‘Playing By The Tribunals’ Rules’: A Solution For Resolving The Conflict Between Rules And Practice In International Investment Agreements Interpretation

Abstract

In his treatise on Interpretation of Investment Treaties, Trinh Hai Yen highlighted a serious problem with International Investment Agreements (IIA): IIAs have had a very tumultuous history with the Vienna Convention on the Law of Treaties (VCLT) as far as the application of Article 31 and 32, the customary standard for dealing with the interpretation of treaties, is concerned. In most instances, arbitral tribunals have not applied these rules properly despite making explicit references to the latter provisions of the VCLT in their awards. In some circumstances, tribunals have just not followed the order in which Article 31 and Article 32 are to be used or have omitted certain steps in the interpretive process laid down in the VCLT, while in some other instances, tribunals did not to follow the VCLT at all and instead relied on other external considerations. There have also been instances when tribunals have over-relied on judicial decisions or have over-read IIA provisions. In fact, a study by the late jurist Thomas Walde showed that very few tribunals actually follow the VCLT rules of treaty interpretation in a step-by-step manner.

Considering that tribunals very rarely follow the VCLT, the question of how to resolve this conflict between the practice of tribunals and the rules regarding IIA interpretation has arisen. Trinh Hai Yen believes that this is not even a point for consideration and that tribunals need to follow the VCLT strictly, and only after exhausting the VCLT steps should tribunals even think of adopting other approaches to treaty interpretation. Even then, any approach adopted should be only used to deduce the mutual intention of the parties to the IIA. However, another view briefly articulated by Gary Born was the possibility that perhaps IIAs could have a separate set of rules for their interpretation.

Based on this premise, I propose that Gary Born might have suggested a million-dollar idea, and in fact, the best way to reduce the conflict between the practice of tribunals and the rules of interpretation is to have a lex specialis regime for IIA interpretation. In brief, I argue that there is a consistent trend in the interpretation of IIA terms by tribunals even when they are not adhering to the VCLT. Tribunals try to align the meanings of IIA terms with the understanding of those terms in International Investment Law (IIL). Further, this trend is a desirable trend since the entire group of IIAs have started behaving like a de facto international regime, and there is a need for consistency and predictability within an international regime. Therefore, in order to reduce the conflict between the interpretive practice of tribunals and the rules of interpretation, I propose a lex specialis regime for IIA interpretation that settles ambiguities in IIA terms in favor of consistency over diversity in the IIA regime.

Keywords: Treaty Interpretation, Vienna Convention on The Law of Treaties, International Investment Law, International Investment Agreements, International Investment Arbitration