The expression ratione temporis denotes the effect of the passage of time on obligations or a tribunal's power to decide a dispute. Numerous tribunals have dismissed claims on this basis. However, despite its potentially critical impact, this area has received relatively little attention in decisions or commentary. Tribunals frequently disagree on the basic principles or inconsistently apply the same principle.
The starting point in a specific case is the express wording of the treaty, which may determine its temporal scope.2 In the absence of express provisions, temporal issues are decided by reference to principles contained in the Vienna Convention on the Law of Treaties (VCLT),3 the International Law Commission's Draft Articles on State Responsibility (the ILC Articles)4 and decisions of international courts and investment treaty tribunals.
This chapter deals with common issues regarding temporal jurisdiction. Section II addresses issues relating to the timing of an 'investment'. Section III outlines the principle of non-retroactivity, and exceptions to the principle. Section IV examines issues relating to the timing of a 'dispute'. Section V outlines temporal issues relating to termination of treaties, and Section VI addresses extinctive prescription.
II TIMING OF AN 'INVESTMENT'
i What happens when the investment was made prior to the treaty coming into force?
This question does not feature significantly in cases. This is likely due in large part to the fact that an investment treaty will commonly state that it covers investments made prior to its entry into force.5
If a treaty is silent on the matter, it has been suggested that investments made before the treaty's entry into force are included within its scope.6
ii What happens if the investment occurred after the breach?
It is well settled that a tribunal has no jurisdiction ratione temporis to consider allegations of a breach of a treaty in relation to acts that occur prior to the making of an investment. In Mesa Power Group LLC v. Canada, the tribunal affirmed that jurisdiction extends only to an investment that existed 'at the time the challenged measure was adopted'.7 The same point was made in Philip Morris v. Australia.8 The tribunal found that the claimant had made its investment before the contested measure, albeit it ultimately held that the initiation of the arbitration constituted an abuse of rights, a different principle from ratione temporis.9
III NON-RETROACTIVITY OF TREATIES
Tribunals have repeatedly found that treaties, in the absence of clear language to the contrary, will not apply retroactively to acts or facts that occur before they enter into force.10 They have relied on Article 28 of the VCLT and Article 13 of the ILC Articles11 in doing so. However, facts occurring before the entry into force of a treaty can be taken into consideration in determining whether the treaty was subsequently breached.12
Some tribunals have found that it is necessary to 'distinguish between (1) jurisdiction ratione temporis and (2) the applicability ratione temporis of the substantive obligations contained in a BIT'.13 The Philip Morris tribunal stated this distinction was 'correct in theory', but was unnecessary when the cause of action was founded upon a treaty breach.14
The principle of non-retroactivity is subject to qualifications where there are continuous and composite acts, and where a treaty is not yet in force, but a state has signed it.
i Can continuous or composite acts occurring before the treaty enters into force be considered in assessing an alleged breach?
The principle of non-retroactivity may not apply to state action that is deemed to be a continuous or composite act. In such cases, a tribunal assessing an alleged breach may consider conduct that occurred before the treaty's entry into force.15 However, a number of tribunals have been cautious in attributing significant weight to such acts, so as to avoid an overreaching retroactive application of the substantive provisions of a treaty. Some tribunals have stated that continuous or composite acts prior to the treaty's entry into force are relevant only as factual background.16 Others have appeared to give them more weight.17 Acts constituting a breach, along with damages, may be limited to those that post-date the treaty's entry into force.18
A continuous act is defined as a single act that extends over time and breaches an international obligation throughout.19 Article 28 of the VCLT supports the relevance of continuous acts despite the principle of non-retroactivity.20 The same is true of Article 14(2) of the ILC Articles.21 A number of tribunals have taken a similar approach.22 Acts found to be continuous include the non-payment of a contractually specified amount,23 the continued withholding of permits and concessions,24 and a continuing delay by national courts.25
A composite act is an act composed of a 'series of actions or omissions defined in aggregate as wrongful'.26 A composite act does not 'occur' until the completion of the series. Tribunals have found it sufficient that the point of completion takes place after the effective date of the treaty.27 Tribunals have, however, been reluctant to accept claims of a composite breach whose purpose is to circumvent a limitation period stated to run from the investor's first knowledge of breach or loss.28
ii What happens if a treaty has not come into force, but a state has signed it?
Arguments that a state is bound by a treaty before it enters into force have been made in three contexts. First, where the treaty is provisionally applicable; second, on the basis that states should refrain from committing acts that defeat the object and purpose of the signed treaty; and third, by reference to an estoppel argument that a tribunal has jurisdiction to hear a case against a state that has implicitly consented to its jurisdiction through words, conduct or silence.
First, as specified in the VCLT, the contracting parties may agree to provisionally apply a treaty, or part of a treaty, before it enters into force.29 In those cases, the treaty will be binding, unless the treaty provides otherwise or it is otherwise agreed.30
Provisional application has been addressed in cases concerning Article 45 of the Energy Charter Treaty (ECT).31 Tribunals have repeatedly retained jurisdiction on the basis of Article 45, including in the Yukos cases, where the tribunal found the ECT was provisionally applicable to Russia even though Russia had not ratified the treaty.32 Ultimately, Russia was held to be liable for breach of the expropriation provision.33 The tribunals in Petrobart v. Kyrgyzstan34 and Kardassopoulos v. Georgia took a similar approach.35
Second, Article 18 of the VCLT requires a state to refrain from acts that would defeat the object and purpose of a treaty. Legal security and transparency are the aims behind this principle.36 The tribunal in Tecmed v. Mexico made explicit reference to Article 18, and stated that it would take the principle into consideration in assessing acts enacted by Mexico between the signature and the entry into force of the relevant treaty.37 However, a more restrictive approach was adopted in MCI v. Ecuador, where the tribunal pointed out that Article 18 is an application of the principle of good faith and does not amount to the retroactive application of a treaty's clauses.38
Third, in Besserglik v. Mozambique, an arbitration conducted under the ICSID Arbitration Facility Rules, the tribunal held (inter alia) that an estoppel could not found its jurisdiction or give effect to a treaty not in force. It went on to observe, obiter, that even if estoppel were capable of giving rise to jurisdiction as a matter of international law, the factual predicates for an estoppel did not exist on the facts before it.39
IV 'DISPUTES' ARISING BEFORE THE ENTRY INTO FORCE OF THE TREATY
Numerous decisions address the meaning of a 'dispute' in treaties' arbitration provisions. Cases in this area have broadly fallen into two categories.
The second comprises cases where the treaty provides no guidance and tribunals have applied general international law principles to determine whether the treaty covers disputes arising before its entry into force. Ping An v. Belgium highlighted the divergent views in such cases, noting that some tribunals have applied a presumption of non-retroactivity (with or without reference to VCLT Article 28) to deny jurisdiction,42 while others have rejected the existence of any such presumption.43 The Ping An tribunal expressed doubt as to whether Mavrommatis Palestine Concessions44 stood for 'a principle that there is a presumption that the jurisdiction of a tribunal extends to disputes which arose prior to its establishment'.45
Common to both categories is the importance of determining when the dispute 'arises'. Some tribunals have asserted that the key factor in determining the existence of a dispute is the expression of a disagreement, which in time acquires a precise legal meaning, or the establishment of a 'conflict of legal views and interests'.46 The identification of when this occurs can give rise to opposing results in apparently similar circumstances. In Lucchetti v. Peru, the tribunal outlined what has been coined the 'subject matter' test, asking if 'the facts or considerations that gave rise to the earlier dispute continued to be central to the later dispute'47 or if the disputes had the same 'origin or source'.48 It considered the subject matter, origin and source of both disputes to be insufficiently different for it to accept jurisdiction.49 By contrast, in Jan de Nul v. Egypt,50 the tribunal held that the dispute before it, which dealt with treaty violations, was a 'new dispute', which crystallised after the treaty came into force.51
This question sharply divided the tribunal regarding the second claimant in Eurogas, where the BIT at issue applied only to disputes 'which [have] arisen not more than three years prior to its entry into force'.52
The majority considered what mattered were 'the real causes of the dispute',53 holding that the transgression complained of was the original reassignment of the claimant's mining rights four years before the BIT took effect, and subsequent actions of the Slovak authorities merely maintained the effects of this. Professor Gaillard's dissent advocated a broader view, concluding that an analysis of 'all the factual and legal circumstances leading to the disagreement brought before the tribunal' revealed that later conduct of the authorities (which included ignoring court decisions quashing the reassignment) in fact constituted the 'definitive reassignment' and thus formed part of the dispute between the parties, meaning the tribunal should accept jurisdiction.54
V IMPACT OF THE TERMINATION OF TREATIES
i Can a claim be initiated after the treaty has been terminated?
Of increasing prominence are temporal issues surrounding termination of BITs. Such terminations have historically been rare,55 but a growing number of states have served notices to terminate or threatened to do so, often because of the existence of or preference for multilateral investment protection arrangements.56 EU Member States have agreed to terminate their intra-EU BITs by way of a plurilateral treaty, consequent upon the CJEU's decision in the Achmea case,57 which held that the Treaty on the Functioning of the European Union precluded the investor–state arbitration provision of the Netherlands–Slovakia BIT.58
BITs tend to contain provisions regulating how they are terminated. Many specify an initial period during which they cannot be terminated except in exceptional circumstances, following which termination is permissible upon a period of written notice. In most BITs, a specific clause (a survival clause) provides for treaty protections to continue after termination for existing investments, usually for between 10 and 15 years.59 There are examples of states purporting to disapply survival clauses in cases of termination by mutual consent,60 albeit the effectiveness of this appears not to have been tested before any tribunal.61
ii What is the impact of a state's denunciation of the ICSID Convention?
The withdrawals from the ICSID Convention of Bolivia, Ecuador and Venezuela in 2007, 2009 and 2012, respectively, spurred debate around the effects of withdrawal on consent to jurisdiction given while the treaty was in force.62 Commentators and tribunals disagree on the effect of Articles 71 and 72, and more specifically, the meaning of 'consent' in Article 72, which provides that denunciation does not affect 'rights or obligations under this Convention . . . arising out of consent to the jurisdiction of the Centre given by [a State or investor] before such notice was received by the depositary'. In Venoklim v. Venezuela, the tribunal found that during the six-month period after denunciation the state was still a contracting state, whose consent to arbitration subsisted, and that consent could still be accepted and 'perfected' by an investor.63 The Blue Bank v. Venezuela tribunal had no hesitation in agreeing.64 By contrast, the tribunal in Fábrica de Vidrios Los Andes CA and Owens-Illinois de Venezuela CA v. Venezuela (Favianca) considered 'consent' in Article 72 to mean consent already perfected – Venezuela's offer to arbitrate in the treaty could not therefore be 'accepted' after its denunciation.65 The tribunal remarked that the ordinary meaning of 'consent to the jurisdiction' could encompass either interpretation, but in the context of the Article and Convention as a whole (including the travaux) it was 'quite obvious' that perfected consent was required.66 It therefore declined jurisdiction over the dispute, a determination reportedly left intact on 22 November 2019 by the ad hoc Committee hearing the claimants' annulment application.67
The Favianca tribunal's reasoning would logically imply that consent could not be perfected after the six-month period in Article 71. While the Venoklim or Blue Bank tribunals did not address this broader issue, in his separate opinion in Blue Bank, Christer Söderlund opined that consent in a treaty remained effective even beyond the six months following denunciation, so ICSID arbitration was in principle available at any time until the treaty's termination.68 Some commentators have concurred with Söderlund's view on this question.69
VI EXTINCTIVE PRESCRIPTION
The principle of extinctive prescription is that a right can be lost, or a claim barred, when not exercised within a certain amount of time.70 For extinctive prescription to operate, the delay must be unreasonable and attributable to the claimant. Prejudice to the respondent may also be a relevant consideration.71 Although this principle is recognised in customary international law, cases applying it are rare and claims are typically time-barred via a specific provision in a treaty.72
Some treaties provide express time limitations on claims. For example, the NAFTA provides a three-year limitation from 'the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage'.73 In Ansung Housing v. China, the tribunal summarily dismissed a claim under a similar provision in a China–Korea BIT as the claim was manifestly time-barred given the facts stated in the Request for Arbitration.74 Tribunals can, however, refer to facts occurring outside the limitation period, where relevant.75
Where a treaty does not provide specific time bars, tribunals have generally allowed claims, without rejecting the possibility of time-barring them. In Wena Hotels v. Egypt, a lapse of seven years after the expropriation was insufficient to bar the claim because the claimant had diligently pursued its claim and provided sufficient notice.76 Similarly, in Kardassopoulos v. Georgia, a delay of 10 years did not prevent the claim from being brought as the claimant had reasonably believed an amicable settlement was possible and Georgia had been given timely notice of the dispute.77