Tuesday, August 4, 2020

Interpreting a treaty - Who has the last word?

The debate on inconsistent interpretation of investment agreements by arbitral tribunals has been one of the critiques of the international investment regime. Further, the overtly expansive and innovative interpretations of treaty provisions by arbitral tribunals is also perceived to question the legitimacy of the system. The constant tension between what treaty parties intended and what the arbitral tribunals actually interpreted the provisions to be is a continuing theme in investment arbitration discussions. It also is a reflection of the battle between judicial autonomy and diplomatic preserve.

The debate is more recently reflected in the form of how State parties can jointly interpret treaties. Seung-Woon Lee has this very exhaustive piece in the Kluwer Arbitration blog on joint treaty interpretations by State parties to control treaty interpretation and has studied recent treaty texts to show the diversity as well as innovation in structure and intent. It also points towards the diversity investment treaty language can have to serve State party intents.

On whether joint interpretative notes are binding or not, the author notes:
Moreover, as pointed out by the CJEU, the independence of a tribunal is an important factor to consider. If a joint interpretation could bind a tribunal in a pending case, this could compromise the tribunal’s ability to adjudicate a dispute between the parties. By agreeing to ISDS in IAs, Contracting States confer to a tribunal the power to resolve disputes between foreign investors and States. ISDS tribunals have a duty to determine a case, interpret a treaty and apply it. Upon making this determination, a tribunal should independently and impartially make its decision. If a joint interpretation becomes binding on a tribunal in a pending case, the tribunal arguably will not be able to independently decide on the proper interpretation of a treaty and apply it to a pending case.
However, aren't arbitral tribunals creatures of the investment agreement between the parties? Aren't their powers and duties dependent on the treaty provisions? Does the arbitral tribunal have an independent power to interpret provisions irrespective of how State parties intended to be? After all treaties bind parties to the agreement to certain standards of obligations. Those obligations are decided by the parties themselves - joint interpretative provisions are a form of that control. When broad treaty language can be interpreted widely by tribunals citing parties intention to leave it open for interpretation, why should the converse not be true?


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