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ICSID Case No. ARB/12/29
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Award
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Date of Award 30 April 2015
Introduction
The award in the International Centre for Settlement of Investment Disputes (ICSID) case Ping An v. Belgium was dispatched to the parties on 30 April 2015.Footnote 1 The case is of significance for a variety of reasons. To start with, it is the first time that Chinese investors instituted arbitration proceedings under the ICSID rules. Furthermore, it is the first time that Belgium is cited as the respondent in an international investment case.
Facts and Claims
The case concerns a dispute between two companies incorporated under the laws of China (Ping An Life Insurance Company and Ping An Life Insurance Group Company – ‘the investors’ or ‘the Claimants’) and Belgium. The investors, after acquiring in 2007–2008 a significant amount of shares in Fortis (or ‘FBB’), a major Dutch/Belgian financial institution, became Fortis’ lead shareholder.Footnote 2
In September 2008, Fortis was hit by the collapse of Lehman Brothers. Fortis’ solvency was in peril thus leading other banks to refrain from lending to FBB. FBB was forced to resort to the marginal lending facility offered by BNB at punitive interest rates.Footnote 3 These circumstances led the Benelux governments to intervene by taking a series of measures designed to rescue the bank.Footnote 4 The measures, however, did not manage to stabilize FBB. A second wave of actions was agreed by the Benelux governments, which resulted in a take-over of FBB by Belgium. Belgium, subsequently, and with the approval of Fortis’ shareholders, sold 75% of FBB to BNP Paribas in May 2009.Footnote 5
The investors alleged that Belgium's actions in attempting to rescue Fortis were unreasonable and harmful. In particular, they submitted that, by adopting such measures, Belgium (i) breached the investors’ legitimate expectations, (ii) forced Fortis to accept Belgium's expropriation of their investment, (iii) discriminated against them and their investment (by treating Dexia – a Belgian bank – more favorably), and (iv) failed to fairly and fully compensate the investors while itself was unjustly enriched.Footnote 6 The investors sought to establish the Tribunal's jurisdiction in the 2009 China–Belgium Bilateral Investment Treaty (BIT), alleging, however, breaches of the substantive provisions of a different treaty, the 1986 China–Belgium BIT.
Belgium raised five jurisdictional objections in the proceedings. The State argued that the 2009 BIT applied only to disputes arising after 1 December 2009, and that it was evident that Ping An's dispute arose before that date (objection ratione temporis). Belgium also argued that (i) the 2009 BIT only covered claimed breaches of that treaty or other existing treaties, not including the terminated 1986 BIT (objection ratione materiae); (ii) the investors had failed to provide a proper notice of dispute under the 2009 BIT (objection ratione voluntatis); (iii) the investors had no prima facie case on the merits; and (iv) the Monetary Gold principle barred the case from proceeding without the involvement of the Netherlands, whose conduct would certainly be adjudicated by the Tribunal.Footnote 7
Main Discussion on Jurisdiction
The Tribunal upheld Belgium's objections and declined jurisdiction.Footnote 8
The Tribunal began by setting out the applicable legal rules for its analysis. It identified the issue as being one of interpretation of two BITs and found the Vienna Convention on the Law of Treaties to be of assistance.Footnote 9
Dispute Resolution and Non-retroactivity of Treaties
The Tribunal addressed the question of non-retroactivity of treaties. After examining the parties’ submissions on the relevance of the principle of non-retroactivity in international law as well as its application in the Mavrommatis case, it found that the principle was not applicable in the case at hand. It reasoned that ‘[i]f (which is doubtful) the Mavrommatis case stands for a principle that there is a presumption that the jurisdiction of a Tribunal extends to disputes which arose prior to its establishment, such a principle finds almost no support in investor-State arbitration’.Footnote 10 According to the Tribunal, the ‘temporal application of jurisdictional provisions is a question separate from the retroactivity of substantive provisions’.Footnote 11 It finally reasoned that ‘the application of a new dispute settlement mechanism to acts which may have been unlawful when they were committed is not in itself the retroactive application of law’.Footnote 12
Successive BITs
The Tribunal then dealt with the interpretation of Article 8(1) of the 2009 BIT, which established consent for ICSID arbitration. The language of the Article read ‘[w]hen a legal dispute arises between an investor of one Contracting Party and the other Contracting Party, either party to the dispute shall notify the other party to the dispute in writing’.Footnote 13 In this regard, according to the Tribunal, Article 8(1) did not encompass disputes having arisen prior to the entry into force of the 2009 BIT. Thus, it rejected the more expansive approach maintained by the investors.Footnote 14
Moreover, Article 10(2) of the 2009 BIT provided that the BIT did not apply to any dispute ‘which was already under judicial or arbitral process’ before 1 December 2009.Footnote 15 Therefore, according to the Tribunal, such disputes would continue to be based on the 1986 BIT.Footnote 16 Nevertheless, the Tribunal appeared to be of the view that the notices of dispute sent prior to the one of 2012 did not suffice for the dispute to be considered under an ‘arbitral process’ prior to December of 2009.Footnote 17
As for the disputes for which notice was given under the 1986 BIT, but which had not matured for the purposes of Article 10(2) of the 2009 BIT, the Tribunal found it implausible that the parties had merely forgotten to provide for such a case.Footnote 18 In its analysis, the Tribunal then set out six reasons to substantiate its conclusion that such disputes were not subject to the 2009 BIT.Footnote 19 The Tribunal stated that the 2009 BIT ‘substituted and replaced’ the 1986 BIT,Footnote 20 but found that this could not be interpreted as permitting notified but not matured disputes to subsist under the 2009 BIT.Footnote 21
The Tribunal expressed its concern that disputes under the 1986 BIT and under arbitration proceedings before 1 December 2009 would be limited by the limited dispute resolution provisions of that BIT. Conversely, disputes under the same BIT but under arbitration proceedings commencing after 1 December 2009 would benefit from a broader dispute-settlement mechanism. However, the Tribunal found nothing to justify the extension of the 2009 BIT to disputes arising before its entry into force.Footnote 22
