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SGS V. Philippines

The tribunal in SGS v. Philippines addressed whether the state fulfilled its contractual obligations, with the Philippines claiming it had paid while SGS argued otherwise. The tribunal distinguished this case from SGS v. Pakistan by clarifying that not all contractual obligations can be treated as treaty obligations, emphasizing a balanced approach depending on whether the state acts as a sovereign or merchant. Additionally, the document discusses principles for compensation to foreign investors, including unjust enrichment and the right to property, along with methods for determining market value for compensation.

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Akarsh Kumar
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60 views2 pages

SGS V. Philippines

The tribunal in SGS v. Philippines addressed whether the state fulfilled its contractual obligations, with the Philippines claiming it had paid while SGS argued otherwise. The tribunal distinguished this case from SGS v. Pakistan by clarifying that not all contractual obligations can be treated as treaty obligations, emphasizing a balanced approach depending on whether the state acts as a sovereign or merchant. Additionally, the document discusses principles for compensation to foreign investors, including unjust enrichment and the right to property, along with methods for determining market value for compensation.

Uploaded by

Akarsh Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SGS V.

Philippines-

Whether state has paid as per contracts or not?

Phillipines- It has paid. SGS- P. has not paid

Umbrella clause-

Tribunal- Tried to differentiate with the case of SGS V Pakistan, as in SGS V Pak, Umbrella clause was
drafted in a vague terms which isn’t so in this case. Tribunal negated all the positions taken by it in
SGS V. Pak.

For Art- X(2)

In general- any contractual obligation can be made an treaty obligation, but in this case, you cant.
Coz if State couldn’t fulfill its part of contract in general, then

Tribunal -violation of contract may become violation of BIT/treaty obligation, but the extent of
violation of contract could not become a treaty obligation.

You cant appropriate and repropriate at the same time.

So, it’s not so that contractual obligation cant become treaty obligation. (As opposed to what
decided in SGS V Pak).

EL Paso case-

Tried to encompasses both SGS V Pak and SGS V Phillipines

What is needed Is a balanced approach.

See as to whether state appearing as a merchant or as a sovereign?

State gives license in its sovereign capacity, then then you can bring case/matter to international
tribunal but not when State acting as a merchant, say, for payment.

If there

……………………………………………….

4/10/21

Sonar- There is no established rule wherein

In treaties- it

Argument for cost effective compensation- it has become part of customary international law

Idea of full compensation- Based on general principles of law.

This has been derived from domestic law, i.e. in domestic law it is provided that in case of
contractual breach, party is liable to give full compensation’

(General principles of law is based on domestic law).

*Foreign investor should be compensated adequately – based on 3 principles :


1. Unjust enrichment- State should not be allowed to unjust enrichment at the expense of the host/
investor.

2. Doctrine of acquired right- If a person has been given some right, it cant be infringed otherwise he
must be compensated.

BITs itself doesn’t

3. Right to property- Investor’s investment is the prop. Of the investory. SO, if you taking it then the
investor need to be compensated.

…….

When any wrong committed to investor, the n except the profit which the investor may have
earned, only that be discounted while determining the amt of compensation.

Instead of adequate com. , appropriate compensation be given.

…..

-Ways of ascertaining market value-

1st is Book Value Method

2nd is ascertaining the value as per market value, it has to be compensated as the company of a
going concern which includes the future profits that comp can make.

3rd is discounted cashflow method – as per market value, that compensate the comp as per the
profit it was expecting to get.

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