1. Everybody has skeletons in their closet. Perhaps a past they´d rather not be brought to light. Countries and government are no different. As a result, they are careful on when to commit to protect the rights of existing investment through bilateral investment treaties or multilateral trade agreements with an investment chapter. Numerous treaties tackle this matter head on with a simple and straightforward statement providing the treaty shall apply to matters after its entry into force.
2. Article 28 of the Vienna Convention of the Law of Treaties is frequently seen as providing a backstop: Non-retroactivity. The Convention provides:
“unless a different intention appears from the treaty or is otherwise established, its provisions do not bind a party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the treaty with respect to that party.”
3. The temporal line that separates matters before and after the treaty’s entry into force however is somewhat porous. The official commentary to the Vienna Convention introduces an important qualification stating that when “an act or fact or situation which took place or arose prior to the entry into force of a treaty continues to occur or exist after the treaty comes into force, it will be caught by the provisions of the treaty. The non-retroactivity principle cannot be infringed by applying a treaty to matters that occur or exist when the treaty is in force, even if they first began at an earlier date” (1)
Continuous and Composite Conduct Is Not Retroactive 4. Other important sources of international law also recognize important caveats to the principle of non-retroactivity: Continuing and Composite breaches of international obligations. The International Law Commission’s Articles on Responsibility of States for Internationally Wrongful Acts (ILC Articles) is considered the authoritative source of law on when a state breaches an international obligation. .
5. Article 14 of the ILC Articles recognizes the breach of an international obligation may occur over time by “...an act of a State having a continuing character.” Article 14 distinguishes a continuing breach extending “over the entire period during which the act continues and remains not in conformity with the international obligation” from an act that “occurs at the moment the act is performed, even if its effect continue.” The commentary to the ILC Articles also provides important context for the existence ofa continuing breach without losing sight of the primary international law obligations are its source. The Commentary provides that “...conduct which has commenced some time in the past, and which constituted [...] a breach at that time, can continue to give rise to a continuing wrongful act in the present (2). Thus, for the continuing act to constitute a continuing breach, by definition the State must have been bound by an international obligation during “over the entire period during which the act continues...”.
6. Article 15 of the ILC Articles also recognizes an international obligation may be breached consisting of a composite act. Article 15 describes that an international obligation can be breached “...through a series of actions or omissions defined in the aggregate as wrongful, occurs when the action or omission occurs which, taken with other actions and omissions, is sufficient to constitute the wrongful act.” Article 15 also provides a temporal component for such a breach establishing “...the breach extends over the entire period starting with the first of the actions or omissions of the series and lasts for as long as these actions or omissions are repeated and remain not in conformity with the international obligation.” In this case, the Commentary to the ILC Articles once again emphasizes how the temporal component of the act must conform to the primary obligations that are in breach. The commentary states the following:
“the State must be bound by the international obligation for the period during which the series of acts making up the breach is committed. In cases where the relevant obligation did not exist at the beginning of the course of conduct but came into being thereafter, the “first” of the actions or omissions of the series...will the first occurring after the obligation came into existence.”
7. A number of recent investment dispute arbitrations provide practical insight into how these principles have been applied by international arbitral tribunals. Though the disputes have arisen under different bilateral and multilateral trade and investment agreements, these temporal questions at issue in all of them have been very similar.
Marvin Roy Feldman Karpa v. United Mexican States (3) 8. The Claimant in this dispute, Marvin Roy Feldman Karpa (Feldman), was a United States citizen and shareholder in Corporacion de Exportaciones Mexicanas, S.A. de C.V. (CEMSA ), a Mexican company purchasing cigarettes from volume retailers for export since 1990. Under the applicable Mexican tax law, cigarette exporters were entitled to apply for a rebate on excise taxes. From 1991 to December 1997, on three separate occasions CEMSA was denied rebates that were granted to other Mexican companies. In December 1997, the applicable tax law was changed barring rebates for cigarette resellers.
9. In 1999 and after the NAFTA’s coming into force(4), Feldman brought a claim against Mexico for its refusal to grant CEMSA tax rebates that it argued were being provided to other Mexican firms. Feldman argued Mexico’s measures constituted “a continuing course on conduct in violation [of] both international law and NAFTA.”(5) Mexico objected to the jurisdiction of the Tribunal arguing that no obligation could breach an obligation incumbent on Mexico only upon the NAFTA’s entry into force.(6)
10. In its Decision on jurisdiction, the Tribunal recognized the notion of continuous conduct that could violate the NAFTA after its coming into force :
Accordingly, this Tribunal may not deal with acts or omissions that occurred before January 1, 1994. However, this also means that if there has been a permanent course of action by Respondent which started before January 1, 1994 and went on after that date and which, therefore, "became breaches" of NAFTA Chapter Eleven Section A on that date (January 1, 1994), that post-January 1, 1994 part of Respondent's alleged activity is subject to the Tribunal's jurisdiction...Any activity prior to that date, even if otherwise identical to its post-NAFTA continuation, is not subject to the Tribunal's jurisdiction in terms of time.(7)
11. In its Award on the merits, the Tribunal found Mexico had violated its NAFTA National Treatment by granting rebates to Mexican companies. In its analysis the Tribunal took into account conduct by Mexico that anteceded the NAFTA’s entry into force.(8)
Mondev International Ltd. v. United States (9) 12. Mondev International Ltd. (Mondev) was a Canadian company owning a subsidiary (LPA) selected by the city of Boston and the Boston Redevelopment Authority (BRA) to rehabilitate a dilapidated area in Boston in the late 1970s and early 80s. The development contract granted LPA an option to purchase a parcel of land in the redevelopment. The city and the BRA however failed to allow LPA to exercise its option by dilatory and obstructionist actions. In 1992, LPA filed suit against the city and the BRA. In 1998, on appeal the city and BRA were found to enjoy legal immunity and therefore not liable.
13. After the NAFTA came into force10, Mondev brought a claim for the actions of the city and of the BRA against the United States in1999 (11). Mondev made a case for the violation for a continuous breach of the treaty provisions.12 During the hearing arbitrator Crawford expressed concern over Mondev’s claim suggesting it was an act occurring before the NAFTA’s entry into force, even though its harmful effects remained:
"There's a distinction between a case where an act which is in itself wrongful can be said to continue and a situation where the harm that an act has caused continues but the act itself has ceased. So, for example, if someone is injured as a result of police brutality and the injury continues to cause them pain and suffering after the critical date, it's not as if the wrongful act has continued after that date. The wrongful act occurred in the past. The person continues to suffer...On the other hand, the human rights courts have held that in the case of a disappearance, where the disappearance, the situation of disappearance continues until after the critical date is a continuing wrongful act (13) ."
14. In its award on the merits, the Tribunal agreed “that an act, initially committed before NAFTA entered into force, might in certain circumstances continue to be of relevance after NAFTA's entry into force, thereby becoming subject to NAFTA obligations. (14) ”The Tribunal later added “it does not follow that events prior to the entry into force of NAFTA may not be relevant to the question whether a NAFTA Party is in breach of its Chapter 11 obligations by conduct of that Party after NAFTA's entry into force." (15)
15. However in its considerations the Tribunal also indicated where international law draws the line by stating “...there is a distinction between an act of a continuing character and an act, already completed, which continues to cause loss or damage.16” On the basis the Tribunal ultimately rejected Mondev’s claims stating “it must still be possible to point to conduct of the State after that date which is itself a breach...The mere fact that earlier conduct has gone unremedied or unredressed when a treaty enters into force does not justify a tribunal applying the treaty retrospectively to that conduct.” (17)
16. The Tribunal’s key holding in this regard however did draw a further distinction. The Tribunal noted the importance of events preceding a legal obligation in determining a breach thereafter.18 This distinction would later inform the decision in another international arbitral tribunal in Técnicas Medioambientales Tecmed S.A. v. The United Mexican States.
Técnicas Medioambientales Tecmed S.A. v. The United Mexican States (19) 17. Técnicas Medioambientales Tecmed S.A (TECMED) was a Spanish company that in February 1996 acquired a landfill of hazardous industrial waste from a municipal government agency in Hermosillo-Mexico. The landfill had operated since 1994 pursuant to a license of indefinite term granted by a federal government agency (Instituto Nacional de Ecología or INE) in charge of environmental matters. Following the purchase, TECMED successfully applied and obtained two one-year licenses to operate the landfill through its subsidiary Cytrar. In November 1998, after a number of local protests against the landfill, the application to renew Cytrar’s license was denied and the landfill was ordered to be closed.
18. In 2000, TECMED brought a claim against Mexico pursuant to the Mexico-Spain Bilateral Investment Treaty (BIT) that had come into force in December 2006. TECMED claimed that Mexico had failed to grant Cytrar the same long-term operation permits it had enjoyed prior to 1996. The Mexican government objected to the temporal jurisdiction of the Tribunal (20)
19. Although TECMED did not claim for government measures before 1996, it considered government conduct at that time was relevant to determine whether treaty violations had occurred thereafter. (21) The Tribunal agreed with Mondev Tribunal that acts committed before a treaty’s entry into force might may continue to be relevant thereafter.(22) The Tribunal cited the commentary to Article 28 of the Vienna Convention of the Law of Treaties to hold the following: (23)
On the other hand, conduct, acts or omissions of the Respondent which, though they happened before the entry into force, may be considered a constituting part, concurrent factor or aggravating or mitigating element of conduct or acts or omissions of the Respondent which took place after such date do fall within the scope of this Arbitral Tribunal’s jurisdiction. This is so, provided such conduct or acts, upon consummation or completion of their consummation after the entry into force of the Agreement constitute a breach of the Agreement.. (24)
20. On this basis the Tribunal held that Mexico’s actions had violated the treaty by destroying the economic value of the investment and failing to recognize the investor’s fair expectations in making its investment. (25) The Tribunal stated the following:
“...particularly if the conduct, acts or omissions ...could not reasonably have been fully assessed by the Claimant in their significance and effects when they took place, either because as the Agreement was not in force they could not be considered within the framework of a possible claim under its provisions or because it was not possible to assess them within the general context of conduct attributable to the Respondent in connection with the investment, the key point of which led to violations of the Agreement following its entry into force. (26)
SGS Société Générale de Surveillance S.A. and the Republic of the Philippines (27) 21. SGS was a Swiss company providing pre-shipment import certification services for the Philippine Bureau of Customs (PBC) in exporting countries, pursuant to a contract signed in 1991. The contract was extended on several occasions and discontinued in March 2000. At that time, SGS had unsettled accounts of about US$ 140 million. In late 2001, at the behest of the Secretary of Finance a joint SGS-PCB team confirmed a significant amount of those unsettled accounts were due. Although Secretary of Finance did not dispute the findings, the accounts remained unpaid thereafter.
22. SGS brought an ICSID claim against the Philippines for its failure to pay those amounts pursuant to the Swiss-Philippines BIT that came into force in April 199928. Although it was not apparent that SGS made its claims pursuant to a continuing or composite breach theory, the Philippines did object to the tribunal’s jurisdiction on temporal grounds.
23. The Tribunal agreed with the Mondev tribunal recognizing “events or conduct prior to the entry into force of an obligation for the respondent State may be relevant in determining whether the State has subsequently committed a breach of the obligation.(29) The Tribunal then determined “the failure to pay sums due under a contract is an example of a continuing breach.(30) ” In the Tribunal’s opinion the actual breach on the treaty could not have occurred until the PBC’s refusal to pay in 2001.(31) Ultimately, the tribunal ordered a stay of the arbitration, pending a decision from the contractually agreed forum.
Impregilo S.p.A. v. Islamic Republic of Pakistan (32) 24. Impregilo, an Italian company was part of a five-party Swiss joint-venture to construct hydroelectric power facilities in Pakistan. Impregilo was designated to act on behalf of the joint-venture and in 1995 signed two civil works contracts with the Pakistan Water and Power Development Authority (WAPDA), a state enterprise. The projects were scheduled for March 2002 but were hampered by delays. The joint-venture’s request for extensions and payment of additional costs were denied.
25. In 2003, Impregilo filed an ICSID claim against Pakistan on behalf of the joint-venture pursuant to the Italy-Pakistan BIT. The BIT had come into force in June 2001. Impregilo claimed WAPDA’s an incurred in “systematic and continuous” conduct constituted both a continuing and composite act.33 Pakistan objected to the jurisdiction of the Tribunal stating most of the acts at issue had occurred before the BIT’s entry into force, while other had not occurred uninterruptedly. (34)
26. In its award on jurisdiction, the Tribunal agreed with Pakistan’s temporal objections stating WAPDA’s acts had not continued in time having “occurred at a certain moment and their legality must be determined at that moment, and not by reference to a Treaty which entered into force at a later date.35” Interestingly the Tribunal distinguished its findings from those in SGS Société Générale de Surveillance S.A. and the Republic of the Philippines providing:
"In this respect, the present case is completely different from that described in the SGS v. Philippines award, which was relied upon by Impregilo. In that case, the Respondent recognised its obligation to pay sums due under a contract, and disputed only the quantum of the indemnity. In contrast, the current dispute is to be compared with cases of expropriation as mentioned by the Rapporteur of the draft Articles in the International Law Commission...in which the effects may be prolonged, whereas the act itself occurred at a specific point in time, and must be assessed by reference to the law applicable at that time...(36)
Conclusion 27. A very important part of disputes over continuing or composite conduct revolves around whether the measures in dispute have “crystallized” before or after they are covered by an investment treaty. In other words, the focus is on whether the act has ceased or whether it continues in time. It is this approach that is reflected in the ILC Articles.
28. A recent case in Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru illustrates this is a very interesting manner.37 The Claimants -a Chilean parent and its local subsidiary- owned a plant for the manufacture and sale of pasta near a protected wetland in Lima-Peru. The municipal authorities first revoked the plant’s permits in late 1997 for environmental concerns but the Claimants successfully challenged the measure. After the entry into force of the Chile-Peru BIT in August 2001, the permits were once again revoked. In this case however, the BIT expressly provided it would not apply to “differences or disputes that arose prior to its entry into force.”38 As a result, the Claimants made a case that the facts did not constitute continuing conduct.
29. In its award on jurisdiction, the Tribunal stated that “the critical element in determining the existence of one or two separate disputes is whether or not they concern the same subject matter.”39 The Tribunal concluded that the fact pattern at issue was an ongoing dispute in the absence of evidence indicating that the earlier dispute “had come to an end or had not as yet crystallized into a dispute.” (40)
* Asociado Senior, Appleton & Associates. Washington DC.
e-mail: hotero@appletonlaw.com
www.appletonlaw.com.
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(1) See commentary to article 28 of the Vienna Convention on the Law of Treaties, in Yearbook of the International Law Commission , 1966, Vol. II, pg. 211-213. The commentary can be found at http://untreaty.un.org/ilc/publications/yearbooks/Ybkvolumes(e)/ILC_1966_v2_e.pdf . http://untreaty.un.org/ilc/documentation/english/a_cn4_191.pdfLast viewed on January 23, 2007). Cited in WTO Appellate Body Report: Canada-Term of Patent Protection, AB-2000-7 WT/DS170/AB/R (00-3564), adopted by Dispute Settlement Body, 12 October 2000, para. 73.
(2) Emphasis is mine. See Commentary in Crawford, p. 138, numeral 12. See also ILC Article 13 providing “An act of a State does not constitute a breach of an international obligation unless the State is bound by the obligation in question at the time the act occurs and
(3) Marvin Roy Feldman Karpa v. United Mexican States, ICSID (Additional Facility) Case No. ARB (AF)/99/1, Interim Decision on Preliminary Jurisdictional Issues (December 6, 2000); 18 ICSID Rev.—F.I.L.J. 469 (2003), 2000 WL 34513942.
(4)The NAFTA came into force on January 1, 1994. The NAFTA provides Chapter 11 “covers investments existing on the date of entry into force of this Agreement as well as investments made or acquired thereafter. See Notes 39 to the NAFTA regarding Chapter 11 at http://www.dfait-maeci.gc.ca/nafta-alena/chap23-en.asp (last viewed January 29, 2007).
(5) See Claimant’s Memorial on Preliminary Issues, August 21, 2000, para. 76. The Claimant also argued “Respondent seeks to preclude the Tribunal from considering "measures" and other facts and circumstances that occurred before NAFTA entered into force on January 1, 1994 that are relevant to claims based on measures taken after that date.” See Claimants Reply on Preliminary Issues of September 22, 2000, para. 63. See both documents at See document at http://www.naftaclaims.com/disputes_mexico_karpa.htm (last viewed February 2, 2007).
(6) See Respondent’s Counter-Memorial on Preliminary Questions, September 8, 2000, paras. 231-235. See document at http://www.naftaclaims.com/disputes_mexico_karpa.htm (last viewed February 2, 2007).
(7) Marvin Roy Feldman Karpa v. United Mexican States, ICSID (Additional Facility) Case No. ARB (AF)/99/1, Interim Decision on Preliminary Jurisdictional Issues (December 6, 2000); 18 ICSID Rev.—F.I.L.J. 469 (2003), 2000 WL 34513942, para. 62
(8) Marvin Roy Feldman Karpa v. United Mexican States, ICSID (Additional Facility) Case No. ARB (AF)/99/1, Award (December 16, 2002); 18 ICSID Rev.—F.I.L.J. 488 (2003), 2002 WL 32818521. See in particular paras. 169 and 179 where the Tribunal notes the existence of de facto discrimination arising out of measures that took place well before the NAFTA’s entry into force on January 1, 1994.
(9) Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2 , Award (October 11, 2002), 2002 WL 32841359.
(10)The NAFTA came into force on January 1, 1994.
(11)The NAFTA provides Chapter 11 “covers investments existing on the date of entry into force of this Agreement as well as investments made or acquired thereafter. See Notes 39 to the NAFTA regarding Chapter 11 at http://www.dfait-maeci.gc.ca/nafta-alena/chap23-en.asp (last viewed January 29, 2007).
(12) Mondev’s claims were made pursuant to the NAFTA Chapter 11 provisions 1105 and 1110 affording investors Fair and Equitable Treatment and compensation upon expropriation of their investments.
(13) Transcript of the Hearing of May 20, 2002, Day One, pgs 273, lns. 12-21 and 274, lns. 1-12. The transcript can be consulted at http://www.naftaclaims.com/disputes_us_mondev.htm (Last viewed on January 26, 2007).
(14) Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2, Award (October 11, 2002); 2002 WL 32841359, para. 58.
(15) Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2, Award (October 11, 2002); 2002 WL 32841359, para. 69.
(16) Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2, Award (October 11, 2002); 2002 WL 32841359, para. 58.
(17 )Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2, Award (October 11, 2002); 2002 WL 32841359, para. 70..
(18) “Thus events or conduct prior to the entry into force of an obligation for the respondent State may be relevant in determining whether the State has subsequently committed a breach of the obligation.” See Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2, Award (October 11, 2002); 2002 WL 32841359, para. 70..
(19) Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States, ICSID (Additional Facility) Case No. ARB (AF)/00/2, Award (May 29, 2003); 2003 WL 24038436. The Tribunal’s award was rendered in Spanish, with an “unofficial English translation” provided in the ICSID’s website at http://www.worldbank.org/icsid/cases/awards.htm (last viewed January 30, 2007). The quotes in this articles are extracted from that translation.
(20) See the Mexican government’s response to TECMED’s claim at paras 414-427. The full document can be viewed at http://www.economia.gob.mx/work/snci/negociaciones/Controversias/Appris/Tecmed.htm (last viewed February 8, 2006).
(21) Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States, ICSID (Additional Facility) Case No. ARB (AF)/00/2, Award (May 29, 2003); 2003 WL 24038436, para. 59. See also TECMED’s post-hearing brief starting on pages 93-97. The full document can be viewed at http://www.economia.gob.mx/work/snci/negociaciones/Controversias/Appris/Tecmed.htm (last viewed February 8, 2006).
(22) Mondev International Ltd. v. United States, ICSID (Additional Facility) Case No. ARB(AF)/99/2, Award (October 11, 2002); 2002 WL 32841359, paras. 58 and 69..
(23) “[A]n act or fact or situation which took place or arose prior to the entry into force of a treaty continues to occur or exist after the treaty continues to occur or exist after the treaty comes into force, it will be caught by the provisions of the treaty. The non-retroactivity principle cannot be infringed by applying a treaty to matters that occur or exist when the treaty is in force, even if they first began at an earlier date.” See commentary to article 28 of the Vienna Convention on the Law of Treaties, in Yearbook of the International Law Commission , 1966, Vol. II, pg. 211-213.
( 24)Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States, ICSID Case No. ARB (AF)/00/2, Award (May 29, 2003); 2003 WL 24038436, para. 68. The original Spanish text reads as follows:
“En cambio, no quedan excluídos de la competencia de este Tribunal Arbitral ni del ámbito de aplicación del Acuerdo, conducta o actos u omisiones de la Demandada, que si bien tuvieron lugar antes de la fecha de entrada en vigor, puedan ser considerados como parte del iter constitutivo, factor coadyuvante, o elemento agravante o atenuante, de conducta o actos u omisiones de la Demandada que tuvieron lugar luego de tal fecha. En la medida que ésta última conducta o tales actos, al consumarse o completarse su consumación luego de entrado en vigor el Acuerdo, sean violatorios de éste;”
(25) Ultimately, Mexico’s actions were considered tantamount to an expropriation and in breach of the Fair and Equitable treatment.
(26) Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States, ICSID Case No. ARB (AF)/00/2, Award (May 29, 2003); 2003 WL 24038436, para. 68.
(27) SGS Société Générale de Surveillance S.A. and the Republic of the Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction (January 29, 2004); 2004 WL 3254664..
(28) SGS claimed the Philippines breached its obligations to protect the investment, to afford fair and equitable treatment, to observe its contractual obligations and to not expropriate without appropriate compensation.
(29) SGS Société Générale de Surveillance S.A. and the Republic of the Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction (January 29, 2004); 2004 WL 3254664.,para 166.
(30) SGS Société Générale de Surveillance S.A. and the Republic of the Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction (January 29, 2004); 2004 WL 3254664.,para 167.
(31) SGS Société Générale de Surveillance S.A. and the Republic of the Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction (January 29, 2004); 2004 WL 3254664, para. 168.
(32) Impregilo S.p.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/3, (April 22, 2005); 2005 WL 1157217.
(33) Impregilo S.p.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/3, (April 22, 2005); 2005 WL 1157217, paras. 88-89.
(34) Impregilo S.p.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/3, (April 22, 2005); 2005 WL 1157217, paras. 74-75 and 292-296.
(35) Impregilo S.p.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/3, (April 22, 2005); 2005 WL 1157217, paras. 312. The Tribunal also dismissed other of Impregilo’s claims including those made on behalf of other joint venture members and contractual claims to which Pakistan was not directly a party.
(36) Impregilo S.p.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/3, (April 22, 2005); 2005 WL 1157217, paras. 313.
(37) Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru, ICSID Case No. ARB/03/4, Award, February 7, 2005, 2005 WL 159302.
(38) The full provision reads as follows: “Article 2.-Scope: This Treaty shall apply to investments made before or after its entry into force by investors of one Contracting Party, in accordance with the legal provisions of the other Contracting Party and in the latter’s territory. It shall not, however, apply to differences or disputes that arose prior to its entry into force.” See Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru, para. 25. The BIT between Chile and Peru can be viewed in Spanish at the SICE website - http://www.sice.oas.org/investment/bitindex_e.asp (Last viewed February 5, 2007).
(39) Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru, para. 50. The Tribunal relied on the case in CMS Gas Transmission Company v. The Republic of Argentina providing that general public policy and specific sectoral measures were relevant : “As long as they affect the investor in violation of its rights and cover the same subject-matter, the fact that they may originate from different sources or emerge at different times does not necessarily mean that the disputes are separate and distinct.”. See CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8, Decision of the Tribunal on Objections to Jurisdiction, 2003 WL 24031304 (July 17, 2003).
(40) Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Republic of Peru, para. 56. In this regard, the Tribunal relied on a the notion of “critical date” articulated in Emilio Agustin Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Decision of the Tribunal on Objections to Jurisdiction, 2000 WL 34508808 (January 25, 2000), para. 96. The relevant excerpt reads as follows:
The Tribunal notes in this respect that there tends to be a natural sequence of events that leads to a dispute. It begins with the expression of a disagreement and the statement of a difference of views. In time these events acquire a precise legal meaning through the formulation of legal claims, their discussion and eventual rejection or lack of response by the other party. The conflict of legal views and interests will only be present in the latter stage, even though the underlying facts predate them. It has also been rightly commented that the existence of the dispute presupposes a minimum of communications between the parties, one party taking up the matter with the other, with the latter opposing the Claimant's position directly or indirectly. This sequence of events has to be taken into account in establishing the critical date for determining when under the BIT a dispute qualifies as one covered by the consent necessary to establish ICSID's jurisdiction".
