H. Frivolous claims
I. Provisional measures
Investment tribunals have the authority to order provisional measures, also frequently referred to as interim measures of protection. A provisional measure is “a remedy or a relief that is aimed at safeguarding the rights of parties to a dispute pending its final resolution.”102
1. Types of provisional measures
Provisional measures can be grouped into three broad categories: (i) measures related to the preservation of evidence; (ii) measures related to the conduct of the arbitration and the relations between the parties; and (iii) measures designed to facilitate the enforcement of any eventual award.103
An example of the first category would be a tribunal ordering a party to preserve certain evidence that could otherwise be destroyed, either deliberately to frustrate the collection of evidence or inadvertently in the course of a regular document purging process.
In investment arbitration, this might involve requesting that documents in the control of an expropriated company be preserved.104
The second category of provisional measures is broader, and usually involves protecting a legal right. This might involve an order requiring a party to continue to perform a contract pending the outcome of any award in order to prevent further damage, or an order not to alienate property so that it can be restored to the complaining party if necessary.
102 A. YeúilÕrmak, 2005, p. 5.
103 Ibid., pp. 11–12.
104 Malintoppi, 2009, pp. 157, 162–164.
As regards the third category, if there is convincing evidence that a party will engage in a bad-faith attempt to hide assets in order to stymie the enforcement of an award, a tribunal might order the posting of security. In ICSID cases these requests have not met with success.105
Provisional measures are appropriate only in the limited circumstances where failure to order them would likely result in a tribunal’s inability to order appropriate final relief.106 Encompassed in these requirements is the notion of urgency (that interim measures be essential to preserve the rights of one of the parties) and necessity (that failure to order the measures would prevent an appropriate award from being entered).
2. Tribunal-ordered interim measures
The ICSID Convention and the UNCITRAL Arbitration Rules both empower the tribunal to order provisional measures.107 These rules can be complemented by special provisions in the IIA addressing this issue, as found in many recent agreements.108 The Mexico-Singapore BIT (2009) serves as an example:
“Article 19. Interim Measures of Protection
1. An arbitral tribunal may order an interim measure of protection to preserve the rights of a disputing party, or to
105 Ibid., pp. 168–170.
106 Other characteristics typical of interim measures are that they presuppose the existence of a dispute, are temporary and should be periodically reviewed to ascertain their continued relevance, and are limited so as not to exceed the final relief that might eventually be given.
107 Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules; Article 26 of the UNCITRAL Arbitration Rules.
108 See, for example, Australia-Chile FTA (2008) Article 10.20(7);
Canada-Jordan BIT (2009) Article 43; Rwanda-United States BIT (2008) Article 28(8); Brunei-Japan FTA (2009) Article 67(19).
ensure that the arbitral tribunal's jurisdiction is made fully effective, including an order to preserve evidence in the possession or control of a disputing party or to protect the arbitral tribunal's jurisdiction.
2. An arbitral tribunal may not order attachment or enjoin the application of the measure alleged to constitute a breach referred to in Article 11. For purposes of this paragraph, an order includes a recommendation.”
This provision grants limited authority as it specifies what a tribunal both may and may not order as interim measures.
Consistent with that BIT’s limitation of authority to award non-monetary remedies,109 this provision prevents a tribunal from ordering a State to cease the application of a measure. Rather, the purpose behind interim measures is to ensure a tribunal’s ability to conduct fair proceedings and preserve its jurisdiction, for example, in the event that one of the parties tries to seek parallel relief in local courts, which is not permitted under the BIT.110
The reason that arbitral tribunals tend to have limited authority to award provisional measures is that they have limited coercive powers. They have authority over the parties to the dispute, but have no authority over third parties. Moreover, even with respect to the disputing parties, they lack the ability to compel compliance with orders, save for their ability to draw adverse inferences against a party that has failed to abide by its orders, or to take into account that party’s acts when determining the allocation of costs.
3. Court-ordered interim measures
The inherent limitations on arbitral tribunal authority mean that domestic courts often play a role in ordering interim measures of protection in support of arbitration. Parties to an arbitration may
109 On the limitation of available remedies, see section II.O.
110 See Kaufmann-Kohler and Antonietti, 2010, pp. 507, 523–526.
thus seek provisional measures from a court in place of arbitration, in the host State, or even from a third State if there is a jurisdictional connection to that forum. The types of assistance available will depend on the arbitral law of the place of the court whose assistance is sought. Domestic court assistance is particularly likely to be sought when the order would be directed against a third party— such as a bank— over whom an arbitral tribunal would have no authority, or when the arbitral tribunal has not yet been constituted.
Some domestic courts will enforce interim awards made by arbitral tribunals; other courts require that relief first be sought in them.111 4. Relationship between tribunal-ordered and court-ordered interim measures
Interim measures from domestic courts are not available in ICSID Convention arbitration (though they would be available in an arbitration under the Additional Facility Rules). The self-contained nature of arbitration under the ICSID Convention precludes relief from national courts, unless the parties have specifically agreed otherwise in their agreement to arbitrate.112
Entrusting provisional measures solely to arbitral tribunals means that provisional measures are not available from an ICSID Convention tribunal prior to its constitution. In order to address potential problems caused by this delay, the 2006 amendments to the ICSID Arbitration Rules provided for an expedited process under which a party can seek provisional measures in parallel with the constitution of the tribunal; by the time the tribunal is constituted, it would have before it a request, as well as the other party’s observations, and should be in a position to decide on the issue promptly.113
111 Sherwin and Rennie, 2009, pp. 325–327.
112 Rule 39(6) of the ICSID Arbitration Rules.
113 Rule 39(5) of the ICSID Arbitration Rules.
In non-ICISID Convention cases it is increasingly accepted, although not universally true, that national courts and international arbitral tribunals can have concurrent jurisdiction to grant interim measures, so it is not out of the question that an investor could seek interim relief in both forums simultaneously.114 In practice, however, the type of relief sought in a court is likely to be quite different from the relief sought before a tribunal. Concerns about limiting costs suggest that parties will go to a court when the court’s stronger and more wide-ranging coercive authority is necessary.
The above-quoted Mexico-Singapore BIT contains a passage that specifies an investor’s retention of the ability to seek injunctive relief in domestic courts:
“Article 11. Submission of a Claim […]
4. A disputing investor may submit a claim to arbitration only if:
[…]
(b) the investor […] waives its right to initiate or continue before any administrative tribunal or court under the laws of the disputing Contracting Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Contracting Party that is alleged to be a breach of Chapter II, except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the laws of the disputing Contracting Party.”
(Emphasis added).
The assumption underlying this provision is that a disputing party will seek from a court relief that is not available from an
114 Kinnear, Bjorklund and Hannaford, 2009, Art. 1134.12–1134.13.
arbitral tribunal. A party may seek such relief without jeopardizing its ability to pursue its claim for damages before the arbitral tribunal itself.