Consent in International Arbitration (Oxford International Arbitration Series)

In commercial arbitration the parties express their consent by promise offer and acceptance or by conduct.

Regularly the arbitration agreement is a bilateral synalagmatic contract, in which both parties have expressed their consent by promise. This is particularly so when the parties adopt model arbitration agreements of arbitration institutions. Nevertheless, it is also possible to have bilateral contracts in which parties express their consent by conduct. Yet not all arbitration agreements are bilateral synalygmatic contracts. Unilateral arbitration agreements are bilateral but non-synalagmatic contracts.

Unilateral clauses are most often used where one party has a superior bargaining power, for instance in charter-parties in favour of owners of the vessel. An agreement between the parties recording consent to arbitration may be reached through a compromissory clause in an investment agreement between the host State and the investor submitting future disputes arising from the investment operation to arbitration.

The host State may offer consent to arbitration in general terms to foreign investors or to certain categories of foreign investors in its national legislation; such an offer, in order to perfect consent, has to be accepted by the foreign investor. Unlike bilateral or multilateral treaties, the provisions contained in national investment protection laws generally extend to all foreign investors, as they may in effect contain an open offer to arbitrate disputes with foreign investors.

The host State may also give its consent to investment arbitration under international treaties, whether bilateral or multilateral. The clauses contained in the BITs—known as unequivocal consent, automatic consent or advanced consent clauses—are characterised by containing an offer to arbitrate that is:. It has been observed that arbitral jurisdiction is no longer premised on the privity of contracts, ie on reciprocity of negotiated consent, as under this new concept reciprocity is renounced and replaced by a sort of compulsory jurisdiction against the host State. The treaty involves … a deliberate attempt to ensure for private investors the benefits and protection of consensual arbitration; … the agreement to arbitrate which results by following the treaty route is not itself a treaty.

It is an agreement between a private investor on the one side and the relevant state on the other. Multilateral investment treaties also contain offers by State parties to consent to arbitration. In commercial arbitration most arbitration agreements are broadly worded, and usually when parties agree to resolve any disputes between them by arbitration, they intend to resolve all disputes between them by this method unless a specific exception is made. This is particularly the case when the parties choose model clauses. However, as consent is expressed by the parties before the disputes break out, there is at the same time a reduction in the pure consensual character of arbitration.

While the scope in commercial arbitration is essentially defined by both disputing parties, the situation is different in investment arbitration. The offer may vary. On the other hand there is nothing which can prevent States circumscribing offers in a narrower way. Important issues may also arise with regard to counterclaims—however these will not be addressed in this article.

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Limitations of the scope of consent are defined by the host State. Indeed, it is the offeror who sets the limitations. Or, in other words, the host State determines how far-reaching the offer is. References to ICSID provided for in national investment legislation typically relate to the application and interpretation of the piece of legislation in question. Although clauses contained in BITs are generally quite broad, there are BIT clauses offering consent to arbitration which do not refer to investment disputes in general terms but circumscribe the types of disputes that are submitted to arbitration.

These conditions are that:. The scope of consent to arbitration offered in national laws and investment treaties may vary. If the investor wishes to rely on a BIT, it must show that it has the nationality of one of the two contracting State parties to the BIT, or, in the case of a multilateral treaty, of one of the contracting State parties to the multilateral treaty. This is particularly true for the definition of the nationality of companies.

In view of consent to arbitration related to jurisdiction ratione personae two aspects are of particular importance: In applying the nationality requirement under Article 25 of the ICSID Convention, the arbitral tribunal of Autopista v Venezuela —composed of arbitrators with a commercial law background—determined that when the investment treaty was silent, the parties to the investment agreement were free to define nationality as long as the definition was reasonable. Recently in Abaclat and Others v Argentina the majority tribunal even departed from the Salini test.

This fact has been borne out by the Report of the Executive Directors:. While consent of the parties is an essential prerequisite for the jurisdiction of the Centre, consent alone will not suffice to bring a dispute within its jurisdiction. In keeping with the purpose of the Convention, the jurisdiction of the Centre is further limited by reference to the nature of the dispute and the parties thereto. Consent to arbitration can also be analyzed under the viewpoint of a tendency to enlarge the reach of jurisdiction. In commercial arbitration the question is mainly about the involvement in arbitration proceedings of third parties.

In investment arbitration the enlargement perspective is related to the jurisdictional requirements, but an enlargement can also take place because of MFN clauses and umbrella clauses contained in investment treaties. Generally, arbitral tribunals and the national courts of countries which follow an approach in favour of arbitration tend to enlarge the field of application of arbitration.

Consent in International Arbitration

On the one hand, it is generally accepted that a party may be introduced in arbitration through specific theories of contract law and general principles of corporate law, for instance agency, assignment, subrogation, third party beneficiaries and universal succession. Non-signatory theories —in particular the doctrine of arbitral estoppel and the doctrine of group of companies —have been developed and employed to facilitate deduction of consent to arbitrate implied by conduct.

Indeed the main purpose of non-signatory theories is:. In some cases non-signatory theories have gone as far as to suggest that mere awareness of the existence of an arbitration clause will be sufficient for a party to be bound by it. Consent to arbitration may also exist if a contract does not contain an arbitration clause but forms part of a contractual network which includes an arbitration agreement, as is the case where parties enter into a framework agreement, containing an arbitration clause, governing their future relationship within which they conclude a number of separate contracts.

In investment arbitration the enlargement perspective is related to the jurisdictional requirements. With regard to the jurisdiction ratione personae the ICSID Convention itself provides for an enlargement of jurisdiction under Article 25 2 b , which deals with the juridical persons that are incorporated in the host State but are controlled by nationals of another State.

An enlargement of jurisdiction can then also take place in relation to the requirements ratione materiae and temporis. Host States frequently require that investments be made through locally incorporated companies. In a pyramid of control two aspects may be controversial:. Moreover there can be an area of conflict between economic reality and legal structure. In relation to jurisdiction ratione temporis the relevant date for determining whether the jurisdictional requirements are satisfied is the date of the institution of proceedings. Arbitral tribunals have from time to time made a distinction between contract claims and treaty claims or distinguished between divergences and disputes.

Most arbitral tribunals have held that MFN clauses cannot prevail over the fundamental arbitration requirement, which is the reaching of mutual consent to arbitrate. Moreover, not all investment treaties contain umbrella clauses. With regard to umbrella clauses much attention has been paid to the conflicting outcomes of the awards in SGS v Pakistan and SGS v Philippines.

An MFN clause contained in an investment treaty will extend the better treatment granted to a third State or its nationals to a beneficiary of the treaty.

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The jurisprudence on MFN clauses is not as inconsistent as it might initially appear to be, especially when taking the following into account:. However, more recently, there have been cases which departed from the aforementioned differentiation. Procedural needs may come into conflict with the consensual nature of arbitration, but parallel proceedings leading to conflicting arbitral awards should be avoided. Joinder of third parties or their intervention in the proceedings is well known in national courts. In national courts, for reasons of efficient administration of justice, procedural laws contain provisions allowing the joinder or intervention of third parties, irrespective of whether all parties concerned agree.

In situations where the arbitration rules provide for joinder and consolidation provisions, the disputing parties sometimes indirectly express their consent to arbitrate in cases of joinder and consolidation by adopting the arbitration rules. This is for instance the case for parties who choose the Swiss Rules of International Arbitration. Moreover, consolidation is also possible where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the ICC Court finds the arbitration agreements to be compatible.

Indeed, the agreement of all parties is also necessary for requests to consolidate two or more arbitrations pending under the CIETAC Arbitration Rules into a single arbitration.

The national laws dealing with consolidation have adopted different solutions. The English Arbitration Act for instance does not really allow for consolidation without the express consent of the parties. In the latter case it is however less clear whether the parties have consented to consolidation, even though it might be argued that they have done so by choosing the seat of arbitration in the Netherlands. Yet a provision like the Dutch one may possibly pose problems with regard to the recognition and the enforcement of awards. Conflicting awards rendered in commercial arbitration may receive judicial redress in the annulment or enforcement phase, whereas the annulment of ICSID awards by domestic courts is excluded by the ICSID Convention and their enforcement is immediate and does not allow for any judicial control over the award as such.

It has been observed that in investment treaty arbitration the consolidation provisions rest on a treaty regime that is consented to by all the parties involved. Therefore, even though consolidation results from an order induced by one of the parties which is finally binding upon all other parties and on previously established tribunals, consolidation ultimately remains a consensual mechanism.

Oxford Legal Research Library: Consent in International Arbitration

While it is true that the State parties consent to consolidation by signing the investment treaties or the free trade agreements, the situation is different for the investors. Indeed, although it might be said that they consent to the eventuality of consolidation by beginning the arbitration proceeding, on the other hand one may question whether they really have an alternative to arbitration when they wish to have a neutral dispute resolution forum which decides their dispute.

The consensual nature of international arbitration has different facets. These different facets lead to a changing perception of the consensual nature of arbitration. One of the reasons— possibly the most important—that the consensual nature of arbitration has evolved over time and the reason it seems to be different among the various fields of arbitration might be the fact that there is an inherent tension between the contractual and the jurisdictional side of arbitration.

In other words, there is a tension between the quasi-judicial role of the arbitrator, as an alternative to the local judge and with the acceptance of local law, and the fact that arbitration rests on an arbitration agreement being thus created by the will and consent of the parties. Consent is not a dogma which should be abandoned.

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To speak of marginalization of consent is also risky, because it gives the impression that the importance of consent is declining. On the other hand this observation has the merit to remind us that the jurisdictional side should not be forgotten. But the evolution has been of arbitration as a dispute resolution mechanism; the concept of consent has rather adapted to this evolution. Indeed, with the appearance of complex multiparty situations and investment arbitration the face of arbitration and its consensual nature has undergone a process of transformation.

Nowadays, the selection of arbitration is no longer seen as an exclusion of the national forum, but rather the natural forum for international disputes. A Tool for Treaty Shopping? Do We Share a Common Vision? How do arbitral tribunal interpret dispute settlement provisions embodied in investment treaties? Est-ce la Fin de la Jurisprudence Maffezzini? A Drifting Jurisdictional Requirement? In particular, the US courts have consistently held that arbitration agreements must be interpreted in favour of arbitration, as was the case in Mitsubishi Motors Corp v Soler Chrysler Plymouth Inc , US , S Ct , The thesis was also developed that arbitration stays at the origin of State justice.

Scope and interpretation of consent to arbitration 7. Consent to arbitration with a perceived reduced consensual character 8.

Extension of consent to arbitration 9. Expression and reaching of consent The applicable law and interpretation of consent Consent and the jurisdiction The scope of consent in investment arbitration Conclusion. It also usefully focuses on problems that frequently arise in the practice of international arbitration, in particular in complex multiparty arbitration and to jurisdictional questions in investment arbitration.

The book is evidence of extensive work and is rich in research and analysis. It will not be possible in the future to conduct any research on consent without referring to Steingruber's treatise. Oxford University Press is a department of the University of Oxford. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide. Academic Skip to main content. Choose your country or region Close. It can be ordered now for delivery when back in stock. Ebook This title is available as an ebook. To purchase, visit your preferred ebook provider.

Consent in International Arbitration Andrea M.