• ICAR


- By Abhilasha Vij

Keywords: arbitration, ISDS, investor rights, lex arbitri, bilateral investment treaty, kompetenz-kompetenz

Anti-arbitration injunction, in the context of investor-state dispute settlement (ISDS), puts an embargo on the treaty-based expectations of resolution of disputes between the investors and the state. [1] In the case of investment arbitration under the ICSID Convention [2], an anti-arbitration injunction would place the state in clear breach of Article 26 of the Convention which provides that consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy.’ Therefore, once the parties have consented to an ICSID arbitration, they lose the right to avail themselves of other forums, international or national.[3] Moreover, the exclusion of other forums is further consecrated by incorporation of the principle of kompetenz–kompetenz under Article 41(1) of the ICSID Convention,[4] which empowers the tribunal to be the judge of its competence or jurisdiction. Going by the rationale, underlying Article 26 read with Article 41(1), an attempt to block an ICSID arbitration may well violate that state’s obligations under the convention.[5] Besides, the ISDS process under a Bilateral Investment Treaty (BIT) would be undermined if the investor was required to exhaust remedies in domestic courts before proceeding to international arbitration.[6]

In Attorney-General v. Mobil Oil NZ Ltd,[7] when the New Zealand government instituted parallel proceedings before its domestic courts to obtain an interim injunction seeking to restrain Mobil Oil from continuing the proceedings before ICSID,[8] the New Zealand High Court stayed the proceedings until the ICSID Tribunal had decided on its jurisdiction. This outcome is in line with the requirements of Article 26 of the ICSID Convention. Similarly, in MINE v. Guinea, the Swiss Federal Tribunal acknowledged the exclusivity of ICSID proceedings under Article 26 of the ICSID Convention.[9] However, the domestic courts do not always pay deference to Article 26 of the ICSID Convention in this fashion.[10] In SGS v. Pakistan,[11] the Government of Pakistan requested an order from its courts enjoining SGS to suspend the ICSID arbitration, on the basis of the arbitration agreement contained in the underlying contract providing for local arbitration.[12] The Supreme Court of Pakistan granted this request. Nonetheless, the tribunal found that the anti-arbitration injunction issued by the Supreme Court of Pakistan, ‘as a matter of international law, does not in any way bind this Tribunal.’The tribunal asserted that it had a duty to protect the rightof access to international adjudication ‘for the proper operation of both the BIT and the ICSID convention’.[13]

These are instances of states that are signatories to the ICSID Convention. As of April 2019, only 154 states have signed and ratified the ICSID Convention.[14] When a state is not a signatory to the ICSID Convention, nothing restrains it from approaching the national courts to seek an injunctive relief to enjoin an investor-state arbitration (unless anything to the contrary is provided under the Bilateral Investment Treaty). The common law courts, especially, are unlikely to deny themselves the ability to enjoin investor-state arbitration. The courts usually derive the authority to issue anti-arbitration injunctions in ISDS from the proposition that the domestic courts inherently retain the jurisdiction to restrict the initiation of international treaty arbitrations which are oppressive or vexatious or cause severe prejudice to the legal process.[15] This is irrespective of the fact that conferring the national courts with such an expansive power to interfere with ISDS amounts to denying the arbitral tribunal the competence to rule on its jurisdiction.

This arrogation of authority by domestic courts has been seen in many instances. In British Caribbean Bank Ltd v. The Government of Belize,[16] the Caribbean Court of Justice (CCJ) addressed the issue of whether courts may grant an injunction restraining arbitral proceedings under a BIT.The CCJ upheld the right of the British Caribbean Bank to arbitrate founded on the reasoning that the effect of the BIT was to ‘oust the jurisdiction of the domestic courts to submit such disputes to the selected international arbitration tribunal.’However, despite recognizing the relevance of upholding the rights of the investors under the BIT, CCJ held that the Belizean courts, like other common law courts of unlimited jurisdiction, had the ability to restrict or enjoin parallel proceedings on the grounds that they are either vexatious or oppressive.[17] While the CCJ noted that this power was subject to a high threshold and was to be exercised under the rarest of circumstances, it upheld the limited yet undeniable authority to issue anti-arbitration injunctions in ISDS.

Similarly, Indian Courts have opined in the cases of Vodafone[18] and Khaitan Holdings [19] that interference by domestic courts in arbitral proceedings commenced under BITs is permissible, albeit in “compelling circumstances.” The courts, while denying the applicability of the Arbitration and Conciliation Act, 1996 to arbitral proceedings under BITs, assumed personal jurisdiction over the defendant under its inherent power. They also pointed out that India has not ratified the ICSID Convention because it negates the role of domestic courts. The courts have therefore indicated that they are not hesitant in interfering with the investment arbitrations initiated under BITs.

This trend of assuming jurisdiction to issue anti-arbitration injunction calls for an intervention of the domestic courts to limit the availability of anti-arbitration injunctions to truly extreme situations. Non-signatories to the ICSID Convention cannot be bound by the fetters imposed by Article 26 read with Article 41 (1) of the Convention. However, as the doctrine of kompetenz-kompetenz finds recognition under the UNCITRAL Model Rules as well as many institutional rules, it cannot be refuted that the issue of arbitral jurisdiction would be better addressed at the first instance by the arbitral tribunal itself, rather than a court. The excessive intervention of national courts renders wasteful the ISDS mechanism.It cannot be overlooked that a national court may be inclined to protect its government. A party may also abuse anti-arbitration injunctions to delay the arbitral proceedings against it. Therefore, court interference slows the process, makes it more expensive, and can tilt the playing field if a party turns to its own national courts for support in an arbitrable dispute.[20] There is also a possibility that the tribunal finds that the injunction has no effect on the exercise of its jurisdiction, and the injunction would fail anyway, like in the case of SGS v. Pakistan. Moreover, in non-ICSID investment arbitrations, domestic courts of state parties to the New York Convention[21] have a duty to decline jurisdiction, in accordance with Article II, para. 3, of the convention, which provides that ‘the court of a Contracting State, when seized of an action in a matter in respect of which the parties have made a [valid arbitration] agreement, shall, at the request of one of the parties, refer the parties to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed.’[22]

A state’s obligations under a BIT are founded on principles of comity. The international law instrument of BIT was developed to remedy the vulnerability of the foreign investor and ameliorate the conditions of their investments and the success of the treaty regime depends upon the acceptance and fulfilment by the host state of the legal obligations imposed by the treaty.[23] Where a party requests a national court for an anti-arbitration injunction to prevent an arbitration, it may be said to fail to honour its obligations under international law. The assumption of authority by the domestic courts of the host state to issue anti-arbitration injunctions contradicts the very purpose of the BITs – to allow foreign investors to challenge those sovereign acts of the host State that allegedly breach the BIT before an autonomous tribunal.

Although the jurisdiction of domestic courts in non-ICSID arbitrations will depend on any specific international investment arbitration provision, the lex arbitri, or the applicable arbitration rules,[24] however, even non-signatories to the ICSID Convention must show restraint in pursuing such remedies. A court’s self-restraint is the proper response in all circumstances to the parties’ attempt to bypass the arbitration agreement through an abusive recourse to the local courts.[25]

Abhilasha Vij is an international disputes attorney from India who holds an LLM in International Economic Law, Business and Policy from Stanford Law School.

Preferred Method of Citation- Abhilasha Vij ‘The Notorious Case Of Anti-Arbitration Injunction In Investor-State Dispute Settlement’ (15 August 2020, ICAR)<>.


[1] S. I. Strong, ‘Anti-Arbitration Injunctions in Cases Involving Investor-State Arbitration: British Caribbean Bank Ltd. v. the Government of Belize’[2014] 15 Journal of World Investment and Trade 324<> accessed 8 August 2020.

[2] Convention on the Settlement of Investment Disputes between States and Nationals of Other States, Mar. 18, 1965, 17 U.S.T. 1270, 575 U.N.T.S. 159<>accessed 8 August 2020.

[3] August Reinisch,‘Dispute Settlement: Selecting an appropriate forum’(United Nations Conference on Trade and Development)<> accessed 9 August 2020.

[4] Article 41 of the ICSID Convention, “(1) The Tribunal shall be the judge of its own competence.”

[5] Christoph H. Schreuer, et al., The ICSID Convention: A Commentary, (Cambridge University Press), Page 393.

[6] [2013] CCJ 4.

[7] Attorney-General v. Mobil Oil NZ Ltd., High Court, Wellington, 1 July 1987, 4 ICSID Reports 117.

[8] Reinisch(n iii).

[9] Maritime International Nominees Establishment (MINE) v. Republic of Guinea, ASA Bulletin (1987) 26.

[10] Gabrielle Kaufmann-Kohler and Michele Potestà, ‘The Interplay Between Investor-State Arbitration and Domestic Courts in the Existing IIA Framework. In: Investor-State Dispute Settlement and National Courts’(European Yearbook of International Economic Law, Springer, Cham. 30 June 2020)<> accessed on 9 August 2020.

[11] SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Procedural Order No. (2 October 16, 2002).

[12] Loukas A Mistelis and Julian D M Lew, ‘Pervasive Problems In International Arbitration’<>accessed 14 June 2020.

[13] SGS(n xi).

[14] List of Contracting States And Other Signatories Of The Convention (as of April 12, 2019)<> accessed 14 June 2020.

[15] Anti-arbitration injunctions: use and controversy’ <> accessed 8 August 2020.

[16] British Caribbean (n vi).

[17] ‘The Caribbean Court of Justice Imposes Limits on Anti-Arbitration Injunctions’(Debevoise& Plimpton LLPArbitrationquarterlyIssue No 3 - September 2013)<> accessed 8 August 2020.

[18] Union of India v. Vodafone Grp. Plc U.K. &Anr., CS(OS) 383/2017 & I.A.No.9460/2017 (May 7, 2018).

[19] Union of India v. Khaitan Holdings (Mauritius) Limited &Ors, CS (OS) 46/2019 I.As. 1235/2019 & 1238/2019 (January 29, 2019).

[20] Ting Wei Chiang,‘Anti-Arbitration Injunctions in Investment Arbitration: Lessons Learnt from the India v. Vodafone case’, 11(2) CONTEMP. ASIA ARB. J. 251 (2018).

[21] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958)<> accessed 9 August 2020.

[22] Kaufmann-Kohler and Potestà (n x).

[23] British Caribbean (n vi).

[24] Kaufmann-Kohler and Potestà (n x).

[25] Mistelis and Lew (n xii).

The views and opinions expressed in the article are those of the author(s) solely and do not reflect the of official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.


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