An Analysis on Current Praxis, Legal Nature, Strategies for Execution

Daiana Miu, Aleksandra Vonica, Ekaterina Mikahail; IARC – University of Bucharest and Saint Petersburg State University

Executive Summary

A joint interpretation is an agreement between State parties to an international investment agreement (“IIA”) on a common interpretation of a provision in the IIA. Joint interpretations can be seen as a way for States to retain control over the interpretation of IIAs, as and when disputes arise under these IIAs. This memorandum addresses three main areas concerning joint interpretation in IIAs: (1) how it has been used in existing treaties; (2) its legal effect on Investor State Dispute Settlement (ISDS) tribunals; and (3) how it can be implemented in future treaties. For the purposes of legal analysis, we classify IIAs into three main categories: (1) where treaties are silent on joint interpretations; (2A) where treaties state that joint interpretations are expressly binding on ISDS tribunals; and (2B) where treaties provide for joint interpretation but are silent as to its legal effect.

Joint interpretations issued under situations (1) and (2B) are governed by Art 31(3)(a) of the Vienna Convention on the Law of Treaties (“VCLT”). This is because joint interpretations constitute “subsequent agreements” under Art 31(3)(a) of the VCLT and, thus, ISDS tribunals are required to “tak[e] [them] into account” in the interpretation of IIAs. However, while joint interpretations constitute an authentic means of interpretation, they form only one part of the holistic exercise of treaty interpretation (which includes, inter alia, the ordinary meaning, context and object and purpose).

By contrast, under situation (2A), the joint interpretation issued by the IIA parties will supersede Art 31(3)(a) of the VCLT and will be binding on the ISDS tribunals, pursuant to the lex specialis principle. This is most evident from the decisions of tribunals in several NAFTA cases, which applied the 2001 Free Trade Commission Interpretive Note on Art 1105 (“FTC Note”). Most tribunals accepted that the FTC Note was binding and applied it. However, as the FTC Note referred to the customary international law standard of treatment, some tribunals have adopted an evolutive approach.

It is also unclear at present how joint interpretations could affect investor rights. The ability to do so turns on the provisions of each IIA, and must therefore be assessed on a case-by-case basis. A survey of such provisions falls beyond the scope of this study. Further, a claim for estoppel, legitimate expectations and/or Fair and Equitable Treatment will likely only succeed if the State had made a sufficiently clear representation prior to the interpretation being issued. iii To implement joint interpretation provisions in existing and future IIAs, States have the option of amending existing IIAs on a bilateral basis. This process is likely to be slow and resource intensive. Other options include the adoption of procedural rules, a multilateral opt-in convention (much like the Mauritius Convention on Transparency) and model treaty provisions. Although getting States to ratify such an opt-in convention is politically challenging, it is likely to be the most efficient option for incorporating joint interpretation mechanisms in IIAs.

This study also recommends that when implementing joint interpretation provisions into treaties, States should include language that such interpretations are binding on the tribunal. Based on our survey of existing IIAs, one possible model provision that can be adopted is:

Any interpretation jointly agreed to by the Parties shall be binding on the tribunal established under these provisions, and any decision or award issued by such a tribunal must be consistent with that interpretation.