National Courts and International Arbitration: Exhaustion of Remedies and Res Judicata under Chapter Eleven of NAFTA
![handle is hein.journals/hasint23 and id is 373 raw text is: National Courts and International
Arbitration: Exhaustion of Remedies and
Res Judicata Under Chapter Eleven of
NAFTA
BYWILLIAM S. DODGE*
Chapter Eleven of the North American Free Trade Agreement
(NAFTA)' marks an important development in the protection of
foreign investors within North America, not just because of its
substantive provisions, which clarify certain rules of customary
international law,2 but because it allows foreign investors to bring
claims directly against a host State in an international forum Before
* Associate Professor, University of California, Hastings College of the Law.
B.A., Yale 1986; J.D., Yale 1991. I would like to thank Ken Doroshow, Mary Kay
Kane, Dan Price, and Don Wallace for comments on an earlier draft and Armand
Roth for valuable research assistance. I should disclose that I was of counsel to the
claimants in Azinian v. Mexico, 14 ICSID REv. FOR. INV. L.J. 535 (1999), one of the
cases discussed below.
1. North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.-U.S., 32
I.L.M. 283 (1993), 32 I.L.M. 605 (1993) [hereinafter NAFTA].
2. Article 1110, for example, resolves a longstanding disagreement between
Mexico and the United States over the standard of compensation for expropriations.
In a 1938 dispute over property expropriated by Mexico, U.S. Secretary of State
Cordell Hull insisted that international law required prompt, adequate and
effective compensation (the so-called Hull formula), whereas the Mexican
Minister of Foreign Relations took the position that international law required only
that foreign investors be treated no less favorably than Mexican nationals. See 3
GREEN H. HACKWORTH, DIGEST OF INTERNATIONAL LAW 655-65 (1942) (reprinting
diplomatic correspondence). By providing for compensation without delay, at
fair market value, in a G7 currency, and that is freely transferable, see NAFTA
Art. 1110(2)-(6), 32 I.L.M. at 641-42, Article 1110 adopts the U.S. position. See
generally Tali Levy, Note, NAFTA's Provision for Compensation in the Event of
Expropriation Reassessment of the Prompt, Adequate and Effective Standard, 31
STAN. J. INT'L L. 423 (1995).
3. See NAFTA, Chapter 11, Section B, 32 I.L.M. at 642-47. Canada, Mexico,
and the United States have each concluded Bilateral Investment Treaties with other
countries that allow foreign investors to bring claims directly against the host State in
an international forum, but there was no such treaty between any two of the parties](ViewImageLocal?handle=hein.journals/hasint23&div=21&collection=&method=preview&ext=.png&size=3)
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National Courts and International Arbitration: Exhaustion of Remedies and Res Judicata under Chapter Eleven of NAFTA
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