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Report No. 260

D. Article 22: Amendments.

(i) Analysis and comment:

7.4.1 There is little uniformity in the amendment clauses in India's earlier BITs, and most, including the 2003 Model, do not have amendment clauses. Indian BITs that provide for amendments (e.g., India-Colombia BIT)101 do so in broad and general language. The 2015 Model captures the power to amend with greater specificity. It is suggested that certain additional factors may be included, such as the requirement of mutual consent, when an amendment can take place, the procedure for obtaining an agreement, the form of the amendment, the procedures required to make the amendment effective, and the date on which the amendment becomes effective.

101 For instance, Article 17(3), of the India-Colombia Bilateral Investment Agreement provides that "This treaty may at any time after its entry into force be amended by mutual consent". See, Agreement for the Promotion and Protection of Investments between the Republic of Colombia and the Republic of India, 2009, Article 17.3.

7.4.2 Requirements for amendment should be in consonance with terms for entry into force (Article 23), and should conform to internal legal requirements.

7.4.3 Under Article 22.1, "a tribunal award must be consistent with all amendments to this Treaty", and the treaty shall stand amended "at all times" to the extent that the parties agree. This raises issues of the date from which the amendments become effective. Article 22 is inconclusive as to whether the revised provisions apply to disputes already settled (retrospective application) as well as those pending (i.e. whether there is retroactive extinguishment of exercised rights). Also, it does not address the issue of whether revised provisions can be applied to a cause of action that arose before amendment (but where no resolution has been sought).

7.4.4 Retrospective application of amendments also goes against principles of estoppel and legitimate expectations.102 International investment law also does not endorse retroactive application of amendments with respect to exercised rights, i.e. where an investor has initiated a claim. International law jurisprudence suggests that, once invoked, jurisdiction cannot be annulled by a subsequent 'extrinsic fact' such as amendment or termination of a treaty.

See Nottebohm Case (Lichtenstein v Guatemala) (Preliminary Objection) [1953] ICJ Rep 111, 123; Questions of Interpretation and Application of the 1971 Montreal Convention arising from the Aerial Incident at Lockerbie (Preliminary Objections) (Libyan Arab Jamahiriya v United Kingdom) [1998] ICJ Rep 9, 23-24.

102 Article 28, VCLT, provides that unless a different intention appears from the treaty or is otherwise established, its provisions do not bind a party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the treaty with respect to that party. This is more the case where rights under the unamended treaty have been exercised and they stand crystallised in terms of an award of the tribunal.

7.4.5 Further, Investor-State tribunals recognise the doctrine of estoppel in public international law, RSM Production Corporation and others v Grenada, ICSID Case No ARB/10/16, Award (10 December 2010) para 7.1.2; Petrobart Limited v Kyrgyz Republic, SCC Case No 126/2003, Award (29 March 2009) 67; Pan American Energy LLC and BP Argentina Exploration Company v Argentine Republic, ICSID Case No ARB/03/13, Decision on Preliminary Objections (27 July 2006) para 159; Pope & Talbot Inc v Canada, UNCITRAL (26 June 2000) p 111. the essential features of which were established in the Temple of Preah Vihear case.105

Although no precedent or jurisprudence provides guidance on this question, tribunals have been willing to accept jurisdictional arguments based on estoppel and good faith. See Government of East Kalimantan v PT Kaltim Prima Coal and Others, ICSID Case No ARB/ 07/3, Award (28 December 2009) paras 211-17; Phoenix Action Ltd v Czech Republic, ICSID Case No ARB/06/5, Award (15 April 2009) paras 94-5; RSM v Grenada (n 97) para 7.1.2.

105 Merits, Judgement, [1962] ICJ Rep 6, ICGJ 160 (ICJ 1962), 15 June 1962, International Court of Justice.

7.4.6 Tribunals have also held that denial-of-benefits clauses can operate only prospectively, Plama v Bulgaria (n 29) paras 159-65; Veteran Petroleum Ltd v Russia, PCA Case No AA 228, Interim Award on Jurisdiction and Admissibility (30 November 2009) paras 514-5.

See also Philip Morris Asia Ltd v Australia, UNCITRAL, PCA Case No 2012-12, Procedural Order No 4 (26 October 2012) paras 38, 58; Liman Caspian Oil BV and NCL Dutch Investment BV v Republic of Kazakhstan, ICISD Case No ARB/07/14, Award (22 June 2010) p 225. as to hold otherwise would undermine the treaty's object to create a 'long-term' framework for investment protection, and could lure putative investors with legitimate expectations only to have those expectations made retrospectively false much later. Plama v Bulgaria (ICJ) p. 162.

7.4.7 This is also consistent with Article 2.5 (2015 Model) under which "this Treaty shall not apply to claims.. raised prior to [its] entry into force" and which should, by corollary, also be the applicable test even as regards amendments to the treaty.

7.4.8 Under international law, in the absence of a specific clause, amendments should not have retroactive application, thus absolving State responsibility for past treaty breaches for which an investor has not yet made a claim.109 This is also consistent with Article 2.5 (2015 Model).

109 The International Court of Justice (ICJ) in Ambatielos (Jurisdiction) (Greece v United Kingdom) stated that a provision bringing a 1926 treaty into force 'might, in the absence of any saving clause, have been regarded as putting the Treaty into full operation so as to completely to wipe out' an earlier 1886 treaty 'and all its provisions, including its remedial provisions, and any claims based thereon'. That conclusion was avoided in Ambatielos because of a declaration attached to (and, as determined by the court, forming part of) the 1926 treaty.

The declaration specifically provided that the 1926 treaty 'does not prejudice claims on behalf of private persons based on the provisions of the [1886 treaty]', which could continue to be referred to arbitration pursuant to the dispute settlement provisions of the 1886 treaty. Although the Court declined to give retrospective effect to the particular provision at issue in the Ambatielos case, it acknowledge that '[s]uch a conclusion might have been rebutted if there had been any special or any special object necessitating retroactive interpretation'.

7.4.9 It is suggested that Article 22, for consistency with international law and Article 2.5, may state that amendments will not apply retroactively for claims arising out of events which occurred, or claims raised, prior to the amendment's entry into force.

7.4.10 If these concerns are addressed, there is no requirement to specify that amendments "shall be binding on the tribunals.", for the binding nature of the amendment upon the tribunals (to the extent applicable) follows from the amendment.



Analysis of the 2015 Draft Model Indian Bilateral Investment Treaty Back




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