I am delighted to pass along the news that Dini Sejko's excellent article, "Sovereign Investors as ICSID Claimants: Lessons from the Drafting Documents and the Case Law," has been published in the Vanderbilt Journal of Transnational Law, Vol. 56(3):853-903, 2023.The abstract lays out the principal arguments:
This Article examines the role of the International Centre for Settlement of Investment Disputes (ICSID) in resolving cases brought by an increasing number of sovereign investors. The Article begins with a linguistic analysis of the ICSID Convention’s relevant provisions, which lack a definitive regulatory position, and then reviews historical and drafting documents showing the position of some states that participated in the negotiations. Part III uncovers new cases and further examines understudied ones, and introduces a holistic and systematic analytical study of the case law, drawing lessons from consistencies in the awards. In Part IV, the awards are grouped, focusing on salient issues deriving from the diverse factual and legal elements of the cases. Initially, Part IV focuses on the first ICSID case in which a state-owned enterprise acts as a claimant. The analysis continues with the first application of the Broches test, an examination of awards in which investors were operating for little or no profit, and a review of awards in which sovereign investors were treated as any other privately owned investor. Last, the Part reviews the particularities of Chinese SCEs in FDI flows and ends with an assessment of the role of sovereign wealth funds and related awards.
A comprehensive evaluation of the case law reveals that European SCEs have massively relied on the ICSID system, in contrast with Chinese SCEs that have made marginal use of it. Part V explains the relevance of the consistent approaches and argues that ICSID tribunals have established a jurisprudence constante in dealing with SCEs that confirms their access as claimants in investor-state disputes. Conversely, Part VI provides innovative approaches and instruments to assess the owner’s role in sovereign investors’ transactions and prevent distortions of the Centre’s jurisdiction. The last Part summarizes the research findings.
Indeed, Sejko considers an increasingly important aspect of international trade outside of the G7--the utility of markets based investment treaty dispute resolution mechanisms for resolving the disputes between states and enterprises that are owned or controlled by other states. That ought to be an important element in South-South trade and calls into question the usual narrative of the exploitative private enterprise taking advantage of developing states through investment treaty provisions and the resolution mechanisms operationalized through mechanisms like ICSID (see eg here). Yet Sejko finds that
The statistical analysis of the ICSID case law that underpins this Article demonstrates that sovereign investors have acted as claimants in ICSID since the very beginning of its operations, with one of the first cases having been lodged by AGIP, an Italian energy SOE. Nowadays, cases filed by SCEs account for around 3 percent of all ICSID arbitral decisions. Surprisingly, the majority of these ICSID awards are filed by European SCEs, while SCEs from developing countries represent only a minority. (Sejko, supra, p. 901).
Sejko does an excellent job of laying out both the trajectories of law and the challenges that are emerging as state controlled entities seek to operate in global markets. The analysis of the sometimes thin line between these enterprises as state instrumentalities (thus moving to a state to state model of dispute resolution) or as commercial vehicle owned by states, is particularly useful.
The article's introduction follows.