbitrator/s on any matter whatsoever relevant to the dispute. Arbitration may be commenced prior to or after completion of the Works, provided that the obligations of the Employer, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works.

Add the following new sub clauses to Clause 67.3 of Part I.

67.3.1 The place of arbitration shall be Addis Ababa, Ethiopia

67.3.2 The Language of arbitration shall be English

67.3.3 The substantive law(s) applicable shall be the Ethiopian law

67.3.4 The rules for arbitration shall be the Civil Code of Ethiopia under Article 3325 et seq. (Arbitral submission)


84 Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration, (2004, 4th ed., Sweet and Maxwell, London, §4-52). Earlier a distinction was drawn between independence and impartiality. However, there has been a trend towards viewing these two elements as the opposite sides of same coin. For more on this, see Id., §4-54 & §4-55.

85 Emmanuel Gaillard and John Savage (eds), Fouchard Gaillard Goldman on International Commercial Arbitration, (Kluwer Law International, The Hague, 1999), §990.

86 Id., § 991.

87 Redfern and Hunter, Supra note 84, § 2-19.

88 Gaillard and Savage, supra note 85, § 991.

89 Ibid

90 Ibid. Under French law also, the courts will be involved in the challenge of an arbitrator if the parties have not agreed on an alternative procedure. Ibid.

91 Clause 67.3 and 67.3.4 of the Agreement, see footnote no 83 above

92 Article 3342(3) of the Civil Code

93 Gary B. Born, International Commercial Arbitration, Vol. I (Kluwer Law International, The Netherlands, 2009), p.1310.

94 Jean-Francois Poudret and Sebastian Besson, Comparative Law of International Arbitration,(Sweet and Maxwell, London, 2007), § 293.

95 See article 3330(2) of the Civil Code and Hailegabriel G Feyissa, “The Role of Ethiopian Courts in Commercial Arbitration,” Mizan Law Review, Vol. 4, No. 2, (2010), p. 310.

96 Article 3330(3) of the Civil Code. This is in sharp contrast to the UNCITRAL Arbitration Rules which give the arbitral tribunal the power to rule on objections that it has jurisdiction, including any objection with respect to the existence or validity of the arbitration clause or of the separate arbitration agreement. See Article 21 of the UNCITRAL Arbitration Rules.

97 Bezzawork Shimelash, “The Formation, Content and Effect of an Arbitral Submission under Ethiopian Law,” Journal of Ethiopian Law, Vol. XVII, (1994), p.81. Bezzawork argues that such jurisdictional objections are to be decided by the court.

98 Article 3325(1) of the Civil Code defines arbitral submission as a contract whereby the parties to a dispute entrust its solution to a third party, the arbitrator, who undertakes to settle the dispute in accordance with the principles of law.

99 Poudret and Besson, Supra note 94, §146. Respect for the mandatory provisions of the lex arbitri is supported at least on two grounds. First, it is justified in order to respect the parties’ will as to their choice of the seat, and in consequence, of the lex arbitri in force at the seat. Secondly, respect for the mandatory provisions of the lex arbitri is also necessary in order to favor the enforcement of the award. Ibid

100 Redfern and Hunter, Supra note 84, §5-57. It would be possible in countries like England and Switzerland, where the policy is that such issues of jurisdiction should be finally resolved at the earliest possible stage by means of concurrent court control. Ibid, note 48.

101 Id., §5-57.

102 Id., §5-59.

103 Paragraph 77 of the Salini Award

104 Article 355(1) of the Civil Procedure Code states: Notwithstanding any agreement to the contrary the parties to arbitration proceedings may, on the conditions laid down in Art 356, apply for an order that an award be set aside.

105 See for instance, Frederic Bachand “Must an ICC Tribunal Comply with an Anti-Suit injunction Issued by the Courts of the Seat of Arbitration? Comment on Salini Construttori S.p.a. V Ethiopia,” Mealy’s International Arbitration Report, Vol. 20, No. 3(March 2005); Mohtashami R., “In Defence of Injunctions Issued by the Courts of the Place of Arbitration: A Brief Reply to Professor Bachand’s Commentary on Salini Construttori S.p.a. V Ethiopia,” Mealey’s International Arbitration Report, Vol. 20, No. 5(March 2005); Constantine Partasides, “Solutions Offered by Transnational Rules in Case of Interference by the Courts of the Place of Arbitration,” Transnational Dispute Management Journal, Vo. 1, No. 2(2004).

106 Emmanuel Gaillard, “Reflections on the Use of Anti-Suit Injunctions in International Arbitration,” in Loukas A. Mistelis and Julian D M Lew QC, (eds.), Pervasive Problems in International Arbitration, (Kluwer Law International, 2006), §10-3.

107 See Paragraphs 128-178 of the Salini Award

108 Matthias Scherer and Teresa Giovannini, “Anti-Arbitration and Anti-Suit Injunctions in International Arbitration: Some Remarks Following A Recent Judgment of the Geneva Court,” Stockholm International Arbitration Review, Vol. 3(2005), p.218.

109 Bachand, Supra note 104, p.3

110 Gilliard Supra note 106, §§10-21

111 Poudret and Besson, Supra note 94, §146a

112 Id., §146a.

113 Eric A. Schwartz, “Do International Arbitration Tribunals Have a Duty to Obey the Orders of Courts at the Place of the Arbitration? Reflections on the Role of the Lex Loci Arbitri in the Light of a Recent ICC Award,” in Gerald Aksen et al., (eds.), Global Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in Honor of Rober Briner, ICC Publication 335, (2005), p.812

114 See article 317(3) of the Civil Procedure Code and Article 3344(2) of the Civil Code

115 Articles 332 et seq of the Civil Procedure Code cover stay of proceedings and executions.

116 Schwartz, Supra note 113, p.810

117 Id., p.811

118 Paragraph 78 of the Salini Award

119Paragraph 88 of the Salini Award

120 Stanimir A Alexandrov, “Breaches of Contract and Braches of Treaty: The Jurisdiction of Treaty Based Arbitration Tribunals to Decide Breach of Contract Claims in SGS v. Pakistan and SGS v. Philippines,” Journal of World Investment and Trade, Vol. 5, No. 4 (2004), p.555.

121 Cremades and Cairns, Supra note 27, p.330. But even these groups accept the possibility of an overlap of the nature of state responsibility under treaty and contract. Ibid.

122 See for example, I. Brownlie, Principles of Public International Law, (5th ed., Oxford Uni.Pre, Oxford, 1998), pp.551-553

123 Three important ICSID cases in this are; Campania de Aquas del Aconquija, S.A. vs. Argentina, Decision on Annulment, ICSID No ARB/97/3, July 3, 2002 (the Vivendi case), Societe Generale De Surveillance S.A (SGS) vs. Pakistan, Decision on Jurisdiction, ICSID No. ARB/01/13, August 3, 2003 and Societe Generale De Surveillance S.A (SGS) vs. Philippines, Decision on Jurisdiction, ICSID No. ARB/02/6, January 29, 2004. In the first two cases, the Tribunal held that it has jurisdiction over claim for breach of the treaty, but not over claims for breach of the contract while in the third case the Tribunal concluded that it has jurisdiction over SGS’s contract claims under the BIT’s dispute settlement provision.

124 Agreement Between the Federal Democratic Republic of Ethiopia and the Government of the State of Israel for the Reciprocal Promotion and Protection of Investment, signed on 26 November 2003, entered into force on March 22, 2004

125 Agreement between the Federal Democratic Republic of Ethiopia and the Kingdom of Denmark Concerning the Promotion and Reciprocal Protection of Investment, signed on 24 April 2004.

126 Agreement between the Federal Democratic Republic of Ethiopia and the Government of the Russian Federation on the Promotion and Reciprocal Protection of Investment, signed February 10, 2000, entered into force on June 6, 2000.

127 Agreement Between the Transitional Government of Ethiopia and the Government of Republic of Italy on the Promotion and Reciprocal Protection of Investment, signed on December 23, 1994 entered into force on May 8, 1997

128 All of the BITs mentioned in notes 124-127 contain a provision of “Fair and Equitable Treatment.”

129 Alexandrov, Supra note 120, p.560

130 UNCTAD, Fair and Equitable Treatment, UNCTAD Series on Issues in International Investment Agreements, Geneva, Switzerland, (1999), 34-37

131 Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, ICSID case No. ARB/84/3 Award on Merits, May 20, 1992, paragraph 165

132 Philips Petroleum Company Iran v. The Islamic Republic of Iran, Award 425-39-2, June 29, 1989, paragraph 76. As cited by Alexandrov, supra note 120, 560

133 Anthony C Sinclair, The Origins of the Umbrella Clause in the International Law of Investment Protection,” Arbitration International, Vol. 20, No. 4 (2004), p.411

134 Agreement between the Federal Democratic Republic of Ethiopia and the State of Kuwait for the Encouragement and Reciprocal Protection of Investment, signed on September 14, 1996, entered into force on November 12, 1998.

135 Christoph Schreuer, “Traveling the BIT Route-of Waiting Periods, Umbrella Clauses and Forks in the Road,” Journal of world Investment and Trade, Vol. 5, No. 2(2004), p.250.

136 Alexandrov, supra note 120, 565

137 Richard Garnet, National Court Intervention in Arbitration as an Investment Treaty Claim, International and Comparative Law Quarterly, Vol. 60 (April 2011), 485

138 Id., 486

139 Ibid

140 Ibid

141The Italian version of Article 2(2) first sentence of the BIT provides “Entrambe le Parti Contraenti assicureranno sempre un trattamento giusto ed equo agli investimenti degli investitori dell’altra Parte Contraente” which is translated to mean “Both Contracting Parties shall ensure a fair and equitable treatment to investments of investors of the other Contracting Party”. The English version of the same provision reads “Both Contracting Parties shall at all times ensure fair treatment to investments effected by investors of the other Contracting Party.” As we can see, the Italian version talks of the fair and equitable treatment of the investment while the English version refers only to fair treatment, and both versions are equally authentic. The author has not so far encountered any IIA, decision of investment tribunals or academic writings which make a distinction between the ‘fair’ and ‘fair and equitable’ treatment of investment. This means that the English version of ‘fair treatment’ found in the Ethio-Italy BIT was meant to refer to the ‘fair and equitable’ treatment of investment.

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