The PCA in Model State Contracts

A number of States and international organizations have recognized the PCA’s experience in contract-based dispute resolution involving States, State entities, and intergovernmental organizations and have entrusted the PCA with roles in model contracts and standard agreements. These instruments frequently relate to natural resources, infrastructure projects, financing arrangements, and other activities involving significant public interests.

In recent years, government agencies in Argentina, Brazil, and Mexico have published model contracts and agreements concerning oil and gas exploration and exploitation that provide for a role for the PCA in their dispute settlement clauses. For example, Brazil’s National Petroleum, Natural Gas and Biofuels Agency included PCA arbitration in its Model Concession Agreement for Exploration and Production of Oil and Gas adopted for the country’s 15th bidding round in 2018. Similarly, Mexico’s National Hydrocarbons Commission incorporated PCA dispute settlement provisions in several model contracts for the exploration and extraction of hydrocarbons adopted between 2016 and 2017. Argentina has also included references to the PCA in bidding terms and conditions for offshore hydrocarbon exploration.

Previously, Ecuador incorporated PCA arbitration provisions in its 2010-2011 model petroleum services contracts. Mozambique and Seychelles, which are not yet Contracting Parties, likewise published model agreements in 2016 and 2013 respectively containing arbitration clauses referring to the PCA. References to PCA dispute settlement mechanisms also appear in certain model instruments adopted by international organizations and development institutions, including the Energy Charter Secretariat’s Model Intergovernmental and Host Government Agreements for Cross-Border Pipelines and Electricity Projects, as well as contractual frameworks used by institutions such as the Asian Infrastructure Investment Bank and the African Development Bank.

Such model instruments are intended for negotiations relating to State-sponsored projects that involve significant capital investment and engage public interests. The designation of an arbitral institution competent to administer disputes arising from such contracts may therefore raise particular considerations. States may prefer dispute resolution mechanisms associated with intergovernmental institutions, while investors may seek procedures that are familiar in international practice. The PCA’s institutional framework has facilitated its inclusion in a number of such agreements.

Dispute Resolution Services

Model State contracts frequently provide for arbitration administered by the PCA under the PCA Arbitration Rules or under the UNCITRAL Arbitration Rules. The PCA Arbitration Rules are themselves based on the UNCITRAL Arbitration Rules, but include a number of further adaptations reflecting the participation of States, State-controlled entities, or intergovernmental organizations.

In addition to arbitration, the PCA may support other forms of dispute resolution that may be incorporated into contractual dispute settlement clauses, including conciliation, mediation, and fact-finding commissions of inquiry.

Conciliation has formed part of the PCA’s activities since 1937, when the Administrative Council formally incorporated conciliation within the PCA’s mandate. The PCA subsequently adopted rules of procedure to facilitate conciliation proceedings. More recently, the PCA supported the conciliation proceedings between Timor-Leste and Australia concerning their maritime boundary in the Timor Sea between 2016 and 2018, which resulted in the conclusion of a maritime boundaries treaty between the parties.

Mediation procedures may likewise be conducted with the assistance of the PCA where parties agree to seek a negotiated settlement with the assistance of a neutral mediator. The PCA may provide administrative and logistical support for such proceedings under procedures agreed by the parties.

The PCA may also assist parties in establishing commissions of inquiry or other fact-finding mechanisms. Historically, such procedures have been used to clarify disputed factual circumstances between States, including in the 1905 Dogger Bank inquiry between Great Britain and Russia conducted under the Hague Conventions. Fact-finding mechanisms remain available to parties who wish to establish an objective record of facts that may facilitate the resolution of a dispute.

Appointing Authority Services

Model State contracts may also refer to the PCA through the designation of the PCA Secretary‑General as appointing authority. The appointing authority plays an important role in facilitating the constitution of arbitral tribunals and ensuring the proper conduct of proceedings under arbitration rules such as the UNCITRAL Arbitration Rules.

In this capacity, the PCA Secretary-General may appoint arbitrators where a party fails to do so, decide challenges to arbitrators for lack of independence or impartiality, and address certain issues relating to tribunal fees and deposits. The Secretary-General may also designate an appointing authority where the parties have not agreed upon one in advance. Model contracts may therefore provide for arbitration while designating the PCA Secretary-General to perform these functions.

Intergovernmental Nature

States that are Contracting Parties to the PCA are also members of the PCA’s Administrative Council. In certain jurisdictions, the intergovernmental character of the PCA may be relevant in the context of public procurement or other regulatory frameworks governing the designation of dispute resolution institutions in State contracts.

Immunities

The PCA enjoys privileges and immunities pursuant to its founding conventions, its Headquarters Agreement with the Kingdom of the Netherlands, Host Country Agreements with several States, and customary international law. These arrangements ensure the inviolability of the PCA’s premises and archives and provide protection for its assets in connection with the administration of dispute resolution proceedings.

Experience in Disputes Involving States

The PCA has administered mixed arbitrations involving States and private parties since its first such case in 1934. This experience complements its activities in inter-State and investor-State dispute settlement. Since 1976, the roles entrusted to the PCA under the UNCITRAL Arbitration Rules have further contributed to its experience in ad hoc international arbitration.

A number of States, including Bolivia, Ecuador, Nigeria, and Mauritius, have entrusted the PCA Secretary-General with exercising certain functions under national arbitration legislation. Through these activities, the PCA has developed experience in the appointment of arbitrators with expertise in disputes involving both commercial and public law considerations.

Global Accessibility of Proceedings

The PCA’s Host Country Agreements and Cooperation Agreements facilitate the conduct of proceedings in a range of locations worldwide. Through Host Country Agreements concluded with Contracting Parties to the 1899 or 1907 Conventions for the Pacific Settlement of International Disputes, the PCA and the host State establish a legal framework under which PCA-administered proceedings, including arbitration, mediation, conciliation, and commissions of inquiry, may be conducted within the territory of the host State.

These agreements address matters such as the provision of hearing facilities and the privileges and immunities afforded to arbitrators, and other participants in proceedings. Host Country Agreements are currently in force with States including Argentina, Austria, Bahrain, Brazil, Chile, China, Costa Rica, Djibouti, Ecuador, India, Ireland, Malaysia, Mauritius, Paraguay, Portugal, Singapore, South Africa, Uruguay, and Viet Nam.

The PCA has also concluded Cooperation Agreements with numerous arbitral institutions and international organizations worldwide, which facilitate the organization of hearings and meetings and promote the exchange of expertise. Such arrangements complement the PCA’s international offices in Buenos Aires, Mauritius, Singapore, Vienna, and Ha Noi, which support the administration of proceedings and provide additional venues for hearings and meetings.

Costs and Facilities

Notwithstanding the particular considerations that may arise in proceedings involving States or State entities, the costs of PCA dispute resolution services remain comparable to those of other dispute resolution providers. The PCA does not charge registration or annual maintenance fees and is generally remunerated only for work performed in accordance with its schedule of fees and costs.

Hearing and meeting rooms at the Peace Palace in The Hague, as well as facilities available through the PCA’s international offices and through Host Country Agreements and cooperation agreements with other institutions, may be made available to tribunals and other dispute resolution bodies in PCA proceedings.