is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
At the outset, let me say that I believe in the importance and authority of the Supreme Court. Whatever one may say regarding the individual justices that comprise it, the fact remains that it is the institution granted by our Constitution with the power to make final interpretations regarding our laws. To disregard such would be to self-arrogate a power reserved for another and thus renders oneself (as well as the country) vulnerable (perhaps even more so) to the tempestuous and passing passions of the day. The blatant disobedience to the Court, no matter what the reason (and reasons are easy to make) is an unfortunate display of political immaturity and utter lack of statesmanship.
However, the past days also made it clear how fragile the power of the Court really is. Freshman law school teaches that the Court is the most passive of the three co-equal branches of government, unable to act except for “justiciable matters.” The Court has no army (unlike the Executive branch) and by nature (quite dissimilar to the Legislative branch) it cannot make public pronouncements unless required to do so by a case brought before it. The power of the Court, therefore, lies in its reticence, the mystique brought about by its rare presence in public life, and of making every word that it utters count.
And it is within this context that we inquire into the curious active public presence of the Supreme Court spokesman Midas Marquez. The Supreme Court should -- must -- only speak through its rulings. The Court should not be made to explain its decisions because the decision itself should categorically stand as the best form with which the Court expressed its decision and legal reasoning. The Court should not defend its decisions because to do so would be to mitigate the prestige upon which a lot of its power is based. As Sir Igor Judge, previous Lord Chief Justice of England and Wales, the head of the English judiciary, once said “I do not want the decision justified other than by the judge. The judge has the responsibility of making clear why he has reached the decision that he has.”
The very public visibility of the present Court administrator and (acting) chief of the Public Information Office is therefore quite peculiar. Considering indeed that the Supreme Court should not be made to explain or defend its rulings, then his act of doing so purportedly on behalf of the Court is superfluous at best. His pronouncements could not be considered as addendums or extensions of Court rulings (as no provision of law would support this). And if he were doing so on his own account, then it would have to be determined what special qualification does he have to entitle him to “explain” the decision of the Court. The credentials and thus right to clarify such Court decisions to the public by a Fr. Joaquin Bernas or Dean Amado Valdez or a Dean Sedfrey Candelaria I can understand. But as to the Court spokesman, the same is not quite so clear.
The said pronouncements by the Court spokesman have even led to complications. Last week, Justice Meilou Sereno “advised” Atty. Marquez “to be careful not to go beyond his role in such offices and that he has no authority to interpret any of our judicial issuances, including the present Resolution, a function he never had from the beginning.” Atty. Marquez then responded by reminding the public that Justice Sereno was speaking through her “dissenting” opinion, which is “merely” a dissent. While Atty. Marquez may be right in classifying Justice Sereno’s comment as a dissent, nevertheless, it does raise the uncomfortable spectacle of a Justice of the Supreme Court being engaged in a public disagreement and essentially being reminded by someone who is unquestionably a subordinate within the judiciary.
And this is not even an isolated one-time thing. Last March, as reported by Newsbreak: “SC spokesman Midas Marquez has been asked to ‘make the necessary correction to media’ surrounding the voting last September 14 of the status quo ante order stopping the House impeachment proceeding against Ombudsman Merceditas Gutierrez.” In this instance, the “senior justice was referring to Marquez’s statements that the justices were given copies of Gutierrez’s 60-page petition before they took a vote on the stay order.” And just this November, BIR Commissioner Kim Henares felt compelled to make a public clarification regarding certain “PEACe Bonds” in reaction to statements by Atty. Marquez. Which raises the question whether Atty. Marquez’s actual legal authority merits such a response from the BIR commissioner (or of any public official, for that matter).
These days, self-restraint in public life is a very rare thing indeed and therefore a virtue to be prized. The Court spokesman is respectfully encouraged to exhibit such restraint, confining himself to merely notifying the public as to when decisions are to be released and to provide copies of such decisions.
24.11.11
17.11.11
Stupid is the new sexy
is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
“There’s something of the mudslide about you. You bring everything down.” It’s one of my favorite movie lines, delivered icily by John Malkovitch (as Tom Ripley) in Ripley’s Game. For some reason, it reminds me of my long unanswered query: is there something in our water that makes people here dumber by the minute?
A marble monument? Cover it with paint. A beautiful road? Put billboards and dig big holes. A nice lake view? Put a huge Batangas sign. A welcoming park? Trash it and allow tacky little stores to squat. A historical site? Put McDonald’s. And ensure that everywhere there’s noise and the ugly mug of some politician and his family.
This freakish mentality is creeping into our services. Which is disconcerting as our economy runs on the service industry. Readers of this column may remember my friend who was shooed away by a Makati building security guard because “bawal tumingin sa directory.” Well, I once wanted to eat at Conti’s. After parking my car a guard comes up and menacingly asks: “Saan kayo?” As I was parked directly in front of Conti’s, I said: “Sa tingin mo saan??”
This idiotic behaviour happens every day. And I strongly disagree that poverty or education accounts for the stupidity: A friend went to KFC. The waitress was spaced out and was more intent in flirting with her co-workers than attending to customers. She was actually pissed off that she had to attend to customers. KFC is one of the worst: never getting delivery orders right, lines at the cashier are always long, and the waiters get angry or confused if you can’t give them the coins they want. Same with Chow King. Idiots.
In Red Ribbon, a friend of mine politely asked for an official receipt. The waiter grumpily replied that the machine dispensing receipts was broken. When my friend insisted, the waiter retaliated by asking for my friend’s name and TIN number and took 30 long slow minutes just to copy the details. The waitresses in Cyma can never remember the orders taken. The S&R meat section people are spaced out and clueless. Shell attendants just mindlessly talk and talk. Example -- Me: “P1,000 unleaded please (as I hand over the money).” Shell guy: “Sir, would you like Citibank card blah blah blah.” Me: “No, thank you.” Shell guy (without pausing to listen to my reply): “Sir, V-Power blah blah blah; sir, cash or card?” Me: “Huh?? High ka ba?? Hawak hawak mo na nga pera ko eh!!” Idiots.
In French Baker, another friend asked for carbonara. The waitress asked what type of pasta she wanted. My friend said she preferred spaghetti. The waitress cheerily replied (and notice that a lot of service providers here are very cheerful when they’re telling you that you can’t have what you want) there’s no spaghetti, only fettucine. My friend said that’s ok. The waitress then proceeded to confirm the entire order, saying “carbonara with spaghetti pasta.” When my friend pointed out that she previously said they’re out of spaghetti, the waitress just shrugged. When the order came, it was carbonara with spinach fettucine. Idiot.
A friend wanted to have Globe Internet. Globe responded by saying they don’t have available connection. Incredibly in the middle of Metro Manila. When it got finally connected, the Internet service kept fizzling out. Another friend went to PLDT, where he was pestered for immediate deposit before they install anything. He promptly paid, got lousy service, asked for his money back. The reimbursement took three weeks to be released. It has to be noted that prompt payments don’t matter much. Inadvertently miss a payment, disconnections are made and demand letters issued. But ask for service and they’re quite talented in making excuses. The same with Meralco, whose repairmen are always nowhere to be found but their disconnection people are incredibly determined workaholics. Idiots.
Cebu Pacific? Never on time. And they think that everything can be smoothed over with that stupid on-air games of theirs. Every flight delay, every re-seating, every chaotic check-in, every malfunctioning online reservation, every rough landing is accompanied by “sir, ok lang?” Siempre hindi! “We hope to make it up to you.” What the %•@# gave you the idea you’re capable of doing that!? Idiots.
Which is perhaps why it’s very hard to find a good martini here. A martini is like our adobo, simple ingredients but easy to louse up. M Cafe’s are disappointing. Mandarin’s Martinis is stingy. Stock Market’s and the rest of Serendra’s are abominations. And that I guess sums it all up. The secret to a good martini, like anything else in life, is simply the care put in making it. Apparently, a lot here just don’t care.
Filipino consumers should be more demanding. And uncompromising. Money is hard to come by in the Philippines for honest folks. There’s no reason why we should part with it for lousy crappy service.
“There’s something of the mudslide about you. You bring everything down.” It’s one of my favorite movie lines, delivered icily by John Malkovitch (as Tom Ripley) in Ripley’s Game. For some reason, it reminds me of my long unanswered query: is there something in our water that makes people here dumber by the minute?
A marble monument? Cover it with paint. A beautiful road? Put billboards and dig big holes. A nice lake view? Put a huge Batangas sign. A welcoming park? Trash it and allow tacky little stores to squat. A historical site? Put McDonald’s. And ensure that everywhere there’s noise and the ugly mug of some politician and his family.
This freakish mentality is creeping into our services. Which is disconcerting as our economy runs on the service industry. Readers of this column may remember my friend who was shooed away by a Makati building security guard because “bawal tumingin sa directory.” Well, I once wanted to eat at Conti’s. After parking my car a guard comes up and menacingly asks: “Saan kayo?” As I was parked directly in front of Conti’s, I said: “Sa tingin mo saan??”
This idiotic behaviour happens every day. And I strongly disagree that poverty or education accounts for the stupidity: A friend went to KFC. The waitress was spaced out and was more intent in flirting with her co-workers than attending to customers. She was actually pissed off that she had to attend to customers. KFC is one of the worst: never getting delivery orders right, lines at the cashier are always long, and the waiters get angry or confused if you can’t give them the coins they want. Same with Chow King. Idiots.
In Red Ribbon, a friend of mine politely asked for an official receipt. The waiter grumpily replied that the machine dispensing receipts was broken. When my friend insisted, the waiter retaliated by asking for my friend’s name and TIN number and took 30 long slow minutes just to copy the details. The waitresses in Cyma can never remember the orders taken. The S&R meat section people are spaced out and clueless. Shell attendants just mindlessly talk and talk. Example -- Me: “P1,000 unleaded please (as I hand over the money).” Shell guy: “Sir, would you like Citibank card blah blah blah.” Me: “No, thank you.” Shell guy (without pausing to listen to my reply): “Sir, V-Power blah blah blah; sir, cash or card?” Me: “Huh?? High ka ba?? Hawak hawak mo na nga pera ko eh!!” Idiots.
In French Baker, another friend asked for carbonara. The waitress asked what type of pasta she wanted. My friend said she preferred spaghetti. The waitress cheerily replied (and notice that a lot of service providers here are very cheerful when they’re telling you that you can’t have what you want) there’s no spaghetti, only fettucine. My friend said that’s ok. The waitress then proceeded to confirm the entire order, saying “carbonara with spaghetti pasta.” When my friend pointed out that she previously said they’re out of spaghetti, the waitress just shrugged. When the order came, it was carbonara with spinach fettucine. Idiot.
A friend wanted to have Globe Internet. Globe responded by saying they don’t have available connection. Incredibly in the middle of Metro Manila. When it got finally connected, the Internet service kept fizzling out. Another friend went to PLDT, where he was pestered for immediate deposit before they install anything. He promptly paid, got lousy service, asked for his money back. The reimbursement took three weeks to be released. It has to be noted that prompt payments don’t matter much. Inadvertently miss a payment, disconnections are made and demand letters issued. But ask for service and they’re quite talented in making excuses. The same with Meralco, whose repairmen are always nowhere to be found but their disconnection people are incredibly determined workaholics. Idiots.
Cebu Pacific? Never on time. And they think that everything can be smoothed over with that stupid on-air games of theirs. Every flight delay, every re-seating, every chaotic check-in, every malfunctioning online reservation, every rough landing is accompanied by “sir, ok lang?” Siempre hindi! “We hope to make it up to you.” What the %•@# gave you the idea you’re capable of doing that!? Idiots.
Which is perhaps why it’s very hard to find a good martini here. A martini is like our adobo, simple ingredients but easy to louse up. M Cafe’s are disappointing. Mandarin’s Martinis is stingy. Stock Market’s and the rest of Serendra’s are abominations. And that I guess sums it all up. The secret to a good martini, like anything else in life, is simply the care put in making it. Apparently, a lot here just don’t care.
Filipino consumers should be more demanding. And uncompromising. Money is hard to come by in the Philippines for honest folks. There’s no reason why we should part with it for lousy crappy service.
10.11.11
Class war
is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
Amid the sloganeering of the Occupy mob regarding the hated 1% were proper calls for restraint. Firstly, the Occupy Wall Street crowd actually is part of the 1%, income-wise if one takes that in the context of incomes made by individuals globally. But more importantly, to target the rich is mindless prejudice against men that would normally include the likes of Steve Jobs, Mark Zuckerberg, Bill Gates, and Warren Buffet. These are guys who built their wealth on sheer talent, intelligence, hard work, and - most importantly - without receiving an iota of goverment subsidy or bailout.
Thus, calls for class warfare in the US (or even Britain, Germany, and the rest of Europe) is uncalled for, even idiotic. The declaration by US President Barack Obama that the taxation of the rich is "not class warfare. It's math" is ingenuous at best. The Economist (Hunting The Rich, 24 September 2011) got it right (when has it not?) by calling for a more studied approach in taxing the rich, ensuring that shouts for undue redistribution be not indulged in, and yet recognizing that a more equitable sharing of the burdens of the economy should be made. In short, avoid class warfare. Nevertheless, Filipinos should be encouraged to read such within proper contexts. If one is to be asked if class warfare is to be applied in the Philippines, then there is a decidedly and hugely reasonable ground to answer in the affirmative.
The difference lies in the nature of their rich. The US and other Western countries have an incredibly healthy social mobility. Forbes' annual 400 richest Americans ranking points to the fact that the list of the richest men in 1990's US is far different from the list of 2011. This indicates a robust and effective competitive business environment, where talent (and not one's surname) is what matters. Another significant difference is that the people who lead in business would not be the same people who comprise government. While undoubtedly relationships exists between the two groups in any country, that is a far cry from having the same families actually in control of both business and government.
The Philippines obviously has a circumstance very different from the context with which The Economist placed its analysis. Social mobility here is non-existent. Any cursory reading of our history would show that the same names in government and business appear over and over and over and over again. The same names, the same families, would side with the Spanish against the Katipunan, collaborate with the Americans, collaborate with the Japanese, then see their kind give pardon to the collaborators, preside over ever increasing corruption and stagnation in the Third Republic, and then exploit (either in government or in opposition) the Marcos era, People Power, and Edsa Dos.
As Tony Lopez of BizNewsAsia once wrote: "In the last quarter century ... Filipinos must note: 1. The Philippines became the slowest growing economy in Asia in terms of per capita income ... 2. The same families who ruled today are the very same families who have ruled the country in the last 25 years. So if nothing happens to Filipinos, blame these dynastic families.” Ditto Elmer Ordonez of the Manila Times: "Self-interest and conspicuous consumption appear to be the oligarchy’s guiding lights. x x x Events like EDSA 1 and 2 are sometimes described as 'revolutionary' but they are actually transfers of political power from one set of oligarchs to another." The idea being peddled by the political class (which, it must be remembered, also constitutes the wealthy end of our social spectrum) pointing to corruption as the problem is misleading. It’s the elite families who are the problem. Commentators from vastly different ends of the political spectrum converge on this point.
That's why books or biographies about our "great" families or men are simply laughable. Claims of having succeeded out of nothing, through wars or poverty, or against political enemies all conveniently forget that their relatives or in-laws (or classmates) own the banks from which they get behest loans, or are part of governments that generously gives them subsidies, protectionist treatment, allowed war profiteering, or simply looks the other way when enforcing laws.
Albert Einstein once said that “insanity is doing the same thing over and over again and expect different results.” Well, it's insanity to have these same families ruling over and over again over the Philippines. We need laws and policies that directly address this insanity: stronger and more comprehensive estate taxes, taxes that focus on property (akin to Britain's Liberal Democrats' proposed "mansion taxes") rather than on wages or salaries, strong competition laws that restrains family control rather than the companies themselves, consistent and sustained liberalization of trade and the economy, controlled election spending, and an overhauled, stricter educational system.
To borrow US President Obama's line (for a more Philippine appropriate context): This is not class warfare; it's nation building.
Amid the sloganeering of the Occupy mob regarding the hated 1% were proper calls for restraint. Firstly, the Occupy Wall Street crowd actually is part of the 1%, income-wise if one takes that in the context of incomes made by individuals globally. But more importantly, to target the rich is mindless prejudice against men that would normally include the likes of Steve Jobs, Mark Zuckerberg, Bill Gates, and Warren Buffet. These are guys who built their wealth on sheer talent, intelligence, hard work, and - most importantly - without receiving an iota of goverment subsidy or bailout.
Thus, calls for class warfare in the US (or even Britain, Germany, and the rest of Europe) is uncalled for, even idiotic. The declaration by US President Barack Obama that the taxation of the rich is "not class warfare. It's math" is ingenuous at best. The Economist (Hunting The Rich, 24 September 2011) got it right (when has it not?) by calling for a more studied approach in taxing the rich, ensuring that shouts for undue redistribution be not indulged in, and yet recognizing that a more equitable sharing of the burdens of the economy should be made. In short, avoid class warfare. Nevertheless, Filipinos should be encouraged to read such within proper contexts. If one is to be asked if class warfare is to be applied in the Philippines, then there is a decidedly and hugely reasonable ground to answer in the affirmative.
The difference lies in the nature of their rich. The US and other Western countries have an incredibly healthy social mobility. Forbes' annual 400 richest Americans ranking points to the fact that the list of the richest men in 1990's US is far different from the list of 2011. This indicates a robust and effective competitive business environment, where talent (and not one's surname) is what matters. Another significant difference is that the people who lead in business would not be the same people who comprise government. While undoubtedly relationships exists between the two groups in any country, that is a far cry from having the same families actually in control of both business and government.
The Philippines obviously has a circumstance very different from the context with which The Economist placed its analysis. Social mobility here is non-existent. Any cursory reading of our history would show that the same names in government and business appear over and over and over and over again. The same names, the same families, would side with the Spanish against the Katipunan, collaborate with the Americans, collaborate with the Japanese, then see their kind give pardon to the collaborators, preside over ever increasing corruption and stagnation in the Third Republic, and then exploit (either in government or in opposition) the Marcos era, People Power, and Edsa Dos.
As Tony Lopez of BizNewsAsia once wrote: "In the last quarter century ... Filipinos must note: 1. The Philippines became the slowest growing economy in Asia in terms of per capita income ... 2. The same families who ruled today are the very same families who have ruled the country in the last 25 years. So if nothing happens to Filipinos, blame these dynastic families.” Ditto Elmer Ordonez of the Manila Times: "Self-interest and conspicuous consumption appear to be the oligarchy’s guiding lights. x x x Events like EDSA 1 and 2 are sometimes described as 'revolutionary' but they are actually transfers of political power from one set of oligarchs to another." The idea being peddled by the political class (which, it must be remembered, also constitutes the wealthy end of our social spectrum) pointing to corruption as the problem is misleading. It’s the elite families who are the problem. Commentators from vastly different ends of the political spectrum converge on this point.
That's why books or biographies about our "great" families or men are simply laughable. Claims of having succeeded out of nothing, through wars or poverty, or against political enemies all conveniently forget that their relatives or in-laws (or classmates) own the banks from which they get behest loans, or are part of governments that generously gives them subsidies, protectionist treatment, allowed war profiteering, or simply looks the other way when enforcing laws.
Albert Einstein once said that “insanity is doing the same thing over and over again and expect different results.” Well, it's insanity to have these same families ruling over and over again over the Philippines. We need laws and policies that directly address this insanity: stronger and more comprehensive estate taxes, taxes that focus on property (akin to Britain's Liberal Democrats' proposed "mansion taxes") rather than on wages or salaries, strong competition laws that restrains family control rather than the companies themselves, consistent and sustained liberalization of trade and the economy, controlled election spending, and an overhauled, stricter educational system.
To borrow US President Obama's line (for a more Philippine appropriate context): This is not class warfare; it's nation building.
3.11.11
Philippines ICSID’d
is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
When people talk about the World Bank, they’re actually talking about a family of institutions: the International Bank for Reconstruction and Development (otherwise known as the IBRD, otherwise known as the World Bank), the Multilateral Investment Guarantee Agency, the International Finance Corporation, the International Development Association, and -- most importantly right now for the Philippines -- the International Center for the Settlement of Investment Disputes.
The ICSID first came to (relative) public view when the German company Fraport sued the Philippine government for P18 billion in relation to its investment in NAIA3. After a much publicized victory by the government, the whole thing became a downer when the said “victory” was later overturned and the case was ordered to start, essentially, at the very beginning.
For students of public international law, the ICSID represents a huge development in that it allows entities normally considered as “objects” in international law to sue a State. As basic constitutional law declares, private individuals or entities are not allowed to sue the State on the basis of immunity, unless, that is, if the State gives its consent to be sued. The ICSID short circuits these obstacles and allows such private entities to protect their investments that they made in a foreign country.
So, for the purpose of encouraging investments among countries, the ICSID scheme was devised by the IBRD, thus accounting for the ICSID’s seat at the IBRD headquarters in Washington, DC. The jurisdiction of the ICSID is set out in Article 25 of the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention):
“The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.”
The ICSID has capacity for conciliation and arbitration. Conciliation requests are rare but arbitration is more common. However, very much like the Permanent Court of Arbitration (which international lawyers affectionately keep referring to as neither being “permanent” nor a “court” nor “arbitrates”), the ICSID is not a tribunal but rather a “framework.” The ICSID maintains a list (panel) of people who can act as conciliation or arbitrators.
It must be emphasized that ICSID proceedings are self-contained: no appeals to local courts, no diplomatic protection and once ICSID is engaged all other remedies are deemed excluded. The ICSID Convention obliges each contracting State to recognize and enforce pecuniary obligations imposed by awards of ICSID tribunals as if they were final judgments of the State’s own courts. Note that State immunity may still hold, but then that State will have to answer for possible treaty violation.
As it stands, the Philippines has two pending cases at the ICSID, with a potential for a third. As mentioned above, there is Fraport AG Frankfurt Airport Services Worldwide vs. Republic of the Philippines (docketed as ARB/11/12). This case, which practically signals a mere beginning (or all back to square one), is taking place after the government had reportedly already spent P2 billion in legal costs. But, as ruled by the ICSID just a little before Christmas Day last year, the original decision (made August 2007) favoring the Philippines was annulled when a second set of arbitrators was said to have found a procedural lapse. Apparently, Fraport was improperly disallowed by the first set of arbitrators from producing evidence relating to alleged agreements among Piatco shareholders as to managerial control of the subject airport.
The second case is Baggerwerken Decloedt En Zoon NV vs. Republic of the Philippines (docketed as ARB/11/27). This is a P4 billion suit against the present government when the latter unilaterally terminated the contract with Baggerwerken Decloedt en Zoon NV for the proposed Laguna Lake Rehabilitation Project for being allegedly a “midnight deal” of the past administration. Reportedly, that conclusion was reached due to a Cabinet secretary making the utterly laughable claim that a unilateral termination of the contract can be done without penalty to the government. The Belgian company subsequently shut down its operations, with an official of it being quoted in the newspapers as saying that it’s “impossible to do business in the Philippines.” Evidently, Belgian Prime Minister Yves Leterme wrote a letter to our government expressing his concern. The latter has yet to reply.
Another ICSID case could come if renegotiations fail after a contract with another foreign company has been unilaterally terminated. It’s really interesting that the government’s intensity in fighting with foreign investors (as well as fighting with the Supreme Court and the Catholic Church, and even the military) is inversely proportional to its determination to defend the State against the MILF or resist China’s Kalayaan advances.
When people talk about the World Bank, they’re actually talking about a family of institutions: the International Bank for Reconstruction and Development (otherwise known as the IBRD, otherwise known as the World Bank), the Multilateral Investment Guarantee Agency, the International Finance Corporation, the International Development Association, and -- most importantly right now for the Philippines -- the International Center for the Settlement of Investment Disputes.
The ICSID first came to (relative) public view when the German company Fraport sued the Philippine government for P18 billion in relation to its investment in NAIA3. After a much publicized victory by the government, the whole thing became a downer when the said “victory” was later overturned and the case was ordered to start, essentially, at the very beginning.
For students of public international law, the ICSID represents a huge development in that it allows entities normally considered as “objects” in international law to sue a State. As basic constitutional law declares, private individuals or entities are not allowed to sue the State on the basis of immunity, unless, that is, if the State gives its consent to be sued. The ICSID short circuits these obstacles and allows such private entities to protect their investments that they made in a foreign country.
So, for the purpose of encouraging investments among countries, the ICSID scheme was devised by the IBRD, thus accounting for the ICSID’s seat at the IBRD headquarters in Washington, DC. The jurisdiction of the ICSID is set out in Article 25 of the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention):
“The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.”
The ICSID has capacity for conciliation and arbitration. Conciliation requests are rare but arbitration is more common. However, very much like the Permanent Court of Arbitration (which international lawyers affectionately keep referring to as neither being “permanent” nor a “court” nor “arbitrates”), the ICSID is not a tribunal but rather a “framework.” The ICSID maintains a list (panel) of people who can act as conciliation or arbitrators.
It must be emphasized that ICSID proceedings are self-contained: no appeals to local courts, no diplomatic protection and once ICSID is engaged all other remedies are deemed excluded. The ICSID Convention obliges each contracting State to recognize and enforce pecuniary obligations imposed by awards of ICSID tribunals as if they were final judgments of the State’s own courts. Note that State immunity may still hold, but then that State will have to answer for possible treaty violation.
As it stands, the Philippines has two pending cases at the ICSID, with a potential for a third. As mentioned above, there is Fraport AG Frankfurt Airport Services Worldwide vs. Republic of the Philippines (docketed as ARB/11/12). This case, which practically signals a mere beginning (or all back to square one), is taking place after the government had reportedly already spent P2 billion in legal costs. But, as ruled by the ICSID just a little before Christmas Day last year, the original decision (made August 2007) favoring the Philippines was annulled when a second set of arbitrators was said to have found a procedural lapse. Apparently, Fraport was improperly disallowed by the first set of arbitrators from producing evidence relating to alleged agreements among Piatco shareholders as to managerial control of the subject airport.
The second case is Baggerwerken Decloedt En Zoon NV vs. Republic of the Philippines (docketed as ARB/11/27). This is a P4 billion suit against the present government when the latter unilaterally terminated the contract with Baggerwerken Decloedt en Zoon NV for the proposed Laguna Lake Rehabilitation Project for being allegedly a “midnight deal” of the past administration. Reportedly, that conclusion was reached due to a Cabinet secretary making the utterly laughable claim that a unilateral termination of the contract can be done without penalty to the government. The Belgian company subsequently shut down its operations, with an official of it being quoted in the newspapers as saying that it’s “impossible to do business in the Philippines.” Evidently, Belgian Prime Minister Yves Leterme wrote a letter to our government expressing his concern. The latter has yet to reply.
Another ICSID case could come if renegotiations fail after a contract with another foreign company has been unilaterally terminated. It’s really interesting that the government’s intensity in fighting with foreign investors (as well as fighting with the Supreme Court and the Catholic Church, and even the military) is inversely proportional to its determination to defend the State against the MILF or resist China’s Kalayaan advances.
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