chapter  5
Consent as a condition of jurisdiction
Pages 51

As in commercial arbitrations,1 an important feature of investor-state arbitration is party autonomy-especially the consent of the parties to arbitration.2 Yet the way in which consent is given for investment arbitration differs from that for commercial arbitration. For instance, in most cases, consent is not given in an agreement signed by both disputing parties. Instead, the host states often give their consent in local laws, the bilateral investment treaties (“BITs”) and free trade agreements (“FTAs”) to which they are parties or such multilateral treaties as the Energy Charter Treaty or the North American Free Trade Agreement (“NAFTA”), and each of these is regarded as a standing offer that can be accepted by investors. In such cases, foreign investors are not parties to the international agreements or unilateral declarations. This has been referred to as “international arbitration without privity,” which “allows the true complainant to face the true defendant. This has the immense merit of clarity and realism; these virtues, and not eloquent proclamations, are the prerequisites of confidence in the legal process.”3 Some scholars, however, argue that “arbitration is entirely dependent on the consent of the parties evidenced in a written argument [sic] to arbitrate future disputes or in a clause in a contract to arbitrate future disputes arising from the contract. An arbitration agreement could also be made after the dispute

issue. Even those who are critical of the above proposition have to admit that the practice is in favor of arbitration without privity:

This view has gained acceptance as a result of some arbitrations in which the tribunals found jurisdiction even in the absence of contractual provisions which indicated consent to arbitration of future disputes arising from the contract. Those who are disposed to seeing progress towards the dawn of an age in which private power will be triumphant, see in these developments the beginning of a trend in which foreign investment arbitration could be held even in the absence of privity.5