Decision on Jurisdiction and Competence of July 6, 1975, 4 Yearbook Commercial Arbitration (Y.B. Com. Arb.) 206 (1979) (excerpts).
INTERNATIONAL CENTRE FOR SETTLEMENT
OF INVESTMENT DISPUTES (ICSID)
1. PRELIMINARY AWARD MADE IN 1975
Arbitrators: Prof. Elihu Lauterpacht (U.K.), who was replaced after resignation by M.
Justice Michael Kerr (U.K.); Dr. Fuad Rouhani (Iran); Dr. Jgrgen Trolle (Denmark).
Parties: Claimant: Alcoa Minerals of Jamaica, Inc. (U.S.A.)
Respondent: Government of Jamaica
Published in: By virtue of Art. 48, para. 5, of the Washington Convention of 1965,
ICSID is not allowed to publish awards without consent of the partes. In the absence of
such consent of the parties in the present case, the following extract is solely based on,
and for its major part literally taken from, the article written by Schmidt, J., Arbitration
Under the Auspices of tlie Internationol Centre for Settlement of lnvesfnient Disputes
(ICSID): I~nplications of the Decisiori on Jlrrisdiction ill Alcoa Minerals of Jamaica.
Inc. v. Government of Jamaica, 17 Harvard International Law Journal pp. 90-109 (1976).
Subject matter: - jurisdiction ICSID
- investment
- withdrawal by State of classes of investment disputes after agreement
to arbitrate
Facts
In an agreement concluded in 1968 for a term of 25 years, Alcoa agreed with Jamaica
that it would construct an alumina refining plant in Jamaica. Under the agreement,
Jamaica would grant Alcoa long-term concessions for the mining of bauxite in
Jamaica. The agreement contained a 'no further tax' clause according to which Jamaica
would not impose on Alcoa's mining and refining operations any further, or other, taxes
than those specifically provided in the agreement. The agreement also contained an
arbitration clause referring to arbitration under ICSID any dispute arising under the
agreement which the parties failed to settle amicably.
After Alcoa had constructed the alumina plant and had begun the mining of bauxite,
Jamaica announced in 1974 that the taxes on the mining of bauxite were to be increased.
When the subsequent negotiations with the mining companies did not result in an
agreement on the amount of the increase Jamaica enacted the Bauxite (Production Levy)
Act of 1974 by which the taxes to be paid by Alcoa in respect of its mining operations
rose from US $ 2.2 million to US $ 22.8 million.
On May 8, 1974, shortly before enacting the Bauxite (Production Levy) Act, Jamaica,
which had in 1966 ratified the Washington Convention of 1965 without making any
reservation, notified ICSID in accordance with Art. 25, para. 4, of the convention,' the
following:
'The Government of Jamaica hereby notifies the Centre that the following class of
dispute at any time arising shall not be subject to the jurisdiction of the Centre.
Class of Dispule
Legal dispute arising directly out of an investment relating to minerals or other
natural resources'.
1. An. 25, pars.:4, provider: 'Any Contracting State may. at the time of ratification, acceptance or
approval of thid Convention or at any time thereafter, nolify the Centre of the class or classes of
disputer which it would or would not consider submitting to the jurisdiction of the Cenlre. The
Secretary-General shall forthwith transmit such notification to all Contracting States. Such notification
shall not con~titute the consent required by paragraph 1'.
ICSID
Considering Jamaica's imposition of the production levy to be a violation of the 'no
further tax'-clause in the 1968 agreement, Alcoa initiated ICSID arbitration and
approached Jamaica for the constitution of a mutually acceptable arbitral tribunal.
When, after three months, Jamaica had not answered, Alcoa appointed its arbitrator
(Prof. Elihu Lauterpacht). Upon the continued refusal of Jamaica to appoint its arbitrator,
the Chairman of the Administrative Council of ICSID (ex oficio the President of
the World Bank) appointed, pursuant to Sect. 38 of the Con~ention,t~h e two other
arbitraton. With the consent of the two other arbitrators Prof. Lauterpacht resigned in
order to assume a legal post, and Alcoa appointed M. Justice-Michael Kerr as replacement.
In accordance with Art. 41, para. 2, of the Convention, the arbitral tribunal decided to
deal with its own jurisdiction and competence as a preliminary question. Two issues were
to be considered: first, whether the dispute fell within the subject matter jurisdiction of
ICSID, and, second, whether Jamaica's notification of May 8, 1974, had the effect of
withdrawing investment disputes concerning national resources from the scope of
Jamaica's prior consent to arbitrate. For the reasons summarized below, the arbitral
tribunal held that the dispute was within its jurisdiction and that the Jamaican notification
did not affect the prior agreement to arbitrate.
Extracl
I. Subject Matter Jurisdiction
Art. 25, para. 1, defines the jurisdiction of the Centre as to 'extend to any legal dispute
arising directly out of an investment . . .'. After having stated in a summary manner
that the case involved a legal dispufe, the arbitral tribunal discussed at some length the
question of whether the case concerned an investment. It concluded that the latter
jurisdictional requirement was satisfied on two grounds. First, the tribunal noted that
Alcoa's operations in Jamaica fit within the ordinary meaning of 'investment' as a
contribution of capital. The arbitral tribunal reasoned that:
'(A) case like the present, in which a mining company has invested substantial
amounts in a foreign state in reliance upon an agreement with that State, is among
those contempiated by the Convention'.
Second, making reference to para. 7 of the Report of the Executive Directors of the
World Bank of 1965, which accompanies the Convention, the arbitral tribunal stated that
'No attempt was made to define the term 'investment' (in the Convention) given the
essential requirement of consent by the parties . . .'.
As regards this second ground, the arbitral tribunal, however, noted that such consent
was only a factor of 'great weight'.
I f . Consent to Arbitrate
The arbitral tribunal considered next the issue of the parties' consent to arbitrate. Art.
25, para. 1, of the Convention specifies that the consent must be in writing. Para. 24 of
the Directors' Report, mentioned above, states that one of the examples of consent is a
clause included in an investment agreement, providing for the submission to the Centre
of future disputes arising out of that agreement. Accordingly, the arbitral tribunal
found that the arbitral clause in the 1968 agreement between Alcoa and Jamaica
satisfied the requirement of written mutual consent to arbitrate.
The above-mentioned para. 24 of the Directors' report states 'Consent of the
parties must exist when the Centre is seized (Arts. 28, para 3, and 36, para. 31, . . .'.
This raised the question whether the Jamaican notification of May 8, 1974, to ICSID
affected the prior agreement to arbitrate.
-
2. Art. 38 provides: 'If the Tribunal rho11 not have been constituted within 90 days after notice of
registration oi the request has been dispatched by the SecielaryGeneral in accordance with paragraph
3 of Article 36, or such other period us the parties may agree, the Chairman shall, at the request of
either party and after consulting both parties as far as possible. appoint the arbitrator or arbitrutors
not yet appointed. Arbitrators appointed by the Chairman puisuvnt to this Article shall not be
nationals of the Contracting 'State party to the dispute or of the Contracting State whose national is a
party to the dispute. ,
A R B I T R A L A W A R D S
To assess the jurisdictional import of this notice, the arbitral tribunal quoted the
sentence in Art. 25, para. 1 'When the parties have given their consent, no party
withdraw its consent unilaterally'. The arbitral tribunal applied Art. 25, para. 1, wit
limitation, and held the notification ineffective to abrogate Jamaica's prior consent
ICSID arbitration of disputes arising out of th'e investment agreement with Alcoa. T
arbitral tribunal stated in particular:
'In the present case the written consent was contained in the arbitration clause
between the Government and Alcoa which has already been quoted. This consent
having been given could not be withdrawn. The notification under Article 25 only,,,
operates for the future by way of information to the Centre and potential future
investors in undertakings concerning minerals and other natural resources of
Jamaica'.
The arbitral tribunal concluded that to decide otherwise 'would largely, if not wholly,
deprive the Convention of any practical value'. In addition, in denying the Jamaican
notification retroactive effect, the arbitral tribunal relied again upon the Directors'
Report, which states in para. 31 in part that:
'. . . Art. 25, para. 4, expressly permits Contracting States to make known to the
Centre in advance, if they so desire, the classes of disputes which they would or
would not consider submitting to the Centre'. (Emphasis added by the arbitral
tribunal).
INTERNATIONAL CENTRE FOR SETTLEMENT
OF INVESTMENT DISPUTES (ICSID)
1. PRELIMINARY AWARD MADE IN 1975
Arbitrators: Prof. Elihu Lauterpacht (U.K.), who was replaced after resignation by M.
Justice Michael Kerr (U.K.); Dr. Fuad Rouhani (Iran); Dr. Jgrgen Trolle (Denmark).
Parties: Claimant: Alcoa Minerals of Jamaica, Inc. (U.S.A.)
Respondent: Government of Jamaica
Published in: By virtue of Art. 48, para. 5, of the Washington Convention of 1965,
ICSID is not allowed to publish awards without consent of the partes. In the absence of
such consent of the parties in the present case, the following extract is solely based on,
and for its major part literally taken from, the article written by Schmidt, J., Arbitration
Under the Auspices of tlie Internationol Centre for Settlement of lnvesfnient Disputes
(ICSID): I~nplications of the Decisiori on Jlrrisdiction ill Alcoa Minerals of Jamaica.
Inc. v. Government of Jamaica, 17 Harvard International Law Journal pp. 90-109 (1976).
Subject matter: - jurisdiction ICSID
- investment
- withdrawal by State of classes of investment disputes after agreement
to arbitrate
Facts
In an agreement concluded in 1968 for a term of 25 years, Alcoa agreed with Jamaica
that it would construct an alumina refining plant in Jamaica. Under the agreement,
Jamaica would grant Alcoa long-term concessions for the mining of bauxite in
Jamaica. The agreement contained a 'no further tax' clause according to which Jamaica
would not impose on Alcoa's mining and refining operations any further, or other, taxes
than those specifically provided in the agreement. The agreement also contained an
arbitration clause referring to arbitration under ICSID any dispute arising under the
agreement which the parties failed to settle amicably.
After Alcoa had constructed the alumina plant and had begun the mining of bauxite,
Jamaica announced in 1974 that the taxes on the mining of bauxite were to be increased.
When the subsequent negotiations with the mining companies did not result in an
agreement on the amount of the increase Jamaica enacted the Bauxite (Production Levy)
Act of 1974 by which the taxes to be paid by Alcoa in respect of its mining operations
rose from US $ 2.2 million to US $ 22.8 million.
On May 8, 1974, shortly before enacting the Bauxite (Production Levy) Act, Jamaica,
which had in 1966 ratified the Washington Convention of 1965 without making any
reservation, notified ICSID in accordance with Art. 25, para. 4, of the convention,' the
following:
'The Government of Jamaica hereby notifies the Centre that the following class of
dispute at any time arising shall not be subject to the jurisdiction of the Centre.
Class of Dispule
Legal dispute arising directly out of an investment relating to minerals or other
natural resources'.
1. An. 25, pars.:4, provider: 'Any Contracting State may. at the time of ratification, acceptance or
approval of thid Convention or at any time thereafter, nolify the Centre of the class or classes of
disputer which it would or would not consider submitting to the jurisdiction of the Cenlre. The
Secretary-General shall forthwith transmit such notification to all Contracting States. Such notification
shall not con~titute the consent required by paragraph 1'.
ICSID
Considering Jamaica's imposition of the production levy to be a violation of the 'no
further tax'-clause in the 1968 agreement, Alcoa initiated ICSID arbitration and
approached Jamaica for the constitution of a mutually acceptable arbitral tribunal.
When, after three months, Jamaica had not answered, Alcoa appointed its arbitrator
(Prof. Elihu Lauterpacht). Upon the continued refusal of Jamaica to appoint its arbitrator,
the Chairman of the Administrative Council of ICSID (ex oficio the President of
the World Bank) appointed, pursuant to Sect. 38 of the Con~ention,t~h e two other
arbitraton. With the consent of the two other arbitrators Prof. Lauterpacht resigned in
order to assume a legal post, and Alcoa appointed M. Justice-Michael Kerr as replacement.
In accordance with Art. 41, para. 2, of the Convention, the arbitral tribunal decided to
deal with its own jurisdiction and competence as a preliminary question. Two issues were
to be considered: first, whether the dispute fell within the subject matter jurisdiction of
ICSID, and, second, whether Jamaica's notification of May 8, 1974, had the effect of
withdrawing investment disputes concerning national resources from the scope of
Jamaica's prior consent to arbitrate. For the reasons summarized below, the arbitral
tribunal held that the dispute was within its jurisdiction and that the Jamaican notification
did not affect the prior agreement to arbitrate.
Extracl
I. Subject Matter Jurisdiction
Art. 25, para. 1, defines the jurisdiction of the Centre as to 'extend to any legal dispute
arising directly out of an investment . . .'. After having stated in a summary manner
that the case involved a legal dispufe, the arbitral tribunal discussed at some length the
question of whether the case concerned an investment. It concluded that the latter
jurisdictional requirement was satisfied on two grounds. First, the tribunal noted that
Alcoa's operations in Jamaica fit within the ordinary meaning of 'investment' as a
contribution of capital. The arbitral tribunal reasoned that:
'(A) case like the present, in which a mining company has invested substantial
amounts in a foreign state in reliance upon an agreement with that State, is among
those contempiated by the Convention'.
Second, making reference to para. 7 of the Report of the Executive Directors of the
World Bank of 1965, which accompanies the Convention, the arbitral tribunal stated that
'No attempt was made to define the term 'investment' (in the Convention) given the
essential requirement of consent by the parties . . .'.
As regards this second ground, the arbitral tribunal, however, noted that such consent
was only a factor of 'great weight'.
I f . Consent to Arbitrate
The arbitral tribunal considered next the issue of the parties' consent to arbitrate. Art.
25, para. 1, of the Convention specifies that the consent must be in writing. Para. 24 of
the Directors' Report, mentioned above, states that one of the examples of consent is a
clause included in an investment agreement, providing for the submission to the Centre
of future disputes arising out of that agreement. Accordingly, the arbitral tribunal
found that the arbitral clause in the 1968 agreement between Alcoa and Jamaica
satisfied the requirement of written mutual consent to arbitrate.
The above-mentioned para. 24 of the Directors' report states 'Consent of the
parties must exist when the Centre is seized (Arts. 28, para 3, and 36, para. 31, . . .'.
This raised the question whether the Jamaican notification of May 8, 1974, to ICSID
affected the prior agreement to arbitrate.
-
2. Art. 38 provides: 'If the Tribunal rho11 not have been constituted within 90 days after notice of
registration oi the request has been dispatched by the SecielaryGeneral in accordance with paragraph
3 of Article 36, or such other period us the parties may agree, the Chairman shall, at the request of
either party and after consulting both parties as far as possible. appoint the arbitrator or arbitrutors
not yet appointed. Arbitrators appointed by the Chairman puisuvnt to this Article shall not be
nationals of the Contracting 'State party to the dispute or of the Contracting State whose national is a
party to the dispute. ,
A R B I T R A L A W A R D S
To assess the jurisdictional import of this notice, the arbitral tribunal quoted the
sentence in Art. 25, para. 1 'When the parties have given their consent, no party
withdraw its consent unilaterally'. The arbitral tribunal applied Art. 25, para. 1, wit
limitation, and held the notification ineffective to abrogate Jamaica's prior consent
ICSID arbitration of disputes arising out of th'e investment agreement with Alcoa. T
arbitral tribunal stated in particular:
'In the present case the written consent was contained in the arbitration clause
between the Government and Alcoa which has already been quoted. This consent
having been given could not be withdrawn. The notification under Article 25 only,,,
operates for the future by way of information to the Centre and potential future
investors in undertakings concerning minerals and other natural resources of
Jamaica'.
The arbitral tribunal concluded that to decide otherwise 'would largely, if not wholly,
deprive the Convention of any practical value'. In addition, in denying the Jamaican
notification retroactive effect, the arbitral tribunal relied again upon the Directors'
Report, which states in para. 31 in part that:
'. . . Art. 25, para. 4, expressly permits Contracting States to make known to the
Centre in advance, if they so desire, the classes of disputes which they would or
would not consider submitting to the Centre'. (Emphasis added by the arbitral
tribunal).
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