The Claimants shall thus pay half of the costs of the annulment proceeding, including the fees and expenses of the Members of the Committee and the costs of the Centre. Lastly, Argentina does not dispute that the Tribunal followed the proper procedures for hearing and deciding an arbitrator challenge. A tribunal's reasons may also be implicit as long as they are understandable. Indeed, a review of the evidence relied on by Argentina to show that it did protest reveals actually that it merely argued that differences existed in the two cases that the Tribunal had to take into account at the. Unlike the other documents on Jus Mundi, these arbitral awards were rendered between two private parties and were initially confidential. Nonetheless, the Committee does not consider that the request for annulment in this case can be regarded as an abusive request for annulment as the Claimants assert. With regard to the second and third categories of reproductions, the question is whether they indicate a failure by the Tribunal to consider properly the arguments of Argentina and that this would amount to a manifest excess of power, a violation of a fundamental rule of procedure or a failure to state reasons. Where applied to the resolution of a disqualification proposal, this standard is not confined to verifying that the applicable procedures have been followed. During the arbitration, the Tribunal considered and rejected arguments against the use of. - 30 July 2010, Separate Opinion of Arbitrator Pedro Nikken (Decision on Liability), Award The Tribunal made another annullable error where it failed to explain how jurisdictional issues, which are clearly different from substantive issues, may fall within the scope of "all matters" relating to the term "treatment" in Article IV. The problem is that this is exactly what the Province of Santa Fe did. This case summary was prepared in the course of research for S Ripinsky with K Williams, Damages in International Investment Law (BIICL, 2008) LG&E Energy Corp., LG&E Capital Corp., LG&E International Inc. v The Argentine Republic Year of the award: 2006-2007 Forum: ICSID Applicable investment treaty: Argentina-US BIT (1991) Arbitrators In this respect there may be a difference between commercial arbitration, for which the IBA rules were developed, and investment arbitration where there is much greater a degree of public interest in the process and outcomes. Suez Crisis, international crisis in the Middle East, precipitated on July 26, 1956, when the Egyptian president, Gamal Abdel Nasser, nationalized the Suez Canal. The Tribunal rejected this rate because it was based on treating the amounts payable as an investment rather than as a debt and the Tribunal simply followed Dr. Equally, it manifestly exceeded its powers and failed to state reasons in concluding that Argentina would have provided fair and equitable treatment if it had reviewed tariffs to allow APSF to repay the secured debt. Argentina never argued before the Tribunal any subsequent treaty practice concerning the Spanish treaty. Notwithstanding this evidence, the unchallenged members of the Tribunal rejected the Proposal for Disqualification and Prof. Kaufmann-Kohler remained as a director of UBS. The Committee lifted the stay without conditions and deferred the decision on costs to a later stage of the proceeding. "Suez and ors v Argentina, Decision on Argentina’s Application for Annulment, ICSID Case No ARB/03/19, IIC 946 (2017), despatched 5th May 2017, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID]" published on by Oxford University Press. That to the Claimants constitutes. - 21 June 2017, Decision on Argentina’s Application for Annulment a. Annulment committees have ordered unsuccessful applicants to pay part or all of the prevailing party's costs in comparable cases, particularly where applications for annulment have been rejected in their entirety;169. b. Cost-shifting is the only check on the losing party's temptation to commence annulment proceedings as a matter of course, and holding Argentina accountable for the costs of this proceeding will discourage future abusive requests for annulment. Tense relationship Rather, Argentina seeks to question the quality or correctness of the Tribunal's reasons, which is not a proper basis for annulment. It is widely recognized that the power of annulment under Article 52 of the Convention does not extend to an appeal on facts or law. On January 17 and 18, 2018, the Committee held a Hearing on Annulment at the World Bank's headquarters in Washington D.C. "5 Moreover, she had reason to rely on the UBS's conflict review after having submitted a list of her arbitrations to the company for that purpose. Claimant(s): As for Argentina's allegations concerning the Tribunal's lack of reasoning in respect of its findings on Claimants' FET claim, Argentina's necessity defence and the Tribunal's valuation of damages, they do not really have anything to do with missing reasons. The Tribunal committed several annullable errors in determining damages in this case: (1) it awarded damages for a measure that was not found to violate the applicable BITs; (2) it valued damages by reference to principles that are at odds with the applicable legal framework as established in the Decision on Liability; (3) it ruled that compensation should be awarded in relation to management fees, even though it did not hold the management contract to be a protected investment nor did it determine the nature of such claim, and ordered compensation for services not rendered; and (4) it applied interest rates that exceeded those requested by the Claimants. As noted above, tribunals are the sole finders of fact, and do not have an obligation to address each and every piece of evidence submitted by a party. Additionally, the Tribunal manifestly exceeded its powers and seriously departed from fundamental rules of procedure where it considered the sponsored debt to be a protected investment for the first time in the Award. Unlike the lengthy analysis of the, Lastly, the Tribunal disregarded all the documentary, witness and expert evidence offered by Argentina in support of its necessity defence, without stating the reasons for which such evidence was considered insufficient, unpersuasive or otherwise unsatisfactory. This, the Respondent argues, meant that Professor Kaufmann-Kohler could not "be relied upon to exercise independent judgment" contrary to the specific requirement of. The canal had been owned by the Suez Canal Company, which was controlled by French and British interests. PROFESSOR KAUFMANN-KOHLER'S APPOINTMENT AS DIRECTOR OF UBS AND HER FAILURE TO DISCLOSE AND INVESTIGATE, C. FAILURE TO COMPLY WITH THE 18 MONTHS' LOCAL LITIGATION REQUIREMENT, D. NECESSITY UNDER CUSTOMARY INTERNATIONAL LAW, Article 31(1) of the Vienna Convention on the Law of Treaties. First, the Tribunal manifestly exceeded its powers and contradicted itself (thus failing to provide reasons) when it awarded damages for claims arising out of the termination of the Concession Contract. Argentina identifies four bases for the annulment of the Award of the Tribunal in relation to the valuation of damages. Failure to identify the facts and circumstances of a case correctly can readily lead to the impression that the tribunal has not devoted the necessary care to the substantive analysis applicable in each case separately. This is not an issue of selecting the right valuation date, as the Claimants contend, but one concerning the valuation period used by the Tribunal. As a result, the total amount of the Award came to USD 225,696,464, plus interest. The Claimants sought pre-award interest at three different rates; one for the period between Argentina's main breach in 2001 and the termination of the Concession in January 2006; another for the 9-month period immediately thereafter and another for the remainder time until the date of the Award (e.g. Accordingly, the Committee rejects Argentina's claim that the reproduction from texts of other awards constitutes a manifest excess of powers (Article 52(1)(b)), a serious departure from a fundamental rule of procedure (Article 52(1)(d)) or a failure to state reasons (Article 52(1)(e)). While arbitrators are subject to a duty to investigate and disclose true conflicts, that duty is not in and of itself a fundamental rule of procedure; it is at most a reflection of the requirement that arbitrators must remain independent and impartial. Dr. Argentina argues that the Tribunal manifestly exceeded its powers, and failed to provide reasons, by awarding damages for termination of the Concession Contract, even though it had found in its Decision on Liability that there had been no breach of the BIT through the termination of the Concession Contract. - 22 Oct 2007, Decision on a Second Proposal for the Disqualification of Gabrielle Kaufmann-Kohler However, the Tribunal took the view that it was not providing damages as if there had been a termination of the Concession Contract. However, the Committee observes that the fact that cases have been placed before a common tribunal is not a license for the tribunal to treat them as if they were a single case. 1 concerning various procedural matters. In the case of arbitration proceedings the Tribunal shall, except as the parties otherwise agree, assess the expenses incurred by the parties in connection with the proceedings, and shall decide how and by whom those expenses, the fees and expenses of the members of the Tribunal and the charges for the use of the facilities of the Centre shall be paid. Instead, it based its damages calculation on Argentina's treaty breaches that preceded the termination. Argentina began privatising public services, including water and sanitation, in 1989. v. República Argentina (ICSID Case ARB/03/17), the same tribunal confirmed this criterion and accepted the participation of third parties acting as amicus curiae (see case attached). Suez and Interagua v. Argentina: Suez, Sociedad General de Aguas de Barcelona, S.A. and Interagua Servicios Integrales de Agua, S.A. v. Argentine Republic (ICSID Case No. In such a case, an annulment committee cannot take on itself the task of deciding whether the tribunal has been properly constituted. 1 dated February 7, 2017, concerning procedural matters, Resolution ETOSS No. The following persons were present at the Hearing: On March 2, 2018, Argentina submitted a Statement of Costs (". Consequently, neither did the Tribunal fail to state reasons nor did it exceed its powers. 10 Egregious Investor-State Cases ... Summary This report examines how global corporations … - 14 Apr 2006, D. SUBMISSIONS ON ARGENTINA'S APPLICATION FOR ANNULMENT, IV. Accordingly, the Committee rejects Argentina's claim for annulment on the basis that the wrongful application of the MFN provision constituted a manifest excess of power or a failure to state supporting reasons. Suez (Arabic: السويس as-Suways; Egyptian Arabic: es-Sewēs, el-Sewēs pronounced [esseˈweːs]) is a seaport city (population of about 750,000 as of August 2018) in north-eastern Egypt, located on the north coast of the Gulf of Suez (a branch of the Red Sea), near the southern terminus of the Suez Canal, having the same boundaries as Suez Governorate. According to Argentina, the Tribunal committed two annullable errors when it permitted AGBAR and Interagua to rely on the MFN clause of the Argentina-Spain BIT to import the dispute settlement provision contained in the Argentina-France BIT and circumvent the otherwise applicable 18-month local court litigation requirement of Article X of the Argentina-Spain BIT.81 It manifestly exceeded its powers because it exercised jurisdiction without Argentina's consent and in doing so it also failed to state supporting reasons.82. When determining damages, however, the Tribunal compensated the Claimants for cash flows until the scheduled end of the Concession in 2025; this is, well beyond the Contract's (lawful) termination in 2006. For the Committee to go behind this would be to engage in an analysis of the substantive issues in the case, something beyond the mandate of an. And in any event it is beyond the scope of annulment for a committee to reweigh the evidence considered by the tribunal. Argentina has not sought annulment of all the ICSID awards rendered against it as the Claimants suggest. Following the First Session, the Committee issued on February 7, 2017, Procedural Order No. The Company collects, treats, and distributes drinkable water. Prices were frozen under an emergency law in 2002 after Argentina was plunged into economic crisis. However, the Committee does not consider that this goes far enough to constitute a manifest excess of powers, violation of a fundamental rule of procedure or a failure to state reasons. Such decision shall form part of the award. During the arbitration, the Claimants consistently argued that APSF's secured debt was a covered investment, and consistently sought damages for that investment. This is not a case like. Nor does Argentina claim that it was denied an opportunity to present its case on Professor Kaufmann-Kohler's independence and impartiality. Therefore, the Committee does not consider that the fact that the language in each case was identical of itself shows that there had been a manifest excess of power, or a violation of a fundamental rule of procedure. It is not possible to draw from this conclusion the supposition that the Tribunal must have ignored arguments for the contrary position. The Committee notes that the arguments made by Argentina here were precisely those raised by Argentina before the Tribunal and rejected. At the same time there have been a number of cases, including more recent decisions, which have interpreted MFN clauses not to include a reference to dispute settlement provisions. There can be no manifest excess of power here. Argentina contends that the Tribunal reproduced in this case the findings of the. Argentina, signed on 3 October 1991 and in force since 28 September 1992. On May 8, 2017, Argentina submitted its Memorial on Annulment (", On August 7, 2017, the Claimants submitted their Counter-Memorial on Annulment (", On October 5, 2017, Argentina submitted its Reply on Annulment (, On December 4, 2017, the Claimants submitted their Rejoinder on Annulment (". First, the Tribunal's liability and FET findings are clearly supported by reasons. sign up to receive free email headlines here. Summary of the Suez Crisis Erupted on July 26, 1956; the Egyptian president, Abdul Nasser nationlises the Suez Canal company as it was previously owned by the British and French. Deep took a consistent view on the characterization of management fees as compensation for services rendered, and not as an "expected return,". This undermined the integrity of the Tribunal and warrants annulment of the Award for improper constitution of the Tribunal and serious departure from fundamental rules of procedure. ", The first approach is that followed by the annulment committee in, Contrary to Argentina's position, Article 14(1) does not empower an, This being clear, there is no need to resort to supplementary means of interpretation. Indeed, the more substantial argument advanced by Argentina relates to the failure to state reasons, specifically in relation to fair and equitable treatment, the necessity defence and valuation. They found no conflict that could result in Professor Kaufmann-Kohler manifestly lacking independence and impartiality to hear this case. An error of law, even a serious error of law, is not an excess of powers under Article 52(1)(b) let alone a manifest one. As several committees have pointed out, a failure to state reasons may lead to annulment where there has been a total absence of reasons, which encompasses cases in which merely frivolous reasons have been stated; where a tribunal's reasoning is contradictory; or where the reasoning is lacking in coherence that a reader cannot follow it (i.e. There would have to be more evidence than this to give some indication that the Tribunal had failed to give due consideration to the arguments of the parties or ignored relevant evidence. In order to be serious, the violation of the rule must have caused the tribunal to reach a result substantially different from what it would have decided had such a rule been observed. 3/19 and AWG v. Argentina, an UNCITRAL (1976) proceeding (Suez 3/18, Suez 3/19 … Nor does the fact that some of the arguments contained in Argentina's pleadings are similar mean that the cases are identical. The treaty text is neither ambiguous nor does it lead to absurd or unreasonable results. Article 58 has assigned that task to the unchallenged members of the tribunal and when those members have exercised that function an annulment committee is faced with findings of fact, an assessment of those facts and an application of law to those facts. The conclusion of the unchallenged members on disqualification that the allegations against Professor Kaufmann-Kohler did not compromise her independence and impartiality was a decision that the Tribunal as composed was an independent and impartial Tribunal. The Respondent claims that annulment should not be opposed to an appeal; the scope of annulment is determined by reference to the wording of Article 52 interpreted in accordance with the rules for the interpretation of treaties. The Tribunal identified the four conditions that must be met to sustain a defence of necessity, on the basis of ILC Article 25(1), and then analyzed each in turn. The Tribunal did not overstep its powers nor did it fail to state reasons when selecting the applicable interest rate for calculating damages. The Respondent argues that the Tribunal was not properly constituted because one of the arbitrators, Professor Kaufmann-Kohler, did not meet the requirements of the ICSID Convention for appointment as arbitrator. In 1993 water in Buenos Aires was sold to a consortium called Aguas Argentinas made up of four foreign corporations: the British company Anglian Water, French companies, Vivendi and Suez … The costs of the proceeding, including the fees and expenses of the Committee, ICSID's administrative fees and direct expenses, amount to: The Committee notes that the Claimants were successful in opposing the annulment in this case and that success by a party should have an impact on costs. They therefore rejected the disqualification proposal. ", Nor did the Tribunal fail to consider Argentina's evidence on necessity. The MFN provision in this case. It failed to state reasons because it followed conflicting reasoning by which, on the one hand, it determined that the operator's fees were a protected investment and, at the same time, it applied the damages calculation prepared by the expert, which assumed that such fees were a rendered service, not a return on investment. In respect of a disqualification proposal, arbitrators are subject to a duty to investigate and disclose true conflicts, but that duty is not in and of itself a fundamental rule of procedure; it is at most a reflection of the requirement that arbitrators must remain independent and impartial. It made a determination on the facts that the contribution by the Argentine government both through its policies and its failure to act when it might have done so to be sufficiently substantial within the meaning of the test so identified. The relevant question, however, is not whether the Tribunal was right or wrong, but whether the Tribunal's decision is supported by reasons and/or constituted a flagrant jurisdictional overreach. Clearly a tribunal does not have to provide an analysis and conclusions on every piece of evidence before it. But, even if it could be shown that a tribunal is in error on the merits, this is not the basis for the annulment of an award. In its Decision on Jurisdiction of May 16, 2006, the Tribunal rejected all the objections raised by Argentina, except for one, which had become moot because of the discontinuance of the proceedings in respect of the claimant against which it was addressed. An inference is sought on the basis of the fact that language has been reproduced from the other awards that the Tribunal had not considered the specific facts of the Santa Fe Concession. The Tribunal did state the legal standards it purported to apply and provided reasons for its interpretation. Thus, a tribunal must take care that when it repeats the same reasoning in each of the cases it has also made clear that each case has been considered on its own merits. Even if it was clear (which it is not) that reconsideration of pre-award decisions is impermissible, the point is that Argentina had the chance to raise this allegation before; it was required to do so and yet it never did until now. The Committee observes that the reproduction of the text from the other awards appears to fall into three categories. 3. This approach ignores, however, that where an annulment committee is called to consider an arbitrator challenge that was decided during the underlying arbitration, the committee does not "write on a blank sheet.
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