LL.M. (Commercial Law) / Please refer to full text to view abstract

LL.D.

University of Macau / Faculty of Law

The boom of bilateral investment treaties and trade agreements came with an increasing number of disputes between investors and states related to actions and omissions of states in respect of the protection of investors and their investments. These instruments made a significant contribution to the development and implementation of an economic and legal framework for the promotion and safeguard of investors and investments. They also played an important part in and improved the access of investors to dispute resolution mechanisms – and, in particular, to arbitration – for the protection of their investments. In this vast network of treaties and agreements aspiring to offer investors proper conditions for a stable and predictable investment environment, the Energy Charter Treaty (ECT) stands out as a unique multilateral treaty aimed at facilitating transactions and investments in the energy field. The ECT came to life soon after the fall of the communist regimes across Europe and the dissolution of the Soviet Union, and it was motivated by the desire of the Western European states to secure their access to the much needed natural resources of the Eastern countries. This Thesis undertakes the challenging task of clarifying the notion of ‘Investor’ within the ECT’s framework and its related treaties and arbitration rules. The notion of ‘Investor’ is essential for the substantive and procedural protection of Investors and their Investments. Although the ECT provides for a definition of Investor, the notion of ‘Investor’ goes beyond this definition: it is shaped not only by the provisions of the ECT, but also by the related treaties and rules under the Investor–Contracting Party dispute resolution mechanism. It is also fundamental for the understanding of the notion of ‘Investor’ to consider it as it naturally interacts with the concepts of ‘Contracting Party’ and ‘Investment’. The notion of ‘Investor’ has two essential characteristics: it is challenging to assign it with a precise definition – any attempt to define this notion will not comprehensively encompass all its features; and it is a flexible notion, tailored to suit the treaties and rules interacting with the ECT. The intrinsic complexity of the notion of ‘Investor’ is amplified by web of provisions of the ECT, not always comprehensible and straightforward. The speed of the ECT’s negotiation was the determinant factor that contributed to the entry into force of the ECT, but also led to a compromise treaty. In this context, it is mandatory that the proper interpretation and analysis of the notion of ‘Investor’ be made in the light of the rules of treaty interpretation of the Vienna Convention on the Law of Treaties.

Arbitrations involving states and foreign private parties are a complex phenomenon, sharing certain animating values with other forms of adjudication, particularly international arbitrations of private commercial disputes, but reflecting at the same time singular values that must be fostered if the institution is to play a beneficial role in the international community. A study of institutional forms of arbitration designed primarily to resolve commercial disputes between private parties reveals that their emphasis upon stability and upon the certainty and predictability of rules can make such institutions inappropriate for the arbitration of disputes involving states. Regimes designed specifically to regulate arbitrations between states and foreign private entities may be more successful in displaying sensitivity to the needs and aspirations of both public and private parties, but the work of the largest specialised institution, the International Centre for Settlement of Investment Disputes, is hampered by its governing Treaty for it does not deal adequately with the enforcement of awards against states. Ad hoc arbitration continues to be a useful means of resolving commercial disputes between states and foreign private parties, especially because the parties are free to design or to choose a delocalised procedural law which need not hinder enforcement. The great difficulty with all forms of arbitration between states and private entities is the substantive law to be applied by such tribunals. Under the principle of the autonomy of the will, the parties are free to choose the governing law, and they may select international law. If they do so, however, the choice does not imply that the foreign private party is assimilated to a state or that the international responsibility of the state party is engaged directly vis-a-vis the private party. The enforcement of arbitral awards is also a troubling problem, but recent municipal case law reveals a growing pro-enforcement bias. Nevertheless, the experience of the Iran-United States Claims Tribunal reveals the significant advantages that accrue to the parties if they agree in advance upon an independent enforcement mechanism. The political tensions inherent in most "mixed" arbitrations demand flexibility in the application of procedural and substantive rules, and require an approach to dispute resolution that emphasises the value of compromise. As such, the awards that emerge from mixed arbitrations are likely to be idiosyncratic or, at the very least, vague. Nevertheless, if one stresses the importance of process values rather than the elaboration of substantive rules, arbitration between states and foreign private parties can play an important role in the enhancement of the international rule of law.

Why do states create new judicial tools that severely limit or altogether undermine their sovereignty? Why do some states choose, moreover, to become leading innovators, adopting these new types of enforcement mechanisms significantly earlier than their peers? This dissertation focuses on the creation of investor-state arbitration provisions in Bilateral Investment Treaties (BITs) and the establishment of the International Criminal Court (ICC), especially its independent prosecutor provision. For all their differences, investor-state arbitration provisions and the ICC share three institutional features that, in combination, pose unprecedented constraints on state sovereignty: they are judicial, they entail compulsory jurisdiction, and they grant non-state actors - private investors or an independent prosecutor - the authority to initiate legal proceedings against states and state officials. The introduction of transnational and supranational judicial mechanisms is a strategy of the strong, not the weak. Contingent on the mobilization of transnational advocacy networks, powerful states turn to sovereignty-constraining tools in response to two core features: an international legal crisis and a relatively empty international judicial landscape. In the aftermath of legal crisis, the creation of sovereignty-constraining tools helps powerful states both to increase the efficacy of legal rules that have been challenged and to validate the authority of legal rules that have been undermined. This argument is counter-intuitive: powerful states turn to costly new judicial mechanisms not to transform but to protect the status quo. To advance this claim I examine both failed and successful attempts at creating novel judicial mechanisms in investment and international criminal law across the twentieth century. I use qualitative and historical analysis at the global level and statistical cross-national analysis at the state level. In the case of BITs, developing countries in the 1970s expropriated foreign property on a large scale and challenged traditional investment rules in the United Nations, thus triggering a crisis for the investment regime. In response, powerful states turned to investor-state arbitration provisions, not simply the BITs themselves, as a strategy to protect the existing regime. In the case of the ICC, Nazi Germany's territorial aggression and the 1990s mass atrocities in the former Yugoslavia and Rwanda prompted legal crises for the territorial integrity principle and the human rights regime respectively. Seeking to bolster territoriality and human rights, powerful states experimented with the establishment of a criminal court. They failed in the 1950s and succeeded in the 1990s. Transnational Advocacy Networks (TANs) were of critical importance. Their interactions with states were reciprocal and strategic. TANs invented and promoted the two forms of judicial mechanisms at the global level, thus influencing state receptivity; they also molded their strategies and substantive goals to suit state preferences A discussion of the effects that crisis and transnational advocates have on the creation of investor-state arbitration provisions and the ICC yields new insights into existing scholarship on transnationalism, credible commitment, legalism, and rational design. This analysis, moreover, has broad implications for our understanding of the forces that can lead to profound political and legal change.

This dissertation examines the impact of International Criminal Court (ICC) prosecutions initiated during ongoing conflict on atrocities, with the goal of developing a typological theory specifying the conditions under which ICC prosecutions alternately prevent, exacerbate, or have no impact on wartime atrocities. This dissertation employs an inductive approach to theory building, using in-depth case studies of the impact of ICC action vis-à-vis two armed groups in the Democratic Republic of Congo (DRC) whose leaders were targeted for prosecution by the ICC, the CNDP/M23 and FDLR, to generate a set of testable hypotheses concerning the effects of ICC action. These case studies draw from over 100 original interviews with current and former members of these groups and other relevant actors in DRC, as well as statistical analysis of patterns of atrocities attributable to each group over time using data sourced from the Armed Conflict Location and Event Database. These case studies suggest variation in the impact of ICC action across stages of the legal process. In the CNDP/M23 case, I find that the issuance of an ICC arrest warrant for senior CNDP commander Bosco Ntaganda in April 2008 initially had negligible effects but subsequently contributed to an escalation in atrocities when Ntaganda, apparently fearing arrest after the conviction of his former commander, Thomas Lubanga, by the ICC and calls for his arrest by international donors and human rights organizations, reneged on a peace deal and instigated a new rebellion, the M23, in April 2013; however, Ntaganda’s surrender to the Court approximately one year later amidst internal tensions within M23 contributed to the prevention of atrocities by reducing M23’s capacity to perpetrate violence and contributing to its eventual military defeat. I find similar though not identical results in the case of the FDLR. First, I find that situation-level ICC action, encompassing preliminary phases before the issuance of indictments for individual leaders, had negligible effects vis-à-vis the FDLR. However, the execution of an indictment for senior FDLR political leader Callixte Mbarushimana initially exacerbated atrocities by further empowering radical leaders within the organization and provoking backlash against the ICC; in the long run, however, Mbarushimana’s arrest generated incapacitative effects that contributed to prevention. Finally, the issuance of an outstanding indictment for FDLR military commander Sylvestre Mudacumura had perverse effects, as it generated incentives for Mudacumura to spoil peace initiatives. I test the generalizability of these findings using statistical analysis of time-series cross-section data covering armed groups active in Africa from 2002 through 2010; this analysis yields three major findings, which are generally consistent with hypotheses derived from my case studies concerning the long-term effects of ICC action. First, this analysis indicates that situation-level action has negligible average effects on atrocities. Second, I find that outstanding indictments tend to exacerbate atrocities, and third, that the execution of ICC indictments contributes to the prevention of atrocities.

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