ISDS at the Peace Palace

PeacePalaceFinalYear 1899 marks the beginning of the Philippines – American war. In the same year, the Spanish-American war ended. It also marks the first international peace conference in the Hague, which represents an important point of time for international arbitration.

The Hague Peace Conference was an initiative of Czar Nicholas II of Russia, the aim of which was to ensure a lasting peace and to limit armaments. One of the proposals that was put forward in this conference was to create an institution for international arbitration to settle international disputes in order to replace institution of wars.

One of the biggest achievements of this conference was the signing of the Convention for Pacific Settlement of International Disputes (“Convention”). The Convention created the Permanent Court of Arbitration (PCA) which is housed in the Peace Palace in the Hague.

Since then, the PCA has administered a large number of high-profile arbitration between states. In Grisbådarna Case between Sweden and Norway, the dispute on the maritime boundary between the two countries was resolved. Another case concerned a bloody conflict between Eritrea and Ethiopia. The two countries submitted to the PCA to settle the delimitation of their borders and to settle claims arising out of violations of international law during the conflict.

Today, the roles of the PCA and international arbitration have moved beyond maintaining peace. It continues to contribute to rule of law by administering ISDS cases – which in the end plays a role in promoting economic development and international trade.

One of the high-profile cases is Chemtura v. Canada, in which a U.S investor brought a claim against Canada due to Canada’s decision to ban sale of a pesticide produced by the investor. The tribunal found that there was a legitimate public health reason behind this ban and therefore it rejected the claim of the investor in its entirety.

Further, the PCA is currently administering a case in which a Canadian investor brought a claim against the government of Barbados for, among others, failure to implement the environmental laws and to abide by its environmental treaties commitments. The investor claimed that this failure has damaged natural sanctuary owned by the investor. The case is still pending however it shows that environmental protection is an important question that may appear in ISDS.

Two centuries after the Hague Peace Conference, international arbitration is still highly relevant as a rule of law mechanism to solve international disputes. This is a value that should be appreciated, not undermined.