6 The Effect of Acts before the Main Temporal Limits on the Tribunal’s Jurisdiction over Later Acts
- Arbitrability — Time limitations (and jurisdiction) — Extinctive prescription (and admissibility) — Arbitral agreements
(p. 101) 6 The Effect of Acts before the Main Temporal Limits on the Tribunal’s Jurisdiction over Later Acts
6.01 The discussion in the previous chapter on continuing acts shows the importance of the identification of the specific act that is challenged on the determination of the tribunal’s temporal jurisdiction. For example, in Loizidou v Turkey, the European Court of Human Rights (ECtHR) accepted jurisdiction over the challenge to Turkey’s continued prevention of Ms Loizidou returning to her home in Northern Cyprus, but would not have been able to accept jurisdiction over a challenge to Turkey’s closure of the border before Turkey had accepted the Court’s jurisdiction.1
6.02 Indeed, to establish a tribunal’s temporal jurisdiction, claimants and applicants often ensure that they challenge an act that falls within the limits described in this book rather than an earlier act that is closely related. For example, in ConocoPhillips v Venezuela, the US company challenged as a breach of an investment treaty the implementation of a tax increase that occurred after the company purchased the investment (and therefore (p. 102) gained the protection of the treaty), but did not challenge the earlier enacted legislation.2
6.03 In these circumstances, respondents have sometimes argued that the prior act prevented the tribunal from taking jurisdiction over the later one. The argument generally goes that the challenge is really to the prior act and, therefore, the tribunal has no temporal jurisdiction over the challenge.
6.04 Tribunals’ response to such arguments can be directed by the limits imposed on the tribunals when their jurisdiction was accepted. For example, the Permanent Court of International Justice (PCIJ) and International Court of Justice (ICJ) consistently found that the ‘Belgian formula’, which is sometimes included in declarations accepting the jurisdiction of an international tribunal (and which was discussed in Chapter 3), prevented them from considering a dispute whose ‘real cause’ was an act before the acceptance of the Courts’ jurisdiction.
6.05 But most treaties and declarations do not contain the ‘Belgian formula’ or any other direction concerning tribunals’ jurisdiction over acts closely related to those outside the limits discussed in this book. In these circumstances, decisions of tribunals have not been uniform.
6.06 This chapter addresses the effect of acts outside the limits previously addressed in this book on tribunals’ power over the acts within those limits. Sections B, C, and D examine the effect of acts before the entry into force of the obligation allegedly breached, before the acceptance of the tribunal’s jurisdiction, and before the period of limitation, respectively.
6.07 In several cases, the European Commission and Court of Human Rights have considered arguments from respondent states that an act before the European Convention on Human Rights (ECHR) entered into force for the state prevented the Commission or Court from hearing an application challenging an act after this date. The tribunals’ responses to these arguments have been mixed.
6.08 In De Becker v Belgium, discussed in the previous chapter, the Commission famously accepted jurisdiction over a challenge to the continued maintenance (p. 103) of the Belgian penal code that had deprived the applicant of certain rights for collaborating with the Nazis, even though the judicial decision applying the code to the applicant was issued before the ECHR came into force for Belgium.3 But, in the following decision of ADQ v Belgium, the Commission rejected a similar challenge to the continuing maintenance of the same code on the grounds that the complaint was really against the earlier judicial decision that applied it.4 The discrepancy in the decisions was noted by Judge Loukis Loucaides of the ECtHR, who stated extrajudicially that: ‘[i]n so far as the Commission found that in [ADQ] v. Belgium the complaint concerned a judicial sentence and not the operation of a legal provision, one may also recall that in the De Becker case the real cause of the legal regime complained of by the applicant was again a judicial sentence and therefore in effect the complaint concerned a judicial sentence as much as it did in [ADQ] v. Belgium’.5
6.09 While the contrast has not been as stark as that between De Becker and ADQ, subsequent decisions of the ECtHR have also not consistently addressed the effect of acts before the Convention entered into force on the Court’s ability to consider challenges to acts after that date.
6.10 The applicant in Rosiński v Poland alleged that Poland interfered with property rights in breach of Article 1 of the First Protocol of the ECHR by refusing him permission to develop his land because it had been designated for future expropriation and the construction of a road and hospital. Poland responded that the Court had no jurisdiction because the ‘alleged violation of the applicant’s property rights had originated in the land development plan adopted in 1993’6 (which had designated the land for future expropriation) and the First Protocol only entered into force for Poland on 10 October 1994.
6.11 The Court did not dwell on the ‘origin’ of the alleged violation, as invited by Poland, but accepted jurisdiction simply because the applicant’s ‘complaint’ was ‘directed’ against measures after the obligation entered into force (as well as measures before).7
6.12 Other decisions of the ECtHR are similar. In Stojanović v Serbia, the applicant challenged the opening of his mail by prison authorities as a breach of Serbia’s obligation in Article 8 of the ECHR, which states that: ‘[t]here shall be no interference by a public authority with the exercise of [the] right [to (p. 104) respect for … correspondence] …’. Serbia challenged the Court’s temporal jurisdiction because the authorities opened the mail under the power of legislation passed before the Convention came into force for Serbia on 3 March 2004. The Court rejected this challenge because:
[t]he alleged interference with the applicant’s correspondence took place after 3 March 2004. Irrespective of the fact that this occurred on the basis of legislation adopted before that date, the applicant’s complaint therefore clearly falls within the Court’s competence ratione temporis …8
6.14 Mr Filipović was a Serbian tax inspector who declared at a public meeting that the mayor of a local town ‘was not the right person for the job’ and accused him of embezzling 500,000 German Marks. A local court ruled on 21 October 2002 that the mayor had not embezzled the money and convicted Mr Filipović of the crime of insult.
6.15 The mayor subsequently filed a civil claim, seeking compensation for mental anguish suffered as a result of the insult. The civil courts agreed on 23 September 2004, ordering compensation, and the appeal court upheld the decision on 20 December 2004.
6.16 Mr Filipović alleged before the ECtHR that the decision of the civil court breached Serbia’s obligation in the ECHR to provide freedom of expression. In response, Serbia noted that the Convention only came into force for it on 3 March 2004 and argued that the application was outside the Court’s temporal jurisdiction because the outcome in the civil proceedings was a ‘logical consequence’ of his prior criminal conviction.9
[t]he principal fact of the present case, namely the respondent State’s interference with the applicant’s freedom of expression, lies in the adoption of the final civil court judgment on 20 December 2004, because it was then that the applicant became obliged to pay the compensation awarded.10
6.18 Hence, the tribunal accepted jurisdiction because the ‘principal fact’—the act that the Court determined had interfered with the applicant’s rights under the human rights convention—occurred after the critical date.
6.20 In Kefalas and Others v Greece, the applicants challenged a 1987 decision of a Greek court that refused to quash a 1984 ministerial order but the ECtHR concluded that it could not hear the challenge because: ‘[t]he applicants essentially criticised the impossibility in Greek law of having Ministerial Order … reviewed by a judicial body … [and] the applicants would have become victims of it on 30 March 1984, when the order in issue was published in the Official Gazette and thereby became binding’.11
6.21 In Syllogos Ton Athinaion v United Kingdom, the applicant challenged the United Kingdom’s refusal to enter mediation over the return of the Elgin Marbles, the marble sculptures that were removed from the Parthenon and other buildings on the Acropolis of Athens and taken to England by Lord Elgin in the nineteenth century. The Court refused to hear the application because, it deemed, the applicant’s ‘underlying grievance’ was the removal of the marbles two centuries ago:
The Court notes that the [Elgin] Marbles were removed from Greece in the early nineteenth century. In order to bring the matter within the temporal jurisdiction of the Court, the applicant has sought to rely on the refusal of the United Kingdom, on 26 March 2015, to enter into mediation with Greece concerning the return of the Marbles and the continuing refusal to return the Marbles. However, it is clear from the nature of the applicant’s complaints that its underlying grievance is the allegedly unlawful removal of the Marbles from Greece. The removal having occurred some 150 years before the Convention was drafted and ratified by the respondent State, the applicant’s complaints would appear to be inadmissible as incompatible ratione temporis with the provisions of the Convention.12
6.23 This contrast in the jurisprudence—between tribunals such as that in the Elgin Marbles case, which relied on an act before the obligation entered into force to refuse to hear a challenge to a later act, and tribunals who ignored prior acts when accepting jurisdiction—is similar to the contrast in jurisprudence considering challenges to acts after the acceptance of the tribunal’s jurisdiction, as explained in the next section.
6.24 Chapter 3 explained that several states limited the temporal jurisdiction of the PCIJ and ICJ through the ‘Belgian formula’, named after Belgium’s Declaration of 25 September 1925, which ‘recognize[d] as compulsory … the jurisdiction of the [Permanent] Court [of International Justice] … in any disputes arising after the ratification of the present declaration with regard to situations or facts subsequent to this ratification … .’.
6.25 Chapter 3 observed that the World Court has interpreted the Belgian formula as requiring it to decline jurisdiction if the ‘source’ or ‘real cause’ of the dispute was an act before the acceptance of the Court’s jurisdiction but that the ECtHR has not applied this test when faced with similarly worded declarations.
6.26 Most states have not included in their treaties or declarations the ‘Belgian formula’, or any other direction on the effect of prior acts on tribunals’ jurisdiction over acts after the date from which the tribunal’s jurisdiction was accepted. In these circumstances, tribunals have not exercised their discretion in a common way.
6.28 On 16 November 2004, the claimant bought shares in Yukos, the Russian oil giant that made Mikhail Khodorkovsky the richest man in the country. One month later the Russian government forced Yukos to sell its shares to pay for outstanding taxes and Khodorkovsky was jailed for fraud. RosInvestCo claimed that the forced sale of the shares breached Russia’s investment treaty obligations.13
6.29 Russia responded that the tribunal could not hear the claim because the claimant had purchased the shares too late. The respondent argued that by the date of the purchase ‘all of the material acts critical to the foundation of Claimant’s complaint had already occurred’. In particular, it noted that previous audits had already assessed Yukos as owing billions of dollars in back taxes.14
6.30 The tribunal rejected Russia’s temporal argument because ‘[t]he major alleged acts of Respondent breaching the [investment treaty], namely the (p. 107) auction of YNG shares and the bankruptcy auctions, all occurred after Claimant was an investor under the [treaty]’.15
6.32 In ConocoPhillips v Venezuela the claimant argued that Venezuela breached its investment treaty with the Netherlands on 1 January 2007 when it formally increased the income tax rate for ‘extra-heavy oil projects’ from 34 per cent to 50 per cent. Venezuela responded that the tribunal had no competence because the National Assembly had actually passed the legislation for the tax increase in August 2006 and the claimant did not acquire its investment and therefore gain the protection of the treaty until the following month, when the enabling legislation for the tax rise was already in place.
6.33 The tribunal rejected Venezuela’s argument because ‘[i]n principle, … a breach of obligation does not occur until the law in issue is actually applied in breach of that obligation and that cannot happen before the law in question is in force’.16 Thus, the tribunal agreed to hear the claim not simply because the claimant had challenged an act within its temporal limits, but after looking deeper and asking when the alleged breach would have occurred if the merits of the claim were proven.
6.34 In Dung Thi Thuy Nguyen v The Netherlands, the author alleged before the United Nations Committee on the Elimination of Discrimination Against Women that the Netherlands had breached its international obligations by refusing her certain benefits during maternity leave. In response, the Netherlands alleged that the matter fell outside the Committee’s temporal scope because the decision to deny the author the benefits occurred before the Netherlands accepted the Committee’s jurisdiction.
6.35 The Committee’s temporal power is addressed in Article 4(2)(e) of the Optional Protocol to the Convention on the Elimination of All Forms of Discrimination against Women, which states that: ‘[t]he Committee shall declare a communication inadmissible where … [t]he facts that are the (p. 108) subject of the communication occurred prior to the entry into force of the present Protocol for the State Party concerned unless those facts continued after that date’.
6.36 In response to the Netherlands’ argument that this article rendered the communication inadmissible, the Committee stated that: ‘the central question to be answered is ‘when has the Dutch legislation at issue been applied to the alleged actual detriment of the author’.17 The Committee concluded that this was not when the legislation was passed, nor when the legislation was applied to reject the applicant’s request for maternity leave benefits, but when she planned to take that leave.18 Since this was within the period of its temporal power, the Committee agreed to hear the communication.
6.37 Hence, some tribunals have examined prior acts, before ultimately deciding that the acts did not prevent them from taking jurisdiction over acts after the date from which the tribunal’s jurisdiction was accepted. But some tribunals have gone further and relied on the prior acts to decline jurisdiction.
6.38 In Cristina Muñoz-Vargas y Sainz de Vicuña v Spain, the United Nations Committee on the Elimination of Discrimination Against Women considered a challenge to a Spanish law on the succession of nobility under which the applicant’s younger brother, rather than she, succeeded to their father’s title as Count of Bulnes. A majority of the Committee decided that the complaint ‘stems from’ the brother’s succession and this was ‘the relevant fact’.19 Since this occurred before Spain had accepted its jurisdiction, the Committee concluded it could not hear the case.20 In her dissenting opinion, Mary Shanthi Dairiam noted that the law which discriminated against the daughters of nobility (and which appeared to have been challenged as well as the brother’s succession) was still in force after this date.
6.39 In ST-AD v Bulgaria, the German claimant bought shares in a company that for many years had been in a dispute over ownership of land and a factory in Sofia. Immediately before the purchase, the local company had lost a decision before a local court over ownership of the land and factory and unsuccessfully tried to set aside the decision. After the purchase (and therefore after the claimant qualified as an investor with an investment protected under the Germany-Bulgaria investment treaty) the German claimant tried to set aside the decision. The application was rejected again and the claimant (p. 109) alleged that this second refusal breached Bulgaria’s obligations in the treaty. The tribunal held that it had no temporal jurisdiction over the claim:
The Tribunal reiterates that it is not acceptable for a claimant to artificially create a new act of the State allegedly interfering with its rights by simply ‘mirroring’ events that occurred before it became a protected investor. For example, if a claimant, before coming under the protection of a given BIT, had asked for and been refused a license, it could not simply purport to create an event posterior to it becoming a protected investor by presenting the very same request for a license that would, no doubt, be similarly refused. In the present case, the Claimant cannot establish jurisdiction for this Tribunal by presenting a request to set aside Decision 1153 after it became an investor on similar grounds than the request that was denied prior to its becoming a protected investor.21
6.42 In Corona v Dominican Republic, an investment treaty tribunal concluded that an act before the period of limitation prevented it from considering a challenge to an act within. In that case, the claimant mining company challenged, among other things, the respondent’s failure to reconsider the rejection of its application for an environmental licence to operate an aggregates mine as a breach of the Central American Free Trade Agreement. The tribunal concluded that the failure could not be considered separately from the rejection of the application and, since this occurred more than three years before the filing of the claim, the claim was time barred. According to the tribunal, ‘the Respondent’s failure to reconsider the refusal to grant the license is nothing but an implicit confirmation of its previous decision’ and, therefore, ‘cannot be considered as a stand-alone “measure”, or a separate breach of the Treaty’.22
6.44 The claimants in Grand River were a Canadian company and indigenous peoples manufacturing and trading cigarettes in Canada and the United States of America, as explained in Chapter 4. They alleged that the Master Settlement Agreement, concluded to settle litigation by several US states against American cigarette manufacturers, and implementing legislation of the states, breached the North American Free Trade Agreement.
An investor may not make a claim [including on behalf of an enterprise] if more than three years have elapsed from the date on which the investor [or enterprise] first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor [or enterprise] has incurred loss or damage.
6.46 The tribunal agreed that the claims regarding the Master Settlement Agreement and most of the implementing legislation were barred because they were all passed by 2000, more than three years before the claim was lodged.23 But the tribunal disagreed that claims challenging implementing legislation passed within the three-year time limitation period were also barred. The US argued that the tribunal also had no competence over these laws because they were just implementing the legislation that came before. The tribunal rejected the argument:
In the circumstances here, the Tribunal has difficulty seeing how NAFTA Articles 1116(2) and 1117(2) can be interpreted to bar considerations of the merits of properly presented claims challenging important statutory provisions that were enacted within three years of the filing of the claim and that allegedly caused significant injury, even if those provisions are related to earlier events.24
6.47 This passage indicates that the tribunal found that its jurisdiction was established because the claimant nominally challenged a statutory provision (albeit an ‘important’ one) that was enacted within the period of its temporal jurisdiction. This interpretation of the decision is supported by a later passage in which the tribunal stated:
The adoption and implementation of the states’ complementary legislation/contraband laws in late 2001 or 2002 (that is, less than three years before the claim was filed) were clearly identified as included in the Notice of Arbitration and the Particularized (p. 111) Statement of Claim. Accordingly, Claimants’ claims in respect of those enactments remain for consideration at the merits stage.25
6.48 Nevertheless, the tribunal’s ultimate position is not clear. To support its conclusion noted above, the Court stated that: ‘[a]s the Permanent Court observed, while “a dispute may presuppose the existence of some prior situation or fact … it does not follow that the dispute arises in regard to the situation or fact” ’.26 This sentence implies that if the dispute over the implementing legislation adopted after 2000 was with ‘regard to’ a prior situation or fact then the tribunal would not have jurisdiction. Indeed, the quote of the Permanent Court on which the tribunal relied arose in the context of the application of the Belgian formula, discussed above in Chapter 3, which directed the Permanent Court to refuse jurisdiction in certain circumstances over an act after the acceptance of the Court’s jurisdiction based on acts before that date.27
6.49 There is little consistency between decisions about the effect of acts before the entry into force of the obligation allegedly breached, before the acceptance of the tribunal’s jurisdiction, and before the period of limitation, on the tribunal’s power over later acts. Some tribunals have ignored these prior acts when agreeing to consider a challenge to later acts, while others have examined these acts and occasionally relied on them to refuse to consider that challenge.
6.50 Even when states have given direction to tribunals on the effect of prior acts, the interpretation of that direction has not been uniform. The PCIJ and the ICJ have interpreted the Belgian formula as requiring an inquiry into the ‘source’ or ‘real cause’ of the dispute, and as preventing it from taking jurisdiction based on ‘factors which … are merely the confirmation or development of earlier situations or facts constituting the real causes of the dispute’.28 However, in Loizidou, the majority of the ECtHR rejected the conclusion of part of the minority that similar wording required a search for the ‘essential’ (p. 112) or ‘material fact’, and the ‘decisive events’, and prevented it from accepting jurisdiction over acts that were just the ‘automatic consequences’ of events before the acceptance of the Court’s jurisdiction. Also, in Silih, the European Court responded to similar wording by noting the ‘source/real cause’ test applied by the World Court but declining to use it.
6.51 Just as decisions differ on whether or not the tribunal must look past the act that is nominally challenged when deciding its temporal jurisdiction, so too do the tests applied by tribunals that have looked further. For example, in one case the ECtHR based its decision on the source of the ‘underlying grievance’ but an investment treaty tribunal based its decision on when the alleged breach would have occurred if the merits of the claim were proven.
6.52 While tribunals have used different words to describe the tests that they applied to determine if a prior act prevented them from taking jurisdiction over an act within their temporal limits, there is arguably commonality in some of those tests. The search of the ECtHR for the ‘underlying grievance’ (in Syllogos Ton Athinaion v United Kingdom) or ‘principal fact’ (in Filipović v Serbia), and the search of the United Nations Committee on the Elimination of Discrimination Against Women for the ‘stem’ of the complaint (in Cristina Muñoz-Vargas y Sainz de Vicuña v Spain) is arguably similar to the search for the ‘source/real cause’ undertaken by the PCIJ and ICJ when faced with the Belgian formula.
2 ConocoPhillips Petrozuata BV, ConocoPhillips Hamaca BV, ConocoPhillips Gulf of Paria BV and ConocoPhillips Company v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Decision on Jurisdiction and the Merits (3 September 2013) (ConocoPhillips v Venezuela).
5 Loukis Loucaides, The European Convention on Human Rights: Collected Essays (Martinus Nijhoff Publishers 2007) 25. See also Andy Van Pachtenbeke and Y Haeck, ‘From De Becker to Varnava: The State of Continuing Situations in the Strasbourg Case Law’ (2010) 1 European Human Rights Law Review 47, 50: ‘[g]iven that both cases de facto are largely the same, the difference does seem rather artificial’.
10 Ibid. The Court further explained: ‘[a]lthough the civil courts were bound by the criminal conviction in terms of whether the applicant had committed the crime at issue, they were free to independently assess the applicant’s civil liability, as well as to decide whether to award any compensation’.
12 Syllogos Ton Athinaion v United Kingdom, App no 48259/15 (31 May 2016). See also Spence International Investments LLC, Berkowitz and Others v Republic of Costa Rica, ICSID Case No UNCT/13/2, Interim Award (25 October 2016) .
16 ConocoPhillips v Venezuela (n 2) . See also Renée Rose Levy and Gremcitel SA v Peru, ICSID Case No ARB/11/17, Award (9 January 2015) : ‘[t]he disagreements between the Parties find their origin in earlier events, in particular, in the Historical Commission’s creation and its 2005 Report, which formed the basis for the subsequent 2007 Resolution. However, it was only when the 2007 Resolution was adopted and published that the rights of the Claimants were allegedly affected. Only at this moment were the precise boundaries of the Morro Solar’s intangible area determined through a binding administrative act. Furthermore, prior to the enactment of the 2007 Resolution, there was still a possibility that the INC would decide not to adopt the Resolution. The Claimants would then have had no act to complain about’.
22 Corona Materials LLC v Dominican Republic, ICSID Case No ARB(AF)/14/3, Award on the Respondent’s Expedited Preliminary Objections in Accordance with Article 10.20.5 of the DR-CAFTA (31 May 2016) –. See also Spence International Investments LLC, Berkowitz and Others v Republic of Costa Rica, ICSID Case No UNCT/13/2, Interim Award (25 October 2016) .
27 See also the tribunal’s oft-quoted statement at paragraph 81, in the context of its consideration of the argument that a separate time limitation period applied to each claim challenging application of the state legislation, that: ‘[t]his analysis seems to render the limitations provisions ineffective in any situation involving a series of similar and related actions by a respondent state, since a claimant would be free to base its claim on the most recent transgression, even if it had knowledge of earlier breaches and injuries’.