FEDELMA C. SMITH

The Permanent Court of Arbitration (PCA), like the United Nations, is an inter-governmental organization. It is the organization for which the Peace Palace, which celebrated its first centenary last year, was constructed in 1913. The PCA was created in The Hague by treaty in 1899. As the world’s oldest intergovernmental organization dedicated to international dispute resolution, the PCA was an important precursor to the UN’s International Court of Justice. After a relatively dormant period from the Second World War to the turn of the millennium, the PCA is now experiencing renewed growth in its activity, with more cases currently pending than were submitted in the first century of its existence. This article will present an overview of the organization and of its main areas of activity.

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Creation

In the summer of 1899, the Tsar of Russia, Nicholas II, called the world’s leading ‘Powers’ of the time to a conference. At the centre of the agenda was the strengthening of the system for the peaceful settlement of international disputes. This was the first major multilateral international peace conference that was not held in the immediate aftermath of a European war, and is said to have marked the beginning of The Hague as ‘the International Capital of Peace and Justice’.[1] A second conference was convened in 1907 in order to make improvements to the 1899 Convention, in the light of experience of the PCA’s initial years of operation. The second conference, which was opened to a larger number of States, resulted in the adoption of the 1907 Convention for the Pacific Settlement of International Disputes. The principal innovation of the 1899 Hague Peace Conference was the creation of the Permanent Court of Arbitration.

The 1899 Convention stipulated that “With a view to obviating, as far as possible, recourse to force in the relations between States, the Signatory Powers agree to use their best efforts to insure the pacific settlement of international differences.”[2] The signatories to the 1899 Convention recognize that “In questions of a legal nature, and especially in the interpretation or application of International Conventions, arbitration is… the most effective and at the same time the most equitable, means of settling disputes which diplomacy has failed to settle.”[3]

At the time of the PCA’s creation, half a century before the adoption of the Charter of the United Nations in 1945, war was a recognized part of international relations. The drafters of the 1899 Convention strove to promote the peaceful alternatives that were available to States in dispute, namely: arbitration, mediation, and fact-finding commissions of inquiry. It was “with the object of facilitating an immediate recourse to arbitration for international differences, which it has not been possible to settle by diplomacy” that the Signatory Powers undertook “to organize a Permanent Court of Arbitration, accessible at all times”.[4]

The PCA was created with a three-part structure: first, the Administrative Council, which is made up of the diplomatic representatives of all the PCA member states; second, the panel of arbitrators, known as the Members of the Court; and third, the International Bureau, which is the PCA’s secretariat and carries out the day-to-day work of the PCA. As well as setting up a permanent, continually accessible mechanism to which States could have recourse for the settlement of disputes by arbitration, the 1899 Convention and its successor Convention of 1907 organized the rules of law governing the process of international arbitration, by setting out basic rules of procedure, from the submission of the dispute to arbitration, to the rendering of the arbitral award.
Throughout the 19th century, arbitration was used in a number of international disputes, including for instance the Alabama arbitration between the United States of America and the United Kingdom arising out of the US Civil War, but these had been organized on an ad hoc basis relating to a particular claim or set of claims. The drafting of the 1899 Convention was the first time the process had been systematically organized through a general, multilateral convention. The function of the International Bureau of the PCA is to provide administrative support to arbitral tribunals. It was created especially to provide this service for inter-state disputes, and it now also deals with cases where at least one party is a state, state entity or intergovernmental organization.
The PCA’s Activities: An Overview

From 1899 to 1914, the PCA dealt with fifteen instances of arbitration and two international commissions of inquiry. It continued to receive cases in the Interbellum, but then saw a period of little to no activity until the end of the 20th century. The PCA is currently administering over twice as many pending cases (78) as the total number of cases submitted to it in the first century of its existence (33). This overview will present some of the PCA’s recent activities and in particular will highlight the principal types of cases administered by the PCA: (i) inter-State disputes; and (ii) “mixed” disputes between a state or state entity on the one hand and a non-state entity, such as a private party, on the other.

Inter-State disputes

Inter-State disputes submitted to arbitration under PCA auspices have concerned such diverse matters as territorial sovereignty, the delimitation of land and maritime boundaries, environmental protection, treaty interpretation, human rights, and international humanitarian law. A number of the inter-state disputes administered by the PCA have taken place in post-conflict settings. Notably, the PCA provided support in the arbitration between Eritrea and Ethiopia to decide multiple claims arising out of breaches of the laws applicable in armed conflict that took place during the Eritrean-Ethiopian war of 1998-2000. The case was submitted to arbitration pursuant to the Algiers Agreement, signed by Eritrea and Ethiopia in December 2000, which brought the war to an end. The PCA further provided support to the boundary commission that was established, also pursuant to the Algiers Agreement, to delimit and demarcate the boundary between Eritrea and Ethiopia.

In the law of the sea, the PCA has administered the last seven arbitrations initiated under the 1982 United Nations Convention on the Law of the Sea, including a pending dispute between Mauritius and the United Kingdom and one between Bangladesh and India. A number of the PCA’s inter-State disputes have been concerned with environmental protection, including two cases submitted by the Netherlands: the Rhine Chlorides arbitration between the Netherlands and France, which concerned the treaty framework for international efforts to reduce industrial pollution; and the Iron Rhine arbitration between the Netherlands and Belgium, concerning the measures of environmental protection to be taken in the reactivation of an historic railway.

‘Mixed’ disputes

In addition to inter-state disputes, the PCA also offers its services in other cases where just one of the parties is a state or a state entity. The PCA’s founding Conventions expressly authorize the International Bureau to place its offices and staff at the disposal of the Contracting Powers for the use of any “special Board of Arbitration”.[5] The International Bureau first provided services under this provision in a dispute between a private body and a State in the 1930s, when a private company, Radio Corporation of America, brought a contractual claim against China. This case involved a claim that a contract to provide radio services was exclusive and had been violated by China’s entry into contracts with other companies. While the claim of Radio Corporation of America was rejected by the tribunal, the case constituted an important precedent in the history of the PCA.

Today, around 90{bfb8b4827b15e0df3d636cc4328af00f95317b5e6a44a4c67b5ed085bc570bb6} of the PCA’s currently pending cases are ‘mixed’ disputes involving a state or public entity, in particular, in the field of investor-state arbitration under investment treaties. Typically, in a bilateral or multi-lateral investment treat, the states parties to the treaty include a clause giving investors from one state the right to bring arbitration against the host state of the investment, to address claims relating to the rights provided to investors in the investment treaty. Those substantive rights will include guarantees against expropriation of the investment, guarantees of fair and equitable treatment, “full protection and security”, and “most favoured nation treatment”.

This type of arbitration is a relatively new field which has seen rapid expansion in the last two decades. The Netherlands alone, for example, has signed at least 97 BITs [bilateral investment treaties; ed.] allowing for this ‘mixed arbitration’. Historically, the only means of redress for the investor were to go to the courts of the host state of the investment, or for the country of its nationality to bring a claim internationally on the basis of diplomatic protection. Now, owing to a network of over 3,000 investment treaties, this area is expected to continue to grow. For foreign investors, this means that proceedings to protect an overseas investment can be initiated independently of foreign policy considerations of the state of nationality.

A unique case in this context is an intra-State dispute between the Government of Sudan and the Sudan People’s Liberation Movement, a boundary delimitation case between a central government and a national liberation movement. The question submitted to arbitration in 2008 was whether the Abyei Boundaries Commission or ABC, an earlier international boundary commission which had been tasked with establishing the boundary of the Abyei area, had gone beyond the powers entrusted to it. The tribunal created in 2008 was tasked, if it found that there had been an excess of power, with drawing the boundary afresh. This arbitration demonstrated the potential for speed of international arbitration. The arbitration agreement was deposited by the Parties in July 2008; the final award was rendered in July 2009. So far, this case has remained unique; however, given that most armed conflicts these days are non-international ones, the question arises whether this mechanism might be applied more often in future.

Adoption of Optional Rules and other activities

The Abyei arbitration was conducted under the PCA Optional Rules for Arbitrating Disputes between Two Parties of which Only One is a State. Those rules are one of four sets of optional arbitration rules that the PCA adopted in the 1990s, in order to cater for arbitrations between various combinations of states, private parties, and intergovernmental organizations. In 2012, the PCA modernized and consolidated the optional procedural rules adopted previously, with the PCA Arbitration Rules 2012, a single set of arbitration rules for any dispute of which at least one party is a state, state entity, or intergovernmental organization. The PCA Arbitration Rules, which are based on the 2010 Arbitration Rules of the United Nations Commission on International Trade Law, reflect the PCA’s experience in recent decades of administering an increasingly broad range of disputes.

As well as proving adaptable in its case administration activities, the PCA has sought to increase the accessibility of its dispute resolution services. In 1995, the PCA established a Financial Assistance Fund, which aims at helping developing countries meet part of the costs involved in international arbitration or other means of dispute settlement offered by the PCA. The PCA pursues a policy of concluding ‘Host Country Agreements’ (HCAs) with its member states, which is designed to allow the conduct of PCA-administered proceedings in the host country on similar terms as in the Netherlands, making PCA arbitration and other services more accessible to parties in the host country and the wider region. To date, the PCA has concluded HCAs in South America (Chile, Costa Rica); Africa (Mauritius, South Africa); Asia (Singapore, India), and pursuant to the Mauritius HCA, opened its first overseas office in Mauritius in 2010.

In addition to its case administration activities, the PCA acts as a centre for academic discourse. In this capacity, the PCA convened a seminar for Members of the Court and other invited guests in October 2013 to celebrate the centenary of the Peace Palace, under the title Confronting Global Challenges: From Gunboat Diplomacy to Investor-State Arbitration. The event included a keynote speech by Professor Jan Paulsson and a panel debate moderated by Judge Peter Tomka, President of the International Court of Justice.

Conclusion

As illustrated by the present overview, the PCA has been able to evolve in order to meet the changing needs of the international community. Events over the past 100 years of the PCA’s existence have shown all too clearly that recourse to armed conflict remains a regrettable fact of international affairs. The historic ideal that led to the creation of the PCA –the pursuit of international peace through justice – which brought world leaders together at the turn of the 20th century, remains as relevant in today’s rapidly changing environment.

Notes

[1]S. Rosenne, The Hague Peace Conferences of 1899 and 1907 and International Arbitration: Reports and Documents (The Hague: TMC Asser Press, 2001),pp. xiii, xvii.[2] 1899 Convention, Article 1; 1907 Convention, Article 1.[3] 1899 Convention, Article 16; 1907 Convention, Article 38.[4] 1899 Convention, Article 20; 1907 Convention, Article 41.[5] 1899 Convention, Article 26; 1907 Convention, Article 47.