Role of the Organization of Islamic Cooperation in Promoting International Investment and Settle Investment Disputes

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Role of the Organization of Islamic Cooperation in

Promoting International Investment and Settle Investment

Disputes

Master’s Thesis: LL.M. International and European Law:

Public International Law

Amirhossein Malekmadani (12766666)

ah.malekmadani@yahoo.com

14 July 2020

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Abstract

Despite the existence of a growing body of multilateral foreign investment protection agreements, especially at the regional level, and their potential advantages in comparison with BITs, their legal framework is not well-scrutinized in literature. This thesis introduces one example of these legal frameworks, namely the OIC foreign investment protection system and evaluates it based on the recent developments in international investment law by responding to this question: What is the main framework of the Organization of Islamic Cooperation (OIC) for foreign investment protection and its dispute settlement?

In this context, a comparative study made with some capital-exporting states’ model bilateral investment treaties and recent discussions on potential reforms in investor-state dispute settlement to provide an ideally comprehensive answer to this question. In addition to the introduction of the general structure of the organization mainly by its constituent instrument, this thesis elaborates on the specific instrument designed for foreign investment protection under the auspices of this organization, analyzes and evaluates the substantive and procedural protections provided in this legal framework. The main pillar of the latter is the mechanisms for dispute settlement which guarantee the efficient function of the entire system. The present thesis not only indicates the main characteristics and challenging issues of the current dispute resolution mechanisms but also provides and assesses the features of the proposed dispute settlement body waiting for the adoption by member states to be established.

This thesis concludes that this legal framework, despite some deficiencies, is capable of playing a significant role in the progress and development of international investment law among developing states, can be a blueprint for the conclusion of a multilateral investment treaty among them, and is a successful south-south multilateral attempt for foreign investment protection.

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Table of Abbreviations

CFM Council of Foreign Ministers of the OIC

DSO Dispute Settlement Organ of the OIC

ECT The Energy Charter Treaty 1994

ICFM International Conference of Foreign Ministers ICSID

IIA IMF

International Center for Settlement of Investment Disputes

International Investment Agreement International Monetary Fund

ISDS Investor-State Dispute Settlement

MIT Multilateral Investment Treaty

NAFTA North America Free Trade Agreement 1992

The OIC The Organization of Islamic Conference

The PCA The Permanent Court of Arbitration

The UN The United Nations

The VCLT The Vienna Convention on the Law of Treaties 1969

UNCITRAL Arbitration Rules The United Nations Commission on International Trade Law Rules of Arbitration

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1. Introduction

The Protection of foreign investments under MITs, instead of BITs, has been a challenging issue in the history of international investment law while has always had supporters. They point to some goals MIAs seem to be more suitable instruments for achieving them, such as increasing the predictability of the outcome of cases, providing a comprehensive coverage for all categories of investments in all sectors applicable to all levels of governments, considering societal interests and regulatory authority of signatory countries while setting a framework for progressive liberalization, and establishing a sophisticated and harmonized system of dispute settlement.1

However, the movement towards an MIT has been more successful at the regional level, like NAFTA,2instead of international level, and sectoral investments, like ECT,3instead of all sectors

of investments.

The treaty in the center of this thesis was concluded between member states of the OIC and is one of the first examples of an MIT among developing states.4This study evaluates this argument that

the OIC agreement is a successful south-south contribution in the protection of foreign investments and can be the cornerstone for the conclusion of an MIT, at least, between all developing states by providing a comparative study, about its substantive protections, with some developed states’ model BITs and, about its new proposed system of ISDS, with the ISDS reform proposals posed before UNCITRAL working group III5 and accepted forms of dispute settlement in recent IIAs.

Compatible with these aims, the main research question of this thesis would be:

1 Rainer Geiger, ‘Towards a Multilateral Agreement on Investment’ (1998) 31 Cornell

International Law Journal 467, 469

2North American Free Trade Agreement (adopted 17 December 1992, entered into force 1 January

1994) < https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2412/download> accessed 26 May 2020

3 The Energy Charter Treaty (adopted 17 December 1994, entered into force 16 April 1998) 2080

UNTS 95

4 Agreement for Promotion, Protection and Guarantee of Investments Among Member States of

the Organization of the Islamic Conference (adopted 5 June 1981, entered into force February 1988) (hereinafter the OIC Agreement) < http://ww1.oic-oci.org/english/convenion/Agreement%20for%20Invest%20in%20OIC%20%20En.pdf > accessed on 20 January 2020

5 As example see UNGA ‘Report of the United Nations UNCITRAL working group III on Possible

reform of ISDS: Interpretation of Investment Treaties by Treaty Parties’ UNCITRAL working group III 39th session UN Doc A/CN.9/WG.III/WP.191 (2020); UNGA ‘Report of the United

Nations UNCITRAL working group III on Possible reform of ISDS: Appellate and Multilateral Court Mechanisms’ UNCITRAL working group III 38th session UN Doc A/CN.9/WG.III/WP.185

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“What is the main framework of the Organization of Islamic Cooperation (OIC) for foreign investment protection and its dispute settlement?”

The concentration of the literature on this topic has been mainly on introducing substantive and procedural aspects of the system and trying to reflect how the interpretation of some of the provisions, mainly dispute settlement provisions, affected the reasoning of tribunals constituted based on this instrument.6The major gap in the topic is the evaluation of the OIC investment

protection system, substantive and dispute settlement mechanism, based on recent developments in international investment law,7as a south-south MIT and a potential blueprint for a future

agreement among developing states.

As the starting point, a general description of the legal structure of the organization will be provided (Chapter Two). This step is the context for discussing the organization’s investment protection legal framework. The third chapter goes into the detail of the investment protection system, starting with the substantive protections. The most important and innovative part of this thesis would introduce and evaluate the current and proposed system of international investment dispute settlement, not only investor-state but also state-state disputes, of the OIC investment legal framework in chapter four. This evaluation requires the knowledge of substantive protections as they constitute the major part of the treaty.

2. History and Structure of the OIC

The first step for providing a comprehensive picture of the OIC investment protection system starts with a brief survey of the organization such as its history (2.1), objectives (2.2), rules of membership (2.3), and structure (2.4). This step would help to clarify the context of concluding such an agreement under the auspices of an international organization and can explain certain specifications of this system that made it a successful south-south investment protection legal framework.

6 As example see: Caline Mouawad, Lillian Khoury, ‘Investment Arbitration under Multilateral

Treaties in the Middle East’ (2016) 3(2) BCDR International Arbitration Review 243; Solomon Ebere, ‘The Phoenix of Multilateral Investment Treaties: The Agreement for the Promotion, Protection and Guarantee of Investments Among Member States of the Organisation of the Islamic Conference - What Impact on Sub-Saharan Africa?’ (2016) Transnational Dispute Management <www.transnational-dispute-management.com/article.asp?key=2359> accessed 17 January 2020

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2.1 History of the Organization

“The Organization was established upon a decision of the historical summit which took place in Rabat, the Kingdom of Morocco on 25 September 1969 following the criminal arson of Al-Aqsa Mosque in occupied Jerusalem.”8 The first OIC Charter was adopted by the 3rd ICFM Session

held in 1972 which laid down the objectives and principles of the organization.9,10 Over the last 40

years, its membership has grown from its founding members of 30 to 57 states.11 The Charter was

amended to keep pace with the developments that have unraveled across the world. The present Charter of the OIC was adopted by the Eleventh Islamic Summit on 13-14 March 2008.12,13 The

38th CFM session in Astana, Kazakhstan decided to change the name of the organization from

‘Organization of Islamic Conference’ to its current name with the aim of clearer reflection of the functions and objectives of the organization (section 2.2).14

2.2 Objectives

Two crucial elements of ‘Islamic’ and ‘Cooperation’ are pillars of the organization. It seems that the main idea for the establishment of such an organization is derived from the religious beliefs of the importance of the unity of ‘Ummah’15 and preserving the interest of Islamic states to ideally

unite the position of these states in international fora.16The common interest of Islamic states in

ascertaining this idea is the most probable cause of making the OIC the second-largest intergovernmental organization after the UN.

The objectives of the organization are indicated under Article 1 of its charter covering a wide range of subjects including, inter alia, human rights, combating terrorism activities, preserving Islamic

8The OIC official website <https://www.oic-oci.org/page/?p_id=52&p_ref=26&lan=en> accessed

22 March 2020

9 Ibid

10 Charter of Islamic Conference (adopted 4 March 1972, entered into force 28 February 1973)

914 UNTS 103

11 The OIC website (n 8) 12 Ibid

13 Charter of the OIC (adopted 14 March 2008, entered into force 2 April 2017) UN registry No.

A-13039

14 Organization of Islamic Conference (The council of Foreign Ministers) ‘Resolution on changing

the name of the Organization of Islamic Conference’ (OIC Astana 2011) OIC/CFM-38/2011/ORG/RES/FINAL, Resolution No.4/38-ORG

15 Ummah means the Muslim nation

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thoughts and values, economic, scientific and technological cooperation. These objectives reiterate the importance of cooperation among member states in a variety of fields to the extent that it would not seem unreasonable if someone argues the ‘Islamic Union’ as the main goal of this organization, notwithstanding how far-reaching it would be.

Promotion of “cooperation among member states to achieve sustained socioeconomic development for effective integration in the global economy, in conformity with the principles of partnership and equality” is one of the member states’ determinations in the charter’s preamble. While there is no explicit indication for the promotion and protection of foreign investments among the members, the most related objective for this purpose is mentioned under Art. 1(9) of the charter which encourages strengthening “intra-Islamic economic and trade cooperation in order to achieve economic integration…”. The charter of Islamic conference also expressed consolidation of “cooperation among member states in economic ... and other vital fields of activity” as one of its objectives.17 These show the importance of economic development of the

members of the organization and providing a suitable environment for increasing the intra-OIC trade and investment.

Based on this general aim of the organization and specifically the important role of economic progress and development of members, ‘The General Agreement for Economic, Technical and Commercial Cooperation among Member States of Islamic Conference’ concluded in 8th ICMF in

May 197718 which then became one of the main incentives of members to conclude ‘The OIC

agreement’ in 1981.

Trade, Investment, and Finance are among the priority areas in the OIC 2025 program of action adopted by the 13th Islamic Summit in April 2016.19 It has the goal of, inter alia, vigorous

implementation of multilateral instruments on trade and investment concluded between member states, and has provided several programs and activities in line with this goal.20

17 Charter of Islamic Conference (n 10), Art.II (A)(2)

18 General Agreement for Economic, Technical and Commercial Cooperation Among Member

States of the Islamic Conference (adopted May 1977, entered into force 1981) ICFM/8-77/ICESC-9 (hereinafter the Economic Cooperation Agreement)

19 The OIC-2025 Program of Action, OIC/SUM-13/2016/POA-Final, p.9

20 For more details see The OIC-2025 Program of Action Implementation Plan 2016-2025 <

https://www.oic-oci.org/upload/documents/POA/en/The%20OIC%20-2025%20POA%20Implementation%20Plan%202016-2025%20%28E%29.pdf> accessed 24 March 2020

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2.3 Membership

The charter provides two types of membership; [principal] member states and observer status. Art.3(1) recognizes 57 principal member states and opens the possibility of accession for other states satisfying the criteria of para.2. Being a member of the UN, having a Muslim majority, and abiding by the charter are the general requirements of membership under Art.3(2). Any state, meeting these criteria, submit an application needs the adoption of CFM with consensus.21Above

theses general requirements, the CFM adopts specific criteria for membership.

Although becoming a principal member is confined to states, international organizations, in addition to states,22can be granted an observer status according to the criteria agreed by the CFM.23

Currently, the OIC has 57 principal member states mostly from Asia and Africa, one from Europe (Albania) and two from South America (Guyana and Suriname). All of these states are members of the UN except for the State of Palestine. Observers encompass States,24 Muslim communities,25

Islamic institutions,26 and International Organizations.27

2.4 Structure

The current structure of the organization is summarized in Art.5 of the charter which includes: - Islamic Summit: It is the supreme authority of the organization composed of kings and head of

states and governments of members.28 It shall convene every two years29and take policy decisions

and provide guidance on the realization of the objectives of the organization.30

- CFM: It has the general duty to consider the means for the implementation of the general policy of the organization through adopting decisions and resolutions, reviewing the progress of their implementation, approving the budget and other financial reports of the General-Secretariat and

21 Charter of the OIC (n 13), Art.3(2) 22 Ibid, Art.4(1)

23 Ibid, Art.4(2)

24 Bosnia and Herzegovina, Central African Republic, Kingdom of Thailand, The Russian

Federation, and Turkish Cypriot State

25 Moro National Liberation Front

26 Parliamentary Union of the OIC Member States

27 The UN, Non-Aligned Movement, League of Arab States, African Union, and Economic

Cooperation Organization

28 Charter of the OIC (n 13), Art.6 29 Ibid, Art.8(1)

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subsidiary organs, recommending the establishment of any new organ or committee.31 It has very

broad authority in the organization and is the second important organ of it.

- Standing Committees: There are four standing committees available in the structure of the organization. One of these committees which its tasks and duties are related to the purpose of this research is the ‘Standing Committee for Economic and Commercial Cooperation’ (COMCEC). This committee follows up the implementation of resolutions in the economic and trade fields, explores possible means of strengthening cooperation among the Member States, and prepares programs and proposals capable of improving capacities in these areas.32 It has an important role

in the adoption of investment protection instruments under the auspices of the organization. - Executive Committee33

- Committee of Permanent Representatives34

- International Islamic Court of Justice (IICJ): Established in Kuwait in 1987 and upon the entry into force of its statute would be the principal judicial organ of the organization.35

- Independent Commission on Human Rights36

- The General Secretariat: This organ comprised of Secretary-General and its staff and is the chief administrative officer of the organization. Secretary-General shall be elected by CFM and should be a national of one of the member states. It has the duty to, inter alia, follow-up the implementation of decisions, resolutions, and recommendations of Islamic Summit, CFM, and other ministerial meetings. 37

- Subsidiary Organs: Islamic Summit and CFM have the authority to establish subsidiary organs within the framework of the organization.38 Currently, the OIC has six subsidiary organs and

member states would automatically become members of these organs.

- Specialized Institutions: The major difference between this organ and the former is that these institutions are independent of the organization and have separate international personality.

31 Ibid, Art.10(4)

32 The OIC official website (n 8) 33 Charter of the OIC (n 13), Art.12 34 Ibid, Art.13

35 Ibid, Art.14

36 Charter of the OIC (n 13), Art.15 37 Ibid, Arts.16-17

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Membership in these institutions is optional and is open for the members of the OIC.39 There are

now seven specialized institutions under the structure of the organization.

- Affiliated Institutions: They are entities or bodies whose objectives are in line with the objectives of the charter of the organization and are recognized as affiliated institutions by CFM.40 They can

be granted observer status while they have all other characteristics of specialized institutions. Seventeen affiliated institutions are now in contact with the OIC, covering a wide range of activities.

Any organ individually and the organs collectively have designed in a way that enable the organization to pursue its objectives. This situation in economic cooperation is more sensible with the existence of a quite comprehensive system of different economic-related organs of the organization.

3. Investment Protection System

This chapter focuses on the substantive investment protections under the OIC legal framework. The first section establishes the legal framework of investment protection by the introduction of the related instruments concluded between the members of the OIC and distinguishes them from other attempts made for investment protection in almost the same region. Under the second section, the substantive protections would be analyzed, some references to relevant cases would be made when necessary to clarify the scope of certain provisions, and a comparative study would be made between this treaty and some of the capital-exporting states’ model BITs (e.g. The US,41 UK,42

and Germany43) to evaluate the substantive protections it provided that would be another step in

assessing the argument of this study.

39 Ibid, Art.24 40 Ibid, Art.25

41 2012 U.S Model Bilateral Investment treaty <

https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2870/download> accessed 1 July 2020

42 2008 U.K Model Bilateral Investment Treaty <

https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2847/download> accessed 1 July 2020

43 2008 German Model Treaty <

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3.1 Legal Framework

Based on the magnitude of economic progress and development of member states and in keeping with the objectives of the OIC, the ‘Economic Cooperation Agreement’ concluded between the OIC member states in 1977. This agreement provides the primary legal basis of cooperation in several fields including economic development and contains four sections and 14 Articles; The First section titled ‘Economic Cooperation’ put an obligation on parties in Art.1:

“to provide, where required, the necessary arrangements, guarantees, and incentives to encourage the transfer of capital and investments among themselves, in conformity with the laws and regulations in force in each member state…”

Based on this obligation, the OIC Agreement opened for signature on 1 June 1981 by resolution No. 7/12-E of the 21st ICFM and entered into force in February 1988. It has been signed by

forty-three states, but has been ratified only by twenty-nine encompassing forty-three chapters and 25 Articles which makes it one of the greatest multilateral efforts in foreign investment protection.

The aims of concluding this agreement are facilitating cooperation, mobilizing, and utilizing capitals among the members to achieve economic and social development .44So, it “provides

adequate protection and security for invested capital. It also makes provision for the entry and exit of capital, as well as the grant of residence and work permits to investors and their families. Additionally, it provides for most-favored-nation treatment, freedom from interference in the ownership of an investment, and the free transfer of capital.”45 However, there is no sign of FET

and umbrella clause provisions in this treaty.

Besides this instrument ‘Unified Arab Investment Agreement’46 is another MIA providing almost

similar protections for foreign investments concluded between the member states of ‘League of Arab States’ in 1980. It is a multilateral agreement between Arab states only, however, its members

44 The OIC Agreement (n 4), preamble

45 Walid Ben Hamida, ‘A Fabulous Discovery: The Arbitration Offer Under the Organization of

Islamic Cooperation Agreement Related to Investment’ (2013) 30(6) Journal of International Arbitration 637, p.638

46Unified Agreement for the Investment of Arab Capital in the Arab States (adopted 26 November

1980, entered into force 7 September 1981) (hereinafter UAIA) <

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overlap with the OIC agreement.47The preamble to this agreement “ describes its purpose as being

to advance economic integration in Arab world and create a favorable investment environment for Arab investors.”48 The agreement is organized in nine chapters with an annex on conciliation and

arbitration while “the chapters and annexes are inseparable parts of the agreement.”49 It amended

during the Arab Summit for Economic and Social Development in 2013 “to take account of recent developments in international investment law.”50However, this amendment only ratified by five

members and entered into force in 2016.

There is no conflict between the provisions of these agreements and depend on the parties involved in a case, either of them can be relied upon by the parties. Both of the founding organizations of these instruments share the objective of economic development for their member states and this can explain the conclusion of these two co-existing agreements during the 1980s.

3.2 Substantive Protections

3.2.1 Covered Investments

What affects an investment arbitral tribunal jurisdiction ratione materiae is the definition of investment under the agreement the proceedings initiated based on it, this is the case for almost all of the IIAs.51 The definition of the covered investments under the OIC agreement is intertwined

with the notion of ‘capital’. This definition is extremely broad and contains “ all assets (including everything that can be evaluated in monetary terms [which are] owned by a contracting party or its nationals... and present in the territories of another contracting party.” It also can be in the form of rights or claims and shall include the net profits accruing from such assets.” 52It does not indicate

‘controlling’ the capital in its definition and is limiter than the definition of Art.1 U.S and Art.1(a) UK model BITs in this respect, however, shares the territoriality requirement with Art.1(1) German and Art.1 US model BIT.

47 It is ratified by all member states of League except Algeria (signed but not ratified) and

Comoros

48 Caline Mouawad (n 6), p.245 49_{UAIA (n 48), preamble} 50 Caline Mouawad (n 6), p.246

51 As example see Art.1 US, Art.1(a) UK, and Art.1(1) German model BIT 52 The OIC Agreement (n 4), Art.1(4)

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Use of the capital with these characteristics “in one of the permissible fields in the territories of a contracting party with a view to achieving a profitable return, or the transfer of capital to a contracting party with the same purpose”53constitutes the covered investments under this

agreement. Therefore, this agreement requires that investments be made with an eye to profits.54

This extensive definition of investment under this agreement does not have too many similarities among other IIAs even though it is in line with its aims. It encourages investors to increase the volume of their economic activities in the territory of other members. However, it is highly probable that it acts as a deterrent element in the eyes of the OIC members and to affect their decision of accession to this instrument.

One of the leading cases in interpreting the provisions of this agreement is Al-Warraq v. Indonesia55 that started with the notice of arbitration from Mr. Al-Warraq, a Saudi national,

concerning the nationalization of the PT Bank Century Tbk, in which he held a substantial shareholding claiming, unsuccessfully,56 the expropriation of his investment.57 One of the

challenging issues between the parties was whether this agreement protects indirect investment because it does not indicate this form of investment unlike the three model BITs mentioned above. The tribunal using treaty interpretation rules of the VCLT and reviewing the wordings of Arts.1(4) and 1(5) concluded that there is no explicit reference to direct or indirect investments in this agreement, and it covers both forms:

“Article 1(5) requires the 'employment' of capital in the territory of a contracting party... without designating that the employment must be in the investor's own name. Similarly, Article 1(4), which defines capital, requires the assets... to be 'owned' by a national of a contracting state... but does not require the shares to be owned personally or directly...” 58

53 Ibid, Art.1(5)

54 Caline Mouawad, Lillian Khoury (n 6), p.256

55 Hesham Talaat M. A-Warraq v. The Republic of Indonesia (Final Award) (Arbitral Tribunal)

(2014) <https://www.italaw.com/sites/default/files/case-documents/italaw4164.pdf > accessed 17 January 2020

56 Ibid, para.683(2)

57 ‘Arbitration News, Volume 4, No.3 [2013]’ (2012) 4(3) International Journal of Arab

Arbitration, p.136

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This conclusion of tribunal is persuasive. Indeed, the only relevant requirement of the agreement is the territorial employment of the capital. However, this does not mean that there should only be a direct investment to be protected by this agreement. Investments can be made through any form qualifies as an indirect investment in the territory of a contracting state.

3.2.2 Protected Investors

The second pillar of an investment protection system is protected investors which affects the tribunal jurisdiction ratione personae. The rule of determining the protected investors is mentioned under Art.1(6) of the OIC agreement, according to it (1) “The government of any contracting party”, or (2) “natural corporate person, who is the national of a contracting party and who owns the capital and invests it in the territory of another contracting party” are protected investors. In this case, two specific points should be made. First, unlike the definition of the investor under this agreement accepting the government of any contracting party as an investor is not common in IIAs because it is approved that “international investment law is designed to promote and protect the activities of private foreign investors.”59. However, this coverage can be justified by the aims

of concluding such an agreement between developing states that governments have extensive involvement in the economy. While there is no sign of this coverage for governments under the UK and German model BIT, the US model BIT interestingly accepted ‘State Enterprise’60 as a

qualified investor. Second, a foreign investor can be a natural or legal person. The notion of the natural corporate person is unknown under the investment law literature. It seems that the intention of this document, as the division made when it describes the criteria of nationality, has been to cover both natural and corporate investors.

The nationality requirement under this Article is not different from the wording of most BITs. For a natural person it is “enjoying the nationality of a contracting party according to the provisions of the nationality law in force therein”, same as Art.1 US, Art.1(c)(i) UK, and Art.1(3)(a) German Model BIT, and for legal persons is establishment “in accordance with the law in force in any contracting party and recognized by the law under which its legal personality is established”,

59 Rudolf Dolzer, Christopher Schreuer, Principles of International Investment Law (2nd edition,

OUP 2012), p.44

60 State Enterprise means an enterprise owned, or controlled through ownership interests, by a

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61same as Art.1(d)(i) UK and Art.1(3)(a) German model BIT. However, Art.1 US model BIT adds

the requirements of presence of a branch in the territory of a party and carrying out business activities there.

3.2.3 Free Transfer of Investment

Freedom of transfer of investments is the subject of three articles in the second and third chapters namely Articles 2, 11, and 12. This is the case for Art.7 US, Art.6 UK, and Art.5 German model BITs.

Article 2 poses an obligation on the parties to “permit the transfer of capitals among them[selves] and its utilization therein in the fields permitted for investment in accordance with their laws... .” The host state laws have the determinant nature in the acceptance of investment. As there is no requirement of consistency with the laws of the host state in the definition of protected investments under Art.1(5), it is possible to argue that the purpose of this notion is the same with the legality of investment included in the definition of investment in some BITs. This Article is located in the second chapter named “General Provision Regarding Promotion, Protection and Guarantee of the Capitals an Investments and the Rules Governing them in the Territories of the Contracting Parties” that strengthen such conclusion.

Article 11 uses firmer language than Art.2. It obliges members to “guarantee the free transfer of capitals and its net proceeds.” Both Articles only cover the transfer of capitals to contracting parties and do not contain such an obligation for the transfer of capitals to a third state. This provision focuses on the prohibition of “any discriminatory banking, administrative or legal restrictions” and levying “any taxes or charges on the transfer”, provides some administrative and procedural obligations relating to the process of transfer such as the currency and exchange rate62and the

required timing for completion of the transfer.63 This is the article that has some equals in other

BITs.

The US model BIT in Art.7 reiterates the transfer of investments and returns into and out of the country freely and without delay (it is approximately 90 days in the OIC agreement after fulfillment of the legal requirements for transfer) without indicating the non-discriminatory

61 The OIC Agreement (n 4), Art.1(6) 62 Ibid, Art.11(2)

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manner requirement. This transfer should be made in a freely usable currency and the market rate of exchange at the time of transfer. The OIC agreement provides the transfer can be made in the currency the investment was made or any other convertible currency and in the exchange rate fixed by the IMF on the day of transfer. The language of Art.6 UK BIT is the most similar example to the text of Art.11 but in the more summarized way. It gives the parties the option to choose an exchange rate other than the date of transfer. Article 5 of the German model BIT provides quite similar conditions for transfers. Unlike the OIC agreement, the time limit for completion of transfer starts from the submission date of the application for transfer. The transfer has been made without delay if it is done in a period as is normally required for the completion of formalities, however, it cannot exceed two months.

The case of beIN v. Saudi Arabia initiated by beIN in 2018, a global sports and entertainment media group incorporated under laws of Qatar, concerning “a series of abusive measures implemented by [it] following the suspension of diplomatic relations with Qatar in June 2017.”64In

this year, “the Saudi authorities implemented several measures specifically designed to destroy beIN’s investments in Saudi Arabia,”65measures like revoking beIN’s legal right to operate in the

jurisdiction, prohibiting the broadcast of beIN channels, etc.66 Claiming the violation of Art.11 is

among the argued violations made by the respondent in this case.67

Article 12 relates to a different subject from previous Articles. It obliges the host state to guarantee the freedom of disposing of “the ownership of the invested capital by selling it, wholly or partly, by liquidation, cession, grant or by any other means” by the investor. If the capital is transferred to “an investor who is a subject of one of the contracting parties and subject to the approval of the host state”, the capital would continue to be treated by the provisions of this agreement. This situation is in line with the definition of capital in Art. 1(4) which not only covers the capital transferred to the territory of a contracting state but also encompasses the capital earned in that territory. One of the ways of this earning is the situation described in Art.12.

64BeIN Corporation v. Kingdom of Saudi Arabia (Notice of Arbitration) (2018)

<https://www.italaw.com/sites/default/files/case-documents/italaw9976.pdf> accessed 17 January 2020, para.3

65 Ibid, para.5 66 Ibid

67Ibid, para.93

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3.2.4 Expropriation

The OIC agreement indicates the issue of expropriation of investment like most of the BITs but in a different manner. The general rule under Art.10 is:

“1. The host state shall undertake not to adopt or permit the adoption of any measure – itself or through one of its organs, institutions or local authorities – if such a measure may directly or indirectly affect the ownership of the investor’s capital or investment by depriving him totally or partially of his ownership or of all or part of his basic rights or the exercise of his authority on the ownership, possession or utilization of his capital, or of his actual control over the investment, its management, making use out of it, enjoying its utilities, the realization of its benefits or guaranteeing its development and growth.”

However, the second paragraph of this provision indicates two exceptions to this general rule. First and the most important exception is expropriation (Art.10(2)(a)), of course, conditioned to fulfilling some conditions like being in the “public interest in accordance with law”, “without discrimination”, and with “prompt payment of adequate and effective compensation to the investor in accordance with the laws of host state regulating such compensation.” 68 In line with the

accepted principle of investment law it “addresses only the conditions and consequences”69of a

lawful expropriation. Innovatively, this document explicitly accepts the right of the investor “to contest the measure of expropriation in the competent court of the host state.”70

The compensation in case of an unlawful expropriation is determined under Art.13 which accepts the “equivalent to the damage suffered by the investor depending on the type of damage and its quantum.”71as compensation. This compensation “shall be monetary if it is not possible to restore

the investment to its state before the damage was sustained.”72 Indeed, this provision reiterates the

general rule of remedies in the law of international responsibility of states.

Art.6 of the US model BIT also prohibits direct and indirect expropriation unless it meets the three criteria accepted in Art.10(2)(a) of the OIC agreement. Art.6(2), inter alia, accept the fair market value of the investment in the date of expropriation as compensation for lawful expropriation.

68The OIC Agreement (n 4), Art.10(2)(a)

69 Rudolf Dolzer, Christopher Schreuer (n 59), p.98 70 The OIC Agreement (n 4), Art.10(2)(a)

71 Ibid, Art.13(2) 72 Ibid, Art.13(3)

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Practically admirable, it explained the different forms of expropriation and their elements in its Annex B that would help the interpretation of this provision. Art.5 of UK model BIT shares almost the same language with the US model BIT. The compensation in case of lawful expropriation would be “the genuine value of the investment expropriated immediately before the expropriation or before the impending expropriation became public knowledge, whichever is the earlier” including interest until the date of payment. Like the OIC agreement, this article accepts the right to contest for the injured investor before the courts of the host state. The relevant provision in the German model BIT is Art.4(2) which is similar to all other provisions discussed earlier. Its divergences are (1) it does not mention the non-discriminatory nature of the expropriation as the condition of a lawful expropriation and (2) The compensation in case of lawful expropriation is the value of the expropriated investment “immediately before the date on which the actual or threatened expropriation, nationalization or other measure became publicly known.” None of these provisions mention the compensation in case of a unlawful expropriation.

The second exception (Art.10(2)(b)) concerns preventive measures adopted by “a competent legal authority and execution measures of the decisions” of a competent judicial authority.73 Both of

these exceptions had been successfully invoked in the Al-Warraq case.74 This exception does not

have any similarity in the model BITs discussed above.

One of the alleged violations of the OIC agreement invoked in the Al-Warraq case was indirect expropriation. However, the tribunal did not accept the claimant’s argument “as the claimant has not been deprived totally or partially or his ownership of [his] shares... nor of his basic rights in the exercise of his ownership of the shares, nor of his 'actual control' over the shares within the meaning of Article 10(1).” 75

Also beIN argued that the respondent with a series of actions like, inter alia, its refusal to issue the required license had the intention of crippling the investor’s ability to operate in the host state. The violation of Article 10(1) is among the alleged treaty violations of the host state.76

73 Ibid, Art.10(2)(b)

74 Hesham Talaat M. A-Warraq v. Indonesia (n 55), paras.527-530 75Ibid, para.524

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3.2.5 Most-Favored-Nations Clause (MFN)

The MFN clause plays a crucial role in any IIA as it enables the investor to incorporate provisions providing a higher level of protection (whether substantive or procedural) from other treaties the host state concluded with other states. However, the scope of this clause is not the same for all investment protection instruments.

The MFN clause under the OIC agreement (Art.8) is restricted to “the context of economic activity in which they [investors] have employed their investments in the territories of another contracting party”, “the treatment accorded to investors belonging to another state not party to this agreement”, and “ in respect of rights and privileges accorded to those investors.”

The second paragraph of this article provides three exceptions excluding the application of this clause in those situations. The most important incident is where a contracting party has given rights and privileges to the investors of other contracting parties under an international agreement, law, or special preferential arrangement.77 This exception, in addition to Art.18, accepts the possibility

of concluding other agreements between the contracting parties containing different and probably better treatment. This also means that this instrument only provides a foundation for foreign investment protection and does not have the intention to block the conclusion of agreements encompassing broader protections. The other two exceptions are namely rights and privileges arising from an existing or future international agreement setting up “an economic union, customs union or mutual tax exemption arrangements”78 and “rights and privileges given for a specific

project due to its importance” to a contracting state.79

The major difference between this article and the corresponding articles in the above-mentioned model BITs is that they provide this clause for investors and investments. The requirement of the same circumstances mentioned only by the US model BIT Art.4. The German model BIT accepted the same exception mentioned under Art.8(2)(b) in its Art.3(3). There is also the same general exception under Art.7(1)(a) of the UK model BIT.

The claimants in the recent Itisaluna case,80‘Itisaluna Iraq LLC’, a subsidiary made by Itisaluna

which is a company incorporated under the laws of Jordan, a shareholding company incorporated

77 The OIC Agreement (n 4), Art.8(2)(a) 78 Ibid, Art.8(2)(b)

79 Ibid, Art.8(2)(c)

80 International Centre for the Settlement of Investment Disputes Itisaluna Iraq LLC and Others

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under the same law, and two Emirati companies, inter alia, tried to incorporate the consent to ICSID jurisdiction in Iraq-Japan BIT into the OIC agreement through its Article 8(1). From 2008 and after a significant increase in claimants’ investment, Iraq prohibited Itisaluna from exercising its rights to build an international gateway which was a starting point to stripping the license, granted by Iraq National Communications & Media Commission to provide a public network and telecommunications services in Iraq on 2006,81of its values As this incorporation was the basis of

the commencement of arbitral proceedings before ICSID, the respondent argued that the tribunal lacks jurisdiction ratione voluntatis. The respondent argued that based on arbitral jurisprudence “an MFN clause cannot create jurisdiction where none exists.”82 It also relied on seven interpretive

points of Art.8 which result in that this article “does not permit the claimant to import into the OIC agreement a dispute resolution clause from another unrelated treaty.”83 The tribunal in its analysis

concentrated on the multilateral nature of the OIC agreement and indicated:

“An MFN clause in a multilateral treaty cannot be used as a foundation on which to construct (even if only potentially) a variable framework of application in respect of its individual Contracting Parties by reference to their distinct and unrelated bilateral treaty practice. That would be the very antithesis of the principle underlying the MFN clause.”84

Consequently, the tribunal accepted the argument of the respondent and declared it lacks jurisdiction ratione voluntatis.85

However, the logic of the tribunal in this case seems generally inapplicable to similar cases. The factual situation of this case had a determinative role in the conclusion of the tribunal. As two of the claimant companies came within the scope of another Iraq’s BIT, i.e. the Iraq-Jordan BIT, the tribunal supposed the claimants attempt to incorporate the dispute settlement provision in Iraq-Japan BIT instead of Iraq-Jordan BIT as an endeavor to circumvent the exception provided under Article 8(2)(a) of the OIC agreement.86 It is also worth noting that the requirements of the ICSID

convention87under Article 25(1) for consent to the jurisdiction of the center is another

81 Ibid, para.26 82_{Ibid, para.100} 83 Ibid, para.107 84 Ibid, para.153 85 Ibid, para.263 86 Ibid, para.200

87 Convention on the settlement of investment disputes between States and nationals of other States

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determinative point that should be considered in such cases.

The MFN clause also invoked by the claimant in the Al-Warraq case to incorporate fair and equitable treatment (FET) to the OIC agreement.88 The tribunal in this case, by relying on the

preamble of the OIC agreement which refers to the anxiety of the signatories to develop a favorable climate for investment, accepted the claimant’s argument to incorporate FET into this instrument by using Article 8(1).89 It also declined the respondent’s argument that some expressions like the

same economic activity requirement in this Article are “imposing a limitation on the scope of application of the MFN clause.”90

BeIN in its notice of arbitration has tried to incorporate, inter alia, more favorable dispute settlement provision in Saudi Arabia-Austria BIT which gives the investor the possibility of choosing between ICSID arbitration, ad hoc arbitration under the UNCITRAL Rules, or any other agreed form of dispute settlement.91 It has argued that the mere presence of multiple fora for

dispute settlement under that BIT makes it more favorable treatment than is provided under the OIC agreement.92

KCI, a Tunisian company, in his case against Gabon also tried to incorporate not only FET but also umbrella clause into the agreement relying the MFN clause.93 When KCI requested the

payment of certain invoices for carrying out part of the work, construction of 5000 residental buildings based on its agreement with the Gabonese government, it was notified of the decision to interrupt the work in 2012. The final award accepted the tribunal’s jurisdiction to incorporate FET provision to the OIC agreement, found the violation of it by the respondent, and ordered it to compensate the applicant for it. However, it declared that it has no jurisdiction to hear the claims of the applicant for breach of the ‘umbrella clause’ incorporated by using the MFN clause. The claimant unsuccessfully sought the annulment of this part of award before the Paris court of appeal.94

88 See also: BeIN Corporation v. Saudi Arabia (n 64), para.94 89 Hesham Talaat M. A-Warraq v. Indonesia (n 55), para.549 90 Ibid, para.552

91 BeIN Corporation v. Saudi Arabia (n 64), para.78 92 Ibid, para.82

93 Kontinental Conseil Ingénierie v. Gabonese Republic, PCA Case No. 2015-25; The final award

is not published publicly.

94Ibid, Judgment of the Paris Court of Appeal, 25 June 2019 <

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3.2.6 National Treatment

National treatment is another protection provided for investors to preserve them against discrimination. This clause obliges the host state to level the playing field between its nationals and foreign investors and not “to make negative differentiation between them.”95

Art.14 of the OIC agreement contains such clause, but its scope of application varies significantly from the same provision in the model BITs in question. The national treatment here is restricted to “compensation of damage that may befall the physical assets of investment due to hostilities of international nature committed by any international body or due to civil disturbances or violent acts of general nature.” The wording of relevant provisions of the US, UK, and German model BITs not only provide this protection for investments and investors of other party but also does not limit its scope of application to certain issues. The UK and German model BITs merge this protection with the MFN clause in their Art.3 while the German model accepts the same exceptions for this treatment as for the MFN clause, and the US model mentions this protection independently under Art.3.

Absence of a general obligation for the host state to accord a treatment to the foreign investor which is not less favorable than that it accords to its nationals can be considered as an important weak-point for this instrument while it has the aim of developing a favorable climate for investment. However, a possible justification can be found among other provisions of this instrument, mostly related Art.18. As discussed in the previous section, this agreement concluded as a basic agreement among members of the OIC and did not have the intention to be the final point in protecting foreign investments. Moreover, the function of the MFN clause under Art.8(1) can fill this gap and become a basis to incorporate this standard of treatment into the OIC agreement without any restrictions.

3.2.7 Positive Obligations for Investors and Counterclaims

The OIC agreement has accepted several obligations for the investors under Art.9 which reads: “ The investor shall be bound by the laws and regulations in force in the host state and shall refrain from all acts that may disturb public order or morals or that may

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be prejudicial to the public interest. He is also to refrain from exercising restrictive practices and from trying to achieve gains through unlawful means.”

Recently, the possibility of making counterclaims in investment arbitration has attracted attention among scholars. A counterclaim is defined as “ a claim made by the respondent in a case, but which goes further than a simple answer to the claimant’s claim.”96 What makes bringing

counterclaims before an investment arbitral tribunal impossible for the host state is, inter alia, that the parties “are not bound by reciprocal obligations.”97 In other words, as the only obligated party

under the IIAs are host states, not investors, it is not feasible for them to bring counterclaims. However, this article has been relied on by the host state in the Al-Warraq case to bring counterclaims against the investor. Although the tribunal rejected the counterclaim based on factual reasons, it admitted that this article accepts some positive obligations for the investor, and there is no limitation in dispute settlement provision of this agreement.98

Although there is no restriction for bringing a counterclaim under the dispute settlement provisions of the above-mentioned BITs, there is no similar provision providing positive obligations for the investor. The step taken by the OIC agreement is a great movement towards balancing the rights and obligations of investors and host states and would be a response to one of the criticisms against the investment protection system.99

3.2.8 Major Absents: FET and Umbrella Clause

Despite most IIAs that explicitly oblige the host state to accord fair and equitable treatment100 to

the investor and its investment, none of the provisions of this instrument contains such an obligation. One of the provisions is argued that can be invoked as the basis of this obligation, even though does not mention this type of protection explicitly, is subparagraph (d) of the first section of Art.13, which provides that one of the cases in which the investor is entitled to be compensated is when the host state “or one of its public or local authorities or its institutions:

96 Arnaud de Nanteuil, ‘Counterclaims in Investment Arbitration: Old Questions, New Answers?’

(2018) 17 The Law and Practice of International Courts and Tribunals 374

97 Ibid, p.376

98 Hesham Talaat M. A-Warraq v.Indonesia (n 55), paras.661,663

99 Charles Brower, Sadie Blanchard, ‘What’s in a Meme?The Truth about Investor-State

Arbitration: Why It Need Not, and Must Not, Be Repossessed by States’ (2014) 52 Columbia Journal of Transnational Law 689, p.712

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Causing, by other means [which does not fall under other cases] or by an act or omission, damage to the investor in violation of laws in force in the state where the investment exists.”

In the author’s view, this subparagraph is incapable of an interpretation that provides a FET obligation for the host state, mainly because it only covers the damages that occurred as the violations of the laws of the host state not international law including rules with customary nature. It becomes more interesting when Art.2 acceptes the similar, but not the same, type of protection namely ‘Full Protection and Security’. However, as mentioned before, the MFN clause can incorporate this provision to this agreement as did in the Al-Warraq case.

Generally, it does not seem reasonable for an agreement like this instrument which has the anxiety of provision and development of a favorable climate for investments among its parties not to provide some of the typical protections for investments. Art.18 indeed encourages the parties to conclude agreements with more favorable treatments, and Art.8 ameliorate this problem to some extent,101 but it shall not be an excuse for the absence of a FET obligation for the host state.

Moreover, the OIC agreement does not provide an umbrella clause which allows the investor to bring the claims for breaches of obligations arising from a source other than the treaty before the arbitral tribunal. The UK and German model BITs under Arts.2(2) and 7(2), respectively accept that the host state should observe any other obligations it may have entered into regarding investments made by investors. The US model BIT accepts the claims of breaching investment authorizations and agreements to be heard by arbitration tribunals under Art.24(1)(a)(i). The absence of such a provision limits the options available for investors to bring a claim and would force them to recourse to the dispute settlement mechanism of the sources of obligation (investment authorization or agreement) which mostly are the courts of the host state.

3.3 Enforcement of Award

After the achievement of an arbitral award, the beneficiary would try to enforce it. Although it is not usual for IIAs to indicate the rules governing the enforcement of the award, and these provisions can be found in other instruments,102 the OIC agreement touched this issue:

101 See the Al-Warraq and KCI cases

102 Treaties like ICSID convention (1956) (n 87) and New York convention on the recognition and

enforcement of foreign arbitral awards (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 3 contain provisions indicating the rules governing the enforcement of awards

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“The decisions of the Arbitration Tribunal . . . shall have the force of judicial decisions. The contracting parties are under an obligation to implement them in their territory, no matter whether it be a party to the dispute or not and irrespective of whether the investor against whom the decision was passed is one of its nationals or residents or not, as if it were a final and enforceable decision of its national courts.”103

This provision equates the arbitral awards with the final decision of a national court of a contracting state with a language similar to the ICSID convention.104 None of the above-mentioned model

BITs include a similar provision, but as they accept the ICSID arbitration as one of their dispute settlement options, at least in this case the final award would have the same authority according to the ICSID convention.

As most cases under this agreement are still pending or have not reached the enforcement stage “it is difficult to identify trends in the enforcement of arbitral awards rendered under [its] aegis. However, given the number of Arab states that are parties to both the New York Convention and the ICSID Convention, other avenues for enforcement may well be available.”105

3.4 Evaluation of Investment Protections

As the comparative study in this chapter indicates the OIC agreement covers a wide range of protections for foreign investments that not only has a similar scope with the protections under these capital-exporting states’ BITs but also on certain occasions provide a higher level of protection for the investors. Besides the absence of the FET and umbrella clause and a limited national treatment clause under this treaty, which can be compensated by the MFN clause, it provides comprehensive protections for foreign investments.

In line with its objectives, this treaty can increase the volume of capital flows between its member states and facilitate the economic development of them. This shows that it is still possible to conclude an MIT between states with different degrees of development without affecting the range

103 The OIC Agreement (n 4), Art.17(2)(d)

104 The relevant Article reads as: “Each Contracting State shall recognize an award rendered

pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.”, ICSID convention (n 87), Art.54(1)

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of substantive protections. The similarities between this agreement and the model BITs studied earlier indicate that, at least about substantive protections, this agreement has been a successful attempt by developing states to conclude an MIT covering investments in all sectors at the regional level.

In conclusion, the author believes that this treaty has all of the required elements to be draft articles in the process of negotiating an MIT between developing states irrespective of their differences. The possible recommendation for evolving the present agreement is the addition of new articles like investment and environment and investment and labor.106

4. Dispute Settlement Procedures

Dispute settlement mechanisms are the crucial part of any IIA as their efficiency and reliability guarantee the application of substantive protections. This chapter turns to the most important part of this study which is the introduction and evaluation of the current and proposed systems of investment dispute settlement under the OIC agreement that is another step in the assessment the main argument of this research.

Like almost all of the IIAs, this instrument, after providing the substantive protections, has allocated some of its provisions to familiarize the structure of its dispute settlement system. Generally, this instrument has not suggested several dispute settlement options to the parties like the choice between ICSID, arbitration under UNCITRAL rules, etc.

The first section discusses the current system of dispute settlement (4.1) and tries to analyze these provisions in light of the interpretations made by the arbitral tribunals in the decided cases initiated under this agreement.

The second part, which is also its innovative part, would describe the features of the proposed dispute settlement mechanism (4.2) that if being approved by the parties, would replace the current system. The evaluation of this mechanism based on the recent discussions and developments in ISDS would be the last section of this chapter.

4.1 Current System

The structure of the dispute settlement system of the OIC agreement is described under Arts.16 and 17. Generally, three different venues have been proposed to settle the disputes according to

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this agreement which are the host state’s judicial system, non-binding conciliation, and binding arbitration. However, the wording of these provisions has not been straightforward and has caused some challenging issues in their application by arbitral tribunals.

4.1.1 Characteristics

The starting point of this part is Art.16. The main difference of this article with Art.17 is that this article has confined its application to the investor and does not speak of the right of the host state. This provision obliges the host state to undertake and guarantee the right of recourse to its judicial system for the investor:

“ to complain against a measure adopted by its authorities against him, or to contest the extent of its conformity with the provisions of the regulations and laws in force in its territory, or to complain against the non-adoption by the host state of a certain measure which is in the interest of the investor, and which the state should have adopted...”107

Indeed, this provision gives vast options to the investor to bring claims against the host state before its judicial system noting that the investor can challenge the non-adoption of a certain measure by the host state which is in his interest.108 However, this article cannot be interpreted as a

pre-condition for bringing a claim against the host state before conciliation or arbitral tribunal as some BITs have provided the recourse to the courts of the host state as a pre-condition for the investor with a variety of wordings.

Despite the first part of this article that is in favor of the investor, the second part provides a ‘fork-in-the-road’ clause which prohibits the investor from recourse to arbitration when he chooses to raise the complaint before the national courts of the host state and vice versa. It is not surprising that there is no indication of conciliation in this clause as it is a non-binding system of dispute settlement.

Article 17 reads as follows:

107 The OIC Agreement (n 4), Art.16

108 However, direct applicability of this specific provision depends on the authority of treaties in

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“Until an Organ for the settlement of disputes arising under the Agreement is established, disputes that may arise shall be entitled through conciliation or arbitration in accordance with the following rules and procedures:

(1) Conciliation

1. (a) In case the parties to the dispute agree on conciliation, the agreement shall include a description of the dispute, the claims of the parties to the dispute and the name of the conciliator whom they have chosen. The parties concerned may request the Secretary General to choose the conciliator. The General Secretariat shall forward to the conciliator a copy of the conciliation agreement so that he may assume his duties.

2. (b) The task of the conciliator shall be confined to bringing the different viewpoints closer and making proposals which may lead to a solution that may be acceptable to the parties concerned. The conciliator shall, within the period assigned for the completion of his task, submit a report thereon to be communicated to the parties concerned. This report shall have no legal authority before a court should the dispute be referred to it.

(2) Arbitration

1. (a) If the two parties to the dispute do not reach an agreement as a result of their

resort to conciliation, or if the conciliator is unable to issue his report within the prescribed period, or if the two parties do not accept the solutions proposed therein, then each party has the right to resort to the Arbitration Tribunal for a final decision on the dispute. 2. (b) The arbitration procedure begins with a notification by the party requesting arbitration

to the other party to the dispute, clearly explaining the nature of the dispute and the name of the arbitrator he has appointed. The other party must, within sixty days from the date on which such notification was given, inform the party requesting arbitration of the name of the arbitrator appointed by him. The two arbitrators are to choose, within sixty days from the date on which the last of them was appointed arbitrator, an umpire who shall have a casting vote in case of equality of votes. If the second party does not appoint an arbitrator, or if the two arbitrators do not agree on the appointment of an Umpire within the prescribed time, either party may request the Secretary General to complete the composition of the Arbitration Tribunal.

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3. (c) The Arbitration Tribunal shall hold its first meeting at the time and place specified by the Umpire. Thereafter the Tribunal will decide on the venue and time of its meetings as well as other matters pertaining to its functions.

4. (d) The decisions of the Arbitration Tribunal shall be final and cannot be contested. They are binding on both parties who must respect and implement them. They shall have the force of judicial decisions. The Contracting Parties are under an obligation to implement them in their territory, no matter whether it be a party to the dispute or not and irrespective of whether the investor against whom the decision was passed is one of its nationals or residents or not, as if it were a final and enforceable decision of its national courts.” Based on this provision, a non-binding conciliation and ad hoc arbitration are designated as dispute settlement procedures. However, these procedures are not confined to investor-state disputes and can also cover inter-state disputes. As Art.1(6) defined ‘the government of any contracting party’ as one of the protected investors, investor-state dispute settlement can overlap inter-state dispute settlement and vice versa.

However, not all of the aspects of the arbitration procedure is indicated by this provision, and the wording of the entire Art.17 has been the subject of different, sometimes opposed, interpretations by the parties, which would be the subject of the next part.

4.1.2 Challenging Issues109

This part elaborates on the interpretive aspects of the dispute settlement procedure of the OIC agreement which interestingly all of them discussed in the Al-Warraq case.110

The first issue ,that can affect the tribunal jurisdiction ratione voluntatis, is whether Article 17 constitutes an investor-state arbitration provision or it only provides inter-state arbitration. The tribunal answered this question by considering the fact that “it is implicit in the language of Articles 16 and 17, and consistent with the object and purpose of the OlC agreement, to conclude that

109 The idea of discussing such aspects of the OIC agreement came from: Solomon Ebere (n 6),

pp.15-19

110 Hesham Talaat M. A-Warraq v. The Republic of Indonesia (Preliminary Objections) (Arbitral

Tribunal) (2012) <https://www.italaw.com/sites/default/files/case-documents/italaw3174_0.pdf> accessed 9 January 2020

Role of the Organization of Islamic Cooperation in Promoting International Investment and Settle Investment Disputes