“Effective Means” Means? The Legacy of Chevron v. Ecuador

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Effective means clauses in bilateral investment treaties—so-named because they require the host state to the investment to provide the investor with “effective means” of asserting claims and enforcing rights in the state’s domestic legal system—have been largely overlooked by practitioners and scholars in the field of investment treaty arbitration.  In 2010, however, the tribunal in Chevron v. Ecuador articulated that effective means clauses are lex specialis, a distinct obligation on the host state to adjudicate investors’ claims without “indefinite or undue delay.”  This approach, subsequently adopted and expanded upon by the tribunal in White Industries v. India, has engendered controversy.  Indeed, Ecuador sought to bring state-to-state arbitration against the United States on the ground that the two sovereigns were in actual opposition as to the meaning of the effective means clause in their treaty.  However, this arbitration was dismissed at the jurisdictional phase, saving the United States from having to articulate its view as to how such clauses should be treated at a merits hearing.

This Student Note traces the origins of the effective means clause and critiques the interpretation promulgated by Chevron and White Industries.  It argues that the decision to treat effective means clauses as lex specialis was based on insufficient textual evidence and is flawed as a matter of interpretation.  It also argues that the result is an unworkable standard:  it is too vague to inform states as to how to structure their judicial systems to comply with the clause’s requirements or to inform investors as to what they must undergo in domestic courts before they have a legitimate effective means claim, and it raises legitimate fairness and equity concerns.  Therefore, this Note offers two alternative approaches that subsequent tribunals could adopt to provide more principled meaning to effective means clauses, one drawing on subsequent state practice and one looking to international comparative law.