CONTENTS

2009 Volume 3, No. 3

20th Annual Workshop

of the Institute for Transnational Arbitration 2009
“Confronting Ethical Issues in International Arbitration”
Volume 3, Nos. 4-5
Introduction David D. Caron, ITA Chair
20th Annual ITA Workshop Program
Faculty Biographies

Introduction to the Workshop and Act I Kenneth B. Reisenfeld, Workshop Co-Chair

Act I: Ethical Issues in Selecting the Arbitral Tribunal
Commentary and Panel Discussion: Insiders’ Jon Beechy
Perspectives on Challenges before the ICC Jennifer Kirby
International Court of Arbitration
Keynote Address: Arbitrator Integrity: Professor W.W. (Rusty) Park
The Transient and the Permanent

Introduction to Act II James E. Castello, Workshop Co-Chair

Act II: The Arbitration: Ethical Issues in Presenting the Case
Luncheon Address: Whose Arbitration Is it Anyway? Carla Powers Herron

Introduction to Act III Catherine A. Rogers, Workshop Co-Chair

Act III: Decisions and Challenges after the Arbitral Proceedings
Remarks on the Change of Chair in the ITA David D. Caron
Bibliography - ITA Workshop 2009: Confronting Ethical Catherine A. Rogers
Issues in International Arbitration

ITA Services and Events

Scoreboard of Adherence to Transnational Arbitration Seem Maleh
Treaties, as of September 25, 2009 Rami Zoubi
ITA 2010 Calendar of Events
ITA Membership Application

JurisNet, LLC
www.arbitrationlaw.com
ISSN: 1934-3310
ICSID PROVISIONAL MEASURES TO ENJOIN
PARALLEL DOMESTIC LITIGATION
Rodrigo Gil
I. INTRODUCTION

International Centre for Settlement of Investment Disputes

(“ICSID”) cases where provisional measures are requested to
enjoin parallel domestic litigation differ substantially from other
ICSID provisional measures cases. In order to account for these
differences, the traditional three-prong test of urgency, necessity
and irreparable harm must be redefined.

There are two main features in provisional measures cases

involving parallel domestic proceedings that distinguish them
from other provisional measures requests.

First, in cases involving parallel domestic litigation, there is a

struggle between the supremacy of international tribunals and
the autonomy of domestic courts. Provisional measures to enjoin
domestic litigation challenge states’ sovereignty to exercise their
powers to conduct national proceedings within their own
territory. This overlap between international and national
jurisdiction has forced ICSID tribunals to consider additional
circumstances, beyond the natural scope of provisional relief,
when they review an interim measures request. ICSID tribunals
have acknowledged their duty to balance the rights of foreign
investors to submit disputes before ICSID with the power of
sovereign states to exercise their own domestic jurisdiction.
Provisional measures provide a procedural tool to set boundaries
between the jurisdictions of ICSID tribunals and domestic courts.

Second, a review of the ICSID cases involving parallel domestic

litigation shows that the main rights invoked in support of the
provisional measures requested are not Claimants’ rights in
dispute, they are instead: the right to exclusivity of ICSID
proceedings and the right to non-aggravation of the ICSID dispute,
both self-standing procedural rights. The first is expressly set
forth in Article 26 of the Washington Convention (also known as

World Arbitration & Mediation Review (WAMR), Vol:3, Nos:4-5, 535-602, copyright ©JurisNet LLC
536 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

the ICSID Convention).1 The second was first established by the

Permanent Court of International Justice (PCIJ) in Electricity
Company of Sofia v. Bulgaria, which held that “the parties to a case
must abstain from any measure capable of exercising a prejudicial
effect in regard to the execution of the decision to be given and, in
general, not allow any step of any kind to be taken which might
aggravate or extend the dispute”.2

The rights to the exclusivity of ICSID jurisdiction and the non-

aggravation of the dispute are separate procedural rights that are
not part of the underlying controversy. This is a fundamental
difference from the typical provisional measure case in
international commercial arbitration in which provisional
measures are aimed at safeguarding Claimants’ rights in dispute.
This difference in the nature of the rights invoked – those at issue
in the litigation as opposed to separate procedural rights – has
not yet been clearly delineated by ICSID tribunals.

In fact, in a typical provisional measures case, the pre-

conditions to the grant of provisional relief are derived from the
fact that the very existence of the rights protected by provisional
relief depends on the final outcome of the arbitration. Because the
actual existence of the disputed right is uncertain, the moving

1 Article 26 of the Washington Convention provides:

Consent of the parties to arbitration under this Convention shall,

unless otherwise stated, be deemed consent to such arbitration to the
exclusion of any other remedy. A Contracting State may require the
exhaustion of local administrative or judicial remedies as a condition
of its consent to arbitration under this Convention.

Avaialable at http://icsid.worldbank.org/ICSID/StaticFiles/basicdoc/partA-
chap02.htm.

Article 38(1) of the Statute of the International Court of Justice provides:

The Court, whose function is to decide in accordance with

international law such disputes as are submitted to it, shall apply: … c.
the general principles of law recognized by civilized nations.

Available at http://www.icj-cij.org/documents/index.php?p1=4&p2=2&p3=
0#CHAPTER_II.
2 Electricity Company of Sofia and Bulgaria (Belg. v. Bulg.), PCIJ series A/B No.

79, Judgment at 199 (Dec. 5, 1939).

2009] ICSID PROVISIONAL MEASURES 537

party must show a strong case on the merits in order to get

provisional relief. Accordingly, the traditional requirements of
urgency, necessity and irreparable harm constitute a strict test
intended to reduce the risk of causing unfair damage to the non-
moving party if the claim is later dismissed.

Notwithstanding, the rights protected by provisional

measures in cases of parallel domestic litigation are procedural,
not substantive. The rights to the exclusivity of ICSID jurisdiction
and the non-aggravation of the dispute are not at issue in the
investment dispute. They are self-standing rights that came
attached to the ICSID proceeding and therefore the traditional
three-prong test of urgency, necessity and irreparable harm must
be tailored to effectively safeguard such kinds of rights.

The understanding of (a) the struggle between ICSID and

domestic jurisdiction and (b) the self-standing nature of the rights
to which relief is sought in cases of parallel domestic litigation is
crucial to model an appropriate test to address these kinds of
cases.

Section II of this article contains a brief explanation of the

importance of provisional measures dealing with parallel
domestic litigation in the context of ICSID case law. Section III
includes a thorough review of ICSID arbitration cases where
parties have submitted requests for provisional measures relating
to parallel domestic litigation. The cases analyzed in this section
are divided into two groups. The first group of cases interprets
ICSID case law evolution as an attempt to reach a balance in the
conflict between ICSID and domestic tribunals over jurisdictional
powers. The second group of cases concerns ICSID tribunals’
application of the traditional urgency, necessity and irreparable
harm test in cases of parallel domestic litigation. Section IV
describes the conclusions derived from the review of ICSID case
law. The traditional three-prong test of urgency, necessity and
irreparable harm is refined in order to take into consideration the
struggle between the supremacy of international tribunals and
the autonomy of domestic courts and to account for the special
self-standing nature of the rights involved in cases of parallel
domestic litigation
538 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

II. PARALLEL DOMESTIC LITIGATION IN THE

CONTEXT OF ICSID PROVISIONAL MEASURES3

The regulation of provisional measures in ICSID arbitration is

found in Article 47 of the Washington Convention, which provides:

3A general review of the regulation and case law on provisional measures

requested in ICSID arbitration can be found in Aurélia Antonietti, ICSID and
Provisional Measures: An Overview, 21 NEWS FROM ICSID, N.º2, 10 (2004); DOAK
BISHOP, JAMES CRAWFORD and MICHAEL W.REISMAN, FOREIGN INVESTMENT DISPUTES:
CASES, MATERIALS AND COMMENTARY (2005); Charles N. Brower & Ronald E.M.
Goodman, Provisional Measures and the Protection of ICSID Jurisdictional
Exclusivity against Municipal Proceeding, 6 ICSID REVIEW-FILJ 441 (1991);
David D. Caron, Interim Measures of Protection: Theory and Practice in Light of
the Iran-United States Claims Tribunal, 46 ZEITSCHRIFT FÜR AUSLÄNDISCHES
ÖFFENLICHES RECHT UND VÖLKERRECHT 465-518 (1986); Lawrence Collins,
Provisional and Protective Measures in International Litigation, 234 RECUEIL DES
COURS 98, 98 (1992–III); LAWRENCE COLLINS, ESSAYS IN INTERNATIONAL LITIGATION
AND THE CONFLICTS OF LAW (1994); Georges R .Delaume, ICSID Arbitration and the
Courts, 77 AJIL 785 (1983); Georges R. Delaume, ICSID Arbitration Proceedings:
Practical Aspects, 5 PACE L. REV. 563 (1985); Georges R. Delaume, ICSID
Tribunals and Provisional Measures—A Review of the Cases, 1 ICSID REVIEW-FILJ
392 (1986); Georges R. Delaume, Judicial Decisions Related to Sovereign
Immunity and Transnational Arbitration, 2 ICSID REVIEW-FILJ 403 (1987); MASIÁ
E. FERNÁNDEZ., ARBITRAJE EN INVERSIONES EXTRANJERAS: EL PROCEDIMIENTO ARBITRAL
EN EL CIADI 226-229 (2004); Steven P. Finizio Ethan G. Shenkman and Julian
Davis Mortenson, Recent Developments in Investor-State Arbitration: Effective
Use of Provisional Measures, in GLOBAL ARBITRATION REVIEW SPECIAL REPORT -
EUROPEAN ARBITRATION REVIEW 2007 at 15.; Yves Fortier, Interim Measures: An
Arbitrator’s Provisional View (lecture delivered at the Fordham Law School
Conference on International Arbitration and Mediation, New York (6 June
2008)); Paul D. Friedland, Provisional Measures in ICSID Arbitration, 2 ARB. INT’L
335 (1986) (hereinafter “Frieldland, Provisional Measures in ICSID
Arbitration”); Paul D. Friedland, ICSID and Court-Ordered Provisional Measures:
An Update, 4 ARB. INT’L 161 (1988) (hereinafter, “Friedland, An Update”);
Rodrigo Gil, Medidas Provisionales en Arbitrajes CIADI, De CSOB a Occidental
Petroleum, in ESTUDIOS SOBRE GARANTIAS REALES Y PERSONALES 905-947, (Editorial
Juridica de Chile, Santiago (2009); Pierre Lalive, The First World Bank
Arbitration (Holiday Inns v. Morocco)—Some Legal Problems, 1 ICSID REPORTS
645; JULIAN D.M. LEW, CONTEMPORARY PROBLEMS IN INTERNATIONAL ARBITRATION,
(Centre for Commercial Law Studies, Queen Mary College University of London
(1987)); LORETTA MALINTOPPI, PROVISIONAL MEASURES IN RECENT PROCEEDINGS:
WHAT PARTIES REQUEST AND WHAT TRIBUNALS ORDER IN INTERNATIONAL INVESTMENT
LAW FOR THE 21ST CENTURY: ESSAYS IN HONOUR OF CHRISTOPH SCHREUER (2009);
Bertrand P. Marchais, ICSID Tribunals and Provisional Measures: Introductory
Note to Decisions of the Tribunals of Antwerp and Geneva in MINE v. Guinea, 1
REV.-FILJ 372 (1986); A. Masood, Provisional Measures of protection in
Arbitration under the World Bank Convention, 1 DELHI L. REV. 138 (1972);
2009] ICSID PROVISIONAL MEASURES 539

Except as the parties otherwise agree, the Tribunal may, if it

considers that the circumstances so require, recommend any
provisional measures which should be taken to preserve the
respective rights of either•party.4

Francisco Orrego Vicuna, The Binding Nature of Procedural Orders in

International Arbitration; 10 ICC INT´L CT. ARB. Bull. (Spring 1999); R. Antonio
Parra, The Powers of the Arbitrator and the Experience of the Arbitral
Institutions: The Practices and Experience of ICSID, in CONSERVATORY AND
PROVISIONAL MEASURES IN INTERNATIONAL ARBITRATION, ICC Publication n.º 519 at
37 (1993); R. Antonio Parra, The Practices and Experiences of ICSID in
Conservatory and Provisional Measures in International Arbitration, 37 ICC No.
519 (1993); REDFERN & HUNTER, LAW AND PRACTICE OF INTERNATIONAL
COMMERCIAL ARBITRATION (4th ed., 2004); LUCY REED, JAN PAULSSON & NIGEL
BLACKABY, GUIDE TO ICSID ARBITRATION (2004); SONIA RODRÍGUEZ JIMÉNEZ, EL
SISTEMA ARBITRAL CIADI 163, 163. (2006); Christoph H. Schreuer, Commentary
on the ICSID Convention: Articles 45, 46, 47, 48 and 49, 13 ICSID REV.-FILJ 150
(1998) (hereinafter “Schreuer, Commentary on the ICSID Convention”);
CHRISTOPH H. SCHREUER, THE ICSID CONVENTION: A COMMENTARY, Cambridge
(2009) (hereinafter “SCHREUER, THE ICSID CONVENTION”); CHILLIDA VIVES, EL
CENTRO INTERNACIONAL DE ARREGLO DE DIFERENCIAS RELATIVAS A INVERSIONES
(CIADI) 144 (1998); ROBERT VOLTERRA, PROVISIONAL MEASURES (INTERIM
MEASURES) AND INVESTMENT TREATY ARBITRATION UNDER ICSID AND UNCITRAL:
DEVELOPMENTS AND TRENDS IN INVESTMENT TREATY LAW, Current Issues III
(Andrea K. Bjorklund, et al., ed. 2009).
4Article 47 is further complemented by Rule 39 of the ICSID Arbitration Rules,
which provides:
(1) At any time after the institution of the proceeding, a party may
request that provisional measures for the preservation of its rights be
recommended by the Tribunal. The request shall specify the rights to
be preserved, the measures the recommendation of which is
requested, and the circumstances that require such measures.
(2) The Tribunal shall give priority to the consideration of a request
made pursuant to paragraph (1).
(3) The Tribunal may also recommend provisional measures on its
own initiative or recommend measures other than those specified in a
request. It may at any time modify or revoke its recommendations.
(4) The Tribunal shall only recommend provisional measures, or
modify or revoke its recommendations, after giving each party an
opportunity of presenting its observations.
(5) If a party makes a request pursuant to paragraph (1) before the
constitution of the Tribunal, the Secretary-General shall, on the
application of either party, fix time limits for the parties to present
540 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

These measures have been requested in a variety of situations,

from the usual cases of evidence preservation and addressing
parallel domestic proceedings to a case involving efforts to stop
adverse propaganda against a foreign investor and another
regarding removal of vegetation. ICSID has issued 37 decisions
on provisional measures in 30 different cases, dating from 1972
to February 2009. Of these, 19 decisions were issued to decide a
request to enjoin a parallel domestic proceeding. The following
chart lists these ICSID cases where provisional measure decisions
were rendered, by date, outcome and the main issue involved.
Those cases involving parallel domestic litigation are presented in
bold type and most of them will be addressed in detail in the next
section.

observations on the request, so that the request and observations may

be considered by the Tribunal promptly upon its constitution.
(6) Nothing in this Rule shall prevent the parties, provided that they
have so stipulated in the agreement recording their consent, from
requesting any judicial or other authority to order provisional
measures, prior to or after the institution of the proceeding, for the
preservation of their respective rights and interests.

Available at http://icsid.worldbank.org/ICSID/StaticFiles/basicdoc/partF-
chap05.htm.
2009] ICSID PROVISIONAL MEASURES 541

ICSID Provisional Measures Decisions

All Cases are available at

http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=ShowHome&pageName=Cases_Home

Provision Measures
Case description Decision date Ruling Issues

1. AGIP S.p.A. v. People's Republic of the Unreported Granted Preservation of Evidence

Congo, ICSID Case No. ARB/77/1
(Nov. 30, 1979).

2. Amco Asia Corporation and others v. December 9, 1983 Dismissed Confidentiality

Republic of Indonesia, ICSID Case
No. ARB/81/1 (Nov. 20, 1984).

3. Atlantic Triton Company Limited v. a) December 18, 1984 Dismissed Enforcement of the award
People’s Revolutionary Republic of Guinea, b) December 18, 1984 Dismissed Costs
ICSID Case No. ARB/84/1 (Apr. 21, 1986). c) December 18, 1984 Dismissed Domestic Proceedings

4. Azurix Corp. v. Argentine Republic, ICSID August 6, 2006 Dismissed Domestic Proceedings
Case. No. ARB/01/12 (July 14, 2006).

5. Bayindir Insaat Turizm Ticaret Ve Sanayi a) November 29, 2004 Granted Domestic Proceedings
A.S. v. Islamic Republic of Pakistan, ICSID b) November 29, 2004 Dismissed Costs
Case No. ARB/03/29 (Aug. 27, 2009).

6. Biwater Gauff (Tanzania) Limited v. United a) March 31, 2006 Granted Preservation of Evidence
Republic of Tanzania, ICSID Case No. b) September 29, 2006 Dismissed Confidentiality
ARB/05/22 (July 24, 2008).

7. Burlington Resources, Inc. and others v. June 29, 2009 Granted Domestic Proceedings
Republic of Ecuador, ICSID Case No.
ARB/08/5 (Decision on Jurisdiction
June 2, 2010).

8. City Oriente Limited v. Republic of Ecuador November 19, 2007 Granted Domestic Proceedings
and Empresa Estatal Petróleos del Ecuador
(Petroecuador), ICSID Case No. ARB/06/21
(discontinued following settlement
Sept. 12, 2008).

9. Compañia del Desarrollo de Santa Elena May 10, 1999 Dismissed Not remove vegetation
S.A. v. Republic of Costa Rica, ICSID Case
No. ARB/96/1 (Feb. 17, 2000).

10. Československa Obchodní Banka, a.s. March 1, 2000 Granted Domestic Proceedings
(CSOB) v. Slovak Republic, ICSID Case
No. ARB/97/4 (Dec. 29, 2004).

11. Helnan International Hotels A/S v. Arab May 17, 2006 Dismissed Domestic Proceedings
Republic of Egypt, ICSID Case No.
ARB/05/19 (July 3, 2008).

12. Holiday Inns S.A. and others v. Morocco, July 2, 1972 Dismissed Domestic Proceedings
ICSID Case No. ARB/72/1 (discontinued
following settlement Oct. 17, 1978).

13. Inceysa Vallisoletana S.L. v. Republic of July 25, 2005 Dismissed Costs
El Salvador, ICSID Case No. ARB/03/26
(Aug. 2, 2006).

14. Libananco Holdings Co. Limited v. Republic June 23, 2008 Dismissed Costs
of Turkey, ICSID Case No. ARB/06/8
(parties post-hearing briefs and statements
of costs July 1, 2010).

15. Emilio Agustín Maffezini c. Reino de España, October 28, 1999 Dismissed Costs
ICSID Case No. ARB/97/7 (Nov. 13, 2000).
542 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

16. Maritime International Nominees December 4, 1985 Granted Domestic Proceedings

Establishment (MINE) v. Republic of
Guinea, ICSID Case No. ARB/84/4
(Jan. 6, 1988).

17. Occidental Petroleum Corporation and August 17, 2007 Dismissed Contract Performance
Occidental Exploration and Production
Company v. Republic of Ecuador, ICSID
Case No. ARB/06/11 (hearing on quantum
Feb. 4, 2010).

18. Perenco Ecuador Limited v. Republic of May 8, 2009 Granted Domestic Proceedings
Ecuador and Empresa Estatal Petróleos
del Ecuador (Petroecuador), ICSID Case
No. ARB/08/6 (tribunal reconstituted
May 6, 2010).

19. Víctor Pey Casado and President Allende a) September 25, 2001 Dismissed Costs
Foundation v. Republic of Chile, ICSID b) September 25, 2001 Dismissed Domestic Proceedings
Case No. ARB/98/2 (May 8, 2008).

20. Phoenix Action, Ltd. v. Czech Republic, April 6, 2007 Dismissed Domestic Proceedings
ICSID Case No. ARB/06/5 (April 15, 2009).

21. Plama Consortium Limited v. Republic September 6, 2005 Dismissed Domestic Proceedings
of Bulgaria, ICSID Case No. ARB/03/24
(Aug. 27, 2008).

22. Quiborax S.A., Non-Metallic Minerals S.A. & February 26, 2010 Granted Domestic Proceedings
Allan Fosk Kaplún v. Plurinational State of
Bolivia, ICSID Case No. ARB/06/2
(respondent files objections to jurisdiction
July 30, 2010).

23. Railroad Development Corporation v. October 15, 2008 Dismissed Preservation of Evidence
Republic of Guatemala, ICSID Case No.
ARB/07/23 (procedural order June 7, 2010).

24. Repsol YPF Ecuador, S.A. and others v. June 17, 2009 Granted Domestic Proceedings
Republic of Ecuador and Empresa Estatal
Petróleos del Ecuador (PetroEcuador),
ICSID Case No. ARB/08/10 (claimants’
memorial on the merits filed Dec. 17, 2009).

25. Saipem S.p.A. v. People's Republic of March 21, 2007 Granted Warranty Bond
Bangladesh, ICSID Case No. ARB/05/7
(June 20, 2009).

26. SGS Société Générale de Surveillance October 16, 2002 Granted Domestic Proceedings
S.A. v. Islamic Republic of Pakistan, ICSID
Case No. ARB/01/13 (discontinued
following settlement May 23, 2004).

27. Tanzania Electric Supply Company December 20, 1999 Dismissed Contract Performance
Limited v. Independent Power Tanzania
Limited, ICSID Case No. ARB/98/8
(July 12, 2001).

28. Tokios Tokelés v. Ukraine, ICSID July 1, 2003 Granted Domestic Proceedings
Case No. ARB/02/18 (July 26, 2007).

29. Vacuum Salt Products Ltd. v. Republic a) December 3, 1992 Dismissed Preservation of Evidence
of Ghana, ICSID Case No. ARB/92/21 b) June 14, 1993 Dismissed Domestic Proceedings
(Feb. 16, 1994).

30. World Duty Free Company Limited April 25, 2001 Dismissed Confidentiality
v. Republic of Kenya, ICSID Case No.
ARB/00/7 (Oct. 4, 2006).

31. Zhinvali Development Ltd. v. Republic January 24, 2002 Granted Domestic Proceedings
of Georgia, ICSID Case No. ARB/00/1
(Jan. 24, 2003).
2009] ICSID PROVISIONAL MEASURES 543

In the majority of cases, domestic proceedings are a legitimate

exercise of a sovereign’s power to decide a domestic dispute.
Parallel domestic litigation is usually initiated for reasonable and
legitimate reasons. However, host sovereigns and foreign
investors sometimes resort to domestic courts to improve their
relative positions in a case pending before ICSID. Parties initiate
these proceedings with various goals in mind: to force a
negotiation, to obtain additional evidence or to prevent eventual
enforcement of a prejudicial award.

For instance, in an ICSID arbitration involving a contract

dispute, a host sovereign could seek a domestic court ruling that a
contract is null and void. A foreign investor could resort to local
courts to obtain an attachment in his favor. In a dispute involving
direct expropriation, a sovereign may try to obtain a domestic
decision declaring that the foreign investment is illegal. A sovereign
may also start criminal proceedings against the management or
counsel of a foreign company in an attempt to persuade them not
to pursue arbitral proceedings against the state.

As shown in the following graph, more than 50% of the

provisional measures have been requested to enjoin parallel
domestic litigation (19 out of 37 provisional measure requests).

Graph 1
More than 50% of the Provisional Measures have been requested to stop
parallel domestic litigation

The largest group of cases involving provisional measures concern parallel

proceedings before domestic courts.
544 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

In the majority of the ICSID cases involving parallel domestic

proceedings, tribunals granted the requested provisional
measures:

Graph 2
Chances to get provisional relief in
cases of parallel domestic litigation
Dismissed Granted
1. Atlantic Triton 1. Bayindir
2. Azurix 2. Burlington
3. Helnan 3. City Oriente
4. Holiday 4. CSOB
5. Pey Casado 5. MINE
6. Phoenix 6. Perenco
7. Plama 7. Quiborax
8. Repsol
9. SGS
10. Tokios Tokelés
11. Vacuum
12. Zhinvali

The available data indicates that not only claimants seek

provisional relief; sovereigns have also requested that ICSID
tribunals enjoin domestic proceedings filed by foreign investors,
though far less frequently.

Graph 3
Which party usually requests interim relief?

Sovereigns have requested provisional relief to stop parallel domestic litigation

in 2 cases: Atlantic Triton and MINE; both relate to attachments by domestic
courts
2009] ICSID PROVISIONAL MEASURES 545

III. EVOLUTION OF THE ICSID TRIBUNAL’S POWERS TO ENJOIN PARALLEL

DOMESTIC LITIGATION THROUGH THE USE OF PROVISIONAL MEASURES

Since the inception of the ICSID in 1966, and the grant of

authority to ICSID to impose provisional measures to enjoin
parallel domestic litigation, ICSID case law on provisional
measures has developed in two main areas. First is the
interpretation of Article 26 of the Washington Convention in
balancing the power of ICSID tribunals to grant provisional relief
against the power of domestic courts to decide local disputes.
Second is the evolution of the traditional three-prong test of
urgency, necessity and irreparable harm, which is typically
required for an ICSID tribunal to grant or deny provisional relief
in cases of parallel domestic litigation.

Accordingly, the two main rights protected by provisional

measures in cases of parallel domestic litigation are the right to
the exclusivity of ICSID jurisdiction and the right not to aggravate
the ICSID dispute. The first right – that of the exclusivity of ICSID
tribunals – is set forth in Article 26 of the Washington
Convention: “Consent of the parties to arbitration under this
Convention shall, unless otherwise stated, be deemed consent to
such arbitration to the exclusion of any other remedy ….”
According to this right, “domestic courts should abstain from any
action that might interfere with the conduct of ICSID proceedings.
If a claim before such a court calls for adjudication under ICSID,
the court before which the claim is brought ought not to entertain
it and should refer the parties to ICSID. This rule can be referred
to as the rule of ‘judicial abstention.’”5

The second right – that of non-aggravation of the dispute

submitted to an international tribunal – has its legal basis in
Article 38(1)(c) of the Statute of the International Court of Justice.
Article 38(1) provides: “The Court, whose function is to decide in
accordance with international law such disputes as are submitted

5Marchais, supra note 3, at 372. In the same sense, Schreuer indicates that “the
exclusive nature of ICSID proceedings is secured by art. 26 of the Washington
Convention.” Schreuer, Commentary on the ICSID Convention, supra note 3, at
784.
546 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

to it, shall apply: . . . the general principles of law recognized by

civilized nations.”6

Applying this principle to relevant ICSID arbitrations,

domestic litigation interfering with ICSID proceedings could
increase damages or aggravate the dispute in other ways. In the
words of Friedland:

Article 38(1) of the Statute of the International Court of Justice

lists the well-known sources of international law, among which
are ‘the general principles of law common to civilized nations.’
One general principle that has been received into international
law, and applied by the International Court of Justice, is that
conduct by one party tending to aggravate the dispute
submitted to the court for resolution may justify provisional
measures.7

In cases of parallel domestic litigation, the right to the

exclusivity of ICSID proceedings and non-aggravation of the
dispute may overlap, but each has its own scope. Generally, if the
right invoked in support of the requested provisional measure is
the exclusivity of the ICSID jurisdiction, the domestic proceeding
should be at a jurisdictional level in order to interfere with the
ICSID proceeding. By contrast, if the right invoked is the non-
aggravation of the ICSID dispute, the scope of domestic
proceeding covered by the provisional relief is bigger including
also domestic administrative proceeding capable to aggravate the
dispute.

In this section, the key cases involving provisional measures

to enjoin domestic litigation are explained with their surrounding
context and highlighting the distinctions among them. The factual
background, the analysis of the parties’ rights and the ICSID
tribunals’ reasoning are limited due to the dearth of available
public information. The fact description is particularly important
to understanding the subjective reasons that may have influenced
ICSID tribunals to grant or dismiss the provisional measures
requested.

6 See note 1.
7 Frieldland, Provisional Measures in ICSID Arbitration, supra note 3, at 336.
2009] ICSID PROVISIONAL MEASURES 547

The cases are divided into two sub-sections. The first includes
the most important cases as ICSID attempted to balance the
tension between ICSID and domestic jurisdictional powers. In
chronological order, these cases are: Holiday Inns, Atlantic Triton,
MINE, Vacuum, CSOB, Pey Casado, Bayindir, Phoenix, SGS, the
closely-related Ecuadorian cases of City Oriente, Burlington,
Perenco and Repsol, and finally Quiborax. The second group of
cases includes the most relevant ICSID decisions dealing with the
urgency, necessity and irreparable harm test: Tokios Tokelés,
Plama, Azurix, and also the Ecuadorian cases of City Oriente,
Burlington, Perenco and Repsol.

A. The Struggle between ICSID and Domestic Jurisdictions

Provisional measures are at the core of the tension between

ICSID authority and a sovereign’s autonomy. Although ICSID’s
jurisdictional power is limited to investment disputes, sovereigns
do not want ICSID tribunals with broad powers interfering with
their domestic policies or courts. While there has been a tendency
to limit the scope of provisional relief so as not to interfere with
local jurisdictions, there has also been an inclination to consider
provisional measures as enforceable orders. The evolution of
ICSID case law demonstrates this tension between ICSID and
domestic jurisdictions.

The issue of provisional measures to enjoin parallel domestic

litigation arose in the first arbitration proceeding before an ICSID
tribunal, Holiday Inns. In this and the next case, Atlantic Triton,
ICSID tribunals lacked the confidence to grant provisional
measures. Such relief was not granted until MINE when the
protected right was the exclusivity of ICSID jurisdiction. After
MINE, ICSID cases have drawn boundaries on the extent of
provisional relief’s scope in cases of parallel domestic litigation,
granting provisional measures only in exceptional cases where
there is a clear violation of Article 26 of the Washington
Convention.

Vaccum set forth that a prima facie case of ICSID jurisdiction is

required before provisional relief will be granted. Since Vaccum,
most ICSID tribunals perform a preliminary review of jurisdiction
before granting provisional measures in cases involving parallel
domestic litigation. The jurisdictional test to grant interim relief
548 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

in these cases is stricter than the test required to register a case

under Article 28(3) of the Washington Convention, but less
rigorous than needed for a decision on jurisdiction or on the
merits.8 The jurisdictional test in cases of parallel domestic
litigation is also stricter than other cases of provisional measures
where the tension between ICSID and domestic courts is absent.
The requirement of a prima facie case of ICSID jurisdiction is a
means of balancing the tension between ICSID and domestic
tribunals and avoiding the damage which would result from
enjoining parallel litigation in a case that is ultimately dismissed
for lack of ICSID jurisdiction.

Later, in CSOB, the ICSID Tribunal restricted the scope of

provisional measures to stop domestic litigation, showing some
deference to domestic tribunals. This Tribunal established, in
effect, an ex parte duty to inform the domestic court of the
existence of an ICSID proceeding before requesting provisional
relief.

In Pey Casado, the ICSID tribunal considered the fact that an

administrative proceeding does not affect the exclusivity of ICSID
jurisdiction because there is no jurisdictional conflict between
ICSID and a domestic tribunal. Therefore, Article 26 of the
Washington Convention does not apply. Under Article 26,
provisional measures can be used only to enjoin parallel domestic
judicial proceedings.

Another restriction was added in Phoenix. Here, the Tribunal

mainly refused to grant provisional relief because, essentially, the
parallel domestic litigation started before the investment was
made. Therefore, there was not a clear purpose to interfere with
ICSID Jurisdiction by initiating such proceedings.

Shortly after Phoenix, in SGS, the provisional measures request

was mainly denied for being too broad. The SGS Tribunal
recognized the tension between domestic and international
jurisdictions, and established that the provisional relief granted
8 Article 28 (3) provides: “The Secretary-General shall register the request

unless he finds, on the basis of the information contained in the request that
the dispute is manifestly outside the jurisdiction of the Centre. He shall
forthwith notify the parties of registration or refusal to register.” Available at
http://icsid.worldbank.org/ICSID/StaticFiles/basicdoc/partA-chap03.htm.
2009] ICSID PROVISIONAL MEASURES 549

should be as limited as possible so as to not interfere with the

domestic courts’ legitimate powers to decide local disputes within
their own jurisdictions.

Notwithstanding this tendency to reduce the scope of

provisional measures to enjoin parallel litigation, ICSID case law
has also evolved to strengthen the enforceability of provisional
measures once granted. Thus, even though ICSID tribunals are
expressly empowered to recommend the adoption of provisional
measures under Article 47 of the Washington Convention, today
there is agreement that provisional measures are enforceable
orders.

The first ICSID Tribunal to rule that – in general – provisional

measures are actual orders and not merely recommendations,
was Maffezini,9 which held that “the word recommend has an
equivalent meaning to the word dictate,” and that such orders are
“no less binding than that [of] a final award.”10

This holding was followed by Pey Casado and Tokios Tokelés,

both parallel domestic litigation cases. Tokios Tokelés was
particularly significant where the Tribunal ruled that “[i]t is to be
recalled that, according to a well-established principle laid down
by the jurisprudence of the ICSID tribunals, provisional measures
‘recommended’ by an ICSID tribunal are legally compulsory; they
are in effect ‘ordered’ by the tribunal, and the parties are under a
legal obligation to comply with them.”11

9Maffezini, ICSID Case No. ARB/97/7, Decision on Provisional Measures (Oct.

28, 1999).
10 Id. ¶ 9.
11 Tokios Tokelės, ICSID Case No. ARB/02/18, Decision on Provisional Measures
(Procedural Order 1), ¶ 4 (July 1, 2003). ICSID provisional measures are also
considered orders out of the scope of a parallel domestic litigation scenario.
The Tribunal that consolidated this view was Occidental Petroleum, which held
that “[t]he Tribunal wishes to make clear for the avoidance of doubt that,
although Article 47 of the Washington Convention uses the word ‘recommend’,
the Tribunal is, in fact, empowered to order provisional measures.” Occidental
Petroleum, ICSID Case No. ARB/06/11, Decision on Provisional Measures,
¶ 58 (Aug. 17 2007).
550 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

This issue is particularly relevant in cases of provisional

measures used to stop domestic litigation, affecting the
sovereign’s power to carry out a legitimate proceeding in their
territory. In Vacuum, CSOB, Tokios Tokelés, Bayindir and City
Oriente, ICSID tribunals considered situations of non-compliance
with the provisional relief granted. Initially, ICSID tribunals
merely reiterated the provisional relief already granted.
Subsequent tribunals made it clear, however, that
recommendations for provisional measures are orders, which
must be obeyed by domestic courts.

The next part of this section describes the key cases dealing
with the struggle between ICISID and domestic jurisdiction. Each
case begins with a summary of the holding, followed by a brief
factual background to assist in understanding the rationale
underlying the tribunal’s decision.

1. Holiday Inns12 – Parallel domestic litigation started with the

first ICSID case

The Government of Morocco (“Morocco”) entered into a Joint

Venture Agreement (“JVA”) with the Swiss corporation, Holiday
Inns, for the construction and operation of four hotels in Morocco.
The JVA also involved Occidental Petroleum, an American
company, which was engaged to construct gas stations next to the
hotels. After a change of government, Morocco stopped paying
foreign investors for the costs incurred during the construction of
the hotels. In 1972, Holiday Inns and Occidental Petroleum filed a
Request for Arbitration with ICSID.

Shortly after the ICSID arbitration was registered, Morocco

obtained an order from a local court instructing Holiday Inns to
resume construction. The court also appointed a judicial
administrator to take over the management of the existing hotels.

The claimants argued before the ICSID Tribunal that Morocco

had breached the terms of the JVA and had infringed the exclusive
ICSID jurisdiction by bringing coercive proceedings before local
12 Holiday Inns, ICSID Case No. ARB/72/1, Decision on Jurisdiction (May 12,

1974) (Unreported). A detailed review of this case is provided by P. Lalive, The

First ‘World Bank’ Arbitration (Holiday Inns v. Morocco) – Some Legal
Problems, 51 BRIT. Y.B. OF INT’L L. 123, 142-43 (1980).
2009] ICSID PROVISIONAL MEASURES 551

courts. During the first session of the Tribunal, Holiday Inns made
an oral request for provisional measures, asking the Tribunal to
order Morocco to enjoin the domestic proceedings. Holiday Inns
invoked the right of the exclusivity of ICSID proceedings as set
forth in Article 26 of the Washington Convention.

While declining to grant the provisional measures, the

Tribunal held that it had jurisdiction to recommend provisional
measures pursuant to Article 47 of the Washington Convention.
Although the Tribunal did not expressly order Morocco to
withdraw the proceedings initiated before local courts, it
requested that the parties cooperate and refrain from any
measures incompatible with the fulfillment of the JVA. Thus, while
the first tribunal in ICSID history did not demonstrate confidence
in granting provisional measures, by making it clear that ICSID
tribunals have the authority to grant provisional relief in order to
enjoin parallel domestic litigation it took an important step
toward developing the scope of provisional measures available in
ICSID proceedings.

2. Atlantic Triton13 – A prima facie case of ICSID jurisdiction is

required

In August 1981, the Republic of Guinea (“Guinea”) entered

into a management agreement (“MA”) with a Norwegian
company, Atlantic Triton, for the conversion, equipping, and
operation of three fishing vessels. The purpose of the MA was to
develop the national fishing industry and thereby improve the
nutrition of Guinea’s urban population.

Pursuant to the MA, Atlantic Triton repaired and converted

the ships in Norway and began operation of the fishing vessels.
Due to the poor performance of the national fishing company,
Guinea requested technical assistance from the Food and
Agriculture Organization (“FAO”) in September 1982. The FAO
found that the vessels converted by Atlantic Triton unsuitable for

13 Atlantic Triton Company Limited v. People’s Revolutionary Republic of

Guinea, ICSID Case No. ARB/84/1, Award (Apr. 21, 1986)., 115 JOURNAL DU
DROIT INTERNATIONAL 181 (1988) (excerpts); English translation of French
original in 3 ICSID Rep. 13 (1995). See also LAWRENCE COLLINS, ESSAYS IN
INTERNATIONAL LITIGATION AND THE CONFLICT OF LAWS 77 (Oxford University Press
1994).
552 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

fishing in Guinean waters, the ships urgently required maintenance

and repair, and new fishing vessels would be necessary to satisfy
the above-mentioned needs of the urban population.

Atlantic Triton acknowledged the unsatisfactory performance,

but claimed financial hardship due to the non-payment of the
management fees Guinea owed under the MA. Based on Guinea’s
refusal to comply with its financial obligations, Atlantic Triton
canceled the MA in April 1983. In October, Atlantic Triton
requested an order from a French commercial court to attach the
three Guinean vessels, which were being repaired in a French
port. The French court granted the attachment. The Government
of Guinea moved to vacate the order and requested compensation
for abuse of process.

Several months later, Atlantic Triton filed a Request for ICSID

Arbitration pursuant to the MA, requesting compensation for cost
overruns, unpaid management fees and damages suffered in
connection with the conversion and operation of the vessels. On
April 6, 1984, the French Commercial Court confirmed the
attachment order. In August, the Guinea responded with a
Request for Provisional Measures, asking the ICSID Tribunal to
order the immediate suspension of the attachments authorized by
the French Commercial Court.

On October 26, 1984, the Rennes Court of Appeals vacated the

attachment of the Guinean vessels, holding that the French courts
lacked jurisdiction to grant Atlantic Triton’s request. The court
ruled that the ICSID Tribunal had general and exclusive
jurisdiction to decide the dispute, both on the merits and as to any
provisional measures requested. The French court strictly applied
Article 26 of the Washington Convention, which provides that
domestic courts in signatory countries shall abstain from any
action that can interfere with the conduct of an ICSID arbitral
proceeding. This is the same right – non-interference with the
conduct of an ICSID arbitration – that Holiday Inns invoked to
support its provisional measures request. In Atlantic Triton, the
French court helped to establish the symbiotic relationship
between Articles 26 and 47 of the Washington Convention,
finding that the purpose of Article 26 is to protect ICSID
jurisdiction. As a result, before a court will grant provisional
measures to enjoin a parallel domestic proceeding, ICSID
jurisdiction should be clearly established.
2009] ICSID PROVISIONAL MEASURES 553

In its April 1986 award, the ICSID Tribunal rejected Atlantic

Triton’s claim and dismissed Guinea’s Request for Provisional
Measures as moot, since local courts had already vacated the
attachments and the ships sailed from France. Subsequently, the
French Cour de Cassation reversed the decision of the Rennes
Court of Appeals, concluding that Article 26 of the Washington
Convention “was not intended to prohibit applications to the
courts for protective measures aimed at ensuring the
enforcement of the forthcoming award.”14

3. MINE15 – The first case to grant provisional measures to enjoin

parallel domestic litigation

In August 1971, Maritime International Nominees Establishment

(MINE), a Liechtenstein company owned by a Swiss national,
entered into a Joint Venture and Transportation Agreement with
the Republic of Guinea (“JVA”). The purpose of this JVA was to
create a mixed-economy company, called La Société Guinéenne de
Transports Maritimes, to transport bauxite mined in Guinea to
several foreign markets.

A dispute arose between the parties when Guinea entered into

a similar transportation agreement with another carrier. Guinea
argued that MINE had defaulted under the JVA and that an
arrangement with third parties was necessary in order to export
bauxite extracted from Guinean mines.

In 1978, MINE submitted the dispute to the American

Arbitration Association (AAA), arguing that Guinea refused to
cooperate with the actions necessary to submit the dispute to
ICSID arbitration. In 1980, the AAA rendered an award in MINE’s
favor. Later, MINE initiated attachment proceedings in Europe to
enforce the AAA award.

Because the AAA decision was later set aside, in May 1984,
MINE initiated an ICSID arbitration. A year later, Guinea

14Cour de cassation [Cass.] [Supreme Court], Paris, Nov. 18, 1986, 2 ICSID REV.-
FILJ 182 (1987) (Fr.).
15 Maritime International Nominees Establishment (MINE) v. Republic of

Guinea, ICSID Case No. ARB/84/4, Award (Jan. 6, 1988). For a comprehensive
factual background of this case see JAMES C. BAKER, FOREIGN DIRECT INVESTMENT IN
LESS DEVELOPED COUNTRIES: THE ROLE OF ICSID AND MIGA 80-82 (1999).
554 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

submitted a Request for Provisional Measures to vacate all

pending attachments over its assets and bank accounts, which
MINE had requested in several European jurisdictions.

On December 4, 1985, the ICSID Tribunal issued its Decision

on Provisional Measures, holding that MINE’s European
attachment actions breached the exclusive ICSID jurisdiction.
Once again, Article 26 of the Washington Convention was the legal
framework invoked to protect the exclusivity of ICSID arbitration.
Pursuant to Article 47, the Tribunal recommended that MINE
“dissolve every existing provisional measure obtained in litigation
in national courts (including attachment, garnishment,
sequestration, or seizure of the property of Guinea, by whatever
term it is designated and by whatever means obtained).”16
Confirming ICSID arbitration as the exclusive remedy, the
Tribunal also recommended that MINE refrain from seeking any
additional remedy in national courts.

On January 6, 1988, the Tribunal rendered its final award,

ruling that Guinea breached the JVA and was, therefore,
responsible for damages. Guinea initiated an annulment
proceeding, but the award was only partially annulled in 1990. A
few months later, Guinea and MINE settled the dispute.

The MINE Tribunal was the first in ICSID history to grant

provisional measures to enjoin parallel domestic proceedings.
The right invoked in support of the request for provisional
measures was, again, the exclusivity of ICSID proceedings set
forth in Article 26.

4. Vacuum 17 – A minimum jurisdictional standard should be met

to grant provisional relief

The frequent failure of sovereign states to obey a decision on

provisional measures, especially temporary restraining orders, is
a critical problem. It affects the jurisdiction, powers, and

16 MINE, ICSID Case No. ARB/84/4, Award, at 69.

17 Vacuum Salt Products Ltd. v. Republic of Ghana, ICSID Case No. ARB/92/21,

Decision on Provisional Measures (June 14, 1993), Award (Feb. 16, 1994). A
detailed review of the facts of this case also in AMAZU ASOUZU, INTERNATIONAL
COMMERCIAL ARBITRATION AND AFRICAN STATES 293 (2001) (part of the Cambridge
Studies in International and Comparative Law).
2009] ICSID PROVISIONAL MEASURES 555

effectiveness of ICSID tribunals. Vacuum represents an important

development in expanding the scope and authority of ICSID
tribunals to address this problem.

In Vacuum, the Tribunal discussed for the first time the issue
of a state party’s failure to comply with a procedural order on
provisional measures. Mr. Panagiotopulos, a Greek national
resident in Ghana, had incorporated Vacuum Salt Products
Limited (“Vacuum”) in Ghana. On January 22, 1988, the
Government of Ghana (“Ghana”) and Vacuum entered into a 30-
year agreement to develop a mining and salt production facility
located in the Songhor Lagoon (“Mining Agreement”). The Mining
Agreement included an ICSID arbitration clause.

On April 24, 1992, Ghana notified Vacuum that it intended to

revoke and cancel the Mining Agreement. Pursuant to the
Ghanaian State Lands Act of 1962, Ghana claimed that the
government was entitled to reacquire title over the Songhor
Lagoon, subject to compensation to be arranged directly by the
Land Valuation Board. In response, on May 28, 1992, Vacuum
initiated an ICSID arbitration against Ghana. Soon after, in August
of the same year, Ghana passed Law 287, which provided the legal
basis for the official cancellation of the Mining Agreement. The
new regulation incorporated a special administrative procedure
to permit review of any compensation claims derived from the
application of Law 287.

Vacuum submitted a Request for Provisional Measures to the

Tribunal on October 22, 1992, claiming that Law 287 violated
ICSID’s exclusive jurisdiction over disputes under the Mining
Agreement. The next day, Vacuum filed a claim before Ghanaian
local authorities for compensation under Law 287.

On December 3, 1992, the ICSID Tribunal issued its Decision

on Provisional Measures, recognizing a prior voluntary
undertaking by Ghana to postpone the Law 287 administrative
proceedings pending completion of the ICSID arbitration. In
March 1993, Vacuum filed a second request for the provisional
measures it had previously requested, asserting that Ghana had
failed to comply with the procedural order. Vacuum claimed that
Ghana had not obeyed the ICSID Tribunal recommendations in
relation to Law 287.
556 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

In June 1993, the Tribunal dismissed Vacuum’s second

Request for Provisional Measures, finding that Ghana had not
breached the Tribunal’s award of provisional measures.18 It is
possible that the Tribunal dismissed the second petition for the
provisional measures because it may not have believed there was
a clear prima facie case of jurisdiction. Therefore, the Tribunal
did not need to reach the issue of the consequences of non-
compliance with a provisional measures order.19

On February 16, 1994, the Tribunal rendered its final award,

holding that it did not have jurisdiction over the dispute because
the involvement of the Greek national, Mr. Panagiotopulos, was
insufficient to show foreign control of the company. This is a good
example of the close relationship between Article 26 of the
Washington Convention and the jurisdictional ICSID requirements.
Since provisional measures under Article 26 are intended to
protect ICSID jurisdiction, ICSID tribunals need to be confident
that a minimum jurisdictional standard is met before granting
provisional relief.

5. CSOB20 – Rule of deference to domestic courts

CSOB arose in the early 1990’s, during the breakup of the

former Czechoslovakia into the Czech and the Slovak Republics,
and the related privatization of the State Bank Ceskoslovakia
Obchodni Banka A.S. (“CSOB”). On December 19, 1993, the
Ministries of Finance of both new republics, together with CSOB,
entered into an agreement to establish the basic principles of the
financial consolidation of CSOB (“Consolidation Agreement”).

18 Vacuum, ICSID Case No. ARB/92/21, Decision on Provisional Measures, at

323.
19 A later Tribunal, City Oriente, pointed out that “a failure to comply with
orders given to Respondents by the Tribunal in accordance with Article 47 of
the Convention will entail a violation of Article 26 thereof, and engage
Respondents’ liability.” See City Oriente Limited v. Republic of Ecuador and
Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No.
ARB/06/21, Decision on Provisional Measures, ¶53 (Nov. 19, 2007).
20 Československa Obchodní Banka, a.s. (CSOB) v. Slovak Republic, ICSID Case

No. ARB/97/4, Award (Dec. 29, 2004). The antecedents of this case can be
found in the Decision on Jurisdiction (May 24, 1999), Procedural Order 2 (Sept.
9, 1998), Procedural Order 3 (Nov. 5, 1998), Procedural Order 4 (Jan. 11,
1999), and Procedural Order 5 (Mar. 1, 2000).
2009] ICSID PROVISIONAL MEASURES 557

In order to facilitate CSOB’s operation in both republics, it was

agreed that the bank would assign its loan portfolio receivables to
two so-called “collection companies” – one to be established by
the Czech Republic and the other by the Slovak Republic. The
companies would finance the assignment price through a loan
granted by CSOB. At the same time, the Czech and the Slovak
Republics guaranteed payment of the obligations arising from the
transaction.

Shortly after the operation was initiated, the Slovakian

collection company, Slovenska Inkasni, incurred losses and
defaulted on its obligations to CSOB under the referred loan
agreement. In turn, the Slovak Republic refused to cover those
losses in favor of CSOB, as the Consolidation Agreement allegedly
provided. CSOB submitted a Request for Arbitration to ICSID on
April 18, 1997.

As the Slovakian collection company’s financial situation

deteriorated, the Bratislava Regional Court began bankruptcy
procedures against Slovenska Inkasni. CSOB was the only
creditor. The bankruptcy procedure was closely linked to the
heart of the dispute submitted to ICSID. The local bankruptcy
court would analyze the validity and amount of CSOB’s credits
against the Slovakian collection company and would decide if the
company had the right to receive funds from the Slovak Republic to
cover its losses in accordance with the Consolidation Agreement.

Because of the inter-relationship between the bankruptcy and

the issues before the ICSID Tribunal, on September 4, 1998, CSOB
requested the Tribunal to grant a provisional measure to suspend
the bankruptcy procedure against Slovenska Inkasni. In
accordance with Article 26 of the Washington Convention, CSOB
invoked the principle of ICSID exclusivity.

Because there was no evidence that the parties reported the

existence of the ICSID arbitration to the Bratislava court, the
ICSID Tribunal concluded that there was reason to assume that
the court would not recognize the ICSID exclusivity and would
only suspend the bankruptcy procedure once it was duly
informed of the existence of the international arbitration.21

21 CSOB, ICSID Case No. ARB/97/4, Decision on Jurisdiction, at 2.

558 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

Following this reasoning, CSOB informed the Bratislava court of

the ICSID proceedings and of the pending request for provisional
measures. The Bratislava court agreed to defer the scheduled
hearing until the end of the year and to postpone its decision on
the request to suspend the bankruptcy procedure.

While the request for suspension of the bankruptcy procedure

was pending, CSOB pressed its request for provisional measures
before the ICSID Tribunal. On November 5, 1998, the Tribunal
delayed rendering a decision on the provisional measure pending
further analysis. In this second award, the Tribunal once again
relied on its confidence that the Bratislava court would suspend
the bankruptcy procedure in favor of the ICSID Arbitration. The
Tribunal emphatically stated that it could not foresee “any reason
to assume that, if the Bratislava court had been duly informed, it
would not suspend the bankruptcy procedure.”22

The Tribunal twice rejected CSOB’s request, relying on the

good judgment of the Bratislava court. However, that confidence
was misplaced. On November 5, 1998, the same day that the
Tribunal dismissed the provisional measures request, the
Bratislava court dismissed CSOB’s request to suspend the
bankruptcy procedure.

CSOB appealed to the Supreme Court of Slovakia and, on

January 7, 1999, requested for the third time that the ICSID
Tribunal issue the provisional measure. On January 11, 1999,
given the changed circumstances in the domestic courts, the
Tribunal finally recommended the suspension of the bankruptcy
procedure.23 Notwithstanding this recommendation, on September
23, 1999, the Supreme Court of Slovakia upheld the decision of
the Bratislava court. The Slovak Republic simply did not obey the
ICSID Tribunal’s provisional measure recommendation. The
Tribunal’s only reaction to this violation was to reiterate its
previous order. Thus, on March 1, 2000, the ICSID Tribunal, in its
fourth decision on the matter, again recommended the
suspension of the bankruptcy procedure and reaffirmed its
previous recommendation.24 The Tribunal thus reached the same
22 Id. at 3.
23 Id. at 2.
24 Id. at 3.
2009] ICSID PROVISIONAL MEASURES 559

conclusion as the Vacuum Tribunal, where Ghana disregarded the

Tribunal’s recommendation.

The CSOB Tribunal implicitly assumed the existence of an ex

parte duty to inform the domestic court of the ICSID arbitration
proceeding. This rule of deference is intended to give domestic
courts the first chance to enjoin parallel litigation. According to
this rule of deference to local authorities, only after the domestic
court formally refuses to stay the parallel proceedings can an
ICSID tribunal recommend suspension of domestic procedures as
a provisional measure. As the results in CSOB demonstrate,
however, an ICSID tribunal should consider the degree of urgency
and necessity of the measures requested in deciding whether to
defer to local authorities.

6. Pey Casado25 – Administrative domestic proceedings do not

violate Article 26 of the Washington Convention
– A violation of Article 26 requires that the
“same dispute” be settled by a domestic court
– A tangential effect on the claimant’s ICSID
interests is insufficient to stop a parallel
domestic litigation Supremacy of ICSID
proceedings over domestic courts

El Clarín was a popular, left wing newspaper that operated in

Chile until 1973. When Pinochet’s dictatorship began, the state
closed down the newspaper and confiscated its assets. Almost
twenty-five years later, in 1997, Victor Pey Casado (“Pey”) – who
asserted that he was one of the newspaper’s shareholders – filed a
request for arbitration before ICSID, claiming compensation for
damages suffered as a consequence of the expropriation.26

25 Víctor Pey Casado and President Allende Foundation v. Republic of Chile,

ICSID Case No. ARB/98/2, Decision on Provisional Measures (Sept. 25, 2001).
The author Rodrigo Gil worked as a counsel of the Republic of Chile during the
revision proceeding phase of this case as a member of Arnold & Porter LLP,
Washington DC. The information provided herein is publically available and
not derived from any personal knowledge of the author.
26 Víctor Pey sued the Republic of Chile jointly with the Salvador Allende

Foundation, after assigning part of his rights under this litigation to that
institution.
560 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

After democracy returned to Chile, the National Congress

passed a law to compensate victims whose property was
expropriated by the military government. In applying this law,
through Decree 43 of April 28, 2000 (“Decree 43”), damages were
awarded to a number of parties registered as holders of rights to
El Clarín at the time of the expropriation. Because Pey had no
legal rights over El Clarín, according to applicable Chilean law, he
received no compensation.27

In April 2001, Pey requested that the ICSID Tribunal

recommend suspension of Decree 43 enforcement. Pey contended
that application of that Decree would result in a denial of his
rights, violate the exclusivity of ICSID jurisdiction and aggravate
the dispute. Following the line of reasoning in Holiday Inns,
Atlantic Triton, MINE, Vacuum and CSOB, Pey relied upon Article
26 of the Washington Convention as the legal framework for the
provisional measure requested.

The Tribunal dismissed the provisional measures requested

by Pey on three grounds. First, the Tribunal pointed out that the
domestic procedure under Decree 43 was an administrative
proceeding, not judicial. This is an important contribution to the
development of Article 26 boundaries by making it clear that
administrative proceedings cannot violate Article 26 of the
Washington Convention.

Second, the ICSID Tribunal found that Decree 43 “did not

settle the same dispute that the plaintiff submitted to the
jurisdiction of [the] ICSID arbitral tribunal, although some of its
motives [were] likely to affect, at least indirectly, the interests

27 Law No. 19.568 published in the Official Gazette of the Republic of Chile on
June 23, 1998. Under this law, any person or entity – including political parties
– whose property rights were affected by the application of Law Decree Nos.
12, 77 and 133 of 1973, 1.697 of 1977, and 2.346 of 1978, had the right to
request that the Government of Chile restore the property, or provide adequate
compensation. The law also established that the legal successor of such people,
and of those who had been deprived of their property by an official act
executed after September 11, 1973, would also be entitled to the referred right
of restitution or compensation. The people who were compensated under
Chilean Law were Jorge Venegas Venegas and the legal successors of Darío
Saint Marie, Ramón Carrasco Peña and Emilio González González, all of them
owners of El Clarín under Chilean Law.
2009] ICSID PROVISIONAL MEASURES 561

invoked by the plaintiff.”28 By this reasoning, the Tribunal

required a high degree of connection between the ICSID dispute
and the domestic proceeding. A mere tangential effect on an
ICSID interest is insufficient grounds for the international tribunal
to enjoin a parallel domestic litigation.
Third, the Tribunal highlighted the supremacy of international
proceedings over proceedings before domestic courts. Asserting
this principle, the Tribunal stated that Decree 43 “could neither
bind the ICSID Tribunal, nor prevail over the decision that could
be issued by [this] kind of arbitral tribunal.”29 Thus, the Tribunal
held that the supremacy principle by itself would be “more than
enough to make unnecessary and inadequate the recommendation
of the provisional measure requested.”30
The application of this principle of supremacy of international
procedures in cases of parallel domestic litigation is not without
criticism. First, it is indifferent to the impact it might have on the
parties’ rights in parallel domestic litigation. Second, it does not
consider the unique facts of individual cases.
Finally, although the Tribunal dismissed the provisional
measures request, it invited both parties to:
strictly respect the general principle of law according to
which each party involved in a legal process has the
obligation to avoid any act that could affect the rights of
the other party upon the enforcement of the final award
on merits, and also avoid any act that could aggravate or
extend the dispute submitted to the Arbitral Tribunal.31

7. Bayindir32 – Reiteration of the provisional relief in cases of

non-compliance

In July 1997, Bayindir Insaat Turizm Ticaret Ve Sanayi

(“Bayindir”), a company incorporated in the Republic of Turkey,

28 Pey Casado, Provisional Measures, ¶ 59.

29 Id. ¶ 60.
30 Id. ¶ 61.
31 Id., Dispositive, item 4. Free translation from the Spanish original.
32Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan,
ICSID Case No. ARB/03/29, Award (Aug. 27, 2009).
562 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

and the National Highway Authority of Pakistan (“NHA”), a public

company responsible for developing and maintaining Pakistan’s
national highway, entered into an agreement for the construction
of a six-lane motorway connecting Islamabad and Peshawar
(“Motorway Contract”). The Motorway Contract provided that
NHA would pay Bayindir 30% of the contract price as an advance
payment and that Bayindir would provide a bank guarantee
equivalent to that advance (“Mobilization Advance Guarantee”).

The highway was originally scheduled for completion on July

31, 2000, but the project experienced repeated delays. In
September 1999, Bayindir submitted claims against Pakistan for
non-payment of construction costs and fees, along with a request
for an extension of time to complete the construction.
Subsequently, the parties agreed to modify the construction
deadlines to allow Bayindir to finish two priority sections of the
highways by March 2001, with the remaining work to be
completed by December 2002. On April 20, 2001, however,
Bayindir notified NHA that it was unable to complete the priority
sections of the highway as scheduled “due to reasons beyond [its]
control.”33 Shortly thereafter, NHA served Bayindir a notice of
termination of the Motorway Contract, and the Pakistani Army
took control of the construction site, forcing all Bayindir
personnel to leave the facilities.34 Bayindir promptly challenged
the notice of termination before the Constitutional High Court of
Lahore, but the court dismissed the case a few days later on the
grounds that the Motorway Contract contained a binding
domestic arbitration clause.35

The following year, Bayindir filed a Request for Arbitration

before ICSID. Pakistan objected to ICSID jurisdiction, arguing that
Bayindir’s claims were really contractual disputes that should be
resolved in a domestic arbitration. In early 2003, NHA served
Bayindir with a notice of arbitration in Pakistan under the

33 Id. ¶ 37.
34 That same month, NHA called in the Mobilization Advance Guarantees that
Bayindir had posted at the beginning of the Motorway Contract. Although
Bayindir obtained an order from the Turkish local courts enjoining the banks
from paying the guarantees, the orders were later vacated.
35 Bayindir, ICSID Case No. ARB/03/29, Decision on Jurisdiction, ¶ 41 (Nov. 14,

2005).
2009] ICSID PROVISIONAL MEASURES 563

Arbitration Act of 1940. In response, Bayindir asserted that the

dispute had already been submitted to ICSID.

In July 2004, Bayindir filed a Request for Provisional

Measures, asking the ICSID Tribunal to order Pakistan to stay the
domestic arbitration, as well as other proceedings which NHA had
initiated in Pakistani and Turkish courts aimed at collecting the
Mobilization Advance Guarantee. The parties agreed to modify
the calendar in the domestic arbitration proceeding to allow the
ICSID Tribunal to issue its Decision on Jurisdiction before the
Pakistani Arbitral Tribunal could issue its decision.

In November 2004, the ICSID Tribunal recommended that

Pakistan take “whatever steps may be necessary to ensure that
NHA does not enforce any final judgment it may obtain from the
Turkish courts with regard to the Mobilisation Advance
Guarantees.”36 Notwithstanding this recommendation, NHA failed
to comply with the provisional measures recommendation and
later obtained a favorable award from the Turkish court in
connection with the collection of the Mobilization Advance
Guarantees.

In April 2006, NHA filed an additional claim against Is Bank – a

Pakistani bank – to collect interest accrued by the Guarantee. In
response, Is Bank sought a declaration from a domestic court
stating that no default interest should be deemed accrued. In
another example of a provisional measure filed by a sovereign
state to stop parallel domestic litigation, Pakistan requested from
the ICSID Tribunal that Bayindir take all necessary steps to
ensure that Is Bank withdrew its action before the domestic court.

On April 14, 2008, the Tribunal granted Pakistan’s requested

provisional measure, ruling: “Bayindir shall take whatever steps
may be necessary and use its best efforts to procure the
withdrawal by Is Bank of its application dated 14 March 2007.”37
In the same order, since Pakistan had not complied with the
provisional measure already ordered, the ICSID Tribunal held that
“Pakistan shall take whatever steps may be necessary to ensure
that NHA does not enforce any final judgment it may obtain from

36 Id. ¶ 55.
37 Id. ¶ 59.
564 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

the Turkish courts with regard to the encashment of interest on

the Mobilization Advance Guarantees.”38 As in Vacuum, CSOB and
Tokios Tokelés, the Bayindir Tribunal’s response to the violation
was merely to reiterate the provisional measure that it had
previously recommended. Ten days later, Bayindir informed the
ICSID Tribunal that Is Bank was prepared to agree with NHA to
suspend the proceedings before the Turkish Court over its claim
for interest on the Mobilization Advance Guarantee until the
ICSID Tribunal rendered its award on the merits.

On August 27, 2009, the Bayindir Tribunal rendered its final

award, rejecting Bayindir’s claim on the grounds that Pakistan
was legally entitled to terminate the Motorway Contract based on
Bayindir’s defective performance of the Contract.

8. Phoenix39 – ICSID jurisdiction is not affected by domestic

proceedings arising before the investment dispute

In this complex case involving several national and

international issues and parties, the Czech Republic initiated a
criminal investigation against Mr. Vladimir Beňo. At the time,
Beňo was the Executive Officer of Benet Praha and Benet Group –
both Czech companies involved in the purchase and sale of
ferroalloys.

The criminal investigation targeted a series of tax and custom

duty evasions. It also focused on income tax fraud allegedly
committed by Mr. Beňo, Benet Praha and Benet Group. After
obtaining an arrest order, the Czech police took Mr. Beňo into
custody, but he escaped and fled to Israel. While the criminal
proceedings were pending, the Czech Republic froze all of Benet
Praha’s bank accounts and other financial assets.

In addition to the criminal investigation and customs

proceedings against Beňo, private parties initiated civil
proceedings against Benet Group before Czech courts. At issue
were the ownership of certain companies, buildings and plots of
land that were in the possession of third parties.

38 Id.
39 Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Decision on

Provisional Measures (April 6, 2007), Award (April 15, 2009).

2009] ICSID PROVISIONAL MEASURES 565

Meanwhile, in Israel, Mr. Beňo registered a new company

under the name of Phoenix Action Ltd (“Phoenix”). On December
26, 2002, Phoenix acquired both Czech companies and became
the sole owner and shareholder of Benet Praha and Benet Group.
On March 2, 2003, only two months after Phoenix’s purchase of
Benet Praha and Benet Group, Phoenix informed the Czech
Republic of an investment dispute between them. Nearly two
years later, in February 2004, Phoenix filed its Request for
Arbitration before ICSID, seeking damages. Phoenix alleged that
the seizure of Benet Praha’s financial assets – and the delay in the
civil proceedings against Benet Group – constituted unfair and
inequitable treatment.

In January 2007, Phoenix filed a request for provisional

measures, requesting that the Tribunal: (a) recommend that the
Czech Cadastral Office block further transfers of the disputed land
plots, and (b) issue a recommendation to lift the freeze on Benet
Praha’s bank accounts. With this request, Phoenix changed the
nature of the remedy requested before the Tribunal, arguing that
the Claimant’s preferred remedy was the recovery of land and
funds, rather than damages.40

Regarding the provisional measures requested to block the

transfer of plots of land, the ICSID Tribunal held that:
provisional measures are indeed not deemed to give to
the party requesting them more rights than it ever
possessed and has title to claim. In other words,
provisional measures are deemed to maintain the status
quo, not to improve the situation of the Claimant before
the rendering of the Tribunal’s award. The Tribunal
considers that, far from seeking to maintain the status
quo, the recommendations sought by the Claimant are
plainly directed to affect a fundamental change to it by
improving the Claimant's situation.41

The ICSID Tribunal refused to grant the request for a measure

seeking the release of Benet Praha’s frozen funds because “it
[was] identical to the final relief sought and [was] not necessary
and urgent in order to protect rights that could be irremediably

40 Phoenix, ICSID Case No. ARB/06/5, Decision on Provisional Measures, ¶ 38.

41 Id. ¶ 37.
566 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

forfeited.”42 Arguably, the critical fact to this Tribunal was that

Benet Praha’s bank accounts had already been frozen for more
than six months at the time Phoenix acquired the company, and
the company was already involved in extended litigation over
ownership of certain other companies and related lands.

9. SGS43 – Request for provisional measures request must not be

too broad;
– Ordinary exercise of domestic proceedings cannot be
restrained

In September 1994, the Islamic Republic of Pakistan

(“Pakistan”) and the Swiss company, Société Générale de
Surveillance S.A. (“SGS”), entered into a contract for the
inspection of goods imported into Pakistan from several foreign
countries (“Inspection Contract”). In December 1996, Pakistan
notified SGS that the Inspection Contract was terminated. SGS
considered this termination to be a unilateral repudiation of the
Inspection Contract and also a violation of the bilateral
investment treaty (“BIT”) between Switzerland and Pakistan.

The arbitration clause in the Inspection Contract provided that

all differences should be settled in Islamabad under the Arbitration
Act of Pakistan. Nevertheless, SGS sued Pakistan in Swiss courts
for damages arising from the unlawful termination of the
Inspection Contract. The Swiss court dismissed the action based
on Pakistan’s sovereign immunity. In response, SGS filed a request
for arbitration before ICSID, and Pakistan initiated a domestic
arbitration through a Pakistani domestic court in Islamabad.

In the Pakistani court proceeding, SGS contended that the

dispute should be settled by ICSID and requested suspension of
the court proceeding until the ICSID Tribunal resolved
jurisdictional objections. Pakistan, in turn, filed a motion to stay
the ICSID arbitration. The case went to the Supreme Court of

42 Id. ¶ 41.
43 SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan,
ICSID Case No. ARB/01/13 Decision on Jurisdiction (Aug. 6, 2003); Decision on
Provisional Measures (Procedural Order 2) (Oct. 16, 2002) (discontinued
following settlement May 23, 2004).
2009] ICSID PROVISIONAL MEASURES 567

Pakistan to determine whether to stay the domestic arbitration or

order a stay of the ICSID proceedings.

Simultaneously, in May 2002, SGS requested that the ICSID

Tribunal adopt four provisional measures: (a) put an end to all
proceedings that were pending in Pakistani courts, especially
Pakistan’s petition to stop the ICSID arbitration; (b) suspend the
domestic arbitration procedure in Islamabad until the ICSID
Tribunal resolved objections to its jurisdiction; (c) direct Pakistan
to abstain from initiating or participating in any other arbitration-
related proceedings before Pakistani courts; and (d) instruct
Pakistan not to engage in any other act that might aggravate or
extend the ICSID dispute between the parties.

Two months after the SGS Request for Provisional Measures

before ICSID, the Supreme Court of Pakistan ordered SGS to
abstain from pursuing ICSID arbitration proceedings. The ICSID
Tribunal held that it could not order the Supreme Court of
Pakistan to reverse its decision under Pakistani domestic law.
Thus, the ICSID Tribunal “accept[ed] that this proceeding in the
Supreme Court of Pakistan is one which Pakistan cannot
withdraw or discontinue. Nor can Pakistan ‘remove’ [it] or set it
aside. It is a final and completed judgment of that Court.” 44

Nevertheless, the ICSID Tribunal indicated that this type of

domestic decision would be unenforceable against an international
tribunal like ICSID. The Tribunal stated that, “although the
Supreme Court Judgment of July 3, 2002 is final as a matter of the
law of Pakistan, as a matter of international law, it does not in any
way bind this Tribunal.”45 The Tribunal emphasized that domestic
decisions cannot be used to frustrate the jurisdiction of an
international court. Moreover, the Tribunal pointed out “[n]or
can a State plead its internal law in defense of an act that is
inconsistent with its international obligations. Otherwise, a
Contracting State could impede access to ICSID arbitration by
operation of its own law.”46

44 SGS, ICSID Case No. ARB/01/13, Decision on Provisional Measures, at 293.

45 Id. at 299.
46 Id. at 300.
568 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

The right SGS invoked to sustain the provisional measure was

the right of access to an ICSID forum. The prima facie existence of
that right can be supported by the BIT between Switzerland and
Pakistan. The ICSID Tribunal held that Article 47 of the
Washington Convention protects this right, and it cannot be
restricted by an order issued by a domestic court.

As to the request to stay the domestic arbitration in

Islamabad, SGS invoked the right of exclusivity of the ICSID
Arbitration under Article 26 of the Washington Convention. The
ICSID Tribunal observed that, since it was SGS that initially sued
in Pakistani courts, the tribunal was not inclined to grant the
measure. However, based on efficiency grounds, the Tribunal
recommended that the arbitration in Islamabad be stayed until
the ICSID Tribunal issued its decision on jurisdiction.

The Tribunal dismissed as too broad the provisional measure

request that Pakistan not initiate or participate in future
proceedings against SGS, finding that “[w]e cannot enjoin a State
from conducting the normal processes of criminal, administrative
and civil justice within its own territory. We cannot, therefore,
purport to restrain the ordinary exercise of these processes.”47 The
Tribunal also rejected the generic petition to recommend that the
State of Pakistan refrain from aggravating or extending the dispute.

10. The Ecuadorian cases.48 – ICSID Tribunals have the power to

stop criminal domestic proceedings

47 Id. at 301.
48 City Oriente Limited v. Republic of Ecuador and Empresa Estatal Petróleos
del Ecuador (Petroecuador), ICSID Case No. ARB/06/21, Decision on
Provisional Measures (Nov. 19, 2007) (discontinued following settlement on
Sept. 12, 2008); Burlington Resources, Inc. and others v. Republic of Ecuador
and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No.
ARB/08/5, Decision on Provisional Measures (Procedural Order 1) (June 29,
2009) (Decision on Jurisdiction pending); Perenco Ecuador Limited v. Republic
of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID
Case No. ARB/08/6, Decision on Provisional Measures (May 8, 2009) (tribunal
reconstituted May 6, 2010); Repsol YPF Ecuador, S.A. and others v. Republic of
Ecuador and Empresa Estatal Petróleos del Ecuador (PetroEcuador), ICSID
Case No. ARB/08/10, Decision on Provisional Measures (June 17, 2009)
(claimants’ memorial on the merits filed Dec. 17, 2009).
2009] ICSID PROVISIONAL MEASURES 569

City Oriente – Temporary restraining orders can be

Burlington used to stay parallel domestic litigation

Perenco – Provisional measures are proper

Repsol “orders”

Various claimants requested provisional measures in four

ICSID cases against the Republic of Ecuador. The disputes related
to several production-sharing contracts for the exploration and
exploitation of oil fields in the Amazon Region. The foreign
investors, City Oriente Limited (“City Oriente”), Perenco Ecuador
Limited (“Perenco”), Repsol YPF Ecuador S.A. (“Repsol”), and
Burlington Resources Oriente Limited (“Burlington”) made
substantial investments in different blocks of the Amazon fields.

While those production-sharing contracts were in effect, oil

prices suddenly rose and the incomes of the hydrocarbon
companies skyrocketed. In reaction to these income spikes, the
President of Ecuador initiated a legal reform to amend the
Hydrocarbon Law so as to enable the Government to seize the
extraordinary revenues those companies were obtaining. On April
19, 2006, Law 42 was passed, providing that all hydrocarbon
companies would grant Ecuador no less than a 50% share of the
extraordinary revenues derived from the higher prices of oil.
More than a year later, in October 2007, while the oil prices
continued to increase, Ecuador passed Decree 662, which
increased the minimum State participation share from 50% to
99% of the “windfall” profits.

City Oriente immediately reacted to the application of Law 42

by filing a request for arbitration with ICSID. Perenco, Burlington
and Repsol filed their requests for arbitration with ICSID only
after Ecuador issued Decree 662. Ecuador initiated a number of
domestic proceedings against these and other foreign investors in
an effort to collect unpaid amounts owed under Ecuador’s new
Hydrocarbon Law. Ecuadorian officials also sought to terminate
production-sharing contracts, citing non-payments to the State.
These domestic proceedings directly targeted claimants closely
linked to the ICSID arbitrations. All claimants requested
provisional measures, asking the ICSID Tribunals to recommend
that Ecuador refrain from: (a) instituting or prosecuting any
proceedings or actions demanding payments due under
570 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

provisions of the country’s Hydrocarbon Law; (b) engaging in any

conduct intended to terminate production-sharing contracts; and
(c) aggravating the dispute or altering the status quo.

Just as City Oriente was the first to register its case with ICSID,
it was also the first to be sued by Ecuador in parallel domestic
proceedings. The parallel litigation was moving forward when, in
October 2007, City Oriente filed its Request for Provisional
Measures to enjoin all domestic litigation. Two days later, the
State Attorney General and the Ecuadorian Prosecutor’s Office
filed a criminal complaint against City Oriente’s representatives
and managers.

In response, City Oriente reappeared before the ICSID

Tribunal to request an order to “immediately” execute the
provisional measures already requested. City Oriente believed
that waiting to get on the calendar for a hearing risked the
imprisonment of the company’s staff and would render moot the
requested provisional measures. Five days later, on October 16,
2007, the Tribunal granted provisional relief with a temporary
restraining order. Although the criminal proceeding was the
main thrust of this order, the ICSID Tribunal’s recommendation
covered the entire scope of the provisional measures requested.

Despite this restraining order, the very next day an Ecuadorian

citizen named Mr. Góngora, together with the Ecuadorian
Prosecutor, filed a criminal complaint of embezzlement against
three executives of City Oriente and Ecuador’s former Minister of
Energy and Mines. The charge was City Oriente’s failure to fulfill
Law 42 payments. The following day, the State Attorney General
and the Ecuadorian Prosecutor filed a second criminal complaint -
in a different district - against City Oriente’s executives for refusal
to make the payments provided for in Law 42. City Oriente
immediately reported to the Tribunal this failure to comply with
the Tribunal’s recommendation.

On October 24, 2007, the Tribunal reiterated the basis for its
restraining order, stating that “[i]t is the Tribunal’s view that said
actions may undermine the effectiveness of the provisional relief
requested by Claimant, thereby depriving Claimant of its lawful
2009] ICSID PROVISIONAL MEASURES 571

right to have its interests effectively protected.”49 The Tribunal

was clear in stating that a failure to comply with its orders in
accordance with Article 47 of the Washington Convention
violated Article 26. By stating that non-compliance would result
in liability, the City Oriente Tribunal’s action sent an important
signal regarding the power of the Tribunal. No longer, as in
previous cases, would ICSID tribunals merely reiterate the
provisional measures ordered without referring to potential
liability for failure to comply.

Subsequently, the City Oriente Tribunal granted the

provisional measures requested, holding that the “Republic of
Ecuador is responsible to stay any proceedings and actions
stemming from the criminal investigation underway that may
affect Claimant or Claimant’s officers or employees, or may
require them to make an appearance.”50

Ecuador had raised two main arguments against the

provisional measures: (a) Ecuador has a sovereign right to
prosecute and punish all crimes perpetrated in its territory, and
(b) the criminal complaint filed by Mr. Góngora should not be
viewed as an act of the State.

The Tribunal responded to the first argument by stating that

the undisputed right of Ecuador to prosecute and punish such
crimes “should not be used as a means to coactively secure
payment of the amounts allegedly owed by City Oriente pursuant
to Law No. 2006-42, since this would entail a violation of the
principle that neither party may aggravate or extend the dispute
or take justice into [its] own hands.”51

The Tribunal agreed with Ecuador’s second argument to the

extent that a complaint filed by a citizen should not be viewed as a
State act. Nevertheless, the Tribunal rejected Ecuador’s
contention because “what should actually be viewed as an act of
the State, for which Ecuador is accountable, is the institution of a

49City Oriente, ICSID Case No. ARB/06/21, Decision on Provisional Measures, ¶

15.
50 Id. ¶ 65.
51 Id. ¶ 62.
572 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

criminal proceeding by the Prosecutor’s Office based on such

complaint.”52

The City Oriente Tribunal seemed to regard the common facts

in the criminal domestic proceedings and the ICSID Arbitration as
material and decisive in reaching its decision. The criminal
proceedings were intrinsically linked to the ICSID arbitration.
Moreover, in one of the criminal complaints against City Oriente’s
executives, the Prosecutor’s Office included an express reference
to certain statements City Oriente had made in the ICSID
proceedings.

Although the cases brought by Perenco and Burlington

involved no criminal complaints, those claimants also asked the
ICSID tribunals to issue temporary restraining orders prohibiting
Ecuador from undertaking any measures against them, pending a
decision on their requests for provisional relief.

Although each of the respondents contended that Ecuador had

not formally started any contract termination proceedings, the
two ICSID tribunals responded differently. The Perenco Tribunal
held that, regardless of Ecuador’s statements, it was necessary “to
request the parties to refrain from initiating or continuing any
action or adopting any measure which may, directly or indirectly,
modify the status quo between the parties vis-à-vis the
participation contracts, including any attempt to seize any asset of
[Perenco], until it has had an opportunity to further hear from the
parties on the question of provisional measures.”53 In contrast,
the Burlington Tribunal declared that there was no need to rule
on Burlington’s request in view of Ecuador’s repeated assurances
to terminate the underlying contract.

A few days later, on March 3, 2009, in violation of the Perenco

Tribunal’s order and in defiance of the Burlington Tribunal’s
reliance on Ecuador’s assurances, a domestic administrative
tribunal ordered the immediate seizure of all of the Perenco-
Burlington consortium’s crude production. Both ICSID tribunals
reacted immediately.

52 Id. ¶ 64.
53 Perenco, ICSID Case No. ARB/08/6, Decision on Provisional Measures, ¶ 28.
2009] ICSID PROVISIONAL MEASURES 573

On March 5, the Perenco Tribunal sent an e-mail to the parties,

making it clear that its February 24, 2009 request “had and
continues to have the same authority as a recommendation, as
envisaged in Article 47 of the [Washington] Convention and
Arbitration Rule 39”.54 On March 6, the Burlington Tribunal
recommended “that the Respondents refrain from engaging in
any conduct that aggravates the dispute between the Parties
and/or alters the status quo until it decides on the Claimants’
Request for Provisional Measures or until it reconsiders the
present recommendation, whichever is first.”55 Both actions came
in the form of temporary restraining orders, issued under Article
47 of the Washington Convention.

11. Quiborax56 – Failure to obey provisional measures

– ICSID Tribunals have the power to enjoin
criminal domestic proceedings, but not
necessarily the tools to enforce this power

This dispute originated from the confiscation of eleven mining

concessions by the Plurinational State of Bolivia (“Bolivia”)
through Presidential Decreto Supremo 27.589 on June 24, 2004.
(“D.S. 27.589”). Such concessions were held by Non Metallic
Minerals (“NMM”), a Bolivian company in which Chilean co-
Claimants Quiborax and Allan Fosk claimed to have a 51%
majority interest.57

54 Id. ¶ 35.
55 Burlington, ICSID Case No. ARB/08/5, Decision on Provisional Measures, ¶ 24.
56 Quiborax S.A., Non-Metallic Minerals S.A. & Allan Fosk Kaplún v. Plurinational
State of Bolivia, ICSID Case No. ARB/06/2, Decision on Provisional Measures
(Feb. 26, 2010) (respondent files objections to jurisdiction July 30, 2010). The
author Rodrigo Gil is counsel to the Claimants in this proceeding as an attorney
with Bofill Mir & Alvarez Jana, Santiago, Chile. As this is an ongoing case and
the parallel proceeding dispute is continuing at the time of this publication, the
author will avoid any particular comment on this decision. In addition, for
these same reasons, the case facts described in this section are mainly a literal
transcription of the relevant sections of the Decision on Provisional Measures.
The information provided herein is publically available and not derived from
any personal knowledge of the author.
57 Quiborax, ICSID Case No. ARB/06/2, Provisional Measures Decision, ¶ 4
574 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

Immediately following Claimants’ request for friendly

consultations under the Chilean – Bolivian Bilateral Investment
Treaty (“BIT”), Bolivia initiated a series of administrative
proceedings against the subsidiary NMM. In an escalating series
of events, Bolivia submitted NMM to multiple investigations and
on October 28, 2004, the Bolivian Mining Superintendency
annulled the already revoked concessions.58 By November 2007,
NMM had been ordered to pay approximately US$1,200,000 in
alleged taxes and fines.59

Simultaneously, Bolivia set up an inter-ministerial task force

to evaluate the merits of Claimants’ claim.60 On December 8, 2004,
in an internal memorandum by Bolivian Authorities – that was
later made public – (the “2004 Memo”), the task force concluded
that D.S. 27.589 suffered serious legal defects and that the case
was about to become an international predicament for Bolivia.61
The task force outlined different scenarios to aid Bolivia’s defense
strategy, recommending as the “best alternative” to try to
demonstrate the existence of flaws in the processing of the mining
concessions.62

On January 18, 2005, six months after Claimants’ request for

friendly consultations and one month following the issuance of
the 2004 Memo, the Superintendencia de Empresas ordered a
corporate audit of NMM.63 The audit was carried out by
employees of the Superintendencia.64 According to the testimony
of one of them, this audit was directed to establish whether
NMM’s shareholders were Chilean nationals.65 The audit
appeared to have been ordered at the request of the Ministry of

58 Id. ¶ 9.
59 Id.
60 Id. ¶ 8.
61 Id.
62 Id.
63 Id. ¶ 23.
64 Id.
65 Id.
2009] ICSID PROVISIONAL MEASURES 575

Foreign Affairs.66 The corporate audit finished with the issuance

of Report 001/2005 where the Superintendencia employees
concluded that NMM’s shareholders were Quiborax, David
Moscoso and Allan Fosk and thus the investment by Chilean
nationals was protected by the BIT.67

On October 10, 2008, the Bolivian Minister of the State’s Legal

Defense, requested the head of Superintendencia to once again
review the file on NMM and certify if there were any irregularities
that could give rise to the annulment of NMM’s corporate acts or
the annulment of the company’s incorporation.68 A week later, on
17 October 2008, the Superintendente de Empresas confirmed the
findings of Informe 001/2005 and denied the existence of any
irregularities that could give rise to the annulment of the
company’s acts, certifying, among other things, the shareholder
composition of NMM.69

The escalated series of events did not stop, however. Despite

the certification issued by the Superintendencia de Empresas on
October 17, 2008, Bolivian authorities continued to review
Claimants’ corporate documentation.70 Bolivia discovered that an
NMM shareholders' meeting on September 11, 2001, contained a
different list of shareholders from that included in the minutes of
a meeting allegedly held 2 days later, on September 13, 2001.71
Both minutes had almost identical content, but while the minutes
of September 11, 2001 stated that the shareholders of NMM were
the attorneys and employees of the local law firm who
participated in the incorporation of NMM, the minutes of
September 13, 2001 stated that the shareholders of NMM were
Allan Fosk, Quiborax and David Moscoso.72

66 Id.
67 Id. ¶ 24.
68 Id. ¶ 25.
69 Id. ¶ 26.
70 Id. ¶ 27.
71 Id. ¶ 28.
72 Id. ¶ 28.
576 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

According to Bolivia, the existence of these two contradictory

documents, seen jointly with other corporate documents of NMM,
suggested that the minutes of September 13, 2001 may have been
forged.73 According to Claimants’ position the explanation of the
inconsistency was merely the result of a clerical error.74 Based on
this inconsistency, Bolivia prepared and initiated criminal actions
against several persons related directly or indirectly to NMM
including co-Claimant Allan Fosk, Claimants’ Bolivian business
partner David Moscoso, the former legal local counsel and his
employees who participated in the NMM incorporation, the
former employees of the Superintendencia de Empresas who
authored a report confirming the condition of Quiborax and Allan
Fosk as shareholders of NMM, and two Notaries Public whose
services NMM has used in the past.75

The proceedings regarding David Moscoso – Claimants’

Bolivian business partner – moved swiftly. Thus, on March 16,
2009, Bolivia presented formal charges against Claimants’
Bolivian business partner David Moscoso and requested his
preventive detention.76 The Judge, Ms. Margot Pérez, refused to
grant Bolivia’s initial request.77 In reaction, the Minister of the
State’s Legal Defense and the Minister of Institutional
Transparency and Defense against Corruption presented criminal
charges of prevaricato (malfeasance in office) against Judge Pérez
for failing in her functions.78 Both Ministers accused Judge Pérez
of not “taking into consideration the importance of this case that
concerns the protection of the goods and interests of the State
that are subject of an international arbitration”; failing to value
“the procedural risks that continue to exist, and that affect the
arbitration that the State of Bolivia confronts before an

73 Id.
74 Id. ¶ 33.
75 Id. ¶ 30.
76 Id. ¶ 38.
77 Id. ¶ 43.
78 Id. The Minister of the State’s Legal Defense justified his standing to file this

criminal complaint on the basis of his legal responsibilities to “promote, defend

and protect the interests of the plurinational state in jurisdictional proceedings
and arbitrations in investment disputes.”
2009] ICSID PROVISIONAL MEASURES 577

international tribunal” and by delaying the proceedings “which

negatively affects the interests of the Bolivian state, since this
causes harm and delay in the international arbitration.”79 A new
Judge was appointed in charge of the criminal proceeding.

Shortly after this replacement, Claimants’ Bolivian business

partner David Moscoso was subject to a bail of US$300,000 on his
personal liberty, to be deposited within seventy-two hours.80 Mr.
Moscoso did not pay. The hearing on David Moscos’s summary
proceeding took place on August 14, 2009.81 The resulting
decision indicated that Mr. Moscoso had confessed his
participation in the forgery of the minutes NMM’s shareholders'
meeting of September 13, 2001,82 though this confession
contradicts Mr. Moscoso´s previous declaration before the
criminal courts, rendered on January 30, 2009.83

On September 14, 2009, Claimants submitted a Request for

Provisional Measures.84 Claimants contended that “[t]he criminal
proceedings were merely instrumental to Bolivia’s goals in the
arbitration, which were to (i) deny the condition of Claimants as
foreign investors under the BIT; (ii) obtain, manipulate and
fabricate evidence that supports Bolivia’s defense strategy, and
(iii) ultimately, force Claimants to give up their claims in the
arbitration.85

Claimants alleged that the criminal proceedings impaired the

rights to preservation of the status quo and non-aggravation of
the dispute; the right to the procedural integrity of the arbitration
proceedings; and the right to exclusivity of the ICSID proceedings
in accordance with Article 26 of the ICSID Convention.86

79 Id.
80 Id. ¶¶ 38-39.
81 Id. ¶ 41.
82 Id.
83 Id. ¶ 42.
84 Id. ¶ 13.
85 Id. ¶ 46.
86 Id. ¶ 49.
578 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

Respondent noted at the outset that provisional measures are

exceptional in nature and should not be granted lightly.87
Respondent also contended that provisional measures may not be
granted in this case because the criminal proceedings do not
affect any of Claimants’ rights in the dispute;88 there was no self-
standing right to the preservation of the status quo or the non-
aggravation of the dispute;89 and that the criminal proceeding
was not dealing with the same ICSID matter.90

On February 26, 2010, the Tribunal issued its decision granting

Claimants request ordering that Respondent take all appropriate
measures to suspend the criminal proceedings identified as Case
Nº 9394/08, and that Respondent also refrain from initiating any
other criminal proceedings directly related to the present
arbitration, or engaging in any other course of action which may
jeopardize the procedural integrity of this arbitration.91

According to press declarations made by the Bolivian Minister

of the State’s Legal Defense, Bolivia has formally contended that it
will not comply with such decision since in their opinion it violate
Bolivia’s sovereign. At the closing of this article, criminal
proceedings were ongoing.

B. Standards for evaluating requests for provisional measures

The traditional purpose of provisional measures is to preserve

claimants’ rights during judicial or arbitral proceedings.
Generally, provisional measures are requested to protect rights
that underlie the claims at issue in the proceeding. A typical
provisional measure in a commercial arbitration case involves a
creditor seeking to secure payment of the credit on which his
claim is based. Because the claim could subsequently be
dismissed for lack of legal standing to sue or for other reasons,
tribunals must balance a petitioner’s right to temporary relief

87 Id. ¶ 73.
88 Id. ¶ 75.
89 Id. ¶ 81.
90 Id. ¶ 92.
91 Id. at p. 46.
2009] ICSID PROVISIONAL MEASURES 579

during the proceeding with the need to preserve the non-moving

party’s position if the petioner should ultimately not prevail.

In this context, the traditional way to balance both claimants’

and defendants’ competitive positions in international arbitration
is the requirement of satisfying the urgency, necessity, and
irreparable harm test. Under this test, provisional measures must
be urgent and necessary to prevent irreparable harm to the rights
for which protection is sought. Tribunals will usually grant
provisional measures only if they determine that there is a high
probability that the alleged right will be recognized in the arbitral
award.

ICSID arbitration differs from commercial arbitration,

however. ICSID tribunals evaluate the sovereign behavior of
states, not just the actions of the parties to commercial contracts.
In their decision-making process, ICSID tribunals thus must
consider the host sovereign’s powers to define its own policies
and to carry out its own domestic proceedings. To accommodate
this difference from the consideration of the “usual” corporate
behavior, the traditional three-prong test should take into
consideration that provisional measures must not place an
excessive burden on a sovereign.92 This duty to avoid an extreme
burden on the host state is particularly important in cases of
provisional measures to enjoin parallel domestic litigation where,
as explained in the previous section, there is a tension between
ICSID and domestic tribunals in the exercise of their respective
jurisdictional powers.

In addition, in cases of provisional measures to enjoin parallel

domestic litigation, the nature of the rights for which protection is
sought is related to the duty of abstention, which is aimed at: (1)

92 This is a principle that could be derived from Article 35 of The International

Law Commission’s Articles on State Responsibility, which provides:

A State responsible for an internationally wrongful act is under an

obligation to make restitution, that is, to re-establish the situation
which existed before the wrongful act was committed, provided and to
the extent that restitution … (b) Does not involve a burden out of all
proportion to the benefit deriving from restitution instead of
compensation.

Available at http://www.ilsa.org/jessup/jessup06/basicmats2/DASR.pdf.
580 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

maintaining the status quo in effect when the investment dispute

arose, and (2) protecting the ICSID proceedings as the exclusive
forum to decide an investment dispute.

Thus, the right to non-aggravation of the ICSID dispute and the

right to the exclusivity of ICSID jurisdiction are aimed at
safeguarding the procedural fairness of ICSID proceedings. These
rights are functionally linked to the ICSID arbitration itself rather
than to the parties’ legal positions. The non-aggravation of the
ICSID dispute and the right to the exclusivity of ICSID jurisdiction
are self-standing post-investment dispute rights.

In the context of parallel litigation, the right to non-

aggravation of the ICSID dispute and the right to the exclusivity of
ICSID jurisdiction thus do not form part of the subject matter of
the ICSID dispute. Their existence is separate and not disputed.

As a technical matter, in cases of parallel domestic litigation,

interim measures do not provide provisional relief; instead they
provide permanent relief, protecting the rights of non-aggravation
of the ICSID dispute and the ICSID exclusivity itself during the
entire life of such rights. These rights arise when the investment
dispute is crystallized, but, significantly, they terminate when the
ICSID award is rendered. From the moment the investment
dispute crystallizes, both parties are indisputably entitled to both
rights. For that reason both parties – not just claimants – are
entitled to ask for provisional relief to enjoin parallel domestic
proceedings. These special features of the rights protected by
provisional measures in cases of parallel domestic litigation must
be considered in the test that ICSID tribunals use to decide
whether to grant provisional measures.

This section addresses ICSID cases applying the traditional

urgency, necessity, and irreparable harm test.93 ICSID case law of
course is still evolving and, although ICSID tribunals have usually
applied the same three-prong test whether parallel domestic
proceedings are involved or for other reasons, there is an emerging

93 In this sense, professor Schreuer also considered that “ICSID arbitration

practice shows that tribunals will only grant provisional measures if they are
found to be necessary, urgent and are required in order to avoid an irreparable
harm. Schreuer, Commentary on the ICSID Convention, supra note 3, at 776.
2009] ICSID PROVISIONAL MEASURES 581

tendency for ICSID tribunals to redefine the test to address the

unique circumstances raised by parallel domestic litigation.

As to the urgency element, as will be explored below, ICSID

tribunals have taken varying approaches to a party’s delay in
asking for provisional relief. In Tokios Tokelés, the Tribunal
concluded that the measure requested was not urgent due to the
delay in requesting relief: The requesting party had the
opportunity to file interim measure with its previous papers. In
contrast, the Azurix Tribunal found that, although the party’s delay
reduced the sense of urgency, a delay does not necessarily affect
the urgent nature of the measure. This dichotomy between a
subjective and objective approach to the urgency of the measure
requested is usually present in cases of parallel domestic litigation.

ICSID Tribunals’ approach to the necessity prong in cases of

parallel domestic litigation focuses upon the relationship between
the respective scopes of the ICSID and domestic proceedings. In
terms of evaluating necessity, Tokios Tokelés was the central case to
address this issue. It held that it is sufficient to show a minimal link
between the domestic proceedings and the investor or his
investment and, further, these domestic proceedings have the
capacity to affect the rights invoked by the parties in the ICSID case.

In applying the irreparable harm prong, ICSID tribunals in

general have tried to reach a balance between two opposing
approaches, where the harm caused by a parallel litigation can be
fully compensated in the damages award. At one extreme is
Plama, where the Tribunal held that harm is not irreparable if it
can be compensated for by damages. At the other extreme is
Azurix, where the Tribunal took an opposite view. Moreover, in
trying to reach a balance, the Burlington Tribunal ruled that a
provisional measure based on irreparable harm should not be
granted when more damages come from the mere passage of time,
as opposed to specific actions initiated by a sovereign state.

Burlington represents the first step in recognizing the special

nature of the rights involved in cases of parallel domestic
litigation. The Tribunal held:

the rights to be preserved by provisional measures are

not limited to those which form the subject matter of the
dispute, or substantive rights as referred to by the
582 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

Respondents; [and further, those rights] may extend to

procedural rights, including the general right to the
status quo and to the non-aggravation of the dispute.
These latter rights are thus self-standing rights.94

The key distinction in cases involving parallel domestic

litigation is that provisional measures preserve independent
procedural rights, not the substantive rights involved in the ICSID
controversy. Therefore, the classic prerequisites of urgency,
necessity and irreparable harm should be redefined with an eye
toward optimizing the protection of ICSID rights: exclusivity of
ICSID proceedings and the non-aggravation of ICSID disputes.

The remainder of this section describes the key provisional

measure cases addressing the three-prong test of urgency,
necessity and irreparable harm in a parallel domestic litigation
scenario. Each case begins again with a summary of the holding,
followed by a brief factual background.

1. Tokios Tokelés95 – The urgency standard is subjective

– The necessity test requires only a minimal
link between the domestic proceeding and
the investor or his investment

In 1994, Tokios Tokelés, an editing and publishing company

incorporated in Lithuania, opened a subsidiary called Taki spravy
in the Ukraine. In January 2002, Taki spravy published a book
that allegedly contained a favorable description of Yulia
Tymoshenko, the leader of the political opposition.96

In February 2002, the Ukraine initiated a series of proceedings

and audits against Taki spravy. It carried out numerous, invasive
tax investigations, filed a series of actions against Taki spravy in
Ukrainian courts and ordered that all company assets be placed
under administrative custody.

94 Burlington, ICSID Case No. ARB/08/5, Decision on Provisional Measures, ¶ 55.

95 Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Decision on

Jurisdiction (Apr. 29, 2004), Procedural Order 1 (July 1, 2003), Procedural

Order 3 (Jan. 18, 2005), Award (July 26, 2007).
96 Leader of the political party Всеукраїнське об'єднання "Батьківщина" (All

Ukrainians United for the Nation).

2009] ICSID PROVISIONAL MEASURES 583

Tokios Tokelés believed that the investigations were a direct

consequence of their published comments about the opposition
leader, and in response to these events, Tokios Tokelés initiated
ICSID arbitration proceedings against the Ukraine. Tokelés
subsequently requested provisional measures to enjoin the
Ukraine’s domestic proceedings against Taki spravy.

In July 2003, the ICSID Tribunal granted the requested

provisional measures based on: (a) the right to the exclusivity of
ICSID proceedings as established in Article 26 of the Washington
Convention, and (b) the obligation of non-aggravation of the
dispute by either party involved. The Tribunal held that the
Ukrainian authorities must suspend or discontinue any judicial or
other proceedings before domestic authorities that might in any
way jeopardize the principle of exclusivity of ICSID proceedings
or aggravate the dispute submitted to ICSID. The Tribunal
concluded that:

In becoming a party to the Convention, Ukraine has

committed itself to the principal of exclusivity of ICSID
proceedings, and, hence, to the exclusion of domestic
judicial or administrative remedies. Pursuant to this
principle, which lies at the very heart of the ICSID
institution and mechanism, once the parties have
consented to ICSID arbitration, they must refrain from
initiating or pursuing proceedings in any other forum in
respect of the subject matter of the dispute before
ICSID.97

The Tribunal’s recommendation, however, made reference only to

proceedings that could pose a threat to the exclusivity of ICSID or
could aggravate the dispute, holding:

(a) that the parties to a dispute over which ICSID has

jurisdiction must refrain from any measure capable of
having a prejudicial effect on the rendering or
implementation of an eventual ICSID award or decision,
and, in general, refrain from action of any kind which
may aggravate or extend the dispute, or render its
resolution more difficult; and (b) that the parties must
withdraw or stay any and all judicial proceedings

97 Tokios Tokelės, Procedural Order 1, ¶ 3.

584 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

commenced before national jurisdictions, and refrain

from commencing any further such proceedings in
connection with the dispute before the ICSID tribunal.98

The Tokelés decision was an important application of the

principle of non-aggravation of the ICSID dispute in parallel
domestic litigation. Moreover, the Tribunal recommended the
suspension of any proceedings “related to Tokios Tokelés and its
investments in Ukraine through Taki spravy.”99 Thus, in order to
obtain the suspension of proceedings before domestic courts, it is
sufficient to show that there is a minimal link between the
domestic proceedings and the investor or his investment, and that
these proceedings have the capacity to affect the rights invoked
by the parties.

The procedural history of this case does not end here,

however. In September 2004, Tokios Tokelés requested that the
ICSID Tribunal reaffirm its decision to grant provisional measures
and issue the following new instructions: (a) cease criminal
proceeding against O.V. Danylov, General Director of the
subsidiaries of Tokios Tokelés in Ukraine; (b) cease confiscation
of assets from another subsidiary (Taki II); and (c) cease tax
investigations of this subsidiary.

Tokios Tokelés contended that the criminal proceeding

against Danylov would violate its right to the exclusivity of ICSID
proceedings to settle investment disputes. In support of their
contention, Tokelés argued that the criminal proceedings had
forced Danylov to leave the Ukraine, which, in turn, caused a loss
of profits for the subsidiary, Taki II. The loss of profits in turn
affected the financing of the ICSID proceedings and put at risk the
issuance of the final award by the ICSID Tribunal.

The Tribunal denied the request for provisional measures to

cease the criminal proceedings. First, the Tribunal found no
necessity because there was no evidence of causation. Second,
based upon Tokios Tokelés’ delay in requesting provisional
measures, the Tribunal concluded that the measure requested
was not in fact urgent. In so finding, the Tribunal used a

98 Id. ¶ 2.
99 Id. ¶ 7.
2009] ICSID PROVISIONAL MEASURES 585

subjective standard to measure the urgency of the provisional

measure request, holding:

Moreover, the circumstances underlying the provisional

measure requested do not appear urgent. Although the
criminal proceedings against O.V. Danylov were initiated
in March 2002 – nine months before ICSID registered
Claimant’s Request for Arbitration – Claimant did not
include these proceedings in its first Request for
Provisional Measures dated June 3, 2003, or its letter of
June 24, 2003, to which Order No. 1 refers. Claimant
cannot credibly claim that circumstances it did not
consider urgent 18 months ago are urgent now.100

The ICSID Tribunal also rejected the other two requested

provisional measures. It first held that it was not necessary to
grant the request to cease confiscation of assets because the
encumbrance had been removed in May 2004. Likewise, the
Tribunal rejected the measure intended to stop the tax
investigations, as those audits had already concluded, and Tokios
Tokelés had not provided sufficient evidence that the
investigations had caused irreparable harm to the right invoked.

The Tokios Tokelés Tribunal clarified the scope of the elements

of necessity and urgency: A measure is necessary when one
party’s actions cause or threaten to cause irreparable harm to the
rights invoked by the other party; a measure is urgent when the
harmful impact on the rights of one party is likely to occur before
the final award.

2. Plama101 – The harm is not irreparable if it can be

compensated for by damages. The “only-more
damages” argument is a valid basis to dismiss a
request for provisional relief

In the late 1990’s, the Government of Bulgaria (“Bulgaria”)

carried out the privatization of a state oil refinery and a Cypriot
company, Plama Consortium Limited (“Plama”), by acquiring

100 Tokios Tokelės, ICSID Case No. ARB/02/18, Procedural Order 3, ¶ 13. I.
101 Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No.

ARB/03/24, Decision on Jurisdiction (Feb. 8, 2005), Decision on Provisional

Measures (Sept. 6, 2005), Award (Aug. 27, 2008).
586 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

49.9% of the shares of the company operating the refinery, Nova

Plama AD (“Nova Plama”). Shortly thereafter, differences arose
between Plama and Bulgaria related to pre-existing debts
incurred when the refinery was under State administration.
Additionally, the parties had a dispute over the enactment of a
new Environmental Protection Act in July 2002, which released
Bulgaria from any historic liability concerning environmental
contamination caused by State companies that had been
subsequently privatized. According to Plama, this caused a
negative impact on the refinery’s operations, as well as on Plama’s
reputation and commercial market value.

On December 24, 2002, under the Energy Charter Treaty and

the Cyprus-Bulgaria BIT, Plama filed a Request for Arbitration
before ICSID. Subsequently, a number of proceedings were
initiated against Plama in Bulgarian courts. Among these was a
bankruptcy process against Nova Plama, initiated by two private
creditors: Yorset Holdings and DZI Bank. These creditors pursued
the collection of the same debts that were subject to dispute in the
ICSID arbitration. On July 19, 2005, the Court of the District of
Pleven declared the bankruptcy of Nova Plama, ordering the
company to cease its commercial activities and to sell its assets
and distribute the proceeds among its creditors. Appealing this
decision did not suspend its immediate execution.

Moreover, in February 2005, the Antitrust Commission of

Bulgaria instructed Nova Plama to reimburse Bulgaria for certain
subsidies that the company had received in violation of antitrust
laws. That decision was also immediately enforceable. At the same
time, Bulgaria’s Credits Collecting Agency instituted a proceeding
against Nova Plama to collect certain taxes and other public debts.

In July 2005, Plama requested the ICSID Tribunal to issue

provisional measures to enjoin the proceedings before Bulgarian
courts and to prevent Bulgaria from carrying out any act that
could aggravate the dispute.102 In support of its request, Plama
invoked the exclusivity of the ICSID arbitration and the right to

102 Plama additionally requested that the Respondent abstain from adopting

any action that could aggravate or extend the disputes submitted to the ICSID
tribunal, and also to secure the payment of trial costs associated with the
provisional measures requested.
2009] ICSID PROVISIONAL MEASURES 587

non-aggravation of the dispute. Moreover, Plama argued that the

domestic proceedings would affect its right to continue operating
its refinery.

On September 6, 2005, the ICSID Tribunal dismissed Plama’s

requests for the following reasons. First, none of the domestic
proceedings violated ICSID’s exclusive jurisdiction. The Tribunal
distinguished this case from CSOB, where a provisional measure
to stay bankruptcy proceedings was granted. The material
distinguishing fact in Plama was that creditors who were not
parties to the ICSID arbitration had initiated the bankruptcy
proceeding. On the issue of the antitrust and tax collection
proceedings, the Tribunal found that those proceedings were at
an administrative level only; the fact that those proceedings had
not yet reached a judicial level was therefore material in this case.
In addition, the Tribunal found that the antitrust claim and tax
collection proceedings were not ICSID claims and, therefore,
would not affect Plama’s claim. This reasoning relates to the
necessity of any provisional measure, requiring a close
connection between the domestic litigation and the ICSID
proceedings.

Second, there was no violation of the non-aggravation duty,

which the Tribunal defined as “refer[ing] to actions which would
make resolution of the dispute by the Tribunal more difficult.”103
In the Tribunal’s opinion, “it is a right to maintenance of the status
quo, when a change of circumstances threatens the ability of the
Arbitral Tribunal to grant the relief which a party seeks and the
capability of giving effect to the relief.”104

Third, regarding the right to continue operating the refinery,

the ICSID Tribunal noted that the “Claimant has not sought
restitution or any other relief from this Tribunal which would
permit it to continue to operate the Nova Plama refinery.”105 In
the Tribunal’s view, “[b]ecause the claims and relief which the
Claimant seeks are limited to damages, the scope of the ‘rights
relating to this dispute,’ which deserve protection by provisional

103 Plama, ICSID Case No. ARB/03/24, Decision on Provisional Measures ¶ 45.
104 Id.
105 Id. ¶ 47.
588 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

measures, is necessarily limited to the damage claims.”106 Given

that Plama had only claimed damages as a remedy, the Tribunal
decided that the outcome of the local proceedings would not
affect the Tribunal’s ability to render its final award.107

The logical extension of this argument is that the irreparable

harm requirement would not be met either. In the words of the
Tribunal:

Whatever the outcome of the bankruptcy proceedings or

the [antitrust] or [tax collecting] proceedings in Bulgaria
is, Claimant’s right to pursue its claims for damages in
this arbitration and the Arbitral Tribunal’s ability to
decide these claims will not be affected. The Tribunal
accepts Respondent’s argument that harm is not
irreparable if it can be compensated for by damages,
which is the case in the present arbitration and which,
moreover, is the only remedy Claimant seeks.108

According to this reasoning, there is no violation of the non-

aggravation duty if the harm caused by domestic litigation can be
compensated by a damages award. A mere increase in damages
would not constitute an aggravation of the dispute. The
significance of this holding cannot be minimized. Had this only-
more-damages argument been raised in earlier cases, it could

106 Id. ¶ 41.

107 The Tribunal held that the rights to be invoked by the parties should refer

to the “rights in dispute” or, at least, to the “rights relating to the dispute” and
that, consequently, they must be related to the arbitration.

The rights to be preserved must relate to the requesting party’s ability

to have its claims and requests for relief in the arbitration fairly
considered and decided by the arbitral tribunal and for any arbitral
decision which grants to the Claimant the relief it seeks to be effective
and able to be carried out. Thus the rights to be preserved by
provisional measures are circumscribed by the requesting party's
claims and requests for relief. They may be general rights, such as the
rights to due process or the right not to have the dispute aggravated,
but those general rights must be related to the specific disputes in
arbitration, which, in turn, are defined by the Claimant’s claims and
requests for relief to date.

Id. ¶ 40.
108 Id. ¶46.
2009] ICSID PROVISIONAL MEASURES 589

have been applied to dismiss the vast majority of the provisional

measures requested, beginning with the first request made in
Holiday Inns as, in nearly every case, damages were the only
remedy being sought. Applying this principle, irreparable harm
could therefore never be shown when the only remedy sought is
damages. The “only-more-damages” argument thus carries the
risk of being dispositive, regardless of the nature and
characteristics of the investment disputes submitted to the ICSID,
or of the facts in each case. Significantly, it could eliminate the
chances of provisional measures awards in an ICSID arbitration,
as the authority of ICSID tribunals to grant remedies other than
damages can also be challenged.

3. Azurix109 – The urgency standard is objective

– The only-more damages argument is not a valid
basis to dismiss a provisional measure request

On June 30, 1999, the Province of Buenos Aires entered into a

30-year concession agreement (“Concession Agreement”) with
Azurix Buenos Aires S.A. (“ABA”), an Argentinean subsidiary of
the U.S. company, Azurix Corp. The purpose of the Concession
Agreement was to distribute potable water and to treat and
dispose of sewage in Buenos Aires

According to Azurix, Buenos Aires would breach the

Concession agreement if it: (a) repudiated the contractual right to
calculate tariffs in U.S. dollars; (b) failed to provide certain
infrastructure contemplated in the Concession Agreement; or
(c) failed to resolve historical problems that arose during the
public administration of the company. Following an alleged breach
of one or more of these provisions, in September 2001, Azurix
initiated arbitration proceedings against Argentina before ICSID.

During the course of the ICSID proceedings in 2002, Buenos

Aires terminated the Concession Agreement on the grounds that
ABA had not complied with the minimum investment
requirements and that the quality of services provided did not
meet standards provided for in the Concession Agreement.

109 Azurix Corp. v. Argentine Republic, ICSID Case. No. ARB/01/12, Decision on

Provisional Measures (Aug. 6, 2003), Decision on Jurisdiction (Dec. 8, 2003),

Award (July 14, 2006).
590 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

In February 2002, ABA filed for reorganization proceedings to

avoid bankruptcy. The purpose of reorganization proceedings
under Argentina’s Bankruptcy Law – like those provided in most
national bankruptcy codes – is to allow the restructuring of a
company’s liabilities and debts and to provide for payment terms
that will allow the company to avoid bankruptcy. To accomplish
that, the Bankruptcy Law requires that preventive agreements
between the company and its creditors must be approved by 50%
of the non-secured creditors, representing two-thirds of the
creditors declared admissible by the bankruptcy judge. If majority
approval is not obtained, any creditor may trigger the liquidation
of the company.110

By resolution No. 46/02, dated May 27, 2002, the regulatory

authority Organismo Regulador de Aguas Bonaerenses
(“Authority”) declared that the termination of the Concession
Agreement, due to ABA’s default, caused damage to Buenos Aires
in the amount of A$173 million. Immediately following the
Authority’s action, credit was verified before the bankruptcy
judge, but it was limited to A$20 million. As a result, Buenos Aires
became the key creditor in ABA’s bankruptcy proceedings.

Azurix countered that the liquidation of ABA would

automatically deprive ABA of its investment in Argentina and,
therefore, it would not be allowed to appear in local
administrative or court proceedings to defend its rights. To avoid
that scenario, on July 15, 2003, Azurix filed a Request for
Provisional Measures, asking the ICSID Tribunal to recommend
that Argentina refrain from any action or omission capable of
aggravating or extending the dispute, in particular with respect to
the reorganization of ABA. According to Azurix, the provisional
measures requested would preserve ABA’s right to continue or
initiate administrative or judicial proceedings to defend its rights.

The Tribunal determined that it was not in a position to

recommend the provisional measures requested. The Tribunal
reasoned that granting the request “would inevitably lead the
Tribunal to prejudice the merits of the case before the Tribunal
[would be] in a position [to consider the merits].”111 The Tribunal
110 Azurix, ICSID Case. No. ARB/01/12, Decision on Provisional Measures ¶¶ 4-6.
111 Id. ¶45.
2009] ICSID PROVISIONAL MEASURES 591

determined that the right invoked by Azurix was not protected by

the provisional measures requested, because “the rights that the
Tribunal may preserve with a recommendation of provisional
measures are limited to those that the treaty accords to the
investors of the nationality of the state parties.”112 Nevertheless,
the Tribunal did ask the parties to “abstain from adopting
measures of any character which could aggravate or extend the
controversy submitted to arbitration.”113

This Tribunal viewed the urgency question somewhat

differently than previous tribunals. Azurix became aware of the
risk of bankruptcy liquidation triggered by Buenos Aires on
October 10, 2002, when the bankruptcy judge accepted the credit
verified by Buenos Aires in the reorganization proceeding.
Azurix, however, waited more than nine months to ask the ICSID
Tribunal to adopt a provisional measure to stop the proceedings.
Unlike in Tokios Tokelés, where the Tribunal found that the
party’s delay reduced the sense of urgency of their position, the
Azurix Tribunal concluded that “the lack of explanation for this
delay does not affect the urgent nature of the measure now
requested. In fact, objectively, the delay has increased its
urgency.”114

Regarding the irreparable harm requirement, one of

Argentina’s arguments in opposition to the request was the “only-
more-damages” argument raised in Plama. According to
Argentina, “the new losses suffered by Azurix as a result of ABA’s
liquidation could be compensated in the arbitration award.”115 In
contrast to the Plama Tribunal’s holding , the Azurix Tribunal
rejected the “only-more-damages” argument on the principle that
“once a dispute is submitted to arbitration, the parties shall not
take steps that may aggravate or extend their disputes or
prejudice the execution of the award.”116 This represents an
important shift from Plama, where the Tribunal held that the

112 Id. ¶43.

113 Azurix, ICSID Case. No. ARB/01/12, Award ¶¶ 11-13.
114 Id. ¶34.
115 Id. ¶21.
116 Id. ¶ 46.
592 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

obligation not to aggravate the dispute was unaffected by a mere

incremental increase in damages even where damages were the
sole remedy requested.

4. The Ecuadorian cases117 – The only-more damages argument is

City Oriente a valid basis to dismiss a provisional
Burlington measure request only if such
Perenco damages resulted from the mere
Repsol passage of time

After the issuance of temporary restraining orders in each of

these cases, the claimants raised the issue of provisional
measures to stop parallel domestic litigation in Ecuador.
Claimants asked for the protection of three rights in support of
their respective requests for provisional measures: (a) the right
to specific performance of the production-sharing contracts; (b)
the right to non-aggravation of the dispute; and (c) the right to
exclusivity of ICSID proceedings under Article 26 of the
Washington Convention.118

The primary argument in support of the right to specific

performance of the production-sharing contracts was that Law 42

117 Burlington Resources, Inc. and others v. Republic of Ecuador and Empresa
Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No. ARB/08/5
(Decision on Jurisdiction pending); City Oriente Limited v. Republic of Ecuador
and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No.
ARB/06/21 (discontinued following settlement on Sept. 12, 2008); Perenco
Ecuador Limited v. Republic of Ecuador and Empresa Estatal Petróleos del
Ecuador (Petroecuador), ICSID Case No. ARB/08/6 (tribunal reconstituted May
6, 2010); Repsol YPF Ecuador, S.A. and others v. Republic of Ecuador and
Empresa Estatal Petróleos del Ecuador (PetroEcuador), ICSID Case No.
ARB/08/10 (claimants’ memorial on the merits filed Dec. 17, 2009). The facts
of these cases were explained in detail in the previous section.
118The legal discussion in Repsol was slightly different than in the other cases.
After submitting the Request for ICSID Arbitration, Repsol and Petroecuador
agreed to modify the underlying production sharing contract. Therefore, the
focus of the discusion triggered by the provisional measure requested in this
case was to determine if Ecuador was obliged to stay the collection
proceedings under the amended agreement. For this reason, the Repsol
Tribunal did not undertake a thorough analysis of the traditional requirements
to grant provisional measures, i.e. urgency, necessity and irreparable harm, as
well as the rights to be protected by provisional relief. Repsol, ICSID Case No.
ARB/08/10, Provisional Measure Decision (June 17, 2009).
2009] ICSID PROVISIONAL MEASURES 593

and Decree 662 implied a breach of the production-sharing

contracts by Ecuador and, therefore, the claimants were entitled
to sue for contract performance. Section 1505 of the Ecuadorian
Civil Code provides that the party in bonis may choose between
contract performance and contract termination, with a claim for
damages in either case; the Claimants chose to demand contract
performance. Thus, the provisional measures that Claimants
requested were designed to preserve the effectiveness of an
expected award that would grant the remedy of contract
performance. In order to recommend the provisional measures
claimants requested, the Tribunals had to find that contract
performance was a feasible and lawful remedy in an ICSID
arbitration. That was not easy to conclude in light of the Occidental
Tribunal’s dismissal of provisional relief on the grounds that
specific performance was not an available remedy.119

To reach this seemingly opposite conclusion, the City Oriente,

Perenco and Burlington Tribunals distinguished the underlying
facts of their respective cases from the Occidental case. The first
factual distinction was that Ecuador had already terminated the
production-sharing contract in Occidental when the claimants
filed their request for arbitration. This meant that Occidental was
claiming the restitution of a concession Ecuador had already
taken over. By contrast in these new cases, the claimants
requested that the Tribunal order Ecuador to comply with
contractual commitments undertaken in the production-sharing
contracts.

119 Occidental Petroleum, ICSID Case No. ARB/06/11, Decision on Provisional

Measures ¶¶ 66, 75, 79, 82, and 93 (Aug. 17, 2007). The Occidental Petroleum
Tribunal analyzed the theoretical existence of the right to restitution of
Occidental’s contractual rights to carry out the exploration and exploitation of
the concession. The ICSID Tribunal held that this right would be conditioned
on the possibility or impossibility to reinitiate the operations of the
concessions. In the view of the Occidental Petroleum Tribunal, to carry out this
right would be “legally impossible” given that the contracts had been cancelled
in the exercise of a State’s sovereignty. Forcing Ecuador to reverse these
actions and reinstate the rights of the investor to resume the operations in
concession would impose an excessive burden on the State – conduct
forbidden by Article 35 of the ILC Articles on State Responsibility. The
Occidental Petroleum Tribunal thus determined that forcing a sovereign State
to restore a concession after nationalization or termination would constitute a
disproportionate reparation that would interfere with the sovereignty of such
State.
594 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

The second factual distinction was that Occidental concerned

purely an investment treaty claim. In City Oriente, Perenco, Repsol
and Burlington, however, the Tribunals had to examine the
provisional measures requested in the context of a contractual
case subject to Ecuadorian law. This difference was material. The
Occidental Tribunal concluded that “in arbitration proceedings
subject to international law, a claimant cannot demand
performance of a contract previously terminated by the State by
virtue of its sovereign powers.”120 The Tribunals in these new
cases found that an ICSID dispute based on a contract violation
subject to domestic law was outside the scope of Occidental.
Thus, the Tribunals gave leave to the Claimants to request
contract performance as a remedy before ICSID, therefore
permitting provisional measures to be used to protect the
effectiveness of an award.121

Since the right invoked in support of the provisional measure

request was the same as the right that was part of the ICSID
dispute and not a self-standing right, the discussion focused on
the plausibility of Claimants’ right. Ecuador argued that City
Oriente mistakenly referenced Section 1505 of the Civil Code, a
section that allegedly did not apply because the production-
sharing contract was an administrative contract. In the view of
the City Oriente Tribunal, “the party requesting the measure need
only prove that its claim has the appearance of good right, fumus
boni iuris, or, in other words, the petitioner must prove that the
rights invoked are plausible.” Following this line of reasoning, the
Tribunal found that this requirement was met because an
Ecuadorian High Court issued at least one decision “where Section
1505 of the Civil Code was applied to a contract entered into by
and between a private person and a public body, where the Court
admitted Plaintiff's claim and ordered the public entity to perform
its contractual duties.”122

120City Oriente, ICSID Case No. ARB/06/21, Decision on Revocation of

Provisional Measures ¶ 43.
121 Id.; Perenco, ICSID Case No. ARB/08/6, Provisional Measures Decision ¶ 48;

Burlington, ICSID Case No. ARB/08/5, Provisional Measures Decision ¶¶ 70-71.

122 City Oriente, ICSID Case No. ARB/06/21, Decision on Revocation of

Provisional Measures ¶¶ 20, 21 and 38.

2009] ICSID PROVISIONAL MEASURES 595

Ecuador raised another related argument: that Law 42 should

be qualified as a new legal obligation, rather than as a contract
modification. The City Oriente Tribunal also rejected this
contention because “City Oriente has a right to have the status
quo ante maintained for as long as these arbitration proceedings
are pending, and that the Contract continues to be regularly
performed as agreed to by the parties … and it also has a right to
request that Petroecuador and Ecuador refrain from adopting any
unilateral compulsory or coercive measure impairing contractual
balance.”123

Second, as to the right to the non-aggravation of the dispute,

one of Ecuador’s contentions was that “there is no general,
autonomous and abstract principle to prevent the aggravation of
the dispute that would automatically justify the passing of
provisional measures,”124 and that the preservation of the status
quo and the non-aggravation of the dispute were not “free
standing rights in international law, independent from
contractual or treaty rights.”125 The Tribunals rejected this
argument. In particular, the Burlington Tribunal held that:

the rights to be preserved by provisional measures are

not limited to those which form the subject matter of the
dispute, or substantive rights as referred to by the
Respondents; [and further, those rights] may extend to
procedural rights, including the general right to the
status quo and to the non-aggravation of the dispute.
These latter rights are thus self-standing rights.126

123 Id. ¶33.

124 Id. ¶24.
125 Burlington, ICSID Case No. ARB/08/5, Decision on Provisional Measures ¶ 39.
126 Id. ¶ 60. The right to the preservation of the status quo was also discussed
in these cases. Although closely linked to the right to the non-aggravation of
the dispute, it has its own analysis in City Oriente. In this case, the Tribunal set
forth that “The sole purpose of the Provisional Measures is to maintain the
status quo ante while a decision is pending on this proceeding and while the
Tribunal determines who is right under Ecuadorian Law, chosen by mutual
agreement of the parties as applicable laws.” City Oriente, ICSID Case No.
ARB/06/21, Decision on Revocation of Provisional Measures ¶ 92.
596 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

Ecuador raised a second defense to the irreparable harm

requirement; that is, that an increase in damages could never
constitute sufficient grounds for the recommendation of
provisional measures – such damages could be compensated in
the final award. This was the same only-more-damages argument
that was accepted in Plama, rejected in Azurix, and later revived
and followed in Occidental. Because Occidental was a closely-
related case, most of the ICSID Tribunals in the related cases were
obliged to deal with this issue again.

The Occidental Tribunal held that the mere incremental

increase in eventual damages suffered by the claimant does not
justify provisional measures, making a clear statement that
“provisional measures are not designed to merely mitigate the
final amount of damages.”127 The Occidental Tribunal stated:

[It] is not directed at the non aggravation of the dispute,

but merely at the non increase of alleged damages; it is
not a provisional measure that the Tribunal can order …
the harm in this case is only “more damages”, and this is
harm of a type which can be compensated by monetary
compensation, so there is neither necessity nor urgency
to grant a provisional measure to prevent such harm.128

Once again, these Tribunals did not follow the Occidental

approach of only-more-damages. The Burlington Tribunal was
particularly clear, holding that “[u]nlike Occidental, this case is
not one of only ‘more damages’ caused by the passage of time. It
is a case of avoidance of a different damage. The risk here is the
destruction of an ongoing investment and of its revenue-
producing potential which benefits both the investor and the
State.” 129 In essence, the Burlington Tribunal adopted the only-
more-damages argument used in Occidental, but it reduced its
scope to cases where “more damages” resulted from the “mere
passage of time.” Thus, it can be argued that more damages caused

Occidental Petroleum, ICSID Case No. ARB/06/11, Decision on Provisional

127

Measures ¶¶ 96, 97.

128 Id. ¶¶ 98, 99.
129 Burlington, ICSID Case No. ARB/08/5, Decision on Provisional Measures ¶

83- 84.
2009] ICSID PROVISIONAL MEASURES 597

by specific actions that are initiated by sovereign states are

outside the scope of Occidental.

In Occidental, the “more damages” were being caused by the

ship-or-pay related contracts. Consequently, the “more damages”
resulted from keeping the status quo and, as such, were caused by
the “mere passage of time.” However, that was not what happened
in Plama, where “more damages” resulted from the ongoing
bankruptcy, antitrust and tax collection domestic proceedings.

After dismissing each of the arguments raised by Ecuador, on

November 19, 2007, the City Oriente Tribunal granted the
provisional measure requested and confirmed its decision on May
13, 2008, by dismissing a request for revocation of the provisional
measures. Later, in May 2009, the Perenco Tribunal also granted
the provisional measure; the Repsol and Burlington Tribunals
made their favorable recommendations in June 2009. In City
Oriente, Perenco and Burlington, as a counterbalance to their
recommendations of provisional measures, the ICSID tribunals
also ordered that the claimants deposit in an escrow account all
payments allegedly due under Law 42 and that those funds shall
only be released in accordance with a final award.

In the next and final section, a new test is suggested from the
ICSID case law. This test is designed to be sensitive to the tension
between ICSID and domestic jurisdictions and to take into
consideration the self-standing and procedural nature of the
rights usually invoked in support of provisional relief in cases of
parallel domestic litigation.

IV. CONCLUSION: REDEFINING THE TEST FOR GRANTING PROVISIONAL

RELIEF IN CASES OF PARALLEL DOMESTIC LITIGATION

Provisional measures are set forth in Article 47 of the

Washington Convention and in Rule 39 of the ICSID Arbitration
Rules. Although these regulations establish that ICSID tribunals
can only recommend the adoption of provisional measures, today
there is agreement that ICSID tribunals are actually empowered
to order these measures. This empowerment is particularly
important in cases of parallel domestic litigation as Sovereigns
are sometimes tempted to initiate domestic proceedings against
foreign investors as a counter-reaction to filing an ICSID claim
against them. This situation is especially critical since parallel
598 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

domestic litigation has been involved in more than 50% of all

provisional measures cases in ICSID history. A detailed review of
these cases reveals two main features with respect to parallel
proceedings. First, in cases of parallel domestic litigation, a
jurisdictional tension is present between the ICSID authority to
rule on the investment dispute and the national courts to decide
the underlying domestic controversy. Second, the rights invoked
in support of the request to enjoin domestic proceeding are self-
standing rights that are not at issue in the investment dispute.

As to the jurisdictional struggle between ICSID and domestic

courts, ICSID tribunals have tried to reach a balance between
their authority to decide the investment dispute and the powers
of sovereigns to carry out their own domestic proceedings. Thus,
ICSID tribunals, on one hand, have tended to limit the scope of
Article 26 of the Washington Convention to cases where the
exclusivity of ICSID jurisdiction is clearly in peril so as to not
affect the ordinary power of domestic courts and, on the other
hand, have strengthened the enforceability of provisional
measures once granted, considering them as proper orders.

In this sense, ICSID Tribunals have considered that, as a

general rule, (a) only judicial proceeding – and not administrative
proceedings – are capable of interfering with ICSID jurisdiction;
(b) judicial proceeding should have been initiated after the ICSID
controversy was crystallized; (c) provisional measures should not
be too broad; and, finally (d) there has to be a close relationship
between the investment dispute and the domestic controversy.

As to the rights invoked to enjoin parallel domestic

proceedings, they consist mostly of the exclusivity of ICSID
jurisdiction set forth in Article 26 of the Washington Convention
and the non-aggravation of ICSID disputes derived from Article
38(1) of the Statute of the International Court of Justice. Such
rights are self-standing rights that are not part of the underlying
investment controversy. They are also post-investment dispute
rights that came attached to the ICSID proceedings. This is a
critical feature compared to the vast majority of provisional
measure cases in international arbitration where the rights to be
protected and the rights underlying the arbitration claims are the
same. ICSID tribunals have not yet adequately addressed this
distinction.
2009] ICSID PROVISIONAL MEASURES 599

The exceptional features of the provisional measures cases

involving parallel domestic litigation require a rethinking of the
traditional three-prong test of urgency, necessity and irreparable
harm usually required to grant provisional relief. The analysis
that ICSID tribunals undertake for deciding whether to order to
enjoin a domestic proceeding (a) has to be sensible to the
jurisdictional tension that is present between ICSID and domestic
courts, and also (b) has to properly take in consideration the self-
standing rights to which both parties are entitled: the right not to
aggravate the ICSID controversy and the right to the ICSID
exclusive forum to decide the investment dispute.

Accordingly, some distinction needs to be made depending

upon the nature of the parallel domestic proceedings:

First, if the domestic litigation is an administrative proceeding,

the right invoked in support of the provisional measure requested
should not be the exclusivity of ICSID jurisdiction because there is
no jurisdictional conflict unless such administrative proceeding
could render the ICSID jurisdiction ineffective. As a general rule,
to enjoin administrative proceedings, the more appropriate right
to invoke is the non-aggravation of the ICSID dispute. ICSID
tribunals are more free to order the suspension of administrative
proceedings to the extent that those proceedings may aggravate
the dispute.

Second, if the domestic litigation is a judicial proceeding, a

special test must be applied in order to strike a balance between
the autonomy of domestic courts and the supremacy of
international tribunals, while also optimizing and protecting the
rights involved in these cases.

With these factors in mind, and in light of the evolution of

ICSID case law on this matter, a tailored test to apply in cases
involving provisional measures to enjoin judicial parallel
domestic proceedings should take in consideration the following
four steps:

Step 1: Strong case for ICSID jurisdiction

Given the struggle between ICSID arbitral proceedings and

domestic courts, the existence of a prima facie case of ICSID
jurisdiction to grant provisional relief in cases of parallel domestic
600 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

litigation should be more rigorous than in other cases of

provisional measures where this conflict is absent. In addition,
before deciding on enjoining a domestic judicial proceeding, the
ICSID tribunal should briefly verify whether the jurisdictional
requirement are prima face met in a more accurate way than
required to merely register the ICSID case under Article 28(3) of
the Washington Convention, but less rigorous than considered
necessary for a decision on jurisdiction. This provides a means to
balance the tension between ICSID and domestic tribunals, and thus
avoid the risk of ICSID enjoining parallel proceedings only to later
dismiss the claims for lack of their own jurisdiction. In other words,
in cases of parallel domestic litigation, a strong case on ICSID
jurisdiction is required rather than a strong case on the merits.

Step 2: Close proximity between the domestic

proceeding and the ICSID arbitration

The main purpose behind provisional measures to enjoin

domestic litigation under Article 26 of the Washington Convention
is to protect ICSID’s exclusive jurisdiction. Therefore, one of the
primary factors to be considered in determining whether to grant a
provisional measures request is the extent to which the domestic
proceedings are closely linked to the ICSID arbitration. Only
parallel jurisdictional domestic litigation is within the scope of
Article 26 of the Washington Convention. There should be a close
relationship between the domestic proceedings and the ICSID
arbitration. In this sense, among the factors to be considered by
the ICSID tribunal in establishing the close proximity between the
two proceedings are: (a) whether the identity of the parties
involved in such proceedings are the same; (b) whether the
domestic claim was motivated by the ICSID claim; (c) whether the
outcome of the domestic proceeding would affect the effectiveness
or enforceability of the ICSID award; (d) whether the domestic
proceeding is being used to obtain unfair evidence to be used in the
ICSID arbitration; and (e) whether the outcome of such domestic
proceeding would affect the understanding of any of the legal
issues involved in the ICSID arbitration.

Step 3: Deference to domestic courts

Even in cases where the ICSID arbitration and the domestic

proceedings are closely linked and where there is a strong case
for jurisdiction, the ICSID tribunal may still decline to grant a
2009] ICSID PROVISIONAL MEASURES 601

provisional measure request to stop a domestic proceeding on

policy grounds. Denials for policy reasons might occur when the
ICSID tribunal considers that: (a) the domestic court has not been
fully informed about the existence of an ICSID arbitration;
(b) rights of innocent third parties might be affected; (c) the
measure requested is too broad; or (d) provisional measures will
interfere with a sovereign’s policies that go beyond private
interests of foreign investors.

Step 4: Urgency

ICSID tribunals have taken two different approaches in

applying the urgency prong of the existing test: one is objective,
the other subjective. Ultimately, this discussion relates to the
effects of the petitioner’s delay in asking for provisional relief.
Although the implications of delay should be analyzed on a case-
by-case basis, it seems reasonable that, in cases involving the
right to exclusivity of ICSID jurisdiction, an objective test for
urgency should be used.

Urgency is the only element of the classic three-prong test of

urgency, necessity and irreparable harm that applies in parallel
domestic litigation scenarios, but it is redefined as an urgency to
avoid a harm to the right to exclusivity of ICSID jurisdiction. It is
not necessary that the harm be irreparable as the rights protected
by provisional measures in a parallel domestic litigation scenario
are independent self-standing procedural rights, unrelated to the
substance of the dispute. The requirement to show irreparable
harm as a condition to grant provisional relief in cases of parallel
domestic litigation would cause unfair and excessive interference
with those rights. The traditional element of necessity and the
redefined harm requirement are conceptually included in the
close proximity step of this test.

In sum, the evolution of ICSID case law regarding provisional

measures shows that the traditional urgency, necessity and
irreparable harm test needs to be redefined in cases of provisional
measures to enjoin parallel domestic litigation. These cases have a
unique status due to the tension between the supremacy of
international tribunals and the autonomy of domestic courts, and
also because they are aimed at protecting procedural rights that
are not disputed in the ICSID arbitration. For these reasons, a more
tailored test of when such relief should be granted must be used.
602 &
WORLD ARBITRATION & MEDIATION REVIEW [VOL. 3:4-5

RODRIGO GIL

Rodrigo Gil is a law professor at the University of

Chile School of Law and senior associate in the
international arbitration group of Bofill Mir &
Alvarez Hinzpeter Jana, Santiago, Chile. He has
experience in investment arbitration, representing
both foreign investors and sovereigns, as well as
in commercial arbitration.

Mr. Gil obtained his Law degree from Universidad de Chile (1999)
and his LL.M. at Berkeley Law School, California in 2008
(Fulbright Scholar). He worked in the international arbitration
team of Arnold & Porter LLP in Washington D.C. and London in
2008 and 2009.

Mr. Gil can be reached at [email protected].