arbitration international

ARBITRATION INTERNATIONAL, Vol. 26, No. 1© LCIA, 2010

43

Witness Intimidation, Tampering and Other

Related Abuses of Process in Investment

Arbitration: Possible Remedies Available

to the Arbitral Tribunal

Witness Intimidation, Tampering and Other Related Abuses of Process in Investment Arbitration: Possible Remedies Available to the Arbitral Tribunal

by

ABBA KOLO*

Arbitration InternationalWilliam W. ParkArbitration International, Volume 26 Issue 12010

ABSTRACT

This articles argues that resort to witness intimidation and/or tampering in internationalinvestment arbitration by disputing parties as a tactic to gain litigation advantage over theiropponent does not only amount to a breach of the obligation to arbitrate in good faith, but alsoundermines the integrity of the arbitral process as a rule-based dispute settlement mechanism.Although the constituting instruments of the arbitral tribunal might not contain an explicitprovision on the tribunal’s powers to deal with witness intimidation, nonetheless the tribunal canrely on its inherent powers as a judicial body to punish the recalcitrant party, and may impose anumber of sanctions such as interim measures of protection, refuse to admit evidence procuredwith improper means, draw adverse inferences, award monetary damages or move the seat of thearbitration to a neutral venue.

I

I. INTRODUCTION

THE MAIN purpose of this article is to discuss the increasing use of intimidationand other related abuses, such as illegitimate pressure, by parties to investmentarbitration as a tactic to influence the outcome of the process, as well as thepossible sanctions available to the tribunal. As investment arbitration proliferatesand information about cases becomes more readily available, we are able to knowmore about some of the substantive and procedural issues that confront tribunals.Many of these issues are not adequately covered by the relevant legal framework.

* Lecturer, Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee. The author isgrateful to THE LATE PROFESSOR Thomas Wälde for his support. I would also like to thank KlausBerger, Bernard Hanotiau, John Bowman, Ruth Tietelbaum, Hege Elisabeth, Melaku Desta, JohnSouthalan and Loius Southaland for their helpful comments and suggestions on earlier drafts of this article.Any errors rest solely with the author. This article and the one by the late Thomas Wälde (also published inthis issue of the journal) have cross-fertilised each other.

44

Arbitration International, Volume 26 Issue 1

The use of intimidation or tampering by a party to gain a litigation advantage isone such problem.

The issue is not only of academic importance, but also of practical relevance asit does occur in practice. It raises an important legal question as to how anarbitral tribunal should deal with the problem in the absence of clear guidancefrom the rules governing the tribunal. The issue, while procedural, cannevertheless have an important bearing on the merits of the case, as it not onlyimpacts on the ability of one of the parties to prove its case and defend itselfagainst that of its opponent, but also threatens the integrity of the tribunal andthe overall investor-state arbitration process.

1

In order to advance internationalarbitration as an effective method of dispute resolution in international commercialtransactions, it is important for arbitral tribunals to be vested with the power orauthority (whether explicitly or implicitly) to resolve new procedural issues whichmight crop up but are inadequately addressed in the applicable legal framework.This enhances respect for and confidence in the arbitral process. The ability of thearbitral tribunal to sanction a party for misconduct, such as witness intimidation,would not only strengthen the hands of arbitrators to deal with the specific issuebut would also discourage potential litigants from resorting to such unconscionabletactics. Importantly, it enhances the credibility and effectiveness of the arbitralprocess as a viable and useful method of dispute resolution and reduces resort topolitical or other less transparent means of resolving investment disputes.

Section II highlights, in an illustrative manner, the numerous forms of witnessintimidation or tampering and related abuses in investment arbitration with aview to demonstrating the prevalence of the issues and their legal implications. Itargues that witness intimidation not only runs counter to the parties’ legitimateexpectations at the time they consented to the arbitration (be it regarding aninvestment treaty or a contract), but also discourages resort to the investor-statedispute settlement process. It also offends the principle of good faith and fairhearing in arbitration, tramples on the integrity of the arbitral process,

2

andprobably encourages resort to other less transparent mechanisms, such as corruptionand diplomatic or economic pressure. From the foreign investment policyperspective, the possibility of frustrating the arbitral process through intimidationincreases the risks in long-term investment and consequently reduces the welfare-enhancing element of such investment.

1

For as the arbitral tribunal in

Libananco

v.

Turkey

observed, an allegation regarding witness and counselintimidation by a party ‘strike[s] at principles which lie at the very heart of the ICSID [and other] arbitralprocess[(es)]’, including procedural fairness and respect for the tribunal which must be viewed with allseriousness by the tribunal.

Libananco

v.

Turkey

, Decision on Preliminary Issues of 23 June 2008, para. 78,available at www.investmentclaims.com. Most of the investment arbitration cases cited in this article areavailable at the ICSID website http://icsid.worldbank.org/ICSID/Index.jsp and/or http://ita.law.univ.ca.Depending on its nature, witness intimidation or tampering may adversely affect the merits of the innocentparty’s case, for example, where an important witness was dissuaded from giving evidence or made tochange his or her evidence, the consequence of which might be the dismissal or rejection of the innocentparty’s case by the tribunal.

2

See

the discussions on the subject in OGEMID, especially the anonymous posting of 18 March 2008,available at www.transnational-dispute-management.com.

Possible Remedies Available to the Arbitral Tribunal

45

Section III focuses on the power of an arbitral tribunal to impose sanctions orto punish for misconduct such as witness intimidation by a party. It argues thatwhile neither the ICSID Convention, ICSID Arbitration Rules, the UNCITRALModel Law and Rules nor any of the other principal arbitration rules (such asthe London Court of International Arbitration (LCIA) Rules, the InternationalChamber of Commerce (ICC) Rules, China International Economic and TradeArbitration Commission CIETAC) Rules, or the American Arbitration Association(AAA) Rules contain express provisions on the subject, such lacunae should notstop an arbitral tribunal from exercising jurisdiction over the matter. Jurisdictionmight be found from a purposive or functional reading of the constitutiveinstruments, or be based on the inherent powers of the tribunal as a judicial body.Although the concept of inherent power is not a

carte blanche

for an arbitraltribunal to do anything under the sun, it does nonetheless provide the tribunalwide discretionary powers to do all that is reasonably necessary to ensure thenon-frustration of the proceedings and enables it to perform its judicial functionseffectively.

Section IV analyses some of the possible sanctions which might be imposed(whether singly or in combination) against a party guilty of witness, party, counselor tribunal intimidation or other related abuses. These include interim measuresof protection; fines or costs in addition to those provided for under ordinary costsrules; drawing adverse inferences and/or shifting the burden of proof onto thewrongdoer; moving the arbitral proceedings to a neutral venue; taking theevidence of intimidated witnesses in camera or via video-conferences; and, inextreme circumstances, dismissing the claims, defences or allegations

in toto

or inpart, or issuing a default award. The legal basis of any of these sanctions might befound either in the constitutive instruments or under the inherent powers of thetribunal.

II

II. WITNESS INTIMIDATION OR TAMPERING: A THREAT TO RULE-BASED DISPUTE SETTLEMENT PROCESS

Nowadays, most parties to international transactions seem to resort tointernational arbitration as the preferred means of resolving their disputes for anumber of reasons, including flexibility, the expertise of the tribunal members,and due to lack of confidence in each others’ legal systems or courts.

3

Perhapsmost importantly, in recent years investment arbitration has come to replaceother traditional methods of dispute resolution between foreign investors and hoststates, such as diplomatic protection. This change has occurred through the

3

On the main reasons (advantages) why arbitration is attractive to parties to an international transaction,

see

M. Hunter, ‘International Commercial Dispute Resolution: the Challenge of the Twenty First Century’in (2000) 16

Arb. Int’l

379 at p. 382; J. Najar, ‘The Inside View: Companies’ Needs in Arbitration’ in (1996)12

Arb. Int’l

359 at pp. 361– 371; A. Reinisch and I. Malintoppi, ‘Methods of Dispute Resolution’ inP. Muchlinski, F. Ortino and C. Schreuer (eds.),

The Oxford Handbook of International Investment Law

(OUP,2008), p. 693, also available at www.transnationaldisputemanagement

TDM

( June 2006).

46


realisation of the positive effect of arbitration on investors’ decision-makingprocesses, and the need to take the political steam out of such disputes.

4

TheICSID Convention was designed to promote foreign investment by providing forinvestor-state arbitration, thereby overcoming the problems of diplomaticprotection and increasing investors’ confidence that investment disputes would bedecided on legal and economic bases rather than political considerations.

5

Thesame reason explains the growth of investment treaties, such as the NorthAmerican Free Trade Agreement (NAFTA), the Energy Charter Treaty (ECT),and bilateral and regional investment agreements, most of which containinvestor-state arbitration as an essential mechanism for ensuring the effectivenessof the rights and obligations provided in such treaties.

6

Under the ICSIDConvention, once the arbitration process is set in motion, neither party canfrustrate it by refusing either to participate or cooperate with the tribunal. Thus,the arbitral process may not be frustrated by withdrawal from the process, non-appointment of an arbitrator by a party nor resort to domestic courts by eitherparty.

7

Similarly, neither direct nor indirect withdrawal of consent to ICSIDarbitration by a party would have any effect on the proceedings.

8

The overridingconsideration for this rule is to ensure the effectiveness of the dispute settlementprocess to which the parties have consented.

9

To a large extent, arbitration underother rules such as the UNCITRAL Arbitration Rules has the same effect.

10

However, notwithstanding the wide acceptance of investment arbitration bystates and the rise in the number of investment arbitration disputes over the

4

R. Dolzer and C. Schreuer,

Principles of International Investment Law

(OUP, 2008), pp. 220–221; C. Brower,‘W(h)ither International Commercial Arbitration?’ in (2008) 24

Arb

.

Int’l

181 at pp. 185–186.

5

Articles 26 and 27 of the ICSID Convention provide for exclusivity of ICSID arbitration and prohibitdiplomatic protection of the investor when the arbitration is proceeding smoothly; Dolzer and Chreuer,

supra

n. 4 at p. 20 (citing I. Shihata, ‘Towards a Greater Depolitisation of Investment Disputes: the Roles of ICSIDand MIGA’ in

The World Bank in a Changing World

(1991), p. 309).

6

S. Frank, ‘Integrating Investment Treaty Conflict and Dispute Systems Design’ (unpublished manuscript,March 2007), pp. 20–21, available at http://ssm.com/abstract=969252; Won-Mog Choi, ‘The Present andFuture of the Investor-State Dispute Settlement Paradigm’ in (2007) 10(3)

JIEL

725 at p. 737; S. Schill,‘Arbitration Risk and Effective Compliance: Cost-Shifting in Investment Treaty Arbitration’ in (2006) 7(5)

JWIT

653 at pp. 693–694.On the main reasons why countries sign up to such treaties,

see generally

, J. Salacuse, ‘The Treatificationof International Investment Law: a Victory of Form over Life? A Crossroad Crossed?’ in

TDM

( June 2006);Z. Elkins, A. Guzman and B. Simmons, ‘Competing for Capital: the Diffusion of BITs, 1960–2000’ in(2006) 60

Int’l Org.

811; A. Guzman, ‘Why Do Less Developed Countries Sign Treaties that Hurt Them:Explaining the Popularity of BITs’ in (1998) 38

Va. J Int’l L

639.

7

ICSID Convention, Art. 26; C. Schreuer,

The ICSID Convention: a Commentary

(OUP, 2001), pp. 374–383.

8

Ibid.

pp. 252–256, and authorities cited in n. 559 therein.

9

See

UNCTAD, Consent to Arbitration, Dispute Settlement Course 2003, pp. 37–38, available at http://ro.unctad.org.disputesettlement/course.htm.

10

This is demonstrated by the experience of the Iran–United States Claims Tribunal, where attempts by someof the Iranian appointed arbitrators to frustrate the arbitral process by withdrawing before awards wereissued was held by the tribunal as invalid and of no effect on the awards issued by the ‘truncated’ tribunals.

See

S.M. Schwebel,

International Arbitration: Three Salient Problems

(1987), ch. 3;

contrast with

J. Seifi, ‘The Legalityof Truncated Arbitral Tribunals (Public and Private): an Overview in the Wake of the 1998 ICC Rules ofArbitration’ in (2000) 17

J Int’l Arb

. 3,

but see Himpurna

v.

Indonesia

(2000) 15 Mealey’s Int’l Arb. Rep.(February) A1.


47

years,

11

at times some host state respondents (and to some extent some privateinvestor claimants) use unscrupulous tactics, including witness intimidation, tofrustrate the process or gain a litigation advantage over their opponents.

12

Amongst the probable reasons why states are more prone to use such tactics arethat: (a) most cases are filed against states and as such they stand to lose morefrom the outcomes;

13

(b) being sovereigns, most states still view arbitration as ‘aloss of liberty, an acceptance of constraints from which [they were] otherwisefree’;

14

and (c) they have command of the instruments of force and authority(police, military, intelligence and courts) which might be deployed against theprivate investor during the arbitral proceedings.

15

The tactics often used by states to frustrate or influence the investor-statearbitral process include:

•

refusal to participate in proceedings with a view to subsequentlychallenging the award;

•

the use of domestic courts to challenge the jurisdiction of the arbitraltribunal;

16

11

See

UNCTAD,

Investor-State Dispute Settlement and Impact on Investment Rulemaking

(United Nations, New Yorkand Geneva, 2007), p. 7 available at www.unctad.org/invstment; Brower,

supra

n. 4; G. van Harten, ‘ThePublic-Private Distinction in the International Arbitration of Individual Claims against the State’ in (2007)56

ICLQ

371.

12

B. Hanotiau, ‘Misdeeds, Wrongful Conduct and Illegality in Arbitral Proceedings’ in A. van den Berg (ed.),

International Commercial Arbitration: Important Contemporary Questions

(Kluwer, London, 2002), p. 261; E. Leahyand K. Pierce, ‘Sanctions to Control Party Misbehaviour in International Arbitration’ in (1986) 26

Va. JIL

291; E. Leahy and C. Bianchi, ‘The Changing Face of International Arbitration’ in (2000) 17(4)

J Int’l Arb.

19.

13

UNCTAD,

supra

n. 11 at p. 7 (noting that ‘[m]ore than two thirds (70 per cent) of the 259 known claims werefiled within the past four years, with virtually none of them initiated by Governments’).

14

R. Boivin, ‘International Arbitration with States: an Overview of the Risks’ in (2002) 19

J Int’l Arb.

285 atp. 286 (citing H. Fox, ‘States and the Undertaking to Arbitration’ in (1988) 37

ICLQ

1 at p. 4).

15

‘Governments have police, military and other security and intelligence forces. They have regulatory andenforcement agencies and they have courts that are not always independent of the political rulers.Governments often have the ability to incite public opinion and, in extreme cases, to encourage mobs to takeaction for which the government does not wish to take responsibility.’

See

‘Contempt of Court, Equality/Asymmetry of Arms, and Assault and Battery on Arbitrators’, available at www.transnational-dispute-management.com, posting on 18 March 2008.

16

Article II(3) of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awardsobligates domestic courts of member countries to decline jurisdiction and instead refer the parties to anarbitration agreement to arbitration. Provisions to the same effect are also found in the UNCITRAL ModelLaw, arts. 5 and 8 and the ICSID Convention, Art. 26. Notwithstanding such explicit provisions, there havebeen several instances of state respondents resorting to their local courts to challenge or question thejurisdiction of the arbitral tribunal as a tactic to derail or scuttle the arbitral process.

See generally

, E. Gaillard(ed.),

Anti-suit Injunctions in International Arbitration

(Institute of International Arbitration, 2005); C. Partasides,‘Solutions Offered by Transnational Rules in case of Interference by the Courts of the Seat’ in E. Gaillard(ed.),

Towards a Uniform International Arbitration Law?

( Juris Publishing, 2004), p. 149.On the other hand, it is worth noting that courts in many other jurisdictions have been supportive of

international arbitration and have only injuncted arbitration in exceptional circumstances.

See

E. Gaillard,‘KBC v. Pertamina, Landmark Anti-Suit Injunction’ in 1(5)

TDM

(2003); G. Born,

International Civil Litigationin U.S. Courts

(3rd edn, 1996), pp. 475–490; H. Dundas, ‘Court Intervention in Support of Arbitration: aClassic Case’ in 2(3)

TDM

(2005).

48


•

revocation of the operating licence of the foreign investors (for allegedbreach of obligations) as retaliation against the investor for daring to suethe host state;

17

•

lightning quick enforcement of alleged tax and environmental laws;

18

and

•

intimidation of witnesses or arbitrators, which forms the basis of ourpresent analysis.

a

(a) What is Witness Intimidation?

In the context of criminal administration of justice, witness intimidation has beendescribed as ‘threats made or actions taken by defendants or others acting ontheir behalf or independently to dissuade or prevent victims or eyewitnesses ofcrimes from reporting those crimes, assisting in the investigation, or givingtestimony at a hearing or trial’, which pressure serves no legitimate purpose.

19

Incivil proceedings, such as investment arbitration, witness intimidation might bedefined as the use of threats or inducements (financial or otherwise) to dissuade awitness or potential witnesses from giving evidence or to persuade them to givefalse evidence before a court or arbitral tribunal. This definition presupposes thatthere are certain types of pressure which might be justified provided they arereasonable and exercised to protect a legitimate interest, such as to recover debtdue, or to make a person perform statutory or contractual obligations. As notedabove, the intimidation might also be directed at the tribunal or the other party to

17

In

Occidental

v.

Ecuador

, ICSID Case ARB/06/11, Decision on Provisional Measures of 17 August 2007,paras. 15–17, the Ecuadorian government issued a Decree terminating the participation contract it had withthe claimant for exploration and exploitation of petroleum resources for alleged violation of the contractualobligations by the claimant but which the claimant alleged was a retaliation against a VAT award issued infavour of the claimant by another tribunal in 2004.

18

In

City Oriente

v.

Ecuador

, ICSID Case ARB/06/21, Decision on Provisional Measures of November 2007,para. 69, the office of Attorney-General of Ecuador filed criminal charges against the claimant’s top officialsfor allegedly refusing to pay disputed taxes imposed by the government. This was viewed by the tribunal asmounting an undue pressure on the claimant to pay the disputed taxes notwithstanding the ongoingarbitration proceedings. It concluded that the Ecuadorian enforcement measure ‘operates as a pressuringmechanism … [which] impairs the rights … Claimant seeks to protect through this arbitration’. In

EnCana

v.

Ecuador

, Interim Award on Request for Interim Measures of Protection of 31 January 2004, theEcuadorian tax authorities froze the bank accounts of the claimant’s subsidiary and of its legal representativeand demanded a hand-over of office building in an effort to recover back monies said to have been wronglypaid out by way of VAT refunds. These enforcement measures were taken shortly after the jurisdictionalhearing was held in the case instituted by the claimant.

These cases illustrate the difficulty, at times, of where to draw the line between measures directed againsta foreign investor aimed at legitimate enforcement of the host state laws and regulations, on the one hand,and those which might be regarded as illegitimate pressure or retaliation against the investor for daring tosue the host government or aimed at intimidating potential witnesses, or frustrating the right of the investorto arbitrate, on the other.

19

M. Graham,

Witness Intimidation

(Quorum Books, Westport, 1985), p. 4. Rule 77 of Rules of Procedure andEvidence of the International Criminal Court for the Former Yugoslavia defines ‘witness intimidation’ asincluding ‘any person who

threatens, intimidates

, causes injury or

offers a bribe to, or otherwise interferes with

, awitness or a potential witness or

otherwise seeking to coerce any person with an intention of preventing that person

fromcomplying with an obligation under an order of a judge or a Chamber’ (emphasis added). For a similarlybroad definition under domestic criminal law,

see e.g.

, s. 1512 of the US Federal Rules of Criminal Procedure,18 U.S.C. s. 1512, and English Criminal Justice and Public Order Act 1994, s. 51(1).


49

the suit. Hence in this article, we use the terms witness and party intimidation ortampering interchangeably.

Generally speaking, there are two types of intimidation or tampering: the overtand the implicit or subtle. While the former might take an extreme form such asthreats or use of physical violence or offering financial inducements, the latter isusually camouflaged as an apparently legitimate act, such as obtaining a courtinjunction against a potential witness, challenging the jurisdiction of the arbitraltribunal in the local courts or threatening to deny the witness or arbitratorbenefits or privileges due to him or her.

20

Practical examples of extreme forms ofarbitrator intimidation include:

•

the physical attack on a neutral member of the Iran-United States ClaimsTribunal in 1984 by two Iranian-appointed members;

21

•

the abduction of an Indonesian arbitrator at the Amsterdam airport byIndonesian officials in order to prevent him from attending a tribunalsitting at The Hague;

22

•

the shooting to death of an arbitrator (allegedly during an ethnic conflict)after returning home from Geneva, where he had attended an arbitralproceeding against his government in contravention of a local court orderenjoining the tribunal from proceeding. One of the co-arbitrators hasdescribed suspicions that his colleague was killed because he was regardedas a ‘traitor’;

23

•

an example highlighted by Jan Paulsson involved Wang Shengchang, theformer Secretary-General of CIETAC. He was sent to jail ostensibly fornot disclosing a portion of his US$80,000 arbitrator fees, but arguably forhaving ‘sold out the motherland’ by voting in favour of Pepsi Cola, theforeign corporation, in an arbitration involving a Chinese company.

24

20

On the numerous forms of witness intimidation in the context of criminal justice,

see

J. Comparet-Cassani,‘Balancing the Anonymity of Threatened Witnesses versus a Defendant’s Right of Confrontation: the WaiverDoctrine after Alvarado’ in (2002) 39

San Diego L Rev

. 1165 at pp. 1195–1203.

21

The incident occurred in September 1984 at the tribunal’s premises when two Iranian arbitrators physicallyattacked Judge Mangard, one of the neutral arbitrators, on the alleged ground that he was biased in favourof the Americans. Although the US government sought to disqualify the two Iranian arbitrators on theground of their partiality and lack of independence, the challenge was dropped when Iran replaced the twoarbitrators. However, the attack led to the resignation of Judge Mangard. C. Brower and J. Brueschke,

TheIran-U.S. Claims Tribunal

(Kluwer, 1998), pp. 169–171; S. Toope,

Mixed International Arbitration

(OUP, 1990),pp. 358–359.

22

Himpurna

v.

Indonesia

(2000) 15 Mealey’s Int’l Arb. Rep. (February) A1; M. Kantor, ‘The Limits ofArbitration’ available at www.gasandoildisputemanagement; J. Werner, ‘The Frailty of the Arbitral Process inCases Involving Authoritarian States and Other Pitfalls of Investment Arbitration’ in (2000) 1

JWIT

321 atpp. 322–325 (also in (2000) 17

J Int’l Arb.

97); S.M. Schwebel, ‘Injunction of Arbitral Proceedings andTruncation of the Tribunal’ in 3(2) TDM (2006); Hanotiau, supra n. 12 at pp. 270–271; M. Goldhaber,‘Arbitral Terrorism’ in 1(3) TDM (2004).

23 Werner, supra n. 22 at pp. 321–322.24 J. Paulsson, ‘The Enclave of Justice’ in 4(5) TDM (2007) at p. 6; W. Mang, ‘The Strange Case of Wang

Shenchang’ in (2007) 24 Arb. Int’l 63. In the same article, Paulsson also gives account of the alleged poisoningof a judge of the ECtHR whilst on an official visit to Russia, and the threat against the President of theECtHR by a Russian diplomat to the effect that the court might be accused of complicity in the ‘Moscowtheatre siege when extremists took 850 people hostage’. Paulsson, ibid. p. 5.

50 Arbitration International, Volume 26 Issue 1

Examples of subtle forms of intimidating arbitrators might include:‘systematically debriefing the arbitrator when he returned home, monitoring hiscommunications with his fellow arbitrators and coercing him to share withcounsel his knowledge of the internal discussions of the arbitral tribunal’.25 Theuse of a court injunction enjoining the arbitral tribunal falls into this category, itseffect being to ‘intimidate arbitrators and advocates who hail from the same stateas the court. More broadly, a meddlesome court can throw the arbitrators’jurisdiction into doubt everywhere’.26

Intimidation of witnesses occurs far more often than intimidation of arbitratorsin international arbitration. A witness is more vulnerable to pressure by adisputing party because he or she might be under the influence of that party.Thus, a government or a company can exert more pressure on a witness whohappens to be its national, employee or business partner than it might on anarbitrator or counsel who might have no relationship or future dealings with anyof the disputing parties. A host state which does not want its national to giveevidence against it in an investment arbitration may bring pressure to bear onthe potential witness by arresting and detaining him on trumped-up charges,confiscating his passport or travel documents on national security grounds,threatening to terminate his appointment (if he works for the government),27

denying him future government patronage, or obtaining a court injunctionagainst him to stop him disclosing ‘confidential’ or ‘sensitive’ information.28

A witness might also be intimidated through blackmail by the party who wouldbe adversely affected by the witness’s testimony, or by a third party with orwithout the knowledge of the disputing party. For example, in the doping

25 Werner, supra n. 22 at p. 325; Hanotiau, supra n. 12 at p. 266.26 Goldhaber, supra n. 22 at p. 3; Boivin, n. 14 at pp. 286–287.27 For instance, in Riahi v. Iran the claimant alleged that members of her family and some of her potential

witnesses were intimidated and coerced by agents of the Iranian government into not only refusing to testifyagainst Iran but into signing false affidavits in support of and testifying for the government. The allegedthreats and intimidation took the form of confiscation of property, dismissal from jobs, preventing thefamily’s children from attending school, interrogation of the family by the security services, eviction fromtheir home and threats to the life and security of one of the witness’s grandsons, forcing the family to movefrom Geneva to the United States. According to Judge Brower, these alleged acts of intimidation adverselyaffected the claimant’s case: (2003) 37 Iran–USCTR 158 at pp. 195–199 (Concurring and DissentingOpinion, Brower). See also, Cherafat v. Iran (1992) 28 Iran–USCTR 216, in which the applicants sought toreinstate their claim against the Iranian government which had been withdrawn some years before on theground that the withdrawal had not been done voluntarily but rather as a result of duress and fear for thepersonal safety of the main claimant, Mr Cherafat. A threat by a government not to renew the appointmentof an employee was enough to dissuade him from giving evidence in a case. See Werner, supra n. 22 at p. 326.During the recently concluded Abyei arbitration between the government of Sudan and the Sudan People’sLiberation Movement/Army, the Sudanese government alleged intimidation and harassment of some of itswitnesses by elements closely associated to the Movement. According to the Sudanese government, one of itswitnesses was approached by his southern tribal elders who told him that they were unhappy with his witnessstatement and warned him not to appear at The Hague to give evidence, otherwise he should blame himselffor the consequences. See the video at www.wx4all.net/pca/8-04-2009.1.1.html.

28 In Enron v. Argentina, Award of 22 May 2007, paras. 149–150, and Sempra v. Argentina, Award of 28 September2007, para. 156, the Argentine government obtained a local court injunction against one of the claimant’switnesses which prevented him from disclosing any ‘confidential’ information acquired whilst serving as aconsultant to the government during the privatisation exercise.

Possible Remedies Available to the Arbitral Tribunal 51

arbitration between the US Anti-doping Agency and Floyd Landis, the formerTour de France champion, both the respondent and his business managerphoned a witness on the night before the hearing and warned him against givingevidence of an alleged admission of doping by the respondent.29 Other moresubtle means of intimidating a witness may include bribing or manipulating thewitness with a view to influencing his or her testimony.30

In certain instances, even lawyers representing claimants or defendants in casesbefore courts or tribunals might be intimidated by the other side in various ways.Examples include denial of access to clients, physical attacks on and even killingthe lawyer,31 as well as expulsion from the country, as occurred with counsel forMr Khordovski in Russia.32

29 The witness testified to the effect that on the night before his testimony one ‘uncle Sam’ called him andinformed him that he (the caller) would be in court the next day to reveal how the witness had been abusedwhilst a child. The police discovered that the anonymous caller was in fact the respondent’s businessmanager. Although the threat did not dissuade the witness from testifying, nonetheless no probativevalue was attached to his testimony by the tribunal because he was dismissed by the tribunal as a witnesswhen he refused to answer certain questions ( probably relating to his childhood experiences) duringcross-examination. See US Anti-doping Agency v. Landis, North American Court of Arbitration for Sports/AAA, Case 30190 00847 06, available at www.usantidoping.org/files/active/arbitration-rulings/Landis%20Final%20.pdf, and at www.bikingbis.com.

30 Bribery is used here in the broad sense to include pecuniary and non-pecuniary benefits or promises of samewith a view to causing the recipient or target to do or to omit to perform a legal duty. Thus, in Prosecutor v.Tadic, the respondent was found guilty of contempt of the tribunal by manipulating and bribing potentialwitnesses. Case IT-94-1-A-R77, Judgment of the Appeals Chamber, 31 January 2000, available atwww.un.org/icty/tadic/. (Most other ICT for the Former Yugoslavia cases cited in this article are availableat this website.) Prosecutor v. Simba, Case ICTR-2001-76-T, Judgment and Sentence of 13 December 2005,para. 50 (‘It is not appropriate for a state official to warn a potential witness that he will be viewed asopposing the government if he testified in ongoing criminal proceedings, particularly if the potential witnessis detained in the custody of the state and depended on it for his welfare’), available at http://69.94.11.53/default.htm. (Most other ICT for Rwanda cases cited in this article are available at this website). In therecently settled legal action by some 31,000 claimants from the Ivory Coast against a UK oil companyalleging injury from toxic waste dumped by the company, the Claimants’ lawyer alleged that one of the witnesseswas ‘persuaded to sign a statement admitting that his claim was “bogus” after he had been offeredinducements, such as money and expensive meals and the prospect of a bright future for his daughter as wellas being flown business class to Morocco and put up in the Sheraton Hotel’. The witness was also ‘asked toreveal everything he knew regarding the Claimants’ litigation strategy’. Consequently, the judge granted atemporary injunction prohibiting the defendant from any communication with any of the claimants or theirwitnesses unless with the consent of the Claimants’ counsel. See ‘Oil company accused of “nobbling” witnesses inAfrican toxic waste case’, Times online, 24 March 2009, available at http://business.timesonline.co.uk/tol/business/law/article5966952.ece.

31 During the trial of Saddam Hussein, the former Iraqi leader and his co-defendants, some defence lawyerswere murdered while others were forced to withdraw from the case due to threats to their lives or that oftheir family members. Some of the judges were either replaced for taking what was seen by the Iraqigovernment as pro-Saddam positions, or criticised by the government for some of their decisions. See N. Bhutta,‘Errors: the Trial and Appeal Judgment in the Dujail Case’ in (2008) 6(1) J Int’l Crim. J 39.

32 While some of Mr Khordovski’s foreign defence lawyers and experts were expelled from Russia or deniedentry visa, some of the in-house Yukos lawyers were imprisoned and tortured by the Russian security servicesunder the guise of investigating tax fraud committed by the company and its senior management. Somedefence lawyers’ offices were searched in their absence and relevant documents were seized by the Russianpolice, while others were threatened with prosecution and possible revocation of their practice licences. TheKremlin also pressured and threatened judges to secure favourable rulings. See Council of Europe SpecialRapporteur Report, Doc. 10368 of 29 November 2004 and the Parliamentary Assembly of the Council ofEurope (PACE) Resolution No. 1418/25.1.2005; see also, Gusinsky v. Russia, ECtHR Judgment of 19 May2004; Lebedev v. Russia, ECtHR Judgment of 18 May 2006; Case Regarding Law on Extradition of Fugitives 95/70 v.


Just as with intimidation of arbitrators, intimidation of counsel might also beimplicit, such as through wire-tapping and interception of communications withthe client. This can be done under the guise of fighting organised crime orprotecting national security, and takes place not only for the ostensible aim ofobtaining information regarding the claimant’s arbitration strategy, but also tointimidate the lawyer, the client and potential witnesses.33 Such cases raise animportant question of how to balance the needs of safeguarding law and order, onthe one hand, with protecting the procedural rights of the individual, on the other.

Without providing a ‘laundry list’, the above cases illustrate not only thenumerous methods of witness/arbitrator intimidation but also the potentialdanger or risk it poses to peaceful means of dispute settlement in general andinvestment arbitration in particular.34 The risk to investment arbitration isparticularly significant in view of the fact that, unlike domestic and internationalcriminal procedures, the problem of witness intimidation is not explicitly treatedin the main arbitration rules, statutes and treaties. This is striking considering itspotential adverse effect on the arbitral process as illustrated by some of the caseshighlighted above, and as will be argued in the next section.

b

(b) Legal Implications of Witness Intimidation

As we noted above, witness intimidation is a subversion of the arbitral process inrather the same manner as fraud because it impedes the other party’s ability toprove its case, while giving the offending party an unfair litigation advantage. Italso hinders the tribunal from discovering the truth or arriving at a fair and justdecision.35 As the tribunal in Libananco v. Turkey observed, witness and counsel

Russian Federation, Decision of the District Court of Nicosia of 10 April 2008, pp. 27–30 and 48–51, availableat www.mbktrial.com/pdfs/judgementVK10april08.pdf; Khodorkovski v. Swiss Federal Prosecutor’s Office, Decision ofthe Federal Tribunal of 23 August 2007, pp. 11–15, available at www.robertamsterdam.com; D. Bernardelli,‘Russian Rule-Ette: Using Khodorkovski’s Criminal Trial to Assess the State of Russia’s Judiciary’ in (2008)31 BC Int’l and Comp. L Rev. 85; ‘Hopes for Court reform stir in Russia’, Washington Post, 9 June 2008, p. A11.

33 In Libananco v. Turkey, para. 79, the claimant contended that the Turkish authorities secretly interceptedelectronic communications between the claimant, its counsel and some potential witnesses, part of which wasleaked to the media. As a result of the media report, one of the claimant’s expert witnesses declined to givetestimony for fear of retaliation by the Turkish authorities. However, Turkey sought to defend its actions onthe ground that the surveillance was conducted as part of an ongoing investigation into criminal offences,which was within its sovereign right to do. While acknowledging Turkey’s right to pursue the investigation ofserious crime, the tribunal observed that that right and duty ‘cannot mean that the investigative powers maybe exercised without regard to other rights and duties or that, by starting a criminal investigation a state maybaulk an ICSID arbitration … The coin has two sides, and both must be respected and put in harmony withone another’. See Libananco v. Turkey, Decision of 23 June 2008; T. Nelson, ‘Paranoids Have Enemies Too:Wiretapping and Other Clandestine Information-Gathering Techniques in International Arbitration’ in(2008) 23(9) Mealey’s Int’l Arb. Rep. 15.

34 For a detailed discussion of most of these and other related cases, see T. Walde, ‘Procedural Challenges inInvestment Arbitration under the Shadow of the Dual Role of the State’ (in this issue).

35 In Prosecutor v. Tadic, the Appeals Chamber of the International Criminal Tribunal for the Former Yugoslaviadescribed the tampering with witnesses by counsel to the defendant as intended to interfere with theadministration of justice, a conduct that ‘strikes at the very heart of the criminal justice system’, Judgment of31 January 2000, para. 167, available at www.un.org/icty/cases-e.htm. Similarly, in Prosecutor v. Bagosora, theInternational Criminal Tribunal for Rwanda observed that, ‘non-cooperation, or active obstruction, couldadversely affect the fairness of a trial. Threats or intimidation of confirmed or prospective witnesses by state


intimidation in investment arbitration ‘strikes at principles which lie at the veryheart of the ICSID arbitral process’, including procedural fairness, respect forconfidentiality and legal privilege and respect for the integrity of the tribunal.36

Furthermore, witness intimidation not only undermines the disputing parties’confidence in the arbitral process, it also diminishes the confidence of otherpotential users of the system. Such loss of confidence provides incentives fordisputing parties to resort to extra-legal means of dispute settlement, such ascorruption, self-help or coercive negotiation tactics. As such, witness intimidationshould be viewed as a fundamental threat to rule of law and due processin international adjudication.37 The underlying rationale for the provision onimmunities to arbitrators, parties and their lawyers and witnesses in ICSIDConvention, Articles 21 and 22 was probably to advance the course of justice andrule of law by removing any fear of legal action for acts performed in the courseof their functions.38 Further, it could be argued that witness intimidation runscounter to many fundamental principles of adjudication, including the duty tocooperate and arbitrate in good faith, equality of arms and due process, and thatit might even amount to a denial of justice.

i

(i) Witness intimidation as a breach of the duty to arbitrate in good faith

First, to intimidate a witness, arbitrator, counsel or the opposing party in aninternational arbitration could be said to amount to a breach of the general dutyof cooperation and good faith in dispute settlement. Once parties have consentedto settle their disputes through arbitration, each party has undertaken a number(or ‘network’) of obligations39 that are intrinsic to a successful resolution of thedispute. These include duties to negotiate, constitute the tribunal, cooperatewith the tribunal and accept the arbitral award as binding. According to onecommentator, cooperation ‘means more than “coexistence” or “coordination”. Itmeans proactively working together, serving objectives that cannot be attained by

officials would, if proven, be a serious violation of the duty of cooperation’. Case ICTR-98-41-T, Decision onMotion Concerning Alleged Witness Intimidation of 28 December 2004, para. 7; Prosecutor v. Simba, CaseICTR-01-76-T, Judgment and Sentence, 13 December 2005, available at http://69.94.11.53/default.htm;J. Marx, ‘Intimidation of Defence Witnesses at the International Criminal Court Tribunals: Commentaryand Suggested Legal Remedies’ in (2007) 7 Chi. J Int’l L 675; Comparet-Cassani, supra n. 20 at p. 1220(noting that: ‘In cases where the [intimidator’s] misconduct procures the unavailability of a witness, thismisconduct rather than the applicable legal principle, may determine the outcome. The outcome may bebased on the [intimidator’s] chicanery, rather than on reliable evidence tested by the trier of fact, who hasthe opportunity to listen to the witness and judge his or her credibility … If the witness does testify, but …the intimidation causes the witness to give false, incomplete or misleading testimony, cross-examination mayor may not bring out the truth … in this way, the [intimidator’s] misconduct undermines the integrity of theadversary process’).

36 Libananco v. Turkey, para. 78.37 Marx, supra n. 35; C. Goldblatt, ‘Disentangling Webb: Governmental Intimidation of Defence Witnesses and

Harmful Error Analysis’ in (1992) 59 U Ch. L Rev. 1239; B. O’Flherty and R. Sethi, ‘Witness Intimidation’(Columbia University Discussion Paper 2007), available at http://digitalcommons.libraries.columbia.edu/econ_dp/194.

38 Schreuer, supra n. 7 at p. 75.39 A. Peters, ‘International Dispute Settlement: a Network of Cooperational Duties’ in (2003) 14(1) EJIL 1.


a single actor’.40 Thus, when a party consents to arbitrate any investment dispute(whether arising from an investment treaty, legislation or an investment contract),such undertaking is not a mere formality but rather a functional obligation. Itobliges the party to actively participate and cooperate with the other party andthe tribunal throughout the arbitration process, from commencement to the finalaward stages, and not to do anything that would frustrate or render the processineffectual. For as Peters argued:

[the] duty to cooperate in dispute settlement is not only a matter of conventional law, but shares,by force of necessity, the customary law quality of a general obligation to settle disputespeacefully. While the dispute itself implies disagreement and non cooperation, some kind ofcooperation, in procedure or in substance, between the parties is needed for its resolution.Without cooperation, no settlement. Therefore a general, customary law-based duty ofcooperation with a view to settlement is inherent in the obligation to settle disputes peacefully.41

This proposition is supported by arbitration conventions, statutes and rules ofprocedure. For example, as noted above, Article 26 of the ICSID Conventionprovides for the exclusivity of consent to ICSID arbitration and the non-revocability of such consent unilaterally by either party. ‘The binding andirrevocable nature of consent to the jurisdiction of ICSID is a manifestation of themaxim “pacta sunt servanda” and applies to undertakings to arbitrate in general.’42

By expressly declaring inadmissible unilateral withdrawal of consent andconfirming the non-frustration of proceedings through refusal by either party toparticipate, the ICSID Convention ensures that both parties to the arbitralproceedings fulfil their obligations in good faith. If a party cannot lawfullywithdraw its consent unilaterally, it follows that it cannot ‘do indirectly [such asthrough witness intimidation] what it is not permitted to do directly’.43

Indeed, Principles 11.1 and 11.2 of the ALI/UNIDROIT Principles ofTransnational Civil Procedure explicitly obligate the parties and their lawyers toconduct themselves in good faith in their dealings with the tribunal and otherparties and to promote a fair, efficient and reasonably speedy resolution of thedispute. Further, the principles state that ‘the parties must refrain from proceduralabuse such as interference with witnesses or destruction of evidence’.44 Suchmisconduct would constitute a serious violation of the principle of good faith and

40 Ibid. p. 2.41 Ibid p. 9.42 UNCTAD, supra n. 9 at p. 37; ICSID Arbitration Rules, rule 34(3) obligates the parties to cooperate with

the tribunal in the production of documents; London Court of Arbitration Rules, rule 14.2 demands ofthe parties, at all times, to do everything necessary for the fair, efficient and expeditious conduct of thearbitration.

43 C. Goodwin-Gill, ‘State Responsibility and the Good Faith Obligation in International Law’ in M.Fitzmaurice and D. Sarooshi (eds.), Issues of State Responsibility by the International Judicial Institution (HartPublishing, 2004), p. 75 at p. 93.

44 Principle 11.2 of the ALI/UNIDROIT Principles of Transnational Civil Procedure adopted by theAmerican Law Institute (ALI) on 1 May 2004 and by the International Institute for the Unification ofPrivate Law (UNIDROIT) in April 2004, available at www.unidroit.org/english/principles/civilprocedure/main.htm.


cooperation in international adjudication, as well as of the fair and effectiveresolution of the dispute.

The Preamble to and Article 26 of the Vienna Convention on the Law ofTreaties state that every treaty in force is binding upon the parties to it and mustbe performed by them in good faith.45 Good faith performance of a contract orany other legal obligation demands that it be performed according to its spiritand not its literal or formal meaning. As the ICJ explained in the Anglo-NorwegianFisheries case:

The principle of good faith requires that every right be exercised honestly and legally. Anyfictitious exercise of a right for the purpose of evading either a rule of law or a contractualobligation will not be tolerated. Such an exercise constitutes an abuse of the right, prohibited bylaw.46

In the context of international arbitration, a party that has consented toresolve a dispute through arbitration is under an obligation not only to cooperatewith the tribunal and the other parties to the proceedings but also to refrain fromany act that would frustrate or undermine the effective resolution of the dispute.47

In other words, it must arbitrate in good faith.48 For as Veeder rightly observed:

[i]n arbitration … the legal roots of a party’s duty to play the game fairly must begin with thearbitration agreement, as a general contractual obligation to arbitrate in good faith.49

In the Sabotage case, the United States-German Mixed Claims Commissionheld that ‘[i]t is well recognised that Governments who have agreed to arbitrate

45 Cameroon v. Nigeria, Preliminary Objection Judgment [1998] ICJ Rep. para. 38, available at www.icj-cij.org(most other decisions of the ICJ cited in this article are available at this website); see also, art. 1 of theInternational Law Commission Model Rules on Arbitral Procedure, 1958, (1958) II YB ILC 1 (which statesthat ‘[a]ny undertaking to have recourse to arbitration in order to settle a dispute … constitutes a legalobligation which must be carried out in good faith’), available at www.untreaty.un.org/ilc/research.htm.

46 [1951] ICJ Rep. 116 at p. 142; Ben Cheng, General Principles of Law as Applied by International Courts andTribunals (OUP, 1953), pp. 115–116; I. Lukashuk, ‘The Principle of Pacta Sunt Servanda and the Nature ofObligations under International Law’ in (1989) 83 AJIL 513 at p. 515.

47 According to Kolb, ‘The most fundamental principle of substantive law applicable to judicial proceedings ingeneral is the proposition that, by engaging in proceedings before an international tribunal, the parties enterinto a legal relationship characterised by mutual trust and confidence. Thus, the parties are bound by ageneral commitment of loyalty among themselves and towards the court. This duty flows from the principleof good faith recognised in general international law … [The principle] requires the parties not to undertakeany action which could frustrate or substantially adversely affect the proper functioning of the procedurechosen, the point being to protect the object and purpose of the proceedings’. R. Kolb, ‘General Principle ofProcedural Law’ in A. Zimmermann, C. Tomuschat and K. Oellers-Frahm (eds.), The Statute of theInternational Court of Justice (2006), p. 793 at p. 830; V.S. Mani, International Adjudication: Procedural Aspects(Martinus Nijhoff, The Hague, 1980), p. 36 (noting that ‘[i]ndeed, an undertaking to adjudicate “constitutesa legal obligation which must be carried out in good faith”’).

48 See ILC Model Rules on Arbitral Procedure, 1958, art. 1; American Arbitration Association Procedures forLarge Complex Commercial Disputes, 2007, rule L-4(b); Mani, supra n. 47 at p. 199.

49 V. Veeder, ‘The Lawyer’s Duty to Arbitrate in Good Faith’ in (2002) 18(4) Arb. Int’l 431 at p. 439; N. Majeed,‘Good Faith and Due Process: Lessons from the Shari’ah’ in (2004) 20(1) Arb. Int’l 97 at p. 104.


are under obligation in entire faith to try to ascertain the truth’.50 More recently,in the Methanex case, the tribunal observed that:

In the tribunal’s view, the Disputing parties each owed in this arbitration a general legal duty tothe other and to the Tribunal to conduct themselves in good faith during these arbitralproceedings and to respect the equality of arms between them.51

Similarly, in Libananco v. Turkey, the tribunal noted that the ‘parties have anobligation to arbitrate in good faith’ and that ‘this principle applies in allarbitration, including investment arbitration, and all parties, including states(even in the exercise of their sovereign powers)’.52

The requirement that parties arbitrate in good faith is a general principle oflaw recognised by the major legal systems of the world, including civil law, Islamiclaw53 and many common law jurisdictions outside of England.54

The above authorities suggest that a party to arbitral proceedings might besaid to have acted in bad faith not only when it explicitly refuses to participate(such as by refusing to appoint its arbitrator or withdrawing from proceedings),but also when it indirectly seeks to undermine the integrity of the tribunalthrough tactics such as obtaining inappropriate court injunctions, witnessintimidation or other forms of non-cooperative behaviour.

From the above analysis it seems clear that witness intimidation ininternational arbitration is a violation of the principle of good faith even thoughthe constitutive instruments of the tribunal might not contain any expressprovision on the issue. This is so because when parties accept settlement of theirdispute through arbitration, they are ‘assumed to be acting in good faith, that isto say honestly, fairly and reasonably, and therefore, cannot be presumed to haveproposed anything which is “illusory or nominal” ’.55 Witness intimidation wouldrender the freely chosen arbitral process illusory or useless since it then ceases tobe an effective means of settling the dispute.

ii

(ii) Witness intimidation as a violation of the principle of equality of arms

Witness intimidation might also amount to a violation of the fundamentalprinciple of judicial procedure which requires that parties be treated equally andthat each party be afforded a reasonable opportunity to present its case and meetthat of the other party (i.e. the right to fair hearing or due process). Due process

50 Lenigh Valley Railroad Co. Agency of Canadian Car and Foundry Ltd and various underwriters (US) v. Germany, 8 UNRIAA 85, available at www.un.org/law/riaa/.

51 Methanex v. United States, Final Award on Jurisdiction and Merits of 3 August 2005, Part II ch. I, para. 54.52 Supra n. 1, para. 78.53 In his analysis of the principle under the Shari’ah, Majeed noted that: ‘In the shari’ah, the procedural aspect

of dispute resolution depends upon the basic principles of fair trial in Islam, which flows from the duty to actin good faith.’ Majeed, supra n. 49 at p. 106.

54 Veeder, supra n. 49 at pp. 439–440.55 H. Engelen, Interpretation of Tax Treaties under International Law ( IBFD, 2004), p. 132 (citing Ben Cheng, supra

n. 46 at p. 106).


in international adjudication involves, amongst other requirements, the ‘right ofthe parties to be treated equally’ and the ‘right in general to be heard by thearbitrators, and specifically to put forward their case and their evidence and tocomment upon what the other party puts forward’.56 Procedurally, ‘equality ofarms’ means that the ‘same rights must be granted to all parties, and there mustbe a constant drive to equalise eventual unevenness among the parties to theextent that it may influence the possibility of a fair outcome of the trial’.57

Although the principle of equality of arms is a ‘natural law’ of judicialproceedings, domestic and international,58 nonetheless it can only be assessed orunderstood in the context of each specific case.59 In theory, the private investorand the host state arbitrate on an equal footing, but in practice, investmentarbitration is asymmetrical.60

Notwithstanding the inherent asymmetries in investor-state arbitration, it is theduty of an arbitral tribunal to ensure a fair and effective trial. It must preserveand protect the procedural integrity of the tribunal by consistently striving to‘equalise eventual unevenness [between] the parties’ which might affect the fairoutcome of the proceedings.61 In other words, it must do all within its power toeliminate or minimise the disadvantages faced by one of the parties vis-à-vis theother regarding time and opportunity to present the party’s case. That includesthe duty to prevent intimidation of any witness by either party, regardless of the

56 A. Philip, ‘The Duties of an Arbitrator’ in L. Newman and R. Hill (eds.), The Leading Arbitrators’ Guide toInternational Arbitration (2nd edn, Juris Publishing, 2008), p. 67 at p. 75; M. Kurkela and H. Snellman, DueProcess in International Commercial Arbitration (Oceana Publication, 2005).

57 Kolb, supra n. 47 at p. 799.58 Ibid. p. 799; Mani, supra n. 47 at p. 30. Indeed, the main purpose of the investor-state arbitration provided

for under most of the modern the investment treaties was to remove the hierarchical relationship betweenthe foreign investor and the host state by granting the foreign investor a direct right of action against the hoststate before an impartial international tribunal. See NAFTA, Art. 1115. Thus, ‘equal treatment of thedisputing parties constitutes an “overriding principle” of most investment treaties. C. Brower, II, ‘Investor-State Disputes under NAFTA: the Empire Strikes Back’ in (2002) 40 Col. J Trans. L 43 at p. 73 (noting thatthe investor-state arbitration mechanism created by the ICSID Convention and investment treaties ‘placeforeign investors and their host states on a more equal footing’).

Furthermore, all the major international arbitration statutes, rules and conventions contain provisionswhich seek to give effect to this principle, e.g. Art. 52 of the ICSID Convention talks of ‘serious departurefrom a fundamental rule of procedure’ as one of the grounds for annulment of an ICSID award); New YorkConvention, Art. V and UNCITRAL Model Law, art. 36 also state that the breach of due procedure is aground for non-recognition and enforcement of the arbitral award. See also, UNCITRAL Arbitration Rules,art. 15(1); London Court of Arbitration Rules, art. 14.1; American Arbitration Association International, art.16.1; American Arbitration Association Commercial Rules, rule R-30(a); Stockholm Chamber of CommerceArbitration Rules, art. 9.2; ALI/UNIDROIT Rules, art. 5, all of which state in effect, that the arbitraltribunal must treat the parties equally.

59 Kolb, supra n. 47 at p. 800; W. Park, ‘Procedural Evolution in Business Arbitration’ (unpublished manuscript,2006, on file with the author) (noting that ‘[l]ike other elastic notions such as justice and equity, the term“due process”, has no sacramental value in itself, but takes meaning from usage … Except on a case by casebasis, due process is difficult to define with any reasonable precision’).

60 Walde, supra n. 34.61 Kolb, supra n. 47 at p. 799; K. Berger, ‘Evidentiary Privileges: Best Practice Standards versus/and Arbitral

Discretion’ in (2006) 22(4) Arb. Int’l 501 at p. 515 (noting that ‘[i]t is one of the principal functions of anarbitral tribunal to act as a guarantor or guardian of the parties’ fundamental procedural right for equaltreatment and their right to be heard as the Magna Carta of arbitral procedure’).


party’s ability to influence the witness, as made clear by the excerpt from theMethanex case above.62

iii

(iii) Witness intimidation as amounting to a denial of justice

Lastly, but by no means the least, witness or arbitrator intimidation may alsoamount to a denial of justice under international law; as was held in the Himpurnacase when a national court of the host state enjoined an international arbitration.In ruling on the illegality of the Indonesian court enjoining the arbitral tribunal atthe risk of contempt, the tribunal held that:

it is a denial of justice for the courts of a state to prevent a foreign party from pursuing itsremedies before a forum of which the state consented, and on the availability of which theforeigner relied in making the investments explicitly envisaged by that state … a state isresponsible for the actions of its courts, and one of the areas of state liability in this connectionis precisely that of denial of justice.63

However, whether or not a particular act of witness intimidation which violatesthe equality of arms principle has the effect of invalidating the whole arbitralproceedings depends on the circumstances of the case, taking into account theextent of the intimidation, the stage of the proceedings, the probative value of thewitness’s evidence, the availability of other evidence to support the injured party’scase, and its effect on the whole proceedings.

To sum up, it seems apparent from the above discussion that witness intimidationmight not only amount to a violation of the obligation to arbitrate in good faith,but also the fundamental principle of due process, and possibly denial of justice.

III

III. INHERENT POWER OF AN ARBITRAL TRIBUNAL TO SANCTION AGAINST WITNESS INTIMIDATION

Having seen that witness intimidation is a threat to the basic principles ofinternational adjudication and consequently, the responsibility of the tribunal toensure a fair and effective process, what powers does an arbitral tribunal have todeal with such misconduct and from where are those powers derived? To answerthese questions, it should be noted that just like other international courts and

62 See Methanex v. United States, Award of 3 August 2005, para. 54; Walde, supra n. 34.63 Himpurna v. Indonesia (2000) 15 Mealey’s Int’l Arb. Rep. (February) A1; Schwebel, supra n.22 at p. 4 (noting

that ‘when a domestic court, an organ of the state in the eyes of international law, blocks access to arbitrationthrough issuance of an anti-suit injunction, that too constitutes a denial of justice for which the state of which thecourt is party (whether or not the judicial branch is independent) is internationally responsible’); J. Paulsson,Denial of Justice in International Law (CUP, 2005), especially ch. 6, reviewed by T. Walde, in (2006) 21(2) ICSIDRev.–FILJ 449. In Saipem v. Bangladesh, the ICSID tribunal held that while the Bangladesh courts hadsubstantial discretion to revoke an arbitrator’s authority in cases of misconduct, ‘they cannot use theirjurisdiction to revoke arbitrators for reasons wholly unrelated with such misconduct’. In the circumstances ofthis case, the tribunal found that ‘the standard for revocation used by the Bangladesh courts and the mannerin which the judge applied that standard to the facts indeed constitutes an abuse of right’ under internationallaw. Award of 30 June 2009, para. 159.


tribunals, an arbitral tribunal performs a judicial function, i.e. settling disputesbetween parties and helping in the creation of a law-abiding or rule-of-law-basedsociety.64 Although in discharging its judicial functions an arbitral tribunal is to beguided by its constitutive instruments, in the case of a lacuna in the instrumentsthe tribunal can rely on its inherent powers to fill the gap.65 As Boyle and Chinkinhave noted, the judicial function of an international court or tribunal is not toabdicate its responsibility for determining a dispute through lack of any provisionin its constitutive instruments explicitly dealing with the issue. Instead, ‘thejudicial function of [an] international court or tribunal must necessarily include“developing and applying international law to hitherto untested situations”’.66

Although the prohibition of non liquet verdicts (substantive) does not necessarilycover the type of lacunae discussed in this article (generally procedural),67

64 The main function of an international tribunal is to do justice by settling disputes between the partiesthrough binding decisions and help in the ‘creation of norms which can generate obedience amongmembers of the community being regulated by that system of the norms’. See Ch. Brown, ‘The InherentPowers of International Courts and Tribunals’ in (2005) 76 BYIL 195 at p. 230.

65 See Prosecutor v. Kanya, ICTY Appeals Chamber Decision of 3 June 1999 (Separate Opinion, Shahabuddeen)(‘a judicial body, whether civil or criminal has the inherent competence … to regulate its own procedure inthe event of silence in the written rules, so as to assure the exercise of such jurisdiction as it has, and to fulfilitself, properly and effectively, as a court of law’); P. Gaeta, ‘Inherent Powers of International Courts andTribunals’ in L.C. Vohrah et al. (eds.), Man’s Inhumanity to Man: Essays on International law in Honour of AntonioCassese (Kluwer, 2003), p. 353 at pp. 366–367 (noting that ‘the doctrine of inherent powers … constitutes anappropriate legal construct for enabling international judicial bodies to fill the lacunae of their constitutiveinstruments’); Ch. Brown, A Common Law of International Adjudication (OUP, 2007), p. 63 (noting that ‘even inthe absence of express authority, all international courts have the power to make rules of procedure and“procedural” orders as a necessary incident of their traditional functions’).

66 A. Boyle and C. Chinkin, The Making of International Law (OUP, 2007), pp. 289–290 (citing R. Higgins,‘Aspects of the Case Concerning the Barcelona Traction Light and Power Co. Ltd’ in (1971) 11 Virg. JIL 327at p. 341; P. Weil, ‘The Court Cannot Conclude Definitively …’: Non-Liquet Revisited’ in (1998) 36 Colum.J Tran’l L 109 at p. 115 (noting that ‘non-liquet frustrates the will of the parties to have their disputes settledjudicially, rather than by some other means in the system. In international adjudication, avoidance of non-liquet is an aspect of jurisdiction’).

67 The existence of the non liquet principle is disputed. Cf. Weil, supra n. 66 at p. 115 (noting that ‘wheneverstates decide … to ask for the judicial settlement of a dispute, they impose on the judge or arbitrator anobligation to settle the dispute. Therefore, ipso jure they confer on the tribunal the normative and quasi-legislative power necessary to produce that result’); M.J. Aznar-Gomez, ‘The 1996 Nuclear Weapons AdvisoryOpinion and Non Liquet in International Law’ in (1999) 48 Int’l and Comp. LQ 3 at p. 17 (international lawdoes not ‘incorporate a general rule which prohibits international courts from dictating a non liquet’); Legalityof the Threat or Use of Nuclear Weapons, Advisory Opinion of 8 July 1996, Declaration, Vereshchetin [1996] ICJRep. 226 at pp. 279–280, available at www.icj-cij.org/docket/files/95/7505.pdf; but see ibid. DissentingOpinion, Higgins at p. 591, para. 36 (‘It is also, I think, an important and well-established principle that theconcept of non liquet – for that is what we have here – is no part of the Court’s jurisprudence’). A. Cassese,International Law (2001), p. 152 Cf. Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion of 8 July1996, Separate Opinion, Guillaume [1996] ICJ Rep. 226 at p. 291, para. 9 (‘In operative paragraph 2E theCourt decided in fact that it could not in those extreme circumstances conclude definitively whether thethreat or use of nuclear weapons would be lawful or unlawful. In other words, it concluded that in suchcircumstances the law provided no guide for States. But if the law is silent in this case, States remain free toact as they intend’); Aznar-Gomez, ibid. pp. 8–9 (referring to the view negating incompleteness ininternational law); ibid. pp. 12–13 (the author refers to the practice of the ICJ in cases where it has identifiedlacunae: ‘What the Court did not do was fill the lacunae. That would have involved a legislative, not judicial,undertaking’). See also, J. Cherian, ‘Seidl-Hohenveldern, Investment Contracts and Arbitration: the WorldBank Convention on the Settlement of Investment Disputes’ in (1976) AJIL 613 (book review). However, theprinciple is explicitly included in the ICSID Convention, Art. 42(2).


nonetheless one of the means through which international courts and tribunalscan develop procedural law is through the exercise of ‘inherent powers’ of thecourt or tribunal derived from general principles of law and other sources ofjurisdiction.68 Some commentators have identified four inherent powers of ajudicial body; one of which is the power to ‘decide all issues concerning theexercise of its jurisdiction, including ruling on questions about evidence, burdenof proof, due process, and questions of law relevant to the merits of the dispute’.69

This is in recognition of the fact that, like any treaty or agreement intended toregulate future relationships between parties, international arbitration rules andstatutes cannot cover every procedural issue which might arise in the future. Theobvious reasons are the impossibility of foreseeing all likely future problems, orbecause the parties were unable to reach agreement on those issues at the time ofdrafting the arbitration statute or compromis and so ‘deliberately postpone[d] theunresolved conflicts to later solutions’.70 A further explanation is the desire of theinstitutions to make their rules more attractive to potential users by not undulyconstraining the parties’ flexibility.71 Some of the lacunae in procedural rulesmight be filled by the parties and tribunal agreeing on the issues at thecommencement of the arbitral proceedings or by adopting voluntary rules, suchas the IBA Rules on the Taking of Evidence, 1999 or UNCITRAL Notes forOrganising Hearings, 1996. However, other issues may remain inadequatelycovered by these mechanisms, and additional powers then become necessary tofill such gaps.

In recognition of these shortcomings, most arbitral rules give the tribunal widediscretion as to how to conduct proceedings, provided the parties are treatedequally.72 Such discretionary power to regulate the proceedings enables thetribunal to ‘punish’ or impose sanctions on a party who intimidates a witness eventhough the constitutive instruments might be silent on the issue. This is based on

68 The sources of the powers of the international court or tribunal include general principles of law, doctrine ofimplied powers, identity of courts and tribunals as judicial bodies and the necessity of the inherent powers toensure the performance of the judicial functions of the court or tribunal. See Brown, supra n. 64 at pp. 67–71;Gaeta, supra n. 65 at p. 367.

69 D. Shelton, ‘Form, Function, and the Powers of International Courts’ in (2009) 9 Chi. J Int’l L 537 at p. 545.70 E. Gordon, ‘The World Court and the Interpretation of Constitutive Treaties’ in (1965) 59 AJIL 794 at

p. 805; Gaeta, supra n. 65 at p. 366; Brown, supra n. 64 at pp. 202–203.71 The major arbitration institutions compete with each other in attracting clients and one of the means to

attract clients is by making the rules less stringent or harsh. See Leahy and Pierce, supra n. 12 at p. 293.72 For example, ICSID Convention, Art. 44 states in part that: ‘If any question of procedure arises which is not

covered by this section or the Arbitration Rules or any rules agreed by the parties, the Tribunal shall decidethe question’. According to Schreuer, ‘[a]n ICSID tribunal’s power to close gaps in the rules of procedure isdeclaratory of the inherent power of any tribunal to resolve procedural questions in the event of lacunae’:Schreuer, supra n. 7 at p. 683. See also, London Court of International Arbitration (LCIA) Rules, art. 14.2,which gives the tribunal the ‘widest discretion to discharge its duties’; International Chamber of Commerce(ICC) Arbitration Rules, art. 20; UNCITRAL Arbitration Rules, art. 18; American Arbitration AssociationInternational Rules, art. 16. Although such wide discretion has the advantage of allowing the tribunal tofashion or formulate rules which are suitable to each case, nonetheless some commentators see it asauthorising ‘ad hoc justice’ which harms the legitimacy of the arbitration process. See W. Park, ‘The 2002Freshfields Lecture, Arbitration’s Protean Nature: the Value of Rules and the Risk of Discretion’ in (2003)19(3) Arb. Int’l 279.


the proposition that the jurisdictional clauses of arbitral tribunals ‘must beinterpreted in a way which ensures their effective operation in terms of the finalresolution of judicial disputes’.73 In other words, whether or not the constitutiveinstruments of the tribunal explicitly or implicitly vest it with such authority, itcan always rely on its inherent powers as a basis of jurisdiction so as to ‘resolvethe disputes submitted to it finally and effectively’.74 The existence of inherentpowers of the arbitral tribunal is necessary to safeguard the integrity of thetribunal and ensure the proper administration of justice. As with domesticcourts,75 international courts and tribunals must have inherent powers for aneffective ‘discharge of their functions, without them they would be unable to fulfilthe role for which they have been set up’.76 For as Lord Morris of Borth-y-Gestnoted (in the domestic court context):

There can be no doubt that a court which is endowed with a particular jurisdiction has powerswhich are necessary to enable it to act effectively within such jurisdiction. I would regard themas powers which are inherent in its jurisdiction. A court must enjoy such powers in order toenforce its rules of practice and to suppress any abuses of its process and to defeat any attemptedthwarting of its process.77

Indeed, the possession of inherent powers is more pertinent with respect tointernational courts and tribunals, which operate in a ‘decentralised legal system’,lacking a law-making body and judicial precedent, as obtained in the domesticlegal arena.78 Thus, at the international level, the ICJ and other courts andtribunals have emphasised the basis of inherent powers with regard to thosefunctions of the court or tribunal which are judicial in nature and not expresslyprovided for in the constitutive instruments. In the Nuclear Tests case, the ICJstated that it:

possesses an inherent jurisdiction enabling it to take such action as may be required, on onehand to ensure that the exercise of its jurisdiction over the merits, if and when established, shallnot be frustrated, and on the other, to provide for the orderly settlement of all matters in dispute… Such inherent jurisdiction, on the basis of which the court is fully empowered to makewhatever findings may be necessary for the purposes just indicated, derives from the mereexistence of the court as a judicial organ established by the consent of states, and is conferredupon it in order that its basic judicial functions may be safeguarded.79

73 A. Orakhelashvili, ‘Judicial Competence and Judicial Remedies in the Avena Case’ in (2005) 18 Leiden JIL 31at p. 38.

74 Ibid. p. 35; Weil, supra n. 66.75 On the nature and basis of the inherent powers of courts under the common law, see I.H. Jacob, ‘The Inherent

Jurisdiction of the Court’ in 23 Current Legal Problems; A. Arnull, ‘Does the Court of Justice have InherentJurisdiction in (1990) 27 CML Rev. 283 (discussing the inherent jurisdiction of the ECJ); C. Amerasinghe,Jurisdiction of International Tribunals (NLD, Brill, Leiden, 2002), pp. 360–368.

76 Gaeta, supra n. 65 at p. 363.77 Connelly v. DPP [1964] AC 1254 at p. 1301 (quoted in Brown, supra n. 64 at p. 205).78 A. Orakhelashvili, ‘Questions of International Judicial Jurisdiction in the LaGrand Case; in (2002) 15 Leiden

JIL 105 at p. 107.79 Nuclear Tests [1974] ICJ Rep. 259 at para. 23; Northern Cameroons [1963] ICJ Rep. 29; LaGrand (Germany v.

United States), Decision of 27 June 2001, para. 48; Nottebohm [1953] ICJ Rep. 111 at p. 119; Orakhelashvili,supra n. 78 at pp. 127–128; Shelton, supra n. 69 at pp. 545–546.


Similarly, in Prosecutor v. Blaskic, the Appeals Chamber of the InternationalCriminal Court for the Former Yugoslavia, while noting the inherent power ofthe court to make a judicial finding regarding a state’s failure to observe theprovisions of the Statute or Rules of the Court, observed that:

[t]he International Tribunal must possess the power to make all those judicial determinationsthat are necessary for the exercise of its primary jurisdiction. This inherent power inures to thebenefit of the International Tribunal in order that its basic judicial function may be fullydischarged and its judicial role safeguarded.80

Several international arbitral tribunals, when confronted with novel proceduralquestions, have also used the notion of inherent powers to fill gaps existing intheir constituting instruments. For instance, in the Rio Grande Irrigation and Land Co.case, the United States-United Kingdom Mixed Claims Commission was facedwith the question of whether it was empowered to entertain a motion to dismissthe claim filed when hearings on the merits of the case had reached an advancedstage. In affirming that it had the inherent power to entertain the motion, theCommission stated that:

[w]hatever the proper construction of the instruments controlling the Tribunal or of the rules ofprocedure, there is inherent in this and every legal Tribunal a power, and indeed a duty, toentertain, and, in proper cases, to raise for themselves, preliminary points going to theirjurisdiction to entertain the claim. Such a power is inseparable from and indispensable to theproper conduct of business.81

Similarly, in the Sabotage case, in rejecting Germany’s argument that theCommission would need an explicit authorisation by the parties before it couldre-open a decision procured by fraud, the Commission held that it had aninherent jurisdiction to re-open the case. According to the Commission:

Every tribunal has inherent power to reopen and to revise a decision induced by fraud. If it maycorrect its own errors and mistakes, a fortiori it may, while it still has jurisdiction of a case, correcterrors into which it has been led by fraud and collusion.82

More recently, in Electroprivreda v. Slovenia, the issue was whether the tribunalhad the power to exclude the claimant’s counsel from appearing in the case ongrounds of ethical considerations, in view of the absence of any express provisionin the tribunal’s constituting and procedural instruments. The tribunal ruled that

80 Prosecutor v. Blaskic, Appeals Chamber Judgement on the Request of the Republic of Croatia for Review of theDecision of the Trial Chamber II of 18 July 1997, Judgment of 29 October 1997, para. 33; Prosecutor v. Tadic,Judgment on Allegations of Contempt against Prior Counsel, Milan Vujin, 31 January 2000, paras. 13, 18;Prosecutor v. Beqa Beqaj, Case IT-03-66-T-R77, Judgment of Contempt Allegations, 27 May 2005, paras. 9, 10.

81 Rio Grande Irrigation and Land Co. Ltd (Great Britain v. United States), Decision of 28 November 1923, VI RIAA131 at pp. 135–136, available at http://un.org/law/riaa/.

82 Lehigh Valley Railroad Co. (US) v. Germany (Sabotage Cases), Decision of 15 December 1933, VII RIAA 160 atp. 190; Ram Int’l v. Air Force of Iran (1993) 29 Iran–USCTR 383, paras. 16–20; Gaeta, supra n. 65 at pp. 356–358; Brown, supra n. 64 at pp. 217–222.


although the ICSID Convention and the ICSID Arbitration Rules do not‘explicitly give the power to tribunals to exclude counsel’, nonetheless that issubject to the ‘overriding principle’ of the immutability of properly constitutedtribunals as provided for in Article 56(1) of the Convention. Furthermore, thetribunal observed that it is not only concerned, but compelled to ‘preserve theintegrity of the proceeding, and, ultimately, its award’. In confirming that it hadthe inherent power to exclude counsel, the tribunal stated that ‘as a judicialformation governed by public international law, [it] has an inherent power to takemeasures to preserve the integrity of its proceedings’.83 According to the tribunal:

that inherent power finds a textual foothold in Article 44 of the Convention, which authorisesthe tribunal to decide ‘any question of procedure’ not expressly dealt with in the Convention,the ICSID Arbitration Rules or ‘any rule agreed by the parties’. More broadly, there is an‘inherent power of an international court to deal with any issues necessary for the conduct ofmatters falling within its jurisdiction’; that power ‘exists independently of any statutoryreferences’.84

In the context of the tribunal’s inherent powers to punish for proceduralmisconduct such as witness intimidation, the tribunal in Libananco v. Turkey(although it did not ultimately conclude that witness intimidation had occurred inthe instant case), observed that it had no doubts that it possessed such a powerbecause, ‘like any other international tribunal, it must be regarded as endowedwith the inherent powers required to preserve the integrity of its own process’.85

Many other arbitral tribunals have also relied on the notion of inherent powersas a basis of exercising jurisdiction over a host of issues not explicitly treated intheir constitutive instruments. These include the power to accept amicus curiaesubmissions by non-disputing parties,86 to issue interim measures and to evaluatethe credibility of a witness.87 For instance, in E-Systems v. Iran, the claimantrequested the Iran-United States Claims Tribunal to order Iran to stay allcounterclaims it had filed in its domestic courts in connection with the claimsbefore the tribunal. Iran argued that under neither the Algiers Accord norgeneral principles of law did the tribunal have exclusive jurisdiction over thecounterclaim. Whilst conceding that under its constitutive instruments it did not

83 Decision of 6 May 2008, para. 33.84 Ibid.85 Libananco v. Turkey, para. 78. Aside from not finding that there was witness intimidation, the tribunal also

concluded that the claimant did not prove that it was prejudiced by the interceptions of communicationsbetween its counsel and potential witnesses undertaken by agencies of the respondent under court orders.Ibid. para. 80.

86 Methanex v. United States, Decision on Petition from Third Persons to Intervene as Amicus Curiae of 15January 2001, paras. 25–27; UPS v. Canada, Decision on Petition for Intervention and Participation as AmiciCuriae of 17 October 2001, para. 38; Aguas Argentina et al. v. Argentina, Order in Response to a Petition forTransparency and Participation as Amicus Curiae of 19 May 2005, paras. 10–16; Aguas v. Argentina, Order inResponse to a Petition for Participation as Amicus Curiae of 17 March 2006, para. 11; C. Knahr,‘Transparency, Third Party Participation and Access to Documents in Investment Arbitration’ in (2007)23(2) Arb. Int’l 327; J. Delaney and D. Magraw, ‘Procedural Transparency’ in Ortino and Chreuer, supra n. 3at pp. 735–742.

87 Prosecutor v. Tadic, Appeals Chamber Judgment of 15 July 1999, para. 322.


have exclusive jurisdiction over counterclaims, the tribunal nevertheless held thatit had ‘an inherent power to issue such orders as may be necessary to conservethe respective rights of the parties and to ensure that this tribunal’s jurisdictionsand authority are made fully effective’.88

The above analysis clearly indicates that an international court or tribunal canexercise jurisdiction over numerous procedural issues, including having the abilityto impose sanctions for improper conduct by the parties, even though suchpowers are not expressly provided for in its constitutive instruments. It can do soon the basis of its implied or inherent powers as a judicial body. The above casesare illustrative of the extent of the inherent powers of an international court ortribunal and not an exhaustive consideration of all the situations or circumstancesunder which such powers might be invoked or relied upon by a tribunal as a basisof jurisdiction. As we shall argue in the next section, the inherent powers of aninternational arbitral tribunal extend to imposing specific sanctions for witnessintimidation or other unconscionable acts by either of the disputing parties.However, this is not to suggest that the tribunal’s inherent powers are limitless.Such powers cannot be exercised in a manner that contradicts the expressprovisions of the tribunal’s constitutive instruments or the compromis,89 nor can thetribunal exercise such a power if it is not necessary for the performance of itsjudicial functions.90

IV

IV. POSSIBLE REMEDIES AVAILABLE TO THE TRIBUNAL

Most of the principal international arbitration statutes and rules contain fewprovisions on sanctions which a tribunal might impose on the disputing partiesto ensure that they arbitrate in good faith and do not frustrate the arbitral processor threaten the integrity of the tribunal. Those that exist include the generalpower:

• to issue interim measures to preserve the rights of a party;

• to proceed with arbitration in the event of unjustified withdrawal or non-participation in the arbitration by a party; or

• to draw adverse inferences from a party’s refusal to produce requestedevidence in its possession or control.

88 E-Systems, Inc. v. Iran (1983) 2 Iran–USCTR 51 at p. 57, and at pp. 59–60 (Concurring Opinions,Holtzmann and Mosk); Fors Aerospace and Comm. v. Air Force of Iran (1984) 16 Iran–USCTR 104 at pp. 108–109.

89 For example, in Pope and Talbot v. Canada, the tribunal rejected the claimant’s request for interim measuresenjoining the application of the disputed measures because such an order would be contrary to NAFTA, Art.1134, which expressly prohibits the tribunal from making such an order. See Order on Interim Measures of7 January 2000, para. 1; Brown, supra n. 64 at p. 80. Furthermore, NAFTA, Art. 1135 limits the power of thetribunal to award either monetary damages or the restitution of property only ‘with the respondent statehaving the option to pay monetary damages in lieu of restitution’. See C. Chreuer, ‘Non-Pecuniary Remediesin ICSID Arbitration’ in (2004) 20(4) Arb. Int’l 325 at pp. 331–332.

90 Brown, supra n. 65 at pp. 78–81; idem, supra n. 64 at pp. 237–244; Gaeta, supra n. 65 at pp. 370–371.


The authority of an arbitral tribunal to sanction any of the disputing partieswho are guilty of misconduct such as intimidating a witness may be derived fromeither the express or implied provisions of its constitutive instruments, or from theinherent powers of the tribunal as a judicial body.91 This section focuses onpossible sanctions which might be imposed by the tribunal in situations involvingwitness intimidation or similar misconduct. As we shall show in the followingsections, the tribunal may decide to impose sanctions (such as cease and desistorders or interim measures of protection, refuse to admit evidence obtainedthrough intimidation, monetary damages, draw adverse inferences, etc.) againstthe offending party. Any of these sanctions might be requested either separatelyor in combination by the aggrieved party.

a

(a) Interim Measure of Protection (‘Cease and Desist’ Order)

Tribunals have extensive powers to issue interim and/or procedural orders.92

They can accordingly order the respondent to ensure that its agencies stop themisconduct at issue. At the request of the aggrieved party, the tribunal may issuean interim measure of protection directing the disputing parties to cease anddesist from intimidating or harassing any potential witnesses or from taking anysteps that would impede a party from presenting evidence in the case, or whichwould aggravate the dispute. The power to issue interim measures of protection isprovided for in most of the arbitration rules and statutes of international courtsand tribunals.93 However, absent an explicit provision in the constitutiveinstruments, the authority is also widely accepted as inherent in the tribunal as a

91 For example, UNCITRAL Arbitration Rules, art. 15(1) gives the tribunal wide discretion to conduct theproceedings ‘in such manner as it considers appropriate’ while LCIA Rules, art. 5.2 vests in the tribunal the‘widest possible discretion to conduct the proceedings in a manner which it considers to be the most efficientand effective in the particular circumstances of each case’. Implicit from these and other similar provisions inarbitration rules is the power of the tribunal to prevent any act which might undermine the basic principlesof procedure (such as equality of arms) or which impairs the efficient and effective resolution of the dispute.See Gaeta, supra n. 65; Brown, supra n. 64.

Although the power of an arbitral tribunal to sanction a conduct which tends to obstruct, prejudice orabuse its administration of justice is within its inherent jurisdiction, nonetheless, ‘[t]his is not to say that thetribunal’s powers to deal with contempt or conduct interfering with the administration of justice are in everysituation the same as those possessed by domestic courts’ because of the obvious limitations on the tribunal’scoercive powers relative to domestic courts. See Prosecutor v. Tadic, Judgement of 31 January 2000, paras. 1, 18;R. Wolfrum, ‘International Courts and Tribunals: Evidence’ in A. Zimmermann et al. (eds.), The Statute of theICJ: a Commentary (2006).

92 Brown, supra n. 65 at pp. 119–151.93 See e.g., ICSID Convention, Art. 47; ICSID Arbitration Rules, rule 39; UNCITRAL Rules, art. 26(1); LCIA

Rules, art. 17; AAA Commercial Arbitration Rules, art. 34; ICC Rules, art. 23; UNCITRAL Model Law,art. 17; WIPO Arbitration Rules, art. 46; Statute of the ICJ, art. 41. On the jurisprudence of internationalcourts and tribunals on interim measures generally, see L. Collins, ‘Provisional and Protective Measures’ in(1992-III ) 234 RDC-Collected Courses 13; S. Rosenne, Provisional Measures in International Law (OUP, 2005);J. Elkind, Interim Protection: a Functional Approach (Martinus Nijhoff, 1981); J. Merrills, ‘Interim Measuresof Protection in the Recent Jurisprudence of the International Court of Justice’ in (1995) 44 ICLQ 90;J. Pasqualucci, ‘Interim Measures in International Human Rights: Evolution and Harmonisation’ in (2005)38 Vand. J Tran’l L 1.


judicial body.94 The main purpose of an interim measure of protection is topreserve the respective rights of the parties from being jeopardised pending thefinal resolution of the dispute and to prevent the escalation or aggravation of thedispute. That is to say, it is intended ‘to induce behaviour by the parties that isconducive to a successful outcome of the proceedings’.95 As the PCIJ stated, ‘theparties to a case must abstain from any measure capable of exercising aprejudicial effect in regard to the execution of the decision to be given, and, ingeneral not allow any step of any kind to be taken which might aggravate orextend the dispute’.96

Several arbitral tribunals have endorsed this proposition and have, where thecircumstances of the case so warranted, issued interim measures of protection.97

Thus, in Biwater Gauff v. Tanzania, in affirming the general principles concerningthe need to minimise the aggravation of the parties’ disputes, as developed byother ICSID tribunals, the tribunal emphasised its responsibility in ‘ensuring thatthe proceedings will be conducted in … a regular, fair and orderly manner’.98 Itthen held that all the parties must ‘refrain from taking any steps which mightundermine the procedural integrity, or the orderly working, of the arbitral processand/or which might aggravate or exacerbate the dispute’ through unauthoriseddisclosure of the proceedings to third parties.99 The tribunal reached thisconclusion after forming the opinion that the media campaigns by both parties

94 E-Systems v. Iran (1983) 2 Iran–USCTR 51 at p. 57; Northern Cameroon, Preliminary Objections, SeparateOpinion, Fitzmaurice, ICJ Rep. 103 (observing that ‘[a]lthough much (though not all ) of this incidentaljurisdiction is specifically provided for in the court’s statute … it is really an inherent jurisdiction; the powerto exercise which is one necessary condition of the court – or any court of law – being able to function atall’); Biwater Gauff v. Tanzania, Procedural Order No. 3 of 29 September 2006, para. 135; Rainbow Warrior(France v. New Zealand), Decision of 30 April 1990, XX RIAA 500, para. 114, available at www.un.org/law/riaa/; Enron v. Argentina, Decision of 14 January 2004, paras. 79–81; Brown, supra n. 65 at p. 128;Pasqualucci, supra n. 93 at pp. 13–14; Shelton, supra n. 69 at pp. 548–550.

95 Biwater Gauff v. Tanzania, Procedural Order No. 3 of 29 September 2006, para. 139 (quoting Schreuer, supran. 7 at p. 746); Occidental v. Ecuador, Decision on Provisional Measures of 17 August 2007, para. 60; CityOriente v. Ecuador, Decision on Provisional Measures of 27 November 2007, paras. 43, 55. On other benefitsof interim measures for the litigants, see Merrills, supra n. 93 at pp. 139–142.

96 Electricity Company of Sofia v. Bulgaria (1939) PCIJ (series A/B) No. 79, 199; Application of the Convention on thePrevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Yugoslavia), Order of September 1993,para. 35; Tehran Hostages (No. 13) [1979] ICJ Rep. 21; M. Mendelson, ‘State Responsibility for Breach ofInterim Protection Orders of the I.C.J.’ in M. Fitzmaurice and D. Sarooshi (eds.), Issues of State Responsibilitybefore International Judicial Institutions (Hart, Oxford, 2004), p. 35 at p. 40; S. Oda, ‘Provisional Measures: thePractice of the ICJ’ in V. Lowe and M. Fitzmaurice (eds.), Fifty Years of the ICJ (CUP, 1996), p. 541.

97 See e.g., Perenco v. Ecuador, Decision on Provisional Measures of 8 May 2009; Burlington v. Ecuador, Decisionon Provisional Measures of 29 June 2009; City Oriente v. Ecuador, Decision on Provisional Measures of27 November 2007; Sergei Paushok v. Mongolia, Order on Interim Measure of 2 September 2008; Tokios v.Ukraine, Order No. 1 of 1 July 2003, para. 2, and Order No. 3 of 18 January 2005, para. 7; Holiday Inn v.Morocco (1980) 51 BYIL 123 at p. 137; E-Systems v. Iran (1983) 2 Iran–USCTR 51 at p. 57; Cases Nos. A4 andA15, 5 Iran–USCTR 112 at p. 113. See generally, J. Rueda-Garcia, ‘Provisional Measures in InvestmentArbitration: Recent Experiences in Oil Arbitration against the Republic of Ecuador’ in 6(1) TDM(March 2009); C. Brower and R. Goodman, ‘Provisional Measures and the Protection of ICSIDJurisdictional Exclusivity against Municipal Proceedings’ in (1991) 6 ICSID Rev. – FILJ 431; P. Friedland,‘Provisional Measures in ICSID Arbitration’ in (1986) 2 Arb. Int’l 335; Brower and Brueschke, supra n. 21 atpp. 216–241.

98 Procedural Order No. 3 of 29 September 2006, para. 14599 Ibid. para. 163.


posed a ‘sufficient risk of harm or prejudice, as well as aggravation of thedispute’.100

This decision suggests that the tribunal accepted the claimant’s contention thatthe media campaign embarked upon by the respondent amounted tounacceptable pressure on the claimant (through its chairman) which threatenedthe integrity of the arbitral process. According to the tribunal, the mediacampaign went beyond merely seeking to annoy the other party as in the AmcoAsia case,101 to an action aimed at and having the effect of prejudicing the right ofthe other party to arbitrate.102 This position is also supported by the decision inCity Oriente v. Ecuador, in which the claimant sought an interim order from the tribunaldirecting the respondent, amongst other things, to refrain from prosecuting theenforced collection of the disputed taxes the subject matter of the proceedings, aswell as from prosecuting senior officials of the claimant in connection with thedisputed taxes. In granting both requests, the tribunal held that ‘pending adecision on this dispute, the principle that neither party may aggravate or extendthe dispute or take justice into their own hands prevails’.103 While acknowledging‘Ecuador’s sovereign right to prosecute and punish crimes of all kinds perpetratedin its territory’, the tribunal nevertheless held that ‘such undisputed right of theRepublic of Ecuador should not be used as means to coercively secure paymentof the amounts allegedly owed by City Oriente pursuant to Law No. 2006-42,since this would entail a violation of the principle that neither party mayaggravate or extend the dispute or take justice into their own hands’.104 Similarly,in EDF v. Romania, the respondent sought provisional measures against theclaimant to refrain from disclosing information to the public or press regarding itsclaims and allegations that ‘reasonably may be expected to antagonise respondentand its witnesses, exacerbate the differences between the parties, pressurerespondent and its witnesses’ nor take ‘any steps that might undermine theprocedural integrity’ of the arbitration or aggravate the dispute.105 The requestwas prompted by publication in an international press of a report allegedlylinking the claim with official corruption in Romania. The respondent allegedthat the claimant provided the information to the press with the view ‘to harass,to pressure and intimidate Romania, its witnesses and potential witnesses’ in theproceedings.106 The respondent claimed that the alleged claimant’s ‘behaviourthreaten[ed] to obstruct its effort to gather rebuttal evidence by scaring andintimidating private individuals having potentially relevant information’.107

100 Ibid. para. 14.101 [1993] 1 ICSID Rep. 410 at p. 412.102 The decision also suggests that although the pressure on the claimant might primarily be exerted by a third party,

nevertheless, the respondent might be enjoined by the tribunal from supporting or encouraging the third party.103 City Oriente v. Ecuador, Decision on Provisional Measures of 27 November 2007, para. 57.104 Ibid. para. 62; Perenco v. Ecuador, Decision on Interim Measures of 8 May 2009, para. 62; Burlington v. Ecuador,

Procedural Order No. 1 of 29 June, 2009, para. 66; Libananco v. Turkey, Decision of 23 June 2008, para. 79;Sergei Paushok v. Mongolia, Order on Interim Measure of 2 September 2008, paras. 81, 91(2), (11).

105 EDF v. Romania, Procedural Order No. 2 of 30 May 2008, para. 19.106 Ibid. para. 22.107 Ibid. para. 41.


Although the tribunal found no evidence that linked the claimant to the saidpublication nor any harm to its integrity as a result of the publication, nonethelessit was of the view that such sensational headlines in the press were capable ofincreasing the pressure on everyone involved in the arbitration.108 According tothe tribunal:

It is part of the inherent procedural powers of an arbitral tribunal, be it acting within theframework of an international commercial arbitration or of an investment treaty arbitrationunder the ICSID Convention to ensure that the proper functioning of the dispute settlementprocess is safeguarded. Procedural integrity and non-aggravation of the dispute are objectivesmeant to preserve the parties’ right to be heard on an equal footing and to be able to collect andprovide the necessary evidence in support of their claims and defenses …

Minimising the scope for any external pressure on any party, witness, expert or any otherperson involved in the arbitral process is certainly within the Tribunal’s mission. No current orimminent harm is necessary for this mission to be carried forward.109

These decisions suggest that parties to an arbitral proceeding would not beallowed to use undue pressure or intimidation against each other or theirpotential witnesses under the guise of enforcing local laws or exercising a legalright if this would prejudice the other party’s right to arbitrate the dispute. In theCity Oriente case, the tribunal reached the conclusion that to allow the Ecuadoriangovernment to enforce payment of the disputed taxes would not only amount toself-help but would also jeopardise the right of the claimant to have the disputeresolved through binding arbitration, as agreed upon by the parties. It might beargued that the enforced collection of the disputed taxes would amount to undueeconomic pressure against the claimant, as the arrest and possible prosecutionand conviction of the claimant’s senior officials might impair the ability of theclaimant to have those officials testify or give evidence on its behalf. This wouldeffectively deny it the right to present its case and respond to the case of therespondent. These decisions also suggest that an arbitral tribunal has the inherentpower to issue interim measures aimed at protecting the procedural rights of thedisputing parties, including the right of a party not to have its potential witnessesintimidated by the other party.

Once issued, such interim measures are binding on the parties. To holdotherwise would effectively defeat the object and purpose of judicial settlement ofdisputes through binding decisions.110 The binding nature of interim measures isnow generally accepted by international courts and tribunals, including theICJ,111 European Court of Human Rights (ECtHR)112 and arbitral tribunals.

108 Ibid. para. 49109 Ibid. paras. 46, 48.110 LaGrand (Germany v. United States), Judgment of 27 June 2001, [2001] ICJ Rep. para. 102.111 Ibid. paras. 102, 103, 110, 112; Orakhelashvili, supra n. 78 at pp. 116–121; Amerasinghe, supra n. 75 at

pp. 368–383; Pasqualucci, supra n. 93 at pp. 21–22.112 Mamatkulov v. Turkey, ECtHR Judgment of 6 February 2003, para. 110 (implicitly overruling Cruz v. Sweden,

Judgment of 20 March 1991); Ch. Brown, ‘Case Comment’ in (2003) 62(3) Camb. LJ 532; Shelton, supran. 69 at pp. 549–550.


Thus, in City Oriente v. Ecuador, the tribunal held that irrespective of the languageused to describe provisional measures, such measures are binding.113 An interimmeasure thus fits well into the menu of the remedies available to a tribunal torespond to a serious breach of procedure by a party.

Notwithstanding the binding nature of an interim measure, what happens if aparty disobeys the order and commits further witness intimidation or similarmisconduct?114 An answer to this question is probably to say that, in addition tointerim measures, an arbitral tribunal is competent to impose other sanctionsagainst the misbehaving party.

b

(b) Contempt

Contempt of court is a common law principle that gives to the court wide powersto safeguard its authority.115 It can include fines, exclusion and even custody. Tothe extent that it overlaps with the principle of ‘inherent powers’, tribunals willhave similar powers except that an arbitral tribunal cannot have all the powersenjoyed by a national court, i.e. an organ of government. Custody, for example,must be excluded, while exclusion is possible. One also must bear in mind thatdomestic courts can refer misconduct (e.g. by counsel, witnesses, experts, partyrepresentatives) to prosecutors; this ability to rely on other instruments of thejustice system is, however, not practically available in investment disputes, at leastnot the justice system of the host state.116 The ‘contempt power’ of internationalinvestment tribunals cannot be rejected simply because judges are public officialsand arbitrators in investment arbitration cases are ‘private’ persons.117 But it islimited by both the nature of the adjudicatory process and the limited meansavailable to tribunals for enforcing their orders. One needs to examine the usualpowers of contempt of court in the major legal systems to identify to which extentsuch powers should also be available to international investment tribunals as partof the ‘inherent powers’ concept.

113 City Oriente v. Ecuador, para. 92 (citing Maffezini v. Spain, Procedural Order No. 2, and LaGrand ).114 Mendelson, supra n. 96 at pp. 40–44; Merrills, supra n. 93 at pp. 137–139; A. Price and S. Wilske, ‘Costs and

Efficiency in International Arbitration: the Arbitrator’s Toolbox for Achieving the “Ideal” ’ in (2007) DAJVNewsletter 184. For example, City Oriente alleged that Ecuador violated the Tribunal’s Interim Order of 27November 2007. See also, City Oriente v. Ecuador, Decision on Revocation of Provisional Measures of 13 May2008, para. 3.

115 Lord Diplock in the Sunday Times case observed that: ‘contempt of court is punishable because it underminesthe confidence of the parties and of the public in the due administration of justice. The due administrationof justice requires that all citizens should have unhindered access to the courts; that they should be able to relyon an unbiased decision based only on facts proved in accordance with the rules of evidence’. See, AttorneyGeneral v. Sunday Times Newspapers, Decision of the House of Lords, 25 July 1973, (1974) AC 273 at 309.

116 For a discussion of disregard of the ICJ’s interim orders, see United States v. Iran (Tehran Hostages) [1980] ICJRep. 3; LaGrand (Germany v. United States) [2001] ICJ Rep. 466; ICJ in Armed Activities (Democratic Republic ofCongo v. Uganda), Judgment of 19 December 2005, para. 345(7).

117 The distinction between ‘public’ judges and ‘private’ arbitrators is often made, e.g. in the criticism by G. vanHarten, Investment Treaty Arbitration and Public Law (OUP, 2007), p. 153 et seq. But while arbitrators in acommercial dispute could be described as ‘private persons’, that does not apply to arbitrators appointed bythe parties on the basis of an international law treaty. They are, in essence, public ad hoc judges, at one endof the spectrum between dispute-specific appointments, the part-time members of the WTO Appellate Bodyand the full-time fixed-term judges of the ICJ.


c

(c) Non-Admissibility of Evidence Procured by Improper Means

There is extensive, though not absolute, authority that evidence procured withimproper (illegal or unethical) means is not admissible.118 For example, inMethanex v. United States, a comparatively harmless case of ‘dumpstering’ (search ina garbage container on private, but accessible premises) led to non-admissibilityof the evidence discovered in this way. In refusing to admit evidence unlawfullyobtained by the claimant, the tribunal held that:

As a general principle … just as it would be wrong for the USA ex hypothesi to misuse itsintelligence assets to spy on Methanex and its witnesses and to introduce into evidence theresulting materials into this arbitration so too would it be wrong for Methanex to introduceevidence materials obtained by Methanex unlawfully.119

This principle might apply more strongly where the communication wasbetween a lawyer and his or her client, which is expressly protected under manyarbitration rules.120 For instance, the power to exclude evidence is recognised inarticle 9 of the IBA Rules on Taking of Evidence, though as a possibility (‘may’),not as an absolute command; the IBA Rules refer to considerations of privilege,but also fairness and equality of the parties.

As with cease and desist orders or interim measures of protection, an orderdeclaring evidence inadmissible may be a proper and necessary measure, but notone that restores the disrupted equilibrium. Its main effect lies, first, in a measureof dissuasion: the parties to whom such an order is addressed may complybecause they take the order seriously, or, at least, because they worry over the riskthat they might be caught not complying. Secondly, non-compliance, if identified,can lead to further, more serious, sanctions.

d

(d) Monetary Damages or Costs Sanction

In addition to any of the above-mentioned sanctions, the tribunal may also awardmonetary compensation for any injury caused or for breach of the arbitration

118 M. Reisman and E. Freedman, ‘The Plaintiff ’s Dilemma: Illegally Obtained Evidence and Admissibility inInternational Adjudication’ in (1982) 78 AJIL 737; in response, H. Thirlway, ‘Dilemma or Chimera:Admissibility of Illegally Obtained Evidence in International Adjudication’ in (1984) 78 AJIL 622; Wolfrum,supra n. 91.

119 Methanex v. United States, Award of 3 August 2005, Part II, ch. I, para. 54; EDF v. Romania, Procedural OrderNo. 3 of 29 August 2008, paras. 37, 38; Libanaco v. Turkey, Decision of 23 June 2008, para. 82 (1.1.6 and1.1.7); see also, ECJ in Texeira de Castro v. Portugal (1999) JCP, I, 105, no. 38 (infiltration by agents).

120 The confidentiality of the client-counsel relationship (‘privilege’) is part of an effective legal representationunder ECHR, Art. 6, but is also protected by Art. 8 and qualifies as a fundamental element of internationaldue process. See Ekinci and Akalin v. Turkey, ECtHR, Judgment of 25 March 1992; Campbell v. United Kingdom;Smirnov v. Russia, ECtHR, Judgment of 7 June 2007; the client-counsel privilege has been recognised recentlyby the ECJ in Akzo v. European Communities, Judgment of 17 September 2007; Weiser v. Austria, ECtHR, Judgmentof 16 October 2007; Association for European Integration and Human Rights and Ekimdzhiev v. Bulgaria, ECtHR,Judgment of 28 June 2007, available at www.echr.coe.int/ECHR/EN/Header/case-law/HUDOC/HUDOC+database/. The right to a fair trial includes the right to communicate freely with counsel; the EUCode of Conduct for Lawyers, para. 2.3 states: ‘Without the certainty of confidentiality there cannot be trust.Confidentiality is therefore a primary and fundamental right and duty of the lawyer. The lawyer’s obligationof confidentiality serves the interest of the administration of justice as well as the interest of the client’.


agreement.121 Witness intimidation is a wrongful act per se which attracts theobligation to make reparation. As the ICJ stated in the Chorzow Factory case:

It is a principle of international law that the breach of an engagement involves an obligation to makereparation in an adequate form. Reparation therefore is the indispensable complement of afailure to apply a Convention and there is no necessity for this to be stated in the Convention.122

Under Article 31 of the ILC’s Articles on State Responsibility, the obligation tomake full reparation extends to any material or moral damage which might havebeen caused by the wrongful act.123

It is arguable (but not established) that tribunals have also an inherent‘contempt of tribunal’ power to levy fines for misconduct based on the analogywith common law courts. For instance, the arbitral tribunal may order theintimidating party to pay damages to the innocent party aimed at offsetting theinjury suffered as a result of the wrongful act. This might include non-materialinjury such as pain and suffering, loss of liberty during detention or other forms ofmoral injury ‘quantified on the basis of an equitable principle’.124 Furthermore,the party responsible for witness or party intimidation could be made to bear allor a larger proportion of the costs of the arbitration, including legal fees incurredby the other party. If the wrongdoer is the winning party, it could be denied all orpart of its costs because of the misbehaviour. Indeed, the tribunal may, at therequest of the aggrieved party, order interim costs to be paid immediately or

121 Friedland, supra n. 97 at p. 343 (suggesting that an extra-ICSID Convention request for interim relief by aparty ‘constitutes a breach of the arbitration agreement for which contract damages should be available’).

122 Factory at Chorzow Case ( Juris.) (1927) PCIJ Ser. A. No. 9 at 21, available at www.icj-cij.org. This observationby the ICJ is not only relevant to any form of assessment of damages under international law, but is stillrelevant in present day dispute settlement under international law, including investor-state arbitration. SeeADM v. Mexico, Award of 21 November 2007, para. 275; BG v. Argentina, Award of 24 December 2007, paras.422–429; C. Brower and M. Ottolenghi, ‘Damages in Investor-Sate Arbitration’ in 4(6) TDM (2007); E. Riedel,‘Damages’ in 2 Ency. of Pub. Int’l Law 929 at p. 930.

Thus, the jurisdiction to order certain remedies is inherent in the nature of any international court ortribunal, and ‘not giving effect to it would render nugatory the existence of the judicial function in theinternational legal system’. See Amerasinghe, supra n. 75 at pp. 387, 700–705; LaGrand, para. 48; Nicaragua v.United States (Merits) [1986] ICJ Rep. 142; R. Higgins, ‘Issues of State Responsibility before the ICJ’ inFitzmaurice and Sarooshi (eds.), supra n. 43 at p. 3; M. Shaw, ‘The ICJ, Responsibility and Remedies’ in ibid.p. 19; I. Brownlie, ‘Remedies in the ICJ’ in Lowe and Fitzmaurice, supra n. 96 at p. 557.

123 J. Crawford, The ILC’s Articles on State Responsibility (OUP, 2001), p. 202. Witness or party intimidation inarbitration might result in material damage to the aggrieved party (e.g. having to pay for additional securitymeasures to protect the witness, costs in preparing for an application for interim measures, etc.) as well asmoral injury (e.g. psychological pain) which justify the award of an appropriate remedy. Although unlike PartOne, Part Two of the ILC Articles does not apply to an investor-state relationship (see Commentary 3 toArt. 28, in Crawford, ibid. p. 193), yet it provides a useful guide to an arbitral tribunal as illustrated by thedecision in ADM v. Mexico, 21 November 2007 at paras. 280–281; M. Endicott, ‘Non-Pecuniary Remedies:the Impact of ARSIWA in Investor-State Arbitration’ in 4(2) TDM (2007). However, the tribunal in BG v.Argentina ruled that Art. 25 only applies to inter-state relationships, but not investor-state as in this case. SeeBG v. Argentina, Award of 24 December 2007, para. 408.

124 Crawford, supra n. 123 at p. 224. In Desert Line v. Yemen, Award of 6 February 2008, the tribunal awarded theclaimant compensation for moral harm suffered consequent to harassment of its officials and employees bythe respondent or due to its inaction. See B. Sabahi, ‘Moral Damages in International Investment Law: SomePreliminary Thoughts in the Aftermath of Desert Line v. Yemen’ in J. Werner and A. Ali (eds.), A Liber Amicorum:Thomas Walde, Law Beyond Conventional Thought (Cameron May, 2009), p. 253.


within a stipulated time as a condition precedent for taking any further steps inthe arbitral proceedings.125 Alternatively, the tribunal may require both parties todeposit probity bonds as security for good behaviour during the arbitration.Although some commentators have noted the due process implications of such aremedy on litigants with limited financial resources,126 it could be argued thatparties who have consented to arbitrate should be prepared to pay for it.127

Perhaps more importantly, the parties also wanted their disputes to be settled inan efficient and effective manner. It could be argued that the ‘existence of theprobity bond would encourage better conduct by the parties’, thereby enhancingthe efficiency and effectiveness as well as the attractiveness of arbitration.128

Most of the international arbitration rules and statutes give the arbitratorswide discretion in the assessment and apportionment of costs.129 Severalarbitration tribunals have used such discretion in costs allocation by taking intoaccount bad faith or otherwise uncooperative behaviour of the parties.130 Forexample, in LETCO v. Liberia, the tribunal awarded the claimant the full costs ofcarrying out the arbitration, including of its own legal representation, based on

125 K. Reichert and J. Hope, ‘Costs: the Sting in the Tail’ in 3(5) TDM (2006).126 D. Brown and P. Fenn, ‘Security for Costs in Arbitration in England and Wales’ in (2003) 6(6) Int’l Arb. L Rev. 191.127 P. Anjomshoaa, ‘Cost Awards in International Arbitration and the Use of “Sealed Offers” to Limit Liability

for Costs’ in (2007) 10(2) Int’l Arb. L Rev. 38 (discusses the various approaches to cost allocation and howparties can cap their potential cost liability).

128 Leahy and Pierce, supra n. 12 at p. 310; Reichert and Hope, supra n. 125 (noting that ‘although tribunals lack apolice force to ensure compliance with their orders; the power to withhold costs (or to award additional cost) isone that should be emphasised’). In Azinian v. Mexico, Award of 1 November 1999, the tribunal noted that therationale for the ‘loser pays’ practice in arbitration is that it ‘serves the dual function of reparation and dissuasion’.

129 Article 61(2) of the ICSID Convention states that except as the parties otherwise agree, the tribunal shalldecide how and by whom the costs of arbitration shall be borne, and ICSID Arbitration Rules, rule 47 givesthe tribunal wide discretion on apportionment of costs, taking into account the circumstances of each case.See Libananco v. Turkey, Decision of 23 June 2008, para. 59. NAFTA, Art. 1135(1) states that the tribunal mayaward costs in accordance with the applicable arbitration rules; Thunderbird v. Mexico, Final Award, paras.213, 215. Article 28(6) of the 2004 US Model BIT gives the tribunal discretion on whether or not to awardthe successful party costs by taking into account the frivolous nature of the claimant’s claim or therespondent’s objection to jurisdiction. UNCITRAL Arbitration Rules, art. 40(2) gives the tribunal discretionin the apportionment and assessment of costs taking into account the circumstances of the case; see AAAInternational Arbitration Rules, art. 31; LCIA Rules, art. 28.4; ICC Arbitration Rules, art. 31(3); WIPOArbitration Rules, art. 72; Swiss Rules on International Arbitration, art. 40(2) provides that with respect tocosts of legal representation, the tribunal shall be free to determine which party shall bear such costs.Principle 17.3 of the ALI/UNIDROIT Principles explicitly provides for award of costs in addition to thosepermitted under ordinary cost rules as a sanction for procedural misconduct. See generally, R. Kreidler,‘Perspectives on State Arbitration: the Future of BITs, the Practitioner’s Perspective’ in (2007) 23(1) Arb. Int’l43 at pp. 55–61; A. Redfern, ‘Interim Measures’ in Newman and Hill, supra n. 56 at p. 232 (noting that ‘aparty which fails to carry out the orders of the tribunal may well be sanctioned by being ordered to pay anylegal costs associated with its failure’).

130 N. Rubins, ‘The Allocation of Costs and Attorney’s Fees in Investor-State Arbitration’ in (2003) 18 ICSIDRev. –FILJ 109; G. Born, International Commercial Arbitration (2nd edn, 2001), p. 912; Reichert and Hope, supran. 125 (noting that ‘[t]he tribunal’s power to award costs is … a potent tool to ensure reasonable behaviourfrom the parties throughout the process’); J. Lew, L. Mistells and S. Kroll, Comparative International CommercialArbitration (Kluwer, 2003), pp. 652–653, 654 and authorities cited in nn. 155, 156; Y. Derians and E. Schwartz,A Guide to the ICC Rules of Arbitration (2nd edn, Kluwer, 2005), pp. 370–374; J. Gotanda, ‘Awarding Costs andAttorney’s Fees in International Commercial Arbitration’ in (1991) 21 Mich. JIL 1; H. Minnerop and K. Johns,‘Attorneys’ Fees in Arbitration’ in (2006) 61 Bus. Law 589.


Liberia’s procedural bad faith.131 Similarly, in the recent ICSID decision in VictorPey v. Chile, the tribunal ‘ordered Chile to pay three-quarters of the arbitrationcosts and US$2million of the claimant’s legal fees because it failed to cooperatewith the arbitration’.132 These cases suggest that misconduct may be taken intoaccount in the context of assessment of damages by the tribunal.

There is no absolute clarity (and this is worth more in-depth study) whether suchcosts sanctions have primarily a compensatory character, i.e. to compensate theaggrieved party for expenditures it would not have incurred had its opponentbehaved correctly, or also/rather a punitive character, i.e. to punish beyond damagescaused to the other party, also as a symbolic expression of the court’s disapproval.

In sum, it could be argued that, aside from interim measures of protection,monetary sanctions might also be used to ensure that parties to an investmentarbitration conduct themselves properly and play by the rules of the game ratherthan engage in inappropriate tactics such as witness intimidation in order to gaina procedural advantage over their opponents.

e

(e) Drawing Adverse Inferences

Another sanction which might be used by an arbitral tribunal to punish and/orprevent witness intimidation is drawing adverse inferences from such misconduct,thereby confirming the innocent party’s assertion or shifting the burden of proofto the wrongdoer. Apart from interim measures, the most frequently invokedprinciple is the power of arbitral tribunals to draw adverse inferences in case of aparty’s misconduct, e.g. non-compliance with discovery or other orders, concealmentof evidence, fraud and forgery, lies, etc. It allows a tribunal to subtly threatenadverse results for the misbehaving party without the tribunal having to take

131 Award of 31 March 1986, 2 ICSID Rep. 343 at 378. And in Amco Asia v. Indonesia [1993] 1 ICSID Rep. 389,and Himpurna v. Indonesia (2000) 25 ICCA YB Comm. Arb. 109, the tribunals found that the actions of theIndonesian courts in granting injunctions that sought to suspend the arbitral proceedings amounted to adenied of justice, and ordered Indonesia to compensate Amco.

132 Victor Pey v. Chile, Award of 22 April 2008, paras. 726–730 (summarised in 1 Investment Arbitration Reporter, 18May 2008, available at www.iareporter.com). In Thunderbird v. Mexico, the tribunal ordered the claimant topay three-quarters of the costs of arbitration including that of the respondent, not because of any misconductbut rather on the basis of the ‘loser pays’ principle. See also, SPP v. Egypt, Award of 20 May 1992; Methanex v.United States, Award of 3 August 2005; Telenor v. Hungary, Decision on Jurisdiction of 13 September 2006;MINE v. Guinea, Award of 6 January 1988 and ICC Award No. 6363 of 1991 involving the same parties inwhich the tribunal ordered the losing party to pay all of the winning party’s legal fees and 85 per cent of thearbitration costs. See Kreindler, supra n. 121); Gotanda, supra, n. 130 at pp. 42–43 and authorities cited inn. 187 therein. For an analysis of the practice of cost decisions, see Dolzer and Schreuer, supra n. 4 at pp. 276,277 and Professor Walde’s Separate Opinion, in Thunderbird v. Mexico, 133 et seq. concluding that prevailingpractice is that each party bears its own legal representation costs except in case of bad faith or highlyincompetent arbitration or exceptional circumstances.

In Karaha Bodas v. Pertamina, 30 April 2007 (US Dist. Lexis 317002), US$ 500,000 was ordered to be paidas ‘there should be a substantial penalty’; at issue was misrepresentation by one of the executives of therespondent; see Kensington v. Congo (SDNY 2007): intimidation of expert by law firm for respondent: ‘Courtsmay sanction parties, attorneys or law firms’, including ‘dismissing actions, assessing attorneys’ fees,imposing monetary penalties or fashioning other appropriate sanctions for conduct which abuses the judicialprocess’. In Lac Minerals [1990] FSR 441, it was recognised that monetary compensation can be awarded forbreach of attorney-client privilege.


more controversial measures such as exclusion or contempt of court. As noted above,most arbitration rules give the arbitral tribunal wide discretion as to how to conductproceedings: it may do so in whatever manner it deems appropriate, provided theparties are treated equally.133 Indeed, most arbitration rules and treaties are eithersilent or contain inadequate provisions on the taking and admissibility of evidence andon the burden and standard of proof required. These and other issues of procedureare usually decided by the tribunal, largely at its discretion. In some cases, theIBA Rules on the Taking of Evidence have been adopted to fill the gap and guidethe tribunal in conducting proceedings in an efficient and economical manner.134

Generally, as with any other form of judicial proceedings, parties to aninternational arbitration are required to present evidence in support of theirrespective positions and in rebuttal of that of their opponents.135 Hence, in orderfor the tribunal to find the truth and decide the dispute fairly, the parties arerequired to present all the relevant evidence. Sometimes the tribunal may requirethe parties to submit other relevant evidence, failing which the tribunal may drawits own conclusions or adverse inferences, should the refusal to produce theevidence be found to be unjustified.136 That is, when weighing the evidence and

133 See e.g., UNCITRAL Arbitration Rules, art. 15(1); LCIA Rules, art. 14.2; ICC Arbitration Rules, art. 21(3);AAA International Rules, art. 16; IBA Rules on Taking of Evidence, art. 8(1); P. Bernardini, ‘The Role of theInternational Arbitrator’ in Liber Amicorum Claude Reymond, Autour de l’arbitrate (LACR, 2004), p. 5 (noting that‘all institutional rules of arbitration recognise the arbitrator’s power in the parties silence to regulate theproceedings in the most appropriate manner as confirmed by a similar provision set by the rules ofprocedure prevailing at the arbitral seat. Such power is very large, the only practical limitation imposed bysuch rules and by applicable international conventions being the respect of due process’) (cited in Kurkelaand Snellman, supra n. 56 at p. 152; J. Lew, ‘Achieving the Dream: Autonomous Arbitrator’ in (2006) 22(2)Arb. Int’l 179 at pp. 194–196; S. Strong and D. Dries, ‘Witness Statement under the IBA Rules of Evidence:What to Do about Hearsay?’ in (2005) 21 Arb. Int’l 302 at pp. 304–305.

Indeed, in their preliminary Report on Revision of the UNCITRAL Rules, Paulsson and Petrochilosuggested adding a provision to art. 15 on the ground that: ‘It seems appropriate in light of modern practiceto include a general provision to the effect that the tribunal has a duty to take all steps necessary for anexpeditious and efficient resolution of the dispute, and issue appropriate directions to the parties. The partieswould have a corresponding duty to cooperate with (or among) each other and with the tribunal, includingby complying with its directions. Failure to do so would have costs consequences’. See ‘Revision of theUNCITRAL Arbitration Rules, A Report’ in TDM (September 2006).

134 Preamble, para. 1 to the IBA Rules on the Taking of Evidence in International Arbitration, 1999; A. Redfern,‘The Standards and Burden of Proof in International Arbitration’ in (1994) 10(3) Arb. Int’l 317 at p. 321;Strong and Dries, supra n. 133.

135 Redfern, supra n. 134 at p. 318.136 UNCITRAL Arbitration Rules, art. 24(3); art. 4(11) of the IBA Rules on the Taking of Evidence in

International Arbitration states that the tribunal may ‘order any party to provide, or to use its best efforts toprovide the appearance for testimony at an evidentiary hearing of any person’ failing which the tribunal mayuse art. 9(5) of the Rules to draw adverse inferences. This provision might be interpreted as authorising thetribunal to presume that the ‘content of requested document [or witness testimony] which has not beenproduced [or frustrated] is true as alleged by the requesting party’. See H. Raeschke-Kessler, ‘The Productionof Documents in International Arbitration: a Commentary on Article 3 of the New IBA Rules of Evidence’in (2002) 18(4) Arb. Int’l 411 at p. 425.; Redfern, supra n. 129 at p. 232 (noting that ‘if … a party refuses todisclose documents without reasonable excuse after being ordered to do so, the tribunal is likely to infer thatthe party has something to hide and so treat its future evidence with a degree of scepticism’). See also, ICSIDArbitration Rules, rule 34(3); Permanent Court of Arbitration Optional Rules for Arbitrating Disputesbetween Two Parties of which Only One is a State, art. 24(3); Principle 21.3 of the ALI/UNIDROITPrinciples. By agreeing to arbitrate under any of these rules (or similar rules), the parties agree to cooperatewith each other and the tribunal in implementing the rules. See T. Webster, ‘Obtaining Documents fromAdverse Parties in International Arbitration’ in (2001) 17(1) Arb. Int’l 41 at pp. 44–45, 57–58.


deciding the case, the tribunal will take into consideration the parties’ proceduralbehaviour.137 Witness intimidation by a party which caused a potential witnessnot to give evidence (in writing or orally) might be equated to blocking orfrustrating the production of evidence by the party. This is so because theintimidating party could be said to be in effective control of the witness whosetestimony is frustrated by the intimidation; more so where the intimidated witnessis under the influence of the offending party (e.g. in its employ or otherwisedependent on it for his or her survival or security). For as Graham noted, ‘threatsmade by a [party] respecting a specific hostile witness may imply that the partymaking the threat has something specific to hide. The desire to “cover up” in turnimplies a consciousness’ about the trustworthiness of the witness.138

Unlike domestic courts, international courts and tribunals have no police forceto compel witnesses’ appearance or compliance with their procedural orders.139

Thus, adverse inferences are the most effective sanction such judicial bodies haveagainst a recalcitrant party in the production of evidence.140 The power of aninternational court or tribunal to draw adverse inferences is widely accepted as ageneral principle of law. As the ICJ observed in the Corfu Channel case: ‘[t]hisindirect evidence is admitted in all systems of law, and its use is recognised byinternational decisions’.141

The main objective of drawing adverse inferences is to discourage non-compliance with tribunal orders on the production of evidence, as well as to ensurea fair hearing.142 Thus, an unjustified failure by a party to produce requestedevidence in its possession or control, or the obstruction of a witness’s testimony, isnot just a breach of the obligation to cooperate with the tribunal in finding thetruth. It also undermines due process since it impedes the other party’s ability topresent its case and/or defend itself against its opponent’s, for which access toevidence is critical.143 Drawing adverse inferences can therefore be considered anappropriate sanction against witness intimidation, since its effect is either that the

137 Kolb, supra n. 47 at pp. 825–827; A. Reiner, ‘Burden and General Standards of Proof ’ in (1994) 10(2) Arb.Int’l 328 at p. 338.

138 Graham, supra n. 19 at p. 179 (quoting United States v. Gonzales, 55 9 F.2d. 271 (5th Cir. 1977)).139 C. Amerasinghe, Evidence in International Litigation (Martinus Nijhoff, 2005), p. 130; Orakhelashvili, supra n. 73

at p. 35. Although a party to an international arbitration may apply to the courts at the seat of arbitrationfor assistance and the tribunal may also apply to foreign courts for assistance in compelling witnessappearance or production of documents, this is not an effective remedy. See Born, supra n. 16 at pp. 843–934;A. Rau, ‘Provisional Relief in Arbitration: How Things Stand in the United States’ in (2005) 22(1) JIA 1;Webster, supra n. 136 at pp. 50–58; M. Polkinghorne, The Withholding of Documentary Evidence inInternational Arbitration: Remedies for Dealing with Uncooperative Parties’ in 2(5) TDM (2005).

140 J. Sharpe, ‘Drawing Adverse Inferences from the Non-Production of Evidence’ in (2006) 22(4) Arb. Int’l 549at p. 551, n. 7 (quoting D. Sandifer, Evidence before International Tribunals (1975), p. 149).

141 Corfu Channel (United Kingdom v. Albania) (Merits) [1949] ICJ Rep. 18; see also, Comment P.17B on the ALI/UNIDROIT Principles (‘In all systems the court may draw adverse inferences from a party’s failure toadvance the proceedings or to respond as required’); Velasquez Rodriguez (1988), IACHR, Series C: Decisionsand Judgements No. 4, para. 130, available at http://dare.uva.nl/docment/124739 (cited in Amerasinghe,supra n. 139 at p. 223).

142 Sharpe, supra n. 140 at p. 550 (noting that ‘the very threat of adverse inferences can impel recalcitrant partiesto produce unfavourable evidence, thereby allowing their adversaries to make out their claims or defences.Adverse inference thus helps ensure the efficacy, as well the fairness of international arbitration’).

143 R. Pietrowski, ‘Evidence in International Arbitration’ in (2006) 2(3) Arb. Int’l 373 at p. 405 (quoting Prosecutorv. Blaskic); Polkinghorne, supra n. 139 at p. 3.


innocent party will be deemed to have discharged its burden of proof, or therewill be a shifting of the burden of proof onto the recalcitrant party. As the UnitedStates-Mexico Claims Commission observed in the Parker case:

While ordinarily it is incumbent upon the party who alleges a fact to introduce evidence toestablish it, yet before this Commission this rule does not relieve the respondent from itsobligation to lay before the Commission all evidence within its possession to establish the truth,whatever it may be … In any case where evidence which would probably influence [theCommission’s] decision is particularly within the knowledge of the claimant or of the respondentGovernment, the failure to produce it, unexplained, may be taken into account by theCommission in reaching a decision.144

Many other arbitral tribunals have affirmed this rule. For instance, in J.I. CaseCo. v. Iran, Judge Holtzmann drew adverse inferences from the respondent’sfailure to produce certain documents it was ordered to produce and to which ithad access. He quoted with approval the Parker case and held that:

The international law which governs situations such as this [withholding documents] is wellestablished. It makes clear that, while a party asserting a fact has the ultimate burden ofpersuading a tribunal of its truth, this does not mean that the opposing party has no duty tobring forward relevant evidence within its control.145

In the circumstances of the case, he was of the opinion that:

The evidence [submitted by the claimant was] sufficient to constitute prima facie proof of the factsalleged: ‘It does not create a moral certainty as to the truth of the allegation, but providessufficient ground for a reasonable belief in its truth, rebuttable by evidence to the contrary’.146

Similarly, in Riahi v. Iran, Judge Brower dissented from the majority decision onthe question of whether or not the claimant had discharged the burden of proofrequired of her, and held that the tribunal ought to have drawn adverseinferences from the respondent’s repeated failure to produce documents relevantto the claimant’s case. In his opinion:

The respondent has clearly and egregiously failed to produce the vast majority of [the]documents which the claimant believes would substantiate her claim – despite its obligation todo so … As a result of this failure, the Tribunal should have drawn inferences adverse to therespondent and assumed that the requested documents, if submitted, would have substantiatedthe claimant’s assertions.147

144 Parker (United States v. Mexico) (1926) 4 RIIA 35 at p. 39, available at www.un.org/law/riaa/; Corfu Channel,p. 22; Preah Vihear (Cambodia v. Thailand) (Merits) [1962] ICJ Rep. 33, available at www.icj-cij.org.

145 J.I. Case Co. v. Iran (1983) 3 Iran–USCTR 62 at pp. 66, 69 (Dissenting Opinion, Holtzmann).146 Ibid. pp. 71–72. see also, Comment P.21C on the ALI/UNIDROIT Principles.147 (2003) 37 Iran–USCTR 156 at p. 176.


After analysing the facts, he concluded that:

The respondent’s failure to comply with the Tribunal’s order to produce relevant … documentswithout providing sufficient explanation is inexcusable. Moreover, the respondent’sintransigence has directly impeded the claimant’s ability to make her case.148

In Feldman v. Mexico, the tribunal held that the claimant had made out a primafacie case that it had been treated less favourably than its Mexican competitors.Consequently, the burden of proof shifted to Mexico to rebut the presumption.The tribunal then drew inferences from the respondent’s failure to presentevidence on the discrimination issue and ruled against Mexico.149

In the context of witness intimidation, none of the illustrative cases highlightedabove (section II) addressed in depth adverse inferences as a possible sanction forwitness intimidation, for the simple reason that the issue was not seriouslycanvassed by the parties. Nonetheless, the tribunals in Enron and Sempra did notein passing the possibility of drawing adverse inferences should a party procure anunreasonable court injunction against a potential witness in order to gain alitigation advantage over its opponent. In both Enron and Sempra, the respondentobtained an Argentine court injunction restraining one of the claimants’ materialwitnesses from testifying in the cases on the grounds of his previous contractualrelationship with the Argentine government. Argentina also challenged theadmissibility of another witness’s testimony in the Sempra case on the allegedground of witness intimidation by the claimant. The tribunal dismissed bothchallenges, holding that the allegation of intimidation must be proven before theArgentine court which was seized of the matter. With regard to the admissibilityof the written statement of the enjoined witness, the tribunal stated that althoughit would not draw any inferences from Argentina’s action, it nevertheless held thewitness statement to be admissible and relied on it as corroborating otherevidence submitted by the claimant on the issue. Further, it observed that underArticles 21 and 22 of the ICSID Convention, all those directly involved in thecase, whether as parties, witnesses or counsel, enjoyed immunity from legal actionfor anything done in the course of the arbitration.150

148 Ibid. p. 201; American Housing v. Housing Cooperative Society (1984) 5 Iran–USCTR 235 at p. 245. For a fullerdiscussion of the Iran–United States Claims Tribunal jurisprudence on the subject, see Sharpe, supra n. 140;M. McCabe, ‘Arbitral Discovery and the Iran-U.S. Claims Tribunal Experience’ in (1986) 20 Int’l Law 499;Brower and Brueschke, supra n. 21; Amerasinghe, supra n. 139 at pp. 133–137 and 223–231.

149 Award of 16 December 2002, paras. 662 and 663. The decision was confirmed by the Ontario SupremeCourt on 3 December 2003 and the Ontario Court of Appeal on 11 January 2005 (all decisions are availableat: http://ita.law.univ.ca). In MINE v. Guinea, the tribunal warned MINE that its failure to comply with thetribunal’s order directing it to withdraw all national court proceedings would be taken into account in thefinal award. See Decision of 4 December 1986, referred to in Friedland, supra n. 97 at p. 346. In Fraport v.Philippines, whilst rejecting the respondent’s request for postponement of the case until access to certaindocuments had been decided by the German court (following an application filed by the claimant opposingaccess to the respondent), the tribunal warned the parties of its previous order to the effect that during theproceedings, it might draw adverse inferences from a party’s failure to comply voluntarily with a request toproduce relevant documents. Award of 16 August 2007, para. 18.

150 Sempra v. Argentina, Award of 28 September 2007, paras. 156, 158–160; Enron v. Argentina, Award of 22 May 2007,paras. 131–142.


These two cases suggest that where the tribunal is convinced that a courtinjunction obtained against a potential witness is unreasonable, it may drawadverse inferences to the effect that the party that procured it probably hadsomething to hide. This entitles the tribunal to shift the burden of proof to suchparty, provided the other party has made out a prima facie case. A similar principlewould probably apply if a party sought to tender or rely on evidence obtainedthrough coercion or fraud. The tribunal should reject such evidence (as was donein the Methanex and EDF cases respectively) or attach no probative value to itunless it is corroborated by other more credible evidence.151 It may also drawadverse inferences from such an act, which can have the effect of underminingthe credibility of the offending party’s case and probably confirming thetruthfulness of the other party’s assertion. This proposition is supported by theseparate opinion of Judge Fortier in Qatar v. Bahrain, in which the authenticity ofcertain documents submitted by Qatar was successfully challenged by Bahrain. Inexpressing his misgivings over the majority’s treatment of the issue, Judge Fortiernoted that in his opinion the ‘documents [had] “polluted” and “infected” thewhole of Qatar’s case’.152 Similarly, in Riahi v. Iran, Judge Brower, in a strongdissenting opinion, criticised the majority for relying on the evidence of twowitnesses whom he regarded as having been ‘coerced’ by the respondent intogiving evidence, noting that by ‘relying on such obviously coerced testimony, theTribunal allowed its own processes to be corrupted’.153

From the above analysis, it could be argued that just as with withholdingdocuments or submitting false evidence, a proven act of witness intimidation shouldgive rise to an inference that the testimony of the prospective witness would beadverse to the interests of the intimidating party, or that it is more likely than notto confirm or substantiate the other party’s assertion.154 The tribunal might bejustified in drawing such an inference on the grounds of the recalcitrant party’sbreach of the duty to cooperate in good faith with the tribunal to resolve thedispute and by the party seeking to thwart its opponent’s ability to present its case.

151 W. Reismann and E. Freedman, ‘The Plaintiff ’s Dilemma: Illegally Obtained Evidence and Admissibility inInternational Adjudication’ in (1982) 76 AJIL 737; contrast with H. Thirlway, ‘Dilemma or Chimera?Admissibility of Illegally Obtained Evidence in International Adjudication’ in (1984) 78 AJIL 622.

152 Maritime Delimitation and Territorial Questions between Qatar and Bahrain (Qatar v. Bahrain), Judgment of 16 March2001, ICJ Rep. 452, para. 4, available at www.icj-cij.org; M. Mendelson, ‘The Curious Case of Qatar v.Bahrain in the ICJ’ in (2001) 71 BYIL 183 at 200 (noting that ‘it would be surprising if this disturbing incidentdid not have at least some adverse effect on the way Qatar was perceived in the subsequent proceedings’);Hanotiau, supra n. 12 at p. 285; Pietrowski, supra n. 143 at p. 406. In the Genocide case, Bosnia urged the courtto order Yugoslavia to produce the full documents it had produced in a redacted form, failing which thecourt should draw adverse inferences. The court only acknowledged Bosnia’s request but it did not draw anyadverse inferences. See Bosnia v. Yugoslavia, Judgment of 26 February 2007 paras. 204–206.

153 (2003) 37 Iran–USCTR 165 (Dissenting Opinion, Brower). In Cherafat v. Iran (1992) 28 Iran–USCTR 216,the claimants sought unsuccessfully to reinstate their case which had been previously withdrawn on theground that the document authorising the withdrawal was procured through coercion. The tribunal heldthat the claimants had failed to establish a prima facie case of coercion.

154 Ibid. p. 175 (noting that the claimant’s ‘case is definitely established by inferences that the tribunal not onlywas permitted to make, but was required to make, given the respondent’s repeated refusal to produce keydocuments in the face of successive Tribunal Orders to do so’); see also, Concurring and Dissenting Opinion,Allison in Levitt v. Iran (1991) 27 Iran–USCTR 145 at pp. 187–188.


Furthermore, a party who intentionally failed to cooperate with the tribunal shouldnot be allowed to benefit from its own wrong to the detriment of the innocent party.As Judge Brower observed with respect to the respondent withholding relevantdocuments in the Riahi case: ‘The respondent’s unjustified non-production of [the]evidence cannot be, and should not have been, held against the Claimant’.155

To sum up, one of the most potent weapons or sanctions in ensuring compliancewith procedural obligations and specific orders by a party is the ability todetermine evidence in a way that is adverse to the non-complying party. It couldbe argued that this is particularly important for international courts and tribunalsbecause of the consensual nature of international arbitration, coupled with theabsence of coercive powers for the courts and tribunals to enforce their proceduralorders, especially against state parties. As with the withholding of documents orother evidence requested to be produced, a party who commits an egregious actof witness intimidation should be presumed to be hiding evidence which wouldcorroborate or confirm what the other party asserts on the specific issue.

f

( f) Moving the Seat of Arbitration to a Neutral Venue

As noted in section II, sometimes intimidation might be directed not at a witnessbut at the tribunal itself. An example is where a local court injunction is obtainedby a party directing the arbitral tribunal to suspend further proceedings pendinga determination by the court of a suit challenging either the jurisdiction of thearbitral tribunal or the arbitrability of the subject matter in dispute. In case offailure to abide by the court’s order, the tribunal risks being held in contempt ofcourt. Intimidation of arbitrators might, however, take a more nuanced or subtleform, such as through organised ‘social and media pressure due to the strongpolitical essence of the arbitration’,156 surveillance of the arbitrators by the hoststate’s security services, or through an orchestrated situation of insecurity directedat the arbitrators. When faced with such threatening situations, the best remedyavailable for the tribunal is probably to move the seat of the arbitration to aneutral venue without changing the legal seat of the arbitration. This is based onthe proposition that ‘[a]rbitrators may be justified as a matter of international lawto hold that the national court, as an instrumentality of a litigant is not entitled toinhibit the actions of the arbitrators’.157

155 (2003) 37 Iran–USCTR 201.156 Such concerns were expressed by City Orient in opposing holding future proceedings in Quito, Ecuador.

City Orient v. Ecuador, Decision on Revocation of Provisional Measures of 15 May 2008, para. 111.157 J. Paulsson, ‘Interference by National Courts’ in Newman and Hill, supra n. 56 at pp. 119, 131; M. Sherer,

‘The Place of “Seat of Arbitration” (Possibility and/or Sometimes Necessity of its Transfer?): Some Remarkson the Award in ICC Arbitration no. 10.623’ in (2003) 21(1) ASA Bull. (March) 119 (noting that ‘there is apanoply of possibilities available to an Arbitral Tribunal to stave off interference of the courts at the place ofarbitration, including holding hearings outside the agreed place, or disregarding injunctions from courtswhich would frustrate the parties’ commitment to arbitrate. In many instances, these remedies will suffice, asthe courageous award in ICC Arbitration no. 10.623 has shown. Sometimes however, a change of seatwould seem to be the only effective means to ensure that the parties’ legitimate expectations and commonintentions at the time they entered into the arbitration agreement are respected’ (quoted in Kurkela andSnellman, supra n. 56 at n. 7).


The authority of an arbitral tribunal to disregard the national court’s order insuch circumstances and proceed with the arbitration at a neutral venue isprovided for in most of the major arbitration rules and statutes. For instance,article 16(2) of the UNCITRAL Arbitration Rules states that ‘the arbitral tribunalmay determine the locale of the arbitration within the country agreed upon bythe parties. It may hear witnesses and hold meetings for consultation among its members at anyplace it deems appropriate, having regard to the circumstances of the arbitration’ (emphasisadded).158 This provision was relied upon by the tribunal in the Himpurna case asa basis for moving the venue of the proceedings from Indonesia to The Haguefollowing an injunction issued against it by an Indonesian court.159 The tribunalruled that the injunction violated the terms of appointment agreed to by Indonesiaand also amounted to a denial of justice.160 An attempt by the Indonesiangovernment to obtain an injunction from the District Court of The Hagueagainst the proceedings being conducted was rejected. The Court ruled that:

Article 16(2) of the [UNCITRAL] Rules explicitly allows the arbitral tribunal to hear witnessesand to hold meetings ‘at any place it deems appropriate’. This power is not limited by theUNCITRAL Rules or by the terms of appointment. Hence, we must conclude that the arbitraltribunal may decide that a hearing shall take place here in The Hague.161

Absent such an express provision in the constitutive instruments of an arbitraltribunal, it could nonetheless be argued that such a power may be implied fromeither the provision vesting in the tribunal a general power to conduct theproceedings in any manner it deems appropriate, or under the inherent powers ofthe tribunal as a judicial body charged with the duty to settle the dispute finally.Other considerations do, however, arise in such cases. Notwithstanding generalor inherent powers of an arbitral tribunal to disregard an arguably unlawful orunreasonable order of a local court and proceed with the arbitration at a neutralvenue, Professor Paulsson notes that in such circumstances practical facts of lifeshould be taken into consideration by the tribunal. These include the risk of theconsequent award not being recognised and/or enforced in the country whosecourt judgment is flouted by the arbitral tribunal (particularly if the respondent’sassets are located solely in the country), or where the arbitrator is a resident of the

158 See also, ICSID Convention, Arts. 62 and 63, together with ICSID Arbitration Rules, rule 13(3); City Orientev. Ecuador, Decision of 15 May 2008, paras. 109–118; ICC Rules, art. 14(2); LCIA, art.16.2 (‘the tribunalmay hold hearings, meetings and deliberations at any convenient geographical place in its discretion’);UNCITRAL Model Law, art. 20(2); WIPO, art. 39; Swiss International Arbitration Rules, art. 16(2);Stockholm Chamber of Commerce Arbitration Rules, art. 20(4); PCA Optional Rules, art. 16(2); CIETAC,art. 35.

159 Himpurna v. Indonesia (2000) 15 Mealey’s Int’l Arb. Rep. (February) A1. For an analysis of this aspect of thecase, see Paulsson, supra n. 157; Schwebel, supra n. 22. This section of the article derives a great deal from thecited papers by Paulsson and Schwebel respectively.

160 Schwebel, supra n. 22 at p. 5 (citing the Benteler ad hoc award, 18 November 1983, Benteler v. Etat Belge (1984)[Bel] J Trib. 230; (1989) Rev. Arb. 339.

161 Paulsson, supra n. 157 at p. 133 (quoting Order of the President of the Arrodissementsrechtbank, The Hagueof 21 September 1999, XXV ICCA YB).


enjoining court’s country and risks being held in contempt.162 These practicalfacts of life lead us to agree with Paulsson’s conclusion to the effect that ‘there arecircumstances when a foreign court may not be safely ignored by internationalarbitrators, and other circumstances when it is appropriate not to acceptsubservience even to the courts at the place of arbitration’.163 An arbitral tribunalwhich has moved the seat of the arbitration to a ‘neutral’ venue and stillencounters problems in getting a party or its witnesses to attend (e.g. if they wererefused an exit permit to leave the country by the host state on ‘national security’grounds), might conduct the hearings using modern technology such as video-conferences, assuming such can be arranged and safely conducted.164

But what should an arbitral tribunal do if the intimidation or misconduct is byone of its own members, perhaps against another member of the tribunal? Insuch a situation, the party who is prejudiced or likely to be prejudiced by themisconduct of the arbitrator may challenge the continued participation of suchan arbitrator under the relevant rules of the tribunal on independence andimpartiality.165 An arbitrator who intimidates another member of the tribunalcould be said to have ceased to remain impartial and therefore exposes him-or herself to challenge by the aggrieved party.166 Where the intimidation ormisconduct took place behind closed doors, the other arbitrators are under a dutyto ‘raise the issue with [the member concerned] and if the facts are established,put him on notice to put an end to the misconduct, and report to the institutionto allow it to take the measure which on the basis of its rules, appearsappropriate’.167 This suggests that the authority of the arbitral tribunal to

162 Paulsson, supra n. 157 at pp. 135–137.163 Ibid. p. 147.164 K. Bockstiegel, ‘Perspectives of Future Developments in International Arbitration’ in Newman and Hill,

supra n. 56 at pp. 821 at 831; Kurkela and Snellman, supra n. 56 at p. 145. However, aside from the technicalproblems (e.g. poor quality of the video or audio) that might be encountered by the tribunal in using moderntechnology, there is also a heightened risk of perjury and contempt by the witness. See M. Davies, ‘Bypassingthe Hague Evidence Convention: Private International Law Implications of the Use of Video and AudioConferencing Technology in Transnational Litigation’ in (2007) 55 Am. J Comp. L 2005.

165 Most arbitration rules, statutes and treaties require all arbitrators to be impartial and independent of thedisputing parties and not to act in the arbitration as advocates for any party. A proven case of partiality orprobability of it happening is one of the grounds for challenging an arbitrator: UNCITRAL Rules, art. 10;LCIA Rules, art. 5.2; UNCITRAL Model Law, art. 12(2); ICC Rules, arts. 7(1) and 11; WIPO Rules, arts.22 and 24; ICSID Rules, rule 6 and ICSID Convention, Art. 52(1)(d); PCA Optional Rules, art. 10;Principle 1 of the ALI/UNIDROIT Principles; rule 1 and General Principle 1 of the IBA Guidelines onConflict of Interests in International Arbitration. See L. Malintoppi, ‘Independence, Impartiality, and Dutyof Disclosure of Arbitrators’ in Muchlinski, Ortino and Schreuer, supra n. 3 at p. 789; A. Shephard,‘Arbitrator Independence in ICSID Arbitration’ in C. Binder, U. Kriebaum, A. Reinisch and S. Wittich(eds.), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (OUP, 2009), p. 131.

166 After the attack on one of the neutral arbitrators of the Iran-United States Claims Tribunal by two Iranianarbitrators in 1984, the US government sought to disqualify the two arbitrators on the ground that theirconduct showed their bias against US claimants. But before the Appointing Authority reached a decision onthe complaint, the two arbitrators were replaced by Iran. See Brower and Brueschke, supra n. 21 at pp. 169–171; Toope, supra n. 21 at pp. 358–359. Under most arbitration rules, the decision of the other arbitrators orappointing authority/institution on such a challenge is final, while under others (e.g. UNCITRAL ModelLaw, art. 13(3)) an appeal might be made to a court of the place of arbitration, whose decision is final.

167 Hanotiau, supra n. 12 at pp. 286–287.


sanction misbehaviour is not limited to the disputing parties but extends to amember of the tribunal. However, a more potent sanction against arbitratormisconduct is the risk of being blacklisted by the arbitration institutions andcommunity.168

It might be argued, then, that moving the seat of the arbitration to a neutralvenue is another remedy available to an arbitral tribunal whose integrity isthreatened by illegitimate local court interference with its proceedings.

g

(g) Dismissal of Claim or Counterclaim

In the face of an extreme or repeated act of intimidation or misconduct by aparty, the arbitral tribunal may, if requested by the aggrieved party, dismiss thewrongdoer’s claim or counterclaim in whole or in part for lack of cooperation,without hearing the merits of the issue. This sanction might seem to run counterto the principle of due process and fair hearing; nonetheless, it can be defendedon the equitable principle that a party should not be allowed to ‘take advantageof its wrong to defeat the right of the other party’,169 as well as on policy grounds,especially the need to defend the integrity and fairness of the arbitral process.170

Although such a sanction is explicitly provided for in some domestic courts andarbitration laws, it is rarely resorted to because it is regarded as ‘draconian’,‘severe’ or ‘too drastic’.171 But arguably, it is appropriate as a possible sanction(and deterrent) where lesser measures have failed to work. Further, there areauthorities for full or partial exclusion (of counsel, party representatives or even a

168 For instance, under the newly amended art. 7bis of the Cairo Regional Centre for International CommercialArbitration Rules, the Centre may, upon the approval of the High Legal Committee, reject the appointmentof an arbitrator chosen to decide the case, if it is confirmed that he has not acted in compliance with theCentre’s Code of Ethics in any previous matter. The Rules are available at www.crcica.org/link.html.

169 Schwebel, supra n. 22 at p. 6. On this point, one might draw an analogy from the position in US criminal lawwhich states that a defendant who causes the non-appearance of a witness through intimidation loses theconstitutional right to confront or cross-examine the witness on grounds of equity and honesty. See Crawfordv. Washington, 541 U.S. 36 (2004), in which the US Supreme Court held that ‘the rule of forfeiture bywrongdoing (which we accept) extinguishes confrontation claims on essentially equitable grounds’. Ibid. p. 62(citing Reynolds v. United States, 98 U.S. 145, 158–59 (1878)); Comparet-Cassani, supra n. 20 at pp. 1219–1223 and 1230–1233; J. Flanagan, ‘Confrontation, Equity, and the Misnamed Exception for Forfeiture byWrongdoing’ in (2006) 14 Wm and Mary Bill of Rights J 1193; Graham, supra n. 19 at pp. 174–181; J. Deahl,‘Expanding Forfeiture Without Sacrificing Confrontation after Crawford’ in (2006) 104 Mich. L Rev. 599.

170 Hanotiau, supra n. 12 at p. 286; Redfern, supra n. 134.171 Under US Federal Rules of Civil Procedure, rule 37(b), if a defendant fails to respond to a discovery order,

the court may impose sanctions against him, which include among others: ‘(C) [an] order striking outpleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action orproceeding or part thereof, or rendering a judgment by default against the disobedient party’ (emphasis added ). SeeS. Murphy, ‘The Use of Rule 37(b) Sanctions to Enforce Jurisdictional Discovery’ in (1982) 50 Fordham L Rev.814 at pp. 843–845; McCabe, supra n. 148 at p. 532. Under English Arbitration Act 1996, s. 41(7), failure tocomply with any kind of peremptory order of the arbitral tribunal, other than for security of costs, gives thetribunal a discretion to impose a number of sanctions, including drawing adverse inferences and precludingthe disobedient party from relying on any allegation or material which was the subject matter of the order.However, according to Russell, ‘[these] remedies do not include the power to proceed immediately to anaward against the defaulting party as this was considered too draconian, but nevertheless they provide thetribunal with powers to impose sanctions as appropriate’. See Russell on Arbitration (Sweet and Maxwell,London, 1997), paras. 5-207–5-209.


party) for serious misconduct before a tribunal or court.172 Can exclusion of aparty – the most extensive sanction available – lead to a ‘default judgment’, i.e. ajudgment based on the submission by the claimant? There is no authorityavailable for a default judgment even in a case of one party’s seriousmisconduct.173 However, if a party were to be excluded for grave misconduct,precedent rather suggests that the procedure applied in the case of a non-appearing party would be followed.174 None of the principal arbitration rules,statutes or treaties explicitly provide for such a sanction, possibly because of itsseverity and the belief that the consensual nature of arbitration would restrict theneed to impose such a sanction. To the best of our knowledge, no arbitral tribunalhas resorted to such a sanction even in the face of repeated non-compliance withits orders. Instead, the tribunals have preferred to make use of less drasticsanctions, such as adverse inferences or awards of costs against the recalcitrantparty. For instance, in Levitt v. Iran, following repeated refusal by the respondentsto produce certain documents, the claimant requested the tribunal to enterdefault judgment in its favour on the ground that the respondents’ failure made itdifficult for the claimant to prove its claim. To do otherwise, the claimant argued,would work gross injustice as it would have allowed the respondents to profit fromtheir flagrant violation of the tribunal’s orders. While acknowledging theindefensible or unjustified refusal by the respondents to comply with the tribunal’sorders, the tribunal rejected the claimant’s request for default judgment. Instead,it drew adverse inferences from the respondents’ conduct when weighing theevidence and compensated the claimant for its extra costs.175

Similarly, in Libananco v. Turkey, the claimant initially sought an exclusion of therespondent from the rest of the proceedings as a punishment for its alleged

172 In European Gas Turbines (1994) Rev. Arb. 359, an ICC award was annulled by the Paris Court of Appeal on theground that the respondent had submitted a fraudulent report of expenses to the arbitral tribunal. The courtapplied the principle of fraus omnia corrumpit (Arrow case (2000) CP Rep. 59): ‘Where a litigant’s conduct putsthe fairness of the trial in jeopardy … the court is entitled – indeed, I would hold bound – to refuse to allowthat litigant to take further part in the proceedings and (where appropriate) to determine the proceedingsagainst him’. Logicrose [1998] EGCS 114: a party should be prevented from continuing to litigate where hisconduct made a fair trial of the action impossible: ‘The deliberate and successful suppression of a materialdocument is a serious abuse of the process of the court and may well merit the exclusion of the offender fromall other participation in the trial. The reason is that it makes the fair trial of the action impossible to achieveand any judgment in favour of the offender unsafe’. Even if the document is produced, the offender still maybe excluded from the proceedings ‘if it were no longer possible to remedy the consequences of thedocument’s suppression despite its production’. Waste Management (No. 2), para. 49, left open the possibilitythat the court had the power to dismiss a claim on this basis ‘for the purpose of protecting the integrity of thetribunal’s processes or dealing with genuinely vexatious claims’. That principle applies equally torespondents as to claimants, but it is of little use to a claimant except in cases where the claimant considersit better to be able to restart the case (at considerable loss of money and time) with a ‘fresh slate’.

173 That might be due to the severity of the sanction and the due process issues it raises.174 Cf. Bogdanov v. Moldova and comment by G. Cordero Moss, ‘Tribunal’s Initiative or Party Autonomy’ in TDM

(2007).175 (1991) 27 Iran–USCTR 145, paras. 65–66 and 126. In fact, even the American member of the tribunal who

was sympathetic to the claimant’s case and dissented from the majority’s award, did not accede to theclaimant’s request. Instead, he was of the opinion that the tribunal should have taken a firmer position withregard to the respondents’ failure to comply with the tribunal orders and awarded more costs against therespondents. Ibid. para. 16 (Concurring and Dissenting Opinion, Allison).


wrongful use of information obtained through court-ordered surveillance ofthe claimant’s counsel and potential witnesses. In view of the extreme nature ofthe request, the claimant later refined its request to that for the exclusion of therespondent from the jurisdictional stage i.e. for the tribunal to rule thatjurisdiction was presumed by virtue of the respondent’s alleged misconduct.Whilst the tribunal acknowledged the serious nature of the allegation, it held thatthe claimant did not prove that it had suffered any prejudice that would warrantthe tribunal to issue such an ‘extreme form of relief ’ at such a stage of theproceedings.176 However, the tribunal was quick to emphasise that ‘irrespective ofwhether the Tribunal is or is not endowed with powers as far-reaching asLibananco wishes it to assert, Libananco’s entitlement to future protection for itsagents, counsel and witnesses is clearly not conditional on proof that it hasactually been prejudiced in the conduct of its case’. And further that ‘[i]f as thearbitration progresses, it turns out that the respondent has used, in any way,privileged or confidential information obtained during the surveillance, theclaimant will be at liberty to bring an appropriate application to the tribunal … If thatevent arises, the tribunal may consider other remedies available apart from the exclusionof improperly obtained evidence or information’ (emphasis added).177

This suggests that the tribunal did not rule out the possibility of granting theremedy of summary judgment, as one of the possible remedies it might considerif any party is found to be in serious violation of rules of procedure such as thosealleged in the instant case. Therefore, notwithstanding these decisions it might beargued that where the wrongful act is egregious (e.g. the intimidation caused avital witness to refuse to give testimony or counsel to withdraw from the casethrough a genuine and reasonable fear for their safety) and/or the non-compliance with the tribunal orders is repeated, default judgment against theoffending party might be warranted. The legal basis for such a decision would bethe protection of the rights of the other party, promotion of an efficient andeffective arbitration, and preservation of the integrity of the arbitral tribunal andprocesses.178 Such a severe sanction might also be justified on the ground that it wouldserve as deterrence to others who may be tempted to act in the same manner.179

As we noted above, the power of an arbitral tribunal to proceed with thearbitration and issue a default award in the face of a party’s wilful non-participation in the arbitration is not in doubt. Whether or not one might drawan analogy from this rule to argue for equating witness intimidation withconstructive or tacit non-participation in the arbitral proceedings is debatable.180

V

176 Libananco v. Turkey, para. 80.177 Ibid. para. 80. See also, para. 81.178 Murphy, supra n. 171 at pp. 834–835. In the context of international criminal law, some commentators have

argued for dismissal of the charge against an accused as a sanction against witness intimidation by stateparties to the International Criminal Court Statute. See Marx, supra n. 35.

179 Here, one may draw analogy from the reasoning of the Appeals Chamber in Prosecutor v. Tadic, Judgment of31 January 2000, para. 168.

180 See e.g., ICSID Arbitration, rule 42; PCA Optional Rules, art. 28(2); Principle 15 of the ALI/UNIDROITPrinciples.


V. CONCLUSION

In this article, we have highlighted the increasing use of arbitration as thepreferred method of settling investment disputes and the probable rise ofinvestment arbitration in the years to come. This arises as a consequence of the‘boom’ in investment treaties, coupled with increasing familiarity with theinvestor-state arbitration process by foreign investors and their legal advisers.Concomitant with the rise in investment arbitration is the potentially increasingsophistication of the parties in devising and adopting unscrupulous tactics, such aswitness or arbitrator intimidation, to gain a litigation advantage over theiropponents. The complex political, social and cultural issues involved in some ofthese cases, as well as the amount of money at stake, raises the profile of suchdisputes and with this, invariably, comes the zeal or desire of the parties to resortto tactics such as witness intimidation to gain litigation advantage over theiropponents. The gap that exists in most arbitration rules and statutes with respectto specific non-cooperative acts such as witness or arbitrator intimidation mightpose a serious procedural challenge to arbitral tribunals. However, we haveargued that the use of intimidation as a tactic in international investmentarbitration is a breach not only of the agreement to arbitrate but also of theobligation to cooperate with the tribunal in resolving the dispute. Such a breachnot only impedes the principle of due process but also undermines the integrity ofthe tribunal and puts in jeopardy the rule-based investor-state dispute settlementwhich forms an important means of achieving the object and purpose ofinvestment treaties – the promotion and protection of investment. The mainobject and purpose of the investor-state dispute settlement provisions of moderninvestment treaties, as well as the ICSID Convention, is to promote the peacefulsettlement of investment disputes based on the rule of law rather than on politicalconsiderations. A functional (rather than literal or formalistic) interpretation ofsuch provisions would suggest that they were meant to provide an effective meansof resolving disputes at times when they are most needed, i.e. when disputeshave arisen. To allow a party to render such provisions ineffectual throughintimidation of another party, witness or counsel, or through other dilatory tactics,would amount to defeating the object and purpose of the treaty.

Although the constitutive instruments of an arbitral tribunal might be silent onthe powers of the tribunal to impose sanctions, and although the tribunal lackscoercive powers to enforce its procedural orders against a party that engages inwitness intimidation or similar misdeeds, nonetheless, it can rely on its inherentpowers as a judicial body to ‘punish’ such misbehaviour. The weapons availableto the tribunal to stamp its authority over the disputing parties and protect itsprocedural integrity include issuing interim measures of protection, making costsawards, drawing adverse inferences, moving the seat of the proceedings and,possibly, entering a default judgment.