Consultations on the interpretation and application of the Agreement on Encouragement
and Reciprocal Protection of Investments between the Kingdom of the Netherlands and
the Czech Republic
[Regeling vervallen per 10-12-2021]
By written consultation made on 30 October 2001, the Czech Republic requested the
Kingdom of the Netherlands to start consultations under Article 9 of the Agreement
on Encouragement and Reciprocal Protection of Investments between the Kingdom of the
Netherlands and the Czech Republic, signed on 29 April 1991. Two questions were formulated:
-
* whether the Agreement extends to Czech investments of another investor prior to the
acquisition, and
-
* whether law of the host state not inconsistent with the terms of the Investment Promotion
and Protection Agreement (IPPA) can be ignored by the Tribunal contrary to Article
8 (6) of the Agreement.
Consultations took place between delegations of the two countries by written exchange
of views and by meetings of the delegations. The consultations were conducted in an
open and constructive atmosphere. The aim of the consultations was to have an exchange
of views in order to investigate the possibility of reaching a common understanding
on the interpretation and application of the IPPA between both countries. During the
consultations, the delegations took note of the mutual explanations, which included
the principles underlying the IPPA. It was agreed upon that the consultations were
held on the interpretation and application of the IPPA. The merits of the outstanding
disputes in which the Czech Republic is involved were not subject of the consultations.
A first meeting took place on 19 December 2001 in The Hague, where mainly procedures
were discussed. Since in the letter of 30 October 2001 no background information was
given with respect to the circumstances that led to the questions referred to, it
was agreed upon that the Czech delegation would produce a background paper elucidating
the two questions. That Czech background paper was sent to the Netherlands on 2 January
2002. The Netherlands delegation drafted a position paper, which was sent to the Czech
Republic on 5 February 2002, in which it addressed the issues forwarded by the Czech
delegation and in which its views were given on the interpretation and application
of the IPPA between the two countries. On 22 February 2002, a further exchange of
views took place during a meeting in Prague, of which the results were written down
in agreed minutes, which were signed on 4 April 2002 by the heads of the two delegations.
On 4 and 5 April 2002, a final meeting between experts of both countries was held
in The Hague. It was agreed upon that the result of the whole consultation process
would be reflected in the present agreed minutes and that it will be proposed to the
responsible ministers in both countries to confirm the result of the consultations
by an exchange of letters between them. By that exchange of letters the consultation
process will be concluded.
The names of the members of both delegations that took part in the consultations are
stated in the Annex.
As a result of the consultation process, a common position was reached on the following
issues:
-
• purpose and context of the Agreement
-
• investments disputes and interpretation of Article 8.6 of the Agreement
-
• assignment of claims arising under the Agreement
-
• application of the Agreement where another IPPA is invoked.
At the same time different views on the interpretation and explanation of the IPPA
remained with respect to some issues.
The following positions have been expressed.
1. On the issue of the purpose and context of the Agreement
[Regeling vervallen per 10-12-2021]
Both delegations agree that the purpose of the Agreement is to protect investments
of investors of one Contracting Party in the territory of the other Contracting Party.
The Agreement creates rights and obligations for the Contracting Parties and gives
rights to investors in respect of their investments. They agree that the IPPA is applicable
to investments of investors made after 1 January 1950 from the moment an investor
of one Contracting Party acquires an investment in the territory of the other Contracting
Party. The IPPA protects investments of investors who are either natural persons,
having the nationality of one of the Contracting Parties in accordance with its law,
or legal persons constituted under the law of one of the Contracting Parties. The
investments covered by the IPPA are invested either directly or through an investor
of a third State. Investors and investments not falling within these categories are
not protected by the IPPA. Investments can be new investments (greenfield investments)
or existing investments acquired by an investor.
2. On the issue of investment disputes and interpretation of Article 8.6 of the Agreement
[Regeling vervallen per 10-12-2021]
The delegations agree that the arbitral tribunal shall decide on the basis of the
law. When making its decision, the arbitral shall take into account, in particular,
though not exlusively, the four sources of law set out in Article 8.6. The arbitral
tribunal must therefore take into account as far as they are relevant to the dispute
the law in force of the Contracting Party concerned and the other sources of law set
out in Article 8.6. To the extent that there is a conflict between national law and
international law, the arbitral tribunal shall apply international law.
3. On the issue of the assignment of claims arising under the Agreement
[Regeling vervallen per 10-12-2021]
The delegations agree that each investor that qualifies under the IPPA is entitled
to the protection of the IPPA from the time the investment is acquired by that investor.
Investors are free to assign their investments protected by the IPPA. A claim which
the first investor has under the IPPA may pass to a second qualifying investor if
that claim has been transferred to the second investor either expressly or impliedly
by operation of the law applicable to the transfer and the claim so transferred will
be available to the second investor on the same basis as it was available to the first
investor. If the first investor’s claim does not so pass to the second investor, the
first investor may still be able to make the claim.
4. On the issue of the application of the Agreement where another IPPA is invoked
[Regeling vervallen per 10-12-2021]
The two delegations agree that, although it might be undesirable that investors submit
the same subject matter to different arbitral tribunals under different Investment
Protection Agreements, the Czech – Dutch investment Agreement does not deal with this
situation. If the Contracting Parties wish to address this issue further, it could
be dealt with either by future amendment of the IPPA or within the framework of a
multilateral investment protection agreement, taking into account the complexity of
the matter and the various situations which may occur.
The delegation of the Netherlands believes that neither written, nor unwritten international
law at present deals with this question. The Czech delegation indicated that there
are rules available in international law, based on fundamental principles, which deal
with the question referred to. The delegations, however, agreed that the consultations
do not provide the context to resolve the issue.
On the issue of different tribunals dealing with supposedly identical cases, the Netherlands
delegation believes that it cannot be maintained that there are always identical cases
when a legal dispute is submitted to international arbitration under different Investment
Protection Treaties and/or by different investors. The provisions of Investment Protection
Treaties may differ and/or the claimant(s) may differ. Claims of different legal entities,
even though they may be controlled by the same economic entity, are not necessarily
the same claims and difference in legal personality has been recognised by tribunals
(see, e.g., the ICJ Barcelona traction case). For instance, subsidiaries can operate
rather independently from the parent company. The Netherlands delegation points out
that an arbitral tribunal decides on its own jurisdiction. The Netherlands added that
within the framework of the World Trade Organisation (WTO) new negotiations on a multilateral
investment agreement are foreseen and may deal with this matter, but it may take some
time before a result may be accomplished.
