The Existence of a Judicial Dialogue between the ECtHR and International Investment Arbitration?

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On Friday 22 November 2019, a celebration in honour of Paul Lemmens’ emeritus status was held, in the company of many of his friends and colleagues. For this occasion, a number of them wrote a contribution for the wonderful Liber amicorum Paul Lemmens. In this blog series we draw attention to several contributions in this book. This week, dr. Charline Daelman discusses the existence and nature of a judicial dialogue between the European Court of Human Rights and international investment arbitration.

It is expected that with the expansion of international investments, an inevitable cross-fertilisation occurs between international investment law and other international law disciplines, such as human rights law. The question arises whether this is actually the case, what the nature is of such a relationship and whether there is a true judicial dialogue between the European Court of Human Rights (ECtHR) and international investment arbitration.

Shared foundations

The foundations and basic notions of international investment law and human rights law reveal shared foundations and characteristics, such as the principle of non-discrimination and the protection against expropriation. While those shared foundations confirm the interconnectedness and basis for a relationship, this is not necessarily translated in the application of the two domains of law as international investment arbitration and ECtHR case law demonstrate.

References to ECtHR case law in international investment arbitration

When looking at the European Convention on  Human Rights (ECHR) and ECtHR case law references in international investment arbitration cases,  three main functions can be identified:

(i) human rights as a source of inspiration for the interpretation of investment agreement clauses (International Thunderbird Gaming Corporation v The United Mexican States; Mondev International Ltd v United States of America; Loewen Group, Inc and Raymond L Loewen v United States of America)

(ii) human rights as part of the context of the investment dispute (Glamis Gold Ltd v The United States of America); and

(iii) conflicts, in respect of the host state, between obligations under human rights law and obligations under investment law (EDF International SA, SAUR International SA and Leon Participaciones Argentina SA v Argentine Republic).

Investment cases show that investment tribunals readily accept ECHR and ECtHR case law references when they protect the interests of the investor. When the host states (state in which the investment is conducted) or third parties call upon human rights law or case law, the investment tribunals are more hesitant to accept them. Silvia Steininger’s study also showed that human rights arguments introduced by the investor have a stronger impact than those introduced by the respondent. Investment tribunals thus accept the relevance of international human rights law for the interpretation of investment law, but adopt it in such an inconsistent manner that it only benefits the investor and not the other parties involved. The adoption of the ECHR and ECtHR case law by international investment tribunals thus primarily results in enforcing the protective status of investors, where the adequate use of the ECHR and ECtHR case law should result in a more balanced protection of all involved parties.

Investor protection by the ECtHR

The case law of the ECtHR (Bimer v Moldova, Regent Company v Ukraine, Shesti Mai Engineering OOD and Others v Bulgaria) confirms the one-sided character of the relationship as human rights law influences international investment law, but international investment law does not impact human rights law nor functions as a source of inspiration for its application. The ECtHR is thus an additional judicial recourse for investors to enforce their protective status.

The adjudication of an investment conflict by investment arbitration and the ECtHR

The Yukos v Russia case is of particular relevance as the ECtHR and an international investment tribunal ruled upon similar facts and the proceedings took place simultaneously.

Both instances addressed the simultaneous character of the proceedings when discussing their jurisdiction. According to Article 35 §2 ECHR, the ECtHR cannot deal with applications that are substantially the same as a matter that was already submitted to another international body and which does not include any relevant new information. Nonetheless, according to the ECtHR, the international investment proceedings that were brought by the shareholders of Yukos, were not substantially the same as the ECtHR’s case as the claimants in both cases were different.

In the investment proceedings, the Russian government followed the fork-in-the-road provision (Article 26(3)(b)(i) ECT) and argued that the ECtHR claims shared the same fundamental basis and therefore the claims made in the investment proceedings should be dismissed. The investment arbitration tribunal followed the claimants’ position and established that the proceedings before the ECtHR did not pass the ‘triple identity’ test and therefore did not trigger the fork-in-the-road provision confirming its jurisdiction. Both the ECtHR and the investment tribunal followed a similar reasoning when establishing their jurisdiction but neither really discussed their relationship in depth.

Although the proceedings took place simultaneously at one point, the judgement of the ECtHR preceded the decision of the investment tribunal. As a result, both the claimants and Russia referred to the ECtHR judgement at several points to strengthen their arguments, but they were never explicitly addressed by the investment tribunal. This was a missed opportunity to shed some light on how the ECtHR’s judgement could potentially relate to and impact the decision of the investment tribunal.

Existence of a judicial dialogue?

The existence of an unbalanced relationship between international investment law and human rights law results in an unwanted confirmation of the protective status of the investor. Great potential lies in an effective judicial dialogue between international investment tribunals and the ECtHR to establish a more adequate application of human rights law that would benefit all parties involved in an investment dispute. Therefore, this observation leads to a call upon the ECtHR and investment tribunals to acknowledge and determine their judicial dialogue in more detail.

Charline Daelman received her doctorate at the KU Leuven (2019) where she was a researcher at the Leuven Centre for Public Law and is currently a social sustainability expert at amfori.


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