ownership of an asset is insufficient to satisfy the test of being an “investor”. “An active relationship between the investor and the investment” is required.23 He found, however, that GRI qualified as investor not because of how it had acquired the Brisas Project, but because in subsequent years GRI had expended nearly US$300 million in developing the Brisas Project.24 It was this US$300 million which qualified as investment under the treaty, in his judgment. It was held as a consequence that Venezuela had lost its right to rely on state immunity in the proceedings.
Sovereign procedural rights
A number of procedural-related questions arise from the decision.
Should failing to disclose the intention of the opposing party to raise sovereign immunity issues have for sole consequence the paying of costs?
Or are more fundamental principles at stake?
The rationale of the judge was a practical one. He subsequently reached the conclusion that GRI was an investor for the purposes of the Venezuela-Canadian BIT and a party to an arbitration agreement in writing with Venezuela, within the terms of section 9 of the State Immunity Act 1978, concluding that therefore Venezuela did not enjoy jurisdictional immunity.
The issue nevertheless is, whether such inter parte hearing and decision of the judge subsequently, be purported, to give legality retrospectively to an ex parte order that in accordance with the procedural rights of the State at that point in time, should have not been given.
Further, Teare J took the view that this all came about as a failure of the claimant to make a full and frank disclosure. But admittedly he acknowledged also duties of the court to give effect to state immunity even when the State does not appear. It would follow that the court had an independent duty before issuing an ex parte order, to ensure that no state immunity defences were intended to be raised, in particular, in the face of the circumstances of the case where throughout the proceedings the State had claimed not to have waived immunity.
Underlying the case is the fundamental question of what is the correct method by which court proceedings are to be served on States in the context of enforcement of awards in England and when is an ex parte order appropriate. That is, a fundamental question of due process. At stake after all are the procedural rights of a State in the context of being impleaded before the courts of another State.25
Gold Reserve v the Bolivarian Republic of Venezuela leaves us with an unsettled statement of the law in that regard.The High Court granted permission to appeal to the Court of Appeal in the case. However, as news emerged of the parties having reached a settlement out of court,26 such procedural questions may remain issues to be clarified in the future by English courts.
EndNotes:
1. G Dealume, “State Contracts and Transnational Arbitration”, (1981) 75 AJIL 784, at p. 785.
2. Jurisdictional Immunities of the State (Germany v Italy-Greece intervening), Judgment, I.C.J. Reports 2012, p. 99, at para. 113. [“Jurisdictional Immunities case”]