CYIL vol. 10 (2019)

MARTINA POHANKOVÁ CYIL 10 ȍ2019Ȏ Still, one must bear in mind that, even in such a case, the respondent must still comply with the applicable procedural rules that will limit the possibility of revoking the clause within the time limit for presenting objections to jurisdiction. 40 A problem of timeliness also arises if the denial is drafted as automatic, as for example in the aforementioned Slovakia–Iran BIT. In this case, the parties included the rule according to which the rights should be denied if the preconditions for the denial are fulfilled at the time when the claim is submitted to arbitration. 41 3.1.3 Notification and consultation A handful of treaties demand that the state first notifies and consults the other contracting party, i.e. the home state of the investor, before invoking the denial of benefits. None of the analysed treaties contained any specification as to the moment or manner in which such notification should be made. In some cases, it is not even entirely clear who is to be notified – most of the treaties expressly subject the denial to “notification or consultation with the other party” , 42 whereas other treaties read merely “subject to prior notification and consultation, a Party may deny […] ”. 43 Finally, in some of the clauses, the contracting parties tried to simplify the need for notification turning it into softer instruments of non-binding nature. The Korea–Turkey FTA states that “ [t] he denying party shall, to the extent practicable, notify the other Party before denying the benefits. If the denying Party provides such notice, it shall consult with the other Party at the request of the other Party.” 44 However, this provision is drafted in an unfortunate way as it is not at all apparent in what situation the notice would seem not practicable and what the consequences are thereof. The Emirates–Mexico BIT even demands agreement of the home and host states on the application of the denial requiring that “ [t] he Contracting Parties may decide jointly in consultation to deny the benefits of this Agreement to an enterprise of the other Contracting Party and to its investments, if a natural person or enterprise of a non-Contracting Party owns or controls such enterprise.” 45 3.1.4 Protection against the treaty shopping of domestic nationals Astonishingly, what many contracting parties forget is to secure the extension of the protection provided by the denial of benefits clauses against investors controlled by its own citizens. I believe that this must be a result of the lack of attention during the stipulation of the agreement. There is no logical explanation for leaving out investors under the control of the host state. A clause with such gap is then construed as follows: “ [a] Contracting party may deny the benefits of this Agreement to an investor of the other Contracting party and to its investments, if investor of a Non-Contracting Party own or control the first mentioned investor and that investor has no substantial business activity in the territory of the Contracting party under whose laws it is constituted or organised.” 46 40 See e.g. ICSID Rules on Procedure, Rule 29(1). 41 Slovakia–Iran BIT, Article 8(3). 42 e.g. ASEAN–India Agreement on Investment, Article 13 (2). 43 Nigeria–Singapore BIT, Article 26. 44 Korea – Turkey FTA, Article 1.15 (2), similarly Rwanda–Turkey BIT, Article 11 (2). 45 See UAE–Mexico BIT, Article 30. 46 Australia–Kyrgyzstan BIT, Article 12.

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