Itisaluna Iraq LLC and others v. Republic of Iraq
ICSID · Investment (ICSID and treaty) · Iraq · 3 Apr 2020
Why it matters
This case is significant for its detailed analysis of the OIC Agreement's dispute resolution provisions and the limits of MFN clauses in investment treaties. The Tribunal clarified that Article 17 of the OIC Agreement does not provide consent to ICSID arbitration, and that MFN clauses cannot be used to import arbitration consent from other treaties. This decision impacts investors seeking to rely on the OIC Agreement for ICSID jurisdiction and sets a precedent for interpreting MFN clauses in the context of dispute resolution.
Summary
The case involved a dispute between four companies (Itisaluna Iraq LLC, Munir Sukhtian Investment LLC, VTEL Holdings Ltd., and VTEL Middle East and Africa Limited) and the Republic of Iraq regarding investments in Iraq's telecommunications sector. The Claimants alleged that Iraq breached its obligations under the OIC Agreement and the Iraq-Japan BIT. The Respondent objected to jurisdiction, arguing that the OIC Agreement does not provide consent to ICSID arbitration. The Claimants contended that Article 17 of the OIC Agreement constitutes general consent to arbitration, and that the MFN clause in Article 8(1) allows them to import the ICSID arbitration clause from the Iraq-Japan BIT. The Tribunal, after analyzing the text, context, and negotiating history of the OIC Agreement, concluded that Article 17 does not provide consent to ICSID arbitration. It further held that the MFN clause cannot be used to import a dispute resolution clause from another treaty, as such clauses are not substantive protections but procedural mechanisms. The Tribunal therefore upheld the Respondent's objection and dismissed the case for lack of jurisdiction. The Tribunal also awarded costs to the Respondent, finding that the Claimants should bear the majority of the costs, with a discount for the provisional measures phase.
The detail
Parties: Itisaluna Iraq LLC and others v. Republic of Iraq
Case number: ICSID Case No. ARB/17/10
Outcome: The Tribunal upheld the Respondent's objection to jurisdiction ratione voluntatis and dismissed the Claimants' case for want of jurisdiction. The Claimants were ordered to pay US$897,383.41 in costs to the Respondent.
Applicable law: OIC Agreement (Agreement on Promotion and Protection and Guarantee of Investments among Member States of the Organization of the Islamic Conference); Iraq-Japan BIT; ICSID Convention
Issues in play: The central issue was whether the OIC Agreement's Article 17 provides consent to ICSID arbitration, and whether the MFN clause in Article 8(1) could import the ICSID arbitration clause from the Iraq-Japan BIT. The Tribunal held that Article 17 does not constitute consent to ICSID arbitration and that the MFN clause cannot be used to import a dispute resolution clause from another treaty.
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