AsiaPhos Limited and Norwest Chemicals Pte Ltd v. People’s Republic of China

Case summary

At a glance

Parties: AsiaPhos Limited and Norwest Chemicals Pte Ltd (Singapore) v. People's Republic of China
Case no.: ICSID Case No. ADM/21/1
Forum and rules: Ad hoc arbitration under Article 13(3) of the Treaty, administered by ICSID; procedure determined with reference to the ICSID Convention and ICSID Arbitration Rules (2006), but the ICSID Convention does not apply; seat Geneva, Switzerland
Treaty: China–Singapore BIT of 21 November 1985 (in force 7 February 1986)
Tribunal: Prof. Dr. Klaus Sachs (President), Dr. Stanimir Alexandrov, Prof. Albert Jan van den Berg
Sector: Phosphate and barite mining; yellow phosphorus production
Outcome: Jurisdiction declined by majority and all claims dismissed (16 February 2023). Stanimir Alexandrov dissented.
Amount: Awarded to the claimants: nothing. The claimants bear all costs of the arbitration (USD 560,818.02) and must reimburse China USD 280,409.01 and CNY 6,351,402.48, with interest at the US Prime Rate, compounded annually, from the 90th day after dispatch of the Award.

The dispute

AsiaPhos and its wholly owned subsidiary Norwest Chemicals are Singapore companies. Through the Chinese company Mianzhu Norwest they held mining and exploration licences for two phosphate mines in Mianzhu City, Sichuan, and they owned the downstream P4 and STPP plants. AsiaPhos also held a 55% interest in Deyang Fengtai, which held exploration rights for a barite mine. In 2016–2017 China adopted a policy that banned mining in and around the Jiudingshan Nature Reserve and the planned Giant Panda National Park. The claimants said the mines were sealed in 2017, their licences were not renewed, and the plants had to shut in June 2018, all without compensation. They claimed indirect expropriation (Article 6), unfair and inequitable treatment, failure to provide full protection and security, and breach of commitments. China answered that the licences simply expired. In the bifurcated phase it objected that its consent in Article 13(3) covers only disputes over the amount of compensation for expropriation, and that the most-favoured-nation (MFN) clause in Article 4 cannot enlarge that consent.

Key holdings

Under its ordinary meaning, Article 13(3) covers only the amount of compensation for expropriatory measures whose existence and legality are undisputed or have already been established. The word "involving" is neutral, but the added words "the amount of compensation" would serve no purpose if any dispute that included a compensation element were covered. The drafting history confirms this reading. ¶¶ 82–89
Read with Article 13, Article 6(2) shows that the Contracting Parties had separate proceedings in mind. The legality and occurrence of an expropriation are for the host State's courts. The amount of compensation can go to domestic courts or, at the investor's choice, to arbitration. ¶¶ 106–110
The fork-in-the-road clause in Article 13(3), second sentence, is triggered only when the investor takes a dispute over the amount of compensation to a domestic court. An investor can therefore ask a Chinese court to rule on legality alone and keep quantum for arbitration, so the arbitration clause keeps its effect. Whether Chinese courts can in fact apply the Treaty is not relevant to the scope of consent. ¶¶ 131–140, 153, 176–177
The MFN clause in Article 4 cannot expand the consent to arbitration. Such an expansion requires a clear and unambiguous intention of both parties, and there is none here. The exchange of letters of 21 November 1985 shows that any wider arbitration clause would need a separate agreement. This applies to both the expropriation claim and the non-expropriation claims. ¶¶ 207–219
The Tribunal has no jurisdiction over any of the claims. Under Article 13(10), the claimants bear all costs of the arbitration and China's legal costs, with post-award interest. ¶¶ 221, 227–232
Dissent (Alexandrov): "involving" is inclusive, so Article 13(3) covers claims for indirect expropriation, including liability. He considered that the majority's reading of Articles 6(2) and 13(3) leads to absurd results, and he relied on Tza Yap Shum, Sanum and BUCG. He did not reach a view on the MFN clause. Dissenting Opinion ¶¶ 1, 6, 19–23, 42–49, 56, 62

Procedural history

7 August 2020The claimants notify their Request for Arbitration under Article 13(3) and appoint Stanimir Alexandrov.
21 October 2020China appoints Albert Jan van den Berg.
10 February 2021The co-arbitrators appoint Klaus Sachs as President; the Tribunal is constituted. On 2 March 2021 the Tribunal selects ICSID as administering institution.
13 July 2021Procedural Order No. 1 sets the procedural rules and alternative timetables (updated 14 September 2022).
23 December 2021Decision on Bifurcation: China's objection on the scope of consent (Article 13(3) and the MFN clause) is bifurcated; its other objections are joined to the merits.
26 May 2022Procedural Order No. 2 on the organisation of the hearing.
30 June – 1 July 2022Hearing on the bifurcated jurisdictional objection, held by videoconference.
16 February 2023Award: jurisdiction declined by majority and costs awarded against the claimants; dissenting opinion by Alexandrov.