The reason for allowing recovery was that losses on sponsored debt were a "direct consequence of Argentina's treaty violations". 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. 10 Egregious Investor-State Cases ... Summary This report examines how global corporations … It is not true that the Decision on Disqualification performed a mere. Argentina does not agree with the Tribunal's interpretation of the MFN provision in this case, but because there is disagreement with a tribunal's conclusions does not mean that the tribunal has failed to state reasons. Deep, and adopted by the Tribunal was lower than the one proposed by the Claimants. It need not prove that the tribunal would have effectively reached a different decision. This is not about whether Argentina could or could not have sought the annulment of that decision or its reconsideration by the original Tribunal as Argentina wrongly suggests. The two unchallenged members of the Tribunal rejected the proposal for disqualification. It also requested that enforcement of the Award be stayed until the Application was decided. Contrary to Claimants' position, an application for annulment must simply demonstrate the impact that the situation could have had on the award, that is to say, that observance of the rule departed from had the potential of causing the tribunal to render a substantially different award from the one it actually rendered. In respect of the first category, Argentina contends that it does not propose a, On the second category, Argentina claims that it has not invoked an erroneous application of the law in the present case. Using a false pretext, Britain, France and Israel united to invade Egypt in order to wrest the Suez Canal from the grip of Gamal Abdel Nasser, the passionate new President of Egypt. But here Argentina is begging the question. 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. The Tribunal indicated in its Decision on Liability that it did not find any basis in international law or the BIT for the view that the human right to water somehow overrode Argentina's obligations under its BIT or gave it a right to disregard those obligations. The Committee thus concludes that the Tribunal did not manifestly exceed its powers or fail to state reasons in respect of the length of the period chosen for the valuation of loss and the treatment of the risk of termination within the discount rate for the twenty-three year period of cash flows. In their Decision on Disqualification the unchallenged members of the Tribunal carefully reviewed the request made, the facts and arguments on which it was based, the law applicable to disqualification and how that applied to the request in respect of Professor Kaufmann-Kohler. In this case the Tribunal made a decision on its constitution. - 12 May 2008, Decision on Liability 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. First, the Tribunal's liability and FET findings are clearly supported by reasons. Sociedad General de Aguas de Barcelona, S.A. Agreement between the Government of the Argentine Republic and the Government of the French Republic on the Reciprocal Promotion and Protection of Investments, signed on July 3, 1991, and in force since March 3, 1993, Agreement between the Argentine Republic and the Kingdom of Spain on the Reciprocal Promotion and Protection of Investments, signed on October 3, 1991, and in force since September 28, 1992, Argentina's Application on Annulment dated September 16, 2016, Argentina's Memorial on Annulment dated May 8, 2017, Argentina's Reply on Annulment dated October 5, 2017, Argentina's Statement of Costs dated March 2, 2018, Award dated December 4, 2015, rendered in the case of, Suez, a company incorporated under the laws of France, Sociedad General de Aguas de Barcelona, S.A. ("AGBAR"), and Interagua Servicios Integrales de Agua S.A. ("Interagua"), companies incorporated under the laws of Spain, Claimants' Counter-Memorial on Annulment dated August 7, 2017, Claimants' Rejoinder on Annulment dated December 4, 2017, Claimants' Statement of Costs dated April 11, 2018, Decision on Jurisdiction dated May 16, 2006 issued in the case of, Decision on Liability dated July 30, 2010 issued in the case of, Decision on Rectification dated May 20, 2016 issued in the case of, IBA Guidelines on Conflicts of Interest in International Arbitration adopted by resolution of the IBA Council on May 22, 2004, International Centre for Settlement of Investment Disputes, ICSID Rules of Procedure for Arbitration Proceedings in force as of April 10, 2006, Convention on the Settlement of Investment Disputes between States and Nationals of other States, Draft Articles of Responsibility of States for Internationally Wrongful Acts adopted by the International Law Commission in 2001. But for the rest the parties differed. Second, the Tribunal's reasoning for rejecting Argentina's necessity defense is also stated in the Award. 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. v. Argentina was an ICSID Convention proceeding. Prices were frozen under an emergency law in 2002 after Argentina was plunged into economic crisis. Argentina also argues that the Tribunal manifestly exceeded its powers and seriously departed from fundamental rules of procedure and failed to state reasons in relying on the report of the expert Dr. Although the existence of a decision on disqualification in the original arbitration proceeding may be an element of judgment for the annulment committee when verifying the proper constitution of the tribunal, it is not binding on the committee nor should it limit its jurisdiction to determine the proper constitution of the tribunal. It stated reasons for its decision and disagreement with those reasons or with the result reached cannot lead to the conclusion that the Tribunal failed to state reasons. Abraham USD 87,141.65, ICSID's administrative fees USD 116,000.00. The Committee considered that this ample treatment of the issue fully responds to the need to state reasons. Both terms must be less than X words apart. Each Party shall bear half of ICSID's administrative fees and expenses incurred in connection with this proceeding, including the fees and expenses of the Members of the Committee. It considered that the existence of a dispute settlement clause in the concession contract concluded by Aguas Provinciales de Santa Fe S.A. ("APSA"), an Argentinian corporation in which the Claimants had shares and other interests, and the Province of Santa Fe for the operation of the water services in that Province did not preclude the Claimants from bringing this arbitration based on breaches of the Argentina-France and the Argentina-Spain BITs. The text and context of Article 52(1)(a) make it clear that the manifest lack of the qualities required by, Supplementary means of interpretation confirmed this conclusion. The problem is that this is exactly what the Province of Santa Fe did. Thus, any suggestion that a jurisdictional error is by its very nature manifest must be rejected. In those circumstances it could have been expected that the Tribunal would have common answers on some issues and the volume of common extracts is not a decisive factor. The Committee's role under either Article 52(1)(a) (i.e. The Tribunal "manifestly" exceeded its powers because it went far beyond the parties' consent, something that is readily apparent from a mere reading of the Award. The Parties confirmed, among others, that the 2006 ICSID Arbitration Rules would apply to the annulment proceedings. The Claimants argue that the Respondent's challenge under Article 52(1)(a) is based on an assumption that a tribunal may decide anew whether the requirements of Article 14(1) have been met. 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. Argentina on the hook for breach of Fair and Equitable Treatment Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal v. Argentine Republic (ICSID Case No. The. As several committees have held, for an excess of powers to be "manifest," the underlying issue cannot be subject to more than one reasonable interpretation or otherwise be open to debate. Suez, Sociedad General de Aguas de Barce de Agua S.A. ona S.A. and Interagua Servicios Integrales, Worldwide Reporting, LLP, English Court Reporter, Treasury Attorney-General's Office personnel costs, Airline tickets, hotel and travel expenses. All other requests by the Parties are dismissed. All its claims seek an impermissible, Annulment, however, is not an appeal. There is no evidence that the errors in this category meet that test. 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. incomplete or inadequate reasons). Claimants refer to Article 52(4) of the Convention, which grants annulment committees the power to require losing parties "to pay their opponents' expenses in appropriate circumstances". Professor Kaufmann-Kohler's financial position would not thus be altered by the result of this arbitration in any material form. The risk of termination was a factor taken into account in the discount rate applied to the twenty-three years of projected cash flows. In Suez v Argentina (Case no ARB/03/17), a challenge to an ICSID arbitrator based upon her participation in an earlier award which was unfavourable to the challenger has been rejected. The Tribunal, on the one hand, recognized the 18-month local litigation requirement as a mandatory condition and, on the other hand, it acknowledged that such requirement had not been satisfied by AGBAR and Interagua. That to the Claimants constitutes. There can be no manifest excess of power here. Although annulment is not an appeal, as it does not authorize substituting the annulled decision with another, this does not mean that annulment grounds should be construed strictly. Specifically, during the course of the arbitration Professor Kaufmann-Kohler accepted an appointment as a member of the Board of Directors of UBS, a company that held shares in one of the claimant companies, Suez. Suez, Sociedad General de Aguas de Barcelona S.A., and InterAgua Servicios Integrales del Agua S.A. (Claimants) and The Argentine Republic (Respondent) (ICSID Case No. The Committee has to construe Article 52(1)(a) in light of the facts on which the claim to annulment takes place. It does not agree with the Tribunal on the merits of its decision. As the, Argentina's second annulment ground should also be dismissed. The Tribunal also exceeded its powers and failed to state reasons where, in contradiction of its own previous findings, it concluded that the Province would only have acted fairly and equitably if it had reviewed tariffs so as to enable APSF to repay the secured debt in full regardless of any other consideration such as the level of financial leverage, thereby effectively removing any financial risk from the Concessionaire. As noted above, the few passages in which the Tribunal refers to this matter are copied from the. Accordingly, the Committee rejects the claim that the Tribunal was not properly constituted on the ground that Professor Kaufmann-Kohler manifestly lacked the necessary independence and impartiality required by. Thus, the decision of the Tribunal on interest was. Deep relied on a proposal to modify the Concession Contract, known as. Suez SA, formerly Suez Environnement Company SA is a France-based holding engaged predominantly in the area of environmental services, transforming waste into resources. 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. It had called for a 60% price rise to pay for infrastructure improvements, but the government offered just 16%. The Tribunal took the view that the management contract, which provided for the payment of fees, was an integral part of the Claimants' investment. The 18-month local litigation requirement stands only if it is not superseded by application of the MFN clause. Nor did they believe that Professor Kaufmann-Kohler's nondisclosure of her UBS directorship demonstrated lack of independence or impartiality. Argentina mischaracterizes how the Tribunal valued the Claimants' loss. ", Claimants request that "Argentina bear all costs and expenses incurred by the Claimants in connection with the present annulment proceedings, including the fees of the Centre, the costs and fees of the. Box 3: Suez v. Argentina: A Civil Society Perspective.....8 III. Argentina simply disagrees with how the Tribunal applied the law to the facts, which is not a ground for annulment. Notwithstanding this evidence, the unchallenged members of the Tribunal rejected the Proposal for Disqualification and Prof. Kaufmann-Kohler remained as a director of UBS. Tense relationship The Tribunal did state the legal standards it purported to apply and provided reasons for its interpretation. As Argentina correctly points out a decision of a tribunal cannot be annulled; only an award can be annulled. Accordingly, the Committee does not find the Tribunal's treatment of sponsored debt as an annullable error. departure from a fundamental procedural rule), the Committee need not even consider it. The Company collects, treats, and distributes drinkable water. The MFN provision in this case. Consequently, neither did the Tribunal fail to state reasons nor did it exceed its powers. Rather, Argentina seeks to question the quality or correctness of the Tribunal's reasons, which is not a proper basis for annulment. The Committee's concern, therefore, is that in establishing the level of knowledge that needs to be had to understand whether there is manifest lack of independence or impartiality, insufficient attention may be given to the question of the perception of lack of independence or impartiality. 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 weight of authority agrees also that the manifest requirement applies equally to both jurisdictional and merits decisions. Thus, Argentina is essentially asking for a reconsideration of the Tribunal's decision on the merits of the damages award. Even so, annulment committees have accepted that an error of law may in some circumstances constitute a manifest excess of power under. Find out all Jus Mundi tutorial videos in : https://tutorial.jusmundi.com, In less than 3 minutes you'll find everything you need to know about Jus Mundi and how to take full advantage of our search engine.. We continuously identify new themes to add to the existing Wiki Notes as well as Contributors to author new Notes. This Wiki Note has not been submitted yet. The Committee observes that the parties had agreed to have a common tribunal for the three cases and that the parties themselves recognized that there were issues that were in common in the three cases by reproducing the same legal arguments for all of the cases on some issues before the Tribunal. The following persons were present at the Hearing: On March 2, 2018, Argentina submitted a Statement of Costs (". IMPROPER CONSTITUTION OF THE TRIBUNAL (ARTICLE 52(1)(A) OF THE ICSID CONVENTION), C. MANIFEST EXCESS OF POWERS (ARTICLE 52(1)(B) OF THE ICSID CONVENTION), D. SERIOUS DEPARTURE FROM A FUNDAMENTAL RULE OF PROCEDURE (ARTICLE 52(1)(D) OF THE ICSID CONVENTION), E. FAILURE TO STATE REASONS IN THE AWARD (ARTICLE 52(1)(E) OF THE ICSID CONVENTION), VI. 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. To find an excess of power for failure to apply the applicable law, there must have been a failure to apply the law. 1 Concerning the Discontinuance of Proceedings with Respect to Aguas Provinciales de Santa Fe SA On June 21, 2017, the Committee issued its Decision on the Stay of Enforcement of the Award. Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. (Claimants) and. It is not possible to draw from this conclusion the supposition that the Tribunal must have ignored arguments for the contrary position. It also includes reviewing whether an arbitrator possesses the requisite qualifications to serve as such. The Committee observes that the question of whether an MFN provision in an investment agreement can be invoked in order to obtain the benefits of dispute settlement provisions in another investment agreement, and specifically an 18-month local litigation requirement, has arisen in a good many cases and inspired a substantial scholarly literature. In short, what Argentina is attacking is the substance of the issue. The Committee sees neither party as capturing accurately the standard of review when annulment is requested under Article 52(1)(a). 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. Interagua Servicios Integrales del Agua S.A. Dr. Further, Argentina claims, the Tribunal ignored large volumes of documentary, expert and witness evidence submitted to it by Argentina. 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. Also, where it has done so, its applications have been based on well-grounded reasons. 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