Investment arbitration is a method for resolving the disputes between investors and host States. Through investment arbitration, investors have access to independent and qualified arbitrators who will resolve the dispute and render an enforceable award. Investors may initiate an investment arbitration, if host State has given its consent. Host States’ usually give their consent through the Bilateral Investment Treaties (hereinafter, “BIT’s”), Free Trade Agreements (hereinafter, “FTA’s”) or and multilateral agreements, such as The Energy Charter Treaty.[1]

The most known arbitration institution administrating investment arbitrations is the International Centre for Settlement of Investment Disputes (hereinafter, “ICSID”). There are other institutions administrating investment arbitration such as Stockholm Chamber of Commerce (hereinafter, “SCC”), the Permanent Court for Arbitration (hereinafter, “PCA”) and the International Chamber of Commerce (hereinafter, “ICC”). Moreover, in case parties decide to initiate ad-hoc arbitration, usually these proceedings are governed by the UNCITRAL Arbitration Rules. [2]  

Investor-State Arbitration may commence by the investor once a Host State breaches the essential protection offered through the investment treaties. Interim measure is a tool which can be used effectively to secure the procedural integrity and the legitimacy of investor-state arbitration. It is a mechanism which serves the parties to be equally heard and protects the Arbitral Tribunal’s jurisdiction.

According to the Article 47 of the ICSID Arbitration Rules, Arbitral Tribunal may recommend interim measures with or without the request of the parties but may not order it.[3] This issue is highly debatable, since it is up to the parties’ discretion whether to implement this decision or not. However, it is important to consider that non-compliance with the interim measure granted by the arbitral tribunal may have an impact on the arbitrators while deciding upon the final decision. 

According to the Redfern and Hunter, the word “recommend” should not be understood as granting powers to tribunals to order State to do or not to do something.[4] However, the word “recommend” observed differently in some of the ICSID cases. For example, in Maffezini v. Spain, the tribunal concluded that the word “recommend” to be of same value as the word “order” and therefore, the Tribunal’s power to rule on interim measures is no less binding than that of a final award.[5]

Despite the ICSID Rules, according to the Article 26 of the UNCITRAL Arbitration Rules, Arbitral Tribunal empowered to order an interim measure such as suspension of the criminal investigations and procedures unless otherwise agreed by the parties.[6] Thus, interim measures in the context of UNCITRAL Arbitration Rules deemed as legally binding as a final award. That being said, the enforceability of such interim awards is finally subject to local jurisdictions and therefore the enforceability of such interim measures is regarded problematic in most cases.

In order to advance an application for interim measures, the Claimant must establish a prima facie case that the Arbitral Tribunal has jurisdiction over the essence of the claim and as to the merits of the claim. As stated in Perenco Ecuador Ltd v Ecuador case, Claimant must make out the following grounds once the Arbitral Tribunal is satisfied that the Claimant has established a prima facie case[7]:

1.      That the Claimants rights require protection;
2.      That the provisional measures are urgent;
3.     That the provisional measures are necessary to avoid irreparable harm; and
4.     That the provisional measures are proportionate.

Due to the state’s actions, such as conducting audit or criminal proceedings, investors are sometimes having a hard time to access the documents or information which they need for the arbitral proceedings Therefore, on some occasions, Arbitral Tribunal’s authority to order binding interim measures described as indispensable for a fair and efficient way for arbitration.[8] The party seeking for the interim measures must establish that the criminal proceedings were preventing them from submitting their rights in the arbitration and causing them irreparable and impending harm which requires urgent remedy.

The binding nature of interim measures may create a conflict between state’s sovereignty and investor’s rights. For an effective dispute resolution mechanism, while ordering interim measures, Arbitral Tribunal should examine the conditions, reasoning, and findings of the case very carefully with full care and sensitivity. Otherwise, it may either fail to protect the investors rights or harm the state’s sovereignty.