Vanishing Treaty Claims: Investors Trapped in a Temporal Twilight Zone

Abstract

The recent surge of arbitral awards forging new paths in the less-explored frontier of jurisdiction ratione temporis is laudable. Yet, if left unchecked, the trajectory of jurisdictional barriers expanding in depth and difficulty threatens to shrink the road of arbitration to the eye of a needle. Two emerging rules are especially worrisome: first, the right to claim under BITs vests exclusively with the investor holding the investment at the date of breach; second, the right is extinguished upon disposal of the investment. Concomitantly, once a pre-existing foreign investment is impaired by State measures, a temporal twilight zone is formed between the date of breach and date of institution of arbitration. The right to claim risks vanishing into a legal black hole along with the investment. Impecunious investors are left with a binary choice: litigate or mitigate. Ultimately, the broader lesson is for investment tribunals to avoid two common missteps when examining temporal objections: overreach of jurisdiction ratione temporis into areas more appropriately covered by the other jurisdictional dimensions (ratione materiae and ratione personae) and doctrine of abuse of process; and overreliance on principles transposed from private commercial arbitration (succession and separability).