Abstract:
Article 52(1)(d) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States entitles ad hoc committees to annul investment arbitration awards where there has been a ‘serious departure from a fundamental rule of procedure’. Despite being one of the most commonly argued grounds for annulment, only one applicant has been successful on this basis, with the low success rate apparently stemming from uncertainty inherent in art 52(1)(d) as to what constitutes a ‘fundamental rule of procedure’. Successive ad hoc committees have perpetuated this uncertainty by failing to conduct a proper analysis of the scope and international law origins of the phrase ‘serious departure from a fundamental rule of procedure’.
This paper argues that future ad hoc committees must make a ‘u-turn’ in approach in order to remedy this analytical gap. Starting from application of the Vienna Convention on the Law of Treaties rules of treaty interpretation, the paper demonstrates that art 52(1)(d) references a hierarchy of rules of procedure where fundamental rules of procedure form the basis from which subsidiary rules of procedure are derived. These findings are then applied to identify four essential procedural principles - ‘fundamental rules of procedure’ - that underpin the conduct of arbitral proceedings as well as the right to a fair trial in international human rights law and procedural review of international commercial arbitration awards. Finally, a four-step ‘road map’ is developed for future ad hoc committees to follow in order to achieve clarity and coherence on the legal standard for annulment that applies under art 52(1)(d).
