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Sunset Clauses in International Law and their Consequences for eu lawSunset clauses are not only a universal feature of the current bilateral investment treaties, theyIPOL STU(2022)703592 ENSunset clauses are not only a universal feature of the current bilateral investment treaties, they
are also a diachronic feature
; even the first bilateral investment treaty agreed between Germany and
Pakistan in 1959
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included two sunset clauses. The former in Article 14 paragraph 2 is a one-year sunset
clause activated once either signatory party submits the notice for termination.
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The latter is a ten-
year sunset clause activated once the treaty has expired and it extends the treaty provisions for ten
years to the already made investments.
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While it seems that sunset clauses are a permanent feature of investment treaties, - such clauses
recently attracted the interest of practitioners and academics alike for a number of reasons.
First, certain States denounced their BITs, for instance Indonesia
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and South Africa
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unilaterally
terminated a number of BITs, and most, if not all of these BITs, contained sunset clauses.
Second, some countries denounced the 1965 Washington Convention (the ‘ICSID Convention’), which
regulates the conciliation and arbitration of investment disputes between state parties to the
Convention and nationals of other contracting states .
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Bolivia was the first country that withdrew from
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See Kathryn Gordon and Joachim Pohl, Investment Treaties over Time – Treaty Practice and Interpretation in a Changing
World, OECD Working Papers on International Investment 19 (OECD Publishing) 19.
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See Treaty for the Promotion and Protection of Investments (with Protocol and exchange of notes), Germany and
Pakistan, 25 November 1959, 457 U.N.T.S. 24 (entered into force 28 November 1962).
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Treaty for the Promotion and Protection of Investments (with Protocol and exchange of notes), Germany and Pakistan,
25 November 1959, 457 U.N.T.S. 24 (entered into force 28 November 1962). Article 14, paragraph 2 provides that ‘(..)
After the expiry of the period of ten years, the present Treaty may be terminated at any time by either Party giving one
year's notice.’
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Treaty for the Promotion and Protection of Investments (with Protocol and exchange of notes), Germany and Pakistan,
25 November 1959, 457 U.N.T.S. 24 (entered into force 28 November 1962). Article 14, paragraph 3 provides ‘In respect
of investments made prior to the date of expiry of the present Treaty, the provisions of Articles 1 to 13 shall continue to
be effective for a further period of ten years from the date of expiry of the present Treaty.’
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‘Indonesia indicates intention to terminate all of its Bilateral Investment Treaties?’ (20 March, 2014)
https://hsfnotes.com/arbitration/2014/03/20/indonesia-indicates-intention-to-terminate-all-of-its-bilateral-investment-
treaties/
(last date accessed August 25 2021).
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see Tania Voon and Andrew D. Mitchell, ‘Denunciation, Termination and Survival: The Interplay of Treaty Law and
International Investment Law’ (2006) 31 ISCID Review 413, 424.
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The ICSID Convention entered into force in 1966 and by 2006, 143 States have ratified the Convention. Key provisions in
the ICSID Convention are articles 53 and 54, which regulate the recognition and enforcement of ICSID awards. In
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