Innovative Steps are Introduced Into Non-Disputing Party ICSID Procedure
By Elizabeth Whitsitt
November 3, 2009
In a high-profile arbitration involving mining interests owned by Piero Foresti, Laura de Carli and others versus the Republic of South Africa, an ICSID tribunal (the “Tribunal”) has accepted two petitions for participation by Non-Disputing Parties (“NDPs”) and imposed innovative procedural steps regarding document disclosure and participant feedback.
In this case, a group of European investors (the “Claimants”), who hold interests in granite quarrying companies in South Africa, argue that the South African government has effectively “extinguished” their mineral rights without providing adequate compensation. Specifically, the European claimants take issue with Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA”), legislation designed to ameliorate social conditions experienced by historically marginalized South Africans.
Under the MPRDA, private ownership of mineral rights was replaced with a system of licenses offered by the South African government. Thus, investors like the Claimants holding mineral rights under the old regime were given an opportunity to apply for licenses under the new regime provided they met certain criteria, including the achievement of certain Broad Based Black Economic Empowerment objectives. By so stipulating, the Claimants assert that their new-order mineral rights are not equivalent in value to the rights they enjoyed previously.
Not surprisingly, the dispute has attracted the concerns of numerous South African and international public interest groups and academics. Thus, in the summer of this year public interest groups sought to assist the Tribunal by addressing the public interest and international law issues raised by the dispute by filing petitions to participate in the arbitral proceedings as NDPs.
Seeking to reduce any potential burden on the Tribunal and to maximize the usefulness of their submission, the first successful petition was initiated by a coalition of four non-governmental organizations comprised of the Centre for Applied Legal Studies (“CALS”), the Center for International Environmental Law (“CIEL”), the International Centre for the Legal Protection of Human Rights (“INTERIGHTS”), and the Legal Resources Centre (“LRC”) (collectively the “Coalition”).
According to the Coalition’s petition, their submissions are intended to provide a thorough understanding of South Africa’s legal obligations – under its constitution and international law – to promote certain human and economic and social rights. Aimed at elaborating on the scope of rights such as the right to equality, development and a healthy environment, the coalition seeks to assist the Tribunal in placing South Africa’s Bilateral Investment Treaty (“BIT”) obligations in context. In so doing, the Coalition’s submissions are meant to promote a coherent interpretive approach that would demonstrate the relevance of such rights in relation to the interpretation of South Africa’s obligations under BITs.
Similarly, the second successful petition, put forward by the International Commission of Jurists (“ICJ”), is intended to address South Africa’s international and constitutional obligations to promote equality and the bearing that such obligations should have on the Tribunal’s assessment of the MPRDA.
The Tribunal granted both petitions on October 5, 2009. Permitting the Coalition and ICJ the opportunity to provide written submissions on those issues delineated above, the Tribunal also ordered the disclosure of the Parties’ key filings to the NDPs prior to the submission of their written arguments despite objections from one of the parties to the dispute – an innovative step in the development of NDP procedure.*
Further, given the novelty of the NDP procedure, the Tribunal indicated that at the end of the arbitration it will invite the Parties and the NDPs to provide feedback concerning the procedure adopted for NDP participation in this case. In addition, the Tribunal has committed to discuss the comments of the parties and the NDPs in its final award.
This is the first time that any ICSID tribunal has expressed interest in obtaining comment from the disputing parties and the NDPs on its NDP procedure; a ground-breaking development that will no doubt be the catalyst for some useful discussion regarding the contentious question of NDP participation in ICSID arbitrations.
The Tribunal indicated that it did not “…envisage that the NDPs will be permitted to attend or to make oral submissions at the hearing.” A decision on those questions is expected in March 2010, after the Parties to the dispute have responded to the NDP submissions.
Meanwhile, the Parties’ redacted documents are expected be filed with ICSID November 16, 2009 so that these can be forwarded on to the NDPs. Leaving the Coalition and ICJ with a little over a month to file their written legal submissions.
* See “NGOs permitted to intervene in South Africa mining case and – for second time at ICSID – tribunal orders would-be petitioners to be given access to case documents” By Luke Peterson, Investment Arbitration Reporter, 14 October 2009, in which the author indicates that access to pleadings has only been granted to an intervener in one other dispute, Electrabel v. Hungary. In that case arbitrators did provide the European Commission access to some of the pleadings so that it could frame its legal submissions in light of arguments made by the parties in the case. This article is available at: http://www.iareporter.com
Sources:
Both Petitions and the Tribunal’s decision can be downloaded from ITN’s website at:
For further background on this dispute, see the ITN’s previous reporting:
“In Brief: Suspension extended in Piero Foresti, Laura de Carli and others v. Republic of South Africa”, By Damon Vis-Dunbar, Investment Treaty Newsletter, 8 June 2009, available here:
“European miners and South Africa suspend proceedings”, By Damon Vis-Dunbar, Investment Treaty Newsletter, 2 April 2009, available here:
“South African court judgment bolsters expropriation charge over Black Economic Empowerment legislation in the mining sector”, By Damon Vis-Dunbar, Investment Treaty Newsletter, 23 March 2009, available here: