A. Introduction
A partial award was delivered on 30 January 2007 in a dispute between The Channel Tunnel Group, a company governed by British law, and France-Manche SA, a French company, on the one part, and the Governments of the United Kingdom and the French Republic on the other.Footnote 1 This arbitration is of an exceptional nature for various reasons. For example, it is probably the first time that two States have been involved as defendants in an arbitration tribunal. The distinctly specific legal architecture that has governed the construction and the operation of the Tunnel has conferred a very particular shape on the arbitration authority, as we will attempt to demonstrate.
First, it is important to present the ins and outs of this eminently uncommon dispute. The origin of the Tunnel is to be found in the signing of the Canterbury Treaty between France and Great BritainFootnote 2 on 12 February 1986, which spelled out the conditions for the granting of a concession to the builders and operators of the work. A concession contract was subsequently entered into on 14 March 1986 in Paris between the two States, on one hand, and the public limited company, France-Manche, and the English firm, The Channel Tunnel Group Limited,Footnote 3 on the other. It grants to these two companies a concession aiming at the development, financing, construction and provision of a permanent service for a period of 55 years, which has, ultimately, been extended to 99 years following a concession extension agreement entered into on 13 February 1998.
By way of a petition filed in 2003, the two concessionary companies started arbitration proceedings against the two States based on two specific grounds. The first claim is directly related to illegal immigration and the proximity between the Sangatte refugee centre and the French infrastructures of Eurotunnel [hereinafter the Sangatte claim]. In the claim, the concessionaires complained about the repeated delays, torts and costs related to the frequent intrusions into their Coquelles terminal of illegal immigrants intending to enter Great Britain. They also alleged that the SNCF (French national railways) had received better treatment from both governments as far as consideration of the issue of illegal immigration was concerned. In addition, they complained that the use of the Tunnel by illegal immigrants has led the United Kingdom to impose civil penalties on the concessionaires.
The second claim concerned the grant of significant subsidies and other benefits, direct or indirect, to SeaFrance Company, a direct competitor of Eurotunnel, by the two governments [hereinafter the SeaFrance claim]. This treatment allowed SeaFrance to remain in operation and to renew its fleet, without equivalent consideration having been given to the concessionaires.
The concessionaires assessed their damage at approximately £30 million for the Sangatte claim and at £428 million for the SeaFrance claim. The concessionaires appointed Messrs Yves Fortier CC QC and Jan Paulsson as members of the Tribunal of Arbitration. HE Judge Gilbert Guillaume, ex-President of the International Court of Justice, was appointed by France, and Rt Hon Lord Millett was appointed by the United Kingdom. Finally, Professor James Crawford SC was appointed Chairman of the Tribunal. Clerical services for the Tribunal were provided by the Permanent Court of Arbitration which was conducted under PCA Rules. Following a request from the governments, the arbitrators decided to treat the issue of retrievable damages separately from that of their monetary evaluation; this second point would be, if necessary, decided at a later stage of the proceedings.Footnote 4
The ruling of 30 January 2007 was a partial award. The arbitration tribunal initially accepted jurisdiction for the two separate claims raised by the plaintiffs. However, in relation to the matter of the support to SeaFrance, the arbitration tribunal ultimately considered that there was no legal basis for the claim in either the Canterbury Treaty or the concession contract and decided that it should fail in its entirity.Footnote 5 On the other hand, in relation to the illegal immigrants issue, the tribunal held that it was up to France and the United Kingdom to maintain normal safety and public order conditions at the Coquelles terminal and in its vicinity. In failing to take appropriate measures to this effect, the tribunal held that the two States had acted in breach of Articles 2.1 and 27.7 of the concession contract. The plaintiffs have, therefore, the right to start a second phase in the proceeding, following which the damage sustained due to this contractual breach will be, if necessary, subject to an assessment.
B. Jurisdictional Foundation of the Arbitration Tribunal
In reaching its decision, the arbitration tribunal undertook a meticulous and detailed analysis of a number of different issues. The decision was made all the more difficult by the locating of the concession contract at the interface between public international law, French law and English law. Similarly, the very particular legal architecture of the situation complicated questions of the powers and jurisdiction of the arbitration tribunal itself. These questions depended on interpretations of both the concession contract and the Canterbury Treaty.
The petition filed in the arbitration by the two concessionary companies was obviously based on the provisions of the concession contract and, more precisely, on Article 40.1. However, this text provides that ‘any dispute between the Concessionaires or either of them and the Principals or either of them relating to this Agreement shall be submitted to arbitration in accordance with the provisions of Article 19 of the Treaty at the request of any party’. There is, therefore, a reference back to the Canterbury Treaty and the arbitration dispute settlement mechanism established therein. Article 19.1 (b) of the Treaty provides that an arbitration Tribunal shall be set up for the settlement of concession-related disputes between the governments and the concessionaires. If the jurisdiction of the arbitration tribunal initially lies, therefore, on the arbitration clause stipulated in the concession contract, it is actually also dependent upon the rules laid down in Article 19 of the Canterbury Treaty, which are themselves complementary to an agreement in the form of Exchange of Letters relating to arbitration settlement and entered into on 29 July 1987 between the French and the British Governments.Footnote 6 The foundation text of the jurisdiction of the Tribunal, therefore, exhibits the characteristics of being somehow ‘compartmentalized’. The arbitration clause contained in the concession contract, the only instrumentum signed by all the parties to the dispute, refers to the provisions of the Treaty between only the two States. The latter text provides for the setting up of an arbitration system applicable at the same time to disputes between the two States, as well as to disputes between concessionaires and to disputes between the concessionaires and the two States. The jurisdiction of the arbitration tribunal rests, therefore, on both the Treaty and on the concession contract. But once a decision had been reached on this issue, the exact framework of jurisdiction of the arbitration tribunal was left to be determined.
C. Jurisdictional Scope of the Arbitration Tribunal
The Tribunal was, in fact, faced with difficulties in relation to the interpretation of Article 40.1 of the concession contract, which provides, as noted above, for the submission to an arbitration proceeding as provided for in Article 19 of the Canterbury Treaty of ‘any dispute between the Concessionaires or either of them and the Principals or either of them relating to this Agreement’. In other words, any dispute relating to the concession contract itself. The question about the proper definition to be attributed to the expression ‘any dispute relating to the Concession’ was raised by the concessionary companies who sought to enlarge significantly the rules of law that the arbitration tribunal would be able to consider.
Article 40.4 of the concession contract certainly provides for the application by the Tribunal of ‘relevant provisions’ of both the Treaty and the concession contract. But it also allows the tribunal to turn to ‘relevant principles of international law’ and to ‘the rules of English law or the rules of French law … when recourse of those rules is necessary for the implementation of particular obligations under English or French law’. In applying both Articles 40.1 and 40.4 together, the concessionaires based their petition not only on the Canterbury Treaty and on the concession contract, but also on other rules of public international law and even on provisions of national and EC laws. As a result, the concessionaires sought to bring within the remit of the arbitration all bilateral agreements entered into between France and Great Britain pertaining to the cross-channel Service and, in particular, the Sangatte Protocol, which provided for the closure of the eponymous Centre. But, in addition to these, the concessionaires have also raised the issue of the enforcement of rules of general international law and, more particularly, of the law for the protection of investments and of the European Convention on Human Rights.Footnote 7 The principles of French law on government contracts were also referred to.Footnote 8 At one point, even violations of EC competition law were raised, in relation to the alleged more favourable treatment which SeaFrance had received.Footnote 9
This reference to laws other than the Canterbury Treaty and the concession contract led to a very significant extension of the Tribunal's jurisdiction. One particular effect of this was to allow the concessionaires, as plaintiff, to file petitions that simply had a ‘factual link’ with the concession contract, without these petitions being based directly on a genuine violation of specific provisions of the concession contract.Footnote 10 Through this process, the concessionaires attempted to make claims for damages related to violations of rules of public international law and of EC law; these violations were linked with the concession contract, but they did not rest on an express violation of a provision of the concession contract or of the Canterbury Treaty. Apart from the fact that it extended considerably the area of petitions likely to be filed, this strategy exposed the arbitration Tribunal to the risk of having its jurisdiction extended to areas theoretically meant for other jurisdictions, be it the Strasbourg Court, the Luxembourg Court, the French Administrative Courts or even the International Court of Justice.
From a methodological point of view, it is worth mentioning that to resolve this issue the arbitration Tribunal based itself exclusively on the jurisprudence of public international law. It is, therefore, implicitly recognized as a jurisdiction rooted in this legal system, which was not obvious considering the presence in the Tribunal of the two companies constituting the Eurotunnel Group, which are subject to national law. But this locating of the question of jurisdiction in public international law is undeniable, in so far as the criteria applied by the Tribunal for defining of its arbitration jurisdiction were based exclusively on decisions of the International Court of Justice,Footnote 11 the Permanent Court of International JusticeFootnote 12 and the International Tribunal for the Law of the Sea.Footnote 13 Indeed it was the decision of the ICJ in the Oil Platforms Case Footnote 14 which provided the Tribunal with the cornerstone of its reasoning.Footnote 15 On the basis of this case law, the arbitration Tribunal firmly defined its jurisdiction as arising only from the Canterbury Treaty and the related concessionary contract,Footnote 16 declaring that ‘national and European law claims against the States are to be subject of proceedings before the appropriate national or European forums’.Footnote 17 Accordingly, the jurisdiction of the arbitration Tribunal was limited only to petitions based on a violation of the concession contract. More precisely, for the Tribunal, ‘the only source’ of the respective rights and obligations of parties was the Canterbury Treaty, but only for its provisions implemented by the concession contract, and the contract itself in its entirety, whether or not its provisions went beyond a mere implementation of the Treaty.Footnote 18 Only damages sustained through violations of these two sets of provisions could be examined.
Any violation of other texts and, in particular, of other public international law agreements, for example those covering the cross-Channel service, were beyond the Tribunal's jurisdiction. A fortiori violations of rules of the European Convention on Human Rights and of EC law were also excluded. However, this delimitation of arbitration jurisdiction did not necessarily imply that the Tribunal was compelled to examine only the concession contract and relevant provisions of the Canterbury Treaty. It is important to understand that it simply refused to examine violations and related damages of provisions other than these. In other words, alleged violations of the Sangatte Protocol or of the EC regulations on State aid, and the resulting damages, would not be examined by the Tribunal. On the other hand, and this is what constitutes all the subtlety of the reasoning adopted, the arbitrators did not exclude—at least at the level of jurisdiction—that a violation of the concession contract may be assessed, for example, against rules of general public international law. In other words, even if the direct violation of such rules was beyond its jurisdiction, the evaluation of a violation of the concession contract in comparison with these provisions was not excluded. It is in the light of this that the Tribunal intended to draw a line between its jurisdiction and the law applicable to the case.
D. Applicable Law
Once the outline of its jurisdiction was established, it was up to the arbitration Tribunal to take a stand on the essential features of the dispute, an exercise which still involved significant difficulties. The determination of the nature of the concession contract entered into on 14 March 1986 was, in particular, an especially difficult process, in so far as it concerned a quadripartite agreement involving two sovereign States and two private companies, one established under English law and the other a product of the French legal system. For the Tribunal, this agreement could not be considered as a treaty,Footnote 19 in so far as a treaty can only be concluded by sovereign States as subjects of public international law (which excluded both private companies).Footnote 20 It is, thus, a contract but a contract of a particular nature since it is governed ‘by international law’.Footnote 21 It is, in other words, an ‘international contract’ to which ‘the principles of international law in the field of interpretation should, thus, be applied’.Footnote 22
The inclusion of the concession contract in the realms of public international law renews the theories, considered at times today as being a bit out of date, aimed at the ‘internationalizing’ of State contracts.Footnote 23 Over and above this reference, to which the arbitrators have certainly not been impervious, this assertion gives some food for thought. One may, as such, wonder about the legal system which, in public international law, is applicable to this contract. The idea according to which there would have been an international law of contract as an autonomous branch of the international legal order has been developed in the past, particularly by Professor Weil, but it can be said today that this attempt of doctrinal construction has failed. No corpus of rules specifically applicable to State contracts and being an integral part of public international law has emerged since the notion was first put forward some 30 years ago.Footnote 24
Today, once the authority of public international law has been asserted, the only corpus of rules of conventional law to which the concession contract could be subject is the law of treaties. In other words, in the absence of a branch of public international law specifically applicable to ‘internationalized’ contracts, it is necessary to rely only on the rules of the law of treaties. But, obviously, some inconsistencies are apparent here. It is rather awkward to assert that a particular agreement is not a treaty, and then ultimately to make it subject, nevertheless, to the rules governing treaties. The arbitration Tribunal was faced with this difficulty during its examination of the various interpretive problems arising from the concession contract, particularly in relation to the divergences between the French and English translation of the text of the contract.Footnote 25 To resolve these difficulties, there was need to rely on interpretative rules. In this respect, the Tribunal opted to apply Article 33 of the Vienna Convention on the Law of Treaties 1969.Footnote 26
The arbitrators were, however, conscious of the inconsistency that could arise by asserting at the same time that the concession is not a treaty, but that it is, nevertheless, subject to the Vienna Convention. It is, thus, with a certain prudence that they chose to invoke on this particular point the agreement of the parties. It is, in fact, found that if the interpretation principles laid down by the Vienna Convention on the Law of Treaties apply to the concession contract, this is because the parties to the dispute expressly agreed that the text is ‘declaratory also for agreements between States and private parties’.Footnote 27 The law of treaties is not, thus, objectively applicable to the concession contract; it was the consent of the parties that allowed arbitrators to draw from the Vienna Convention principles to help interpret inconsistencies between the French and English translations of the text.
It is observed that the arbitration Tribunal made a particular point of separating the concession contract from the legal definition of treaty. If it is governed by public international law, in accordance with the assertion operated in the award,Footnote 28 it is not, for all that, an instrument of public international law. To have found differently would have been excessively embarrassing to the case in point, that is, in the very particular case of the legal regime of the Channel Tunnel. In fact, if there is a fundamental idea which is not subject here to any objection, it is the submission of the concession contract to the Canterbury Treaty. However, qualifying the concession contract as a treaty would have placed it on an equal footing with the Canterbury Treaty, which would not have been at all in line with the intention of the drafters of the two texts. The concession contract is, thus, simply governed by international law. This has allowed the arbitration Tribunal to borrow the rules of interpretation of conventions from the law of treaties. On the other hand, the impact of this submission on the examination of violations attributable to States has been, so to speak, nil.
E. Breaches of the Concession Contract
The decision that the concession contract was governed by international law could have led the arbitrators to search within public international law generally for rules giving effect to the contractual stipulations. In other words, the liability of the relevant States could have been examined on the basis of not only the contract itself but also in consideration of other principles of international law to which the States were legally bound. However, it is clear from the decision that the arbitration Tribunal did not look beyond the concession contract and the Canterbury Treaty for legal provisions applicable to the dispute. Even where the plaintiffs tried to refer to other sources, it was actually only in terms of these two texts that the behaviour of the two States has been assessed.
This approach was central to consideration of the question raised by the concessionaires as to whether the defendants had joint liability. The arbitration Tribunal referred to this argument of the plaintiffs in terms of ‘joint and several responsibility’.Footnote 29 To declare the existence of a joint responsibility between the two defendant States, it was necessary to identify the conventional or extra-conventional provision likely to suppose—and impose—this interstate joint liability. In other words, either the joint liability was a plea from a stipulation of the concession contract or from a provision of the Canterbury Treaty, or it was laid down by a rule of general international law applicable to the said concession.
On the latter point, plaintiffs referred, in particular, to Article 47 of the International Law Commission's Articles on State Responsibility.Footnote 30 However, the Tribunal promptly set the argument aside on the basis that Article 47 does not actually lay down any general principle of joint responsibility between States.Footnote 31 It was, accordingly, necessary to look to the Canterbury Treaty as given effect to by the concession contract and that contract itself to establish whether joint responsibility had been established. The Tribunal found that there was, within the concession contract a clause (Article 20) providing for the joint and several liability of the concessionaires but that there was no equivalent provision requiring the joint and several liability of the Principals (that is the two States).Footnote 32 Indeed, an attempt during the drafting of the contract by the concessionaires to include such a provision in the contract had been rejected by the two States. No provision for joint and several liability of the two States could be found in the Canterbury Treaty either. The Tribunal did comment, however, on the requirement that the two States cooperate closely, primarily through joint organs such as the Intergovernmental Commission (IGC) and the Safety Committee, both of which had been established by the Canterbury Treaty.Footnote 33
A more or less equivalent observation was made by the arbitration Tribunal in relation to the law on international investments. The concessionaires mentioned several differences in treatment, inequitable or discriminatory, that they allegedly received, namely vis-à-vis SeaFrance and SNCF. But here, again, it was necessary to find a legal basis for these claims. The concessionaires sought to rely on the customary international law for the protection of investments. The arbitrators first raised some doubt as to whether the creation of the cross-Channel service (referred to as the Fixed Link) could be considered as ‘a foreign investment in either country’.Footnote 34 Indeed, it is true that the investment was for the benefit of both States. Thus, we are a very long way from the conventional form of the law on investments where a company from State A comes to invest in State B, with the hope of obtaining some guarantees. The analogy with the law on investments was thus delicate. The Tribunal preferred to consider that the customary law on investments was not applicable to the case in point, taking into account the specificity of the work. It held that the Canterbury Treaty and the concession contract set aside the customary rules on the basis that the two agreements were the ‘lex specialis of the investment’.Footnote 35 Crucially, the two texts did not impose on the two States any particular non-discriminatory obligations between the different operators offering the cross-Channel service.Footnote 36
It seems clear that, in spite of the acceptance by the Tribunal that the concession contract and the Canterbury Treaty were governed by international law, attempts by the concessionaires to draw on a wide range of international instruments and other rules of international law to argue that the principle of joint and several responsibility and non-discrimination applied in the present case were doomed to fail, both as a result of the inapplicability of those rules of general international law or because of the lex specialis character of the Canterbury Treaty and concession contract. Thus it is only these instruments that could form the legal basis for the ascribing of liability to either or both of the two States.
Ultimately, the Tribunal did not consider that the opening of the Sangatte Centre or its coming into operation before September 2000 constituted a violation of the concession contract.Footnote 37 However, from that date the Tribunal accepted that the number of intrusions into the Coquelles terminal increased significantly. The Tribunal considered that by January 2001 at the latest it should have been clear to the two States that the Sangatte Centre was used as a ‘base for criminal activities’.Footnote 38 By virtue of Articles 2.1 and 27.7 of the concession contract, the States should have reacted, through the Intergovernmental Commission, by taking the steps necessary to ensure the orderly operation of the Tunnel. However, they did not do so and, in fact, sought to shift the burden of security to Eurotunnel in breach of Articles 2.1 and 27.7 in a manner prejudicial to the concessionaires.Footnote 39
The existence of damages to the concessionaires has, thus, been acknowledged by the award. The reaching of this decision required the Tribunal to solve some very complicated theoretical problems. One may suppose that the monetary assessment of damages, which is due to be subject to a new arbitration trial, should not in principle raise so many difficulties, although one never can tell in such a litigation.
