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Abaclat and others v. Argentina

Type of decisionDecision on Jurisdiction
Date of decision4 August 2011
Tribunal
Pierre Tercier (President)
Albert Jan van den Berg
Georges Abi-Saab (dissenting)
Legal instrumentBIT between Argentina and Italy (1990)
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Statements from this decision

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International Investment Treaties (IITs)
International Law Rules Applicable to IITs
Relationship of IITs to Other Sources of International Law
System of Precedents
While different tribunals should seek to act consistently with one another, there is no doctrine of precedent
Relationship of an IIT to General Principles of International Law
Good Faith
Abuse of rights is an expression of the principle of good faith; it is a fundamental principle of international law and international investment law
"Material good faith" and "procedural good faith" can be relevant at different stages of the proceedings
Further Problems
General principles of law require consent to be genuine and intended, i.e. free from coercion, fraud or any essential mistake; a distinction must, however, be drawn between the genuine character of the consent and the motivations lying behind it
Law of Treaties
Rules of Interpretation
Interpretation Rules of the Vienna Convention on the Law of Treaties (VCLT) as Reflecting Customary International Law
IITs must be interpreted using the rules of interpretation laid down in the VCLT
Object and Purpose as a Rule of Interpretation
When resolving procedural questions in the event of lacunae, a tribunal should make adaptations based on the object and purpose of the ICSID Convention
Protection of Investors under IITs
Applicability of IITs
Ratione Materiae – Definition of Investment
The Concept of "Investment"
General Remarks
The definition of investment provided in IITs focuses on what is to be protected, while the definitions developed regarding Article 25 ICSID Convention focus on the contributions
In the BIT between Italy and Argentina, the term "obligations" in Article 1(1) refers to the economic value incorporated into a credit title representing a loan, i.e. a bond
Investment “In the Territory”
The determination of the place of the investment depends on the nature of such investment; with regard to investments of purely financial nature, the criteria is where and/or for the benefit of whom the funds are used
Forum selection clauses are of a procedural nature; they are not relevant to determine the place where the investment was made
Ratione Personae – Protected Investors
Juridical Persons
Neither the definition in the Italy-Argentina BIT, nor Article 25 ICSID Convention limit the scope of eligible entities to those having full legal capacity; entities enjoying limited civil capacity are protected inasmuch as they have the capacity to make an investment, sue and be sued
According to general international law, a corporate entity enjoys the nationality of the state it is duly constitute and organised under and/or has its siège social
Dispute Settlement Clauses
Waiting Clauses / Duty to Attempt Settlement Before Arbitration
Character of Waiting Clauses
Even if the dispute settlement clause of an IIT establishes an integrated system for dispute resolution, the disregard for a litigation requirement is only relevant where it unduly deprived the host state of a fair opportunity to address the issue through its domestic legal system; a mere theoretical opportunity is not sufficient
If an IIT requires the dispute parties to conduct consultations "to the extent possible", this does not impose a mandatory admissibility requirement
Consequences of Failure to Observe the Waiting Period
The negotiation requirement in the IIT between Argentina and Italy concerns the admissibility of the claim, not the tribunal's jurisdiction
Applicable Law / Choice of Law Clauses
The question of the existence and validity of consent within the meaning of Article 25(1) ICSID Convention is not subject to the law applicable to the merits (i.e. Article 42 ICSID Convention or an IIT's choice of law clause), but rather to Article 25 ICSID Convention itself
Waiver of Rights Under an IIT
An exclusive choice of forum clause in a contract cannot bar a tribunal from examining treaty based claims
Claimants may consciously waive certain procedural rights vis-à-vis a third party when entering a mass-claim arbitration
In a mass-claim arbitration, the fact that the claimants entrusted a third party with extensive rights (inter alia waiving the ability to individually exercise procedural rights) is a problem of admissibility, not jurisdiction
Contract and Treaty Claims
Impact of Contract Claims on IIT Claims
Potential contract claims against entities which are not a party to the current treaty based arbitration are of no relevance
An IIT tribunal has no jurisdiction over pure contract claims
A claim has to be considered a pure contract claim where the host state breaches obligations arising by the sole virtue of such contract, i.e. where the host state did not exercise sovereign state power
Investment Treaty Arbitration
Distinction Between Jurisdiction and Admissibility
In a mass-claim arbitration, issues relating to aspects of the proceedings, which would not apply if there was just one claimant, must be considered a matter of admissibility, not jurisdiction
While the concept of "jurisdiction" under the ICSID Convention also covers issues which are usually considered issues of "admissibility", it is nevertheless appropriate to distinguish between these concepts
The difference between jurisdictional and admissibility issues is not always clear; if a tribunal decides that contrary to the parties' opinion an individual issue is one of admissibility rather than jurisdiction, any argument by the parties aimed at establishing a lack of jurisdiction should be considered as an argument of lack of admissibility by the tribunal
In a mass-claim arbitration, the fact that the claimants entrusted a third party with extensive rights (inter alia waiving the ability to individually exercise procedural rights) is a problem of admissibility, not jurisdiction
The negotiation requirement in the IIT between Argentina and Italy concerns the admissibility of the claim, not the tribunal's jurisdiction
"Material good faith" and "procedural good faith" can be relevant at different stages of the proceedings
Jurisdiction
Consent by the Parties
Irrevocability is not a prerequisite of a valid consent, but its consequence
The question of the existence and validity of consent within the meaning of Article 25(1) ICSID Convention is not subject to the law applicable to the merits (i.e. Article 42 ICSID Convention or an IIT's choice of law clause), but rather to Article 25 ICSID Convention itself
Objections regarding the formal invalidity of a power of attorney may be relevant under Rule 18 ICSID Arbitration Rules; they do not, however, affect the validity of claimant's consent to arbitration
A tribunal not only has the duty to examine the existence of a written document incorporating the consent, but also whether the consent reflects the claimant's sincere intention
General principles of law require consent to be genuine and intended, i.e. free from coercion, fraud or any essential mistake; a distinction must, however, be drawn between the genuine character of the consent and the motivations lying behind it
Where the request for arbitration is filed by a lawyer, the lawyer must be duly authorized to do so; it is the power of attorney and the request filed by him or her which contains and constitutes the investor's consent
One must distinguish the validity of the power of attorney and the validity of the consent
Further Problems
An IIT tribunal has no jurisdiction over pure contract claims
Admissibility
Prima Facie Case
At the jurisdictional stage, a tribunal must establish whether the facts alleged by the claimant, if established, are capable of coming within those provisions of the IIT which the claimant has invoked
Further Problems
The silence of the ICSID framework regarding mass-claim arbitration is not a qualified silence categorically prohibiting collective proceedings; the silence has to be considered as a gap, which a tribunal in principle has the power fill according to Article 44 ICSID Convention
The fact that a third-party may have taken a certain advantage from the conduct by the claimants of the proceedings cannot lead to the inadmissibility of the claims due to abuse of rights
Procedural Questions
Further Problems
Article 44 ICSID Convention and Rule 19 ICSID Arbitration Rules express the inherent power of any tribunal to resolve procedural questions in the event of lacunae
Costs
Further Problems
As Rule 44 ICSID Arbitration Rules does not provide a rule for the allocation of costs, a tribunal must turn to Article 61(2) ICSID Convention
Vienna Convention on the Law of Treaties
Article 31 - General rule of interpretation
Object and Purpose
When resolving procedural questions in the event of lacunae, a tribunal should make adaptations based on the object and purpose of the ICSID Convention
ICSID Convention
International Centre for Settlement of Investment Disputes (Articles 1-24)
Article 6
While a tribunal may resolve procedural questions in the event of lacunae, it must not modify existing rules or attempt to complete/improve the ICSID framework in general
Jurisdiction of the Centre (Articles 25-27)
Article 25
General Remarks
While the concept of "jurisdiction" under the ICSID Convention also covers issues which are usually considered issues of "admissibility", it is nevertheless appropriate to distinguish between these concepts
Consent
General Remarks
Irrevocability is not a prerequisite of a valid consent, but its consequence
The question of the existence and validity of consent within the meaning of Article 25(1) ICSID Convention is not subject to the law applicable to the merits (i.e. Article 42 ICSID Convention or an IIT's choice of law clause), but rather to Article 25 ICSID Convention itself
A tribunal not only has the duty to examine the existence of a written document incorporating the consent, but also whether the consent reflects the claimant's sincere intention
General principles of law require consent to be genuine and intended, i.e. free from coercion, fraud or any essential mistake; a distinction must, however, be drawn between the genuine character of the consent and the motivations lying behind it
Consent Based on an IIT
A state's consent to arbitration is expressed in the IIT
Objections regarding the formal invalidity of a power of attorney may be relevant under Rule 18 ICSID Arbitration Rules; they do not, however, affect the validity of claimant's consent to arbitration
Where the request for arbitration is filed by a lawyer, the lawyer must be duly authorized to do so; it is the power of attorney and the request filed by him or her which contains and constitutes the investor's consent
One must distinguish the validity of the power of attorney and the validity of the consent
In a mass-claim arbitration, the fact that the claimants entrusted a third party with extensive rights (inter alia waiving the ability to individually exercise procedural rights) is a problem of admissibility, not jurisdiction
The consent to ICSID arbitration entails consent to a mass-claim arbitration
Jurisdiction Ratione Materiae
Investment
The Parties’ Consent and “Investment” / Two-Part Test of Investment
The definition of investment provided in IITs focuses on what is to be protected, while the definitions developed regarding Article 25 ICSID Convention focus on the contributions
"Double barrelled test" does not mean that the IIT definition has to fit the definition in the ICSID Convention; the investment has to fit into both of these concepts as both focus on different aspects of the investment
"Salini" Criteria
The Salini criteria should not serve to create a limit which neither the ICSID Convention nor the IIT parties intended to create
Legal Dispute
A dispute is a disagreement on a point of law or fact, a conflict of legal views or interest between parties; it must relate to clearly identified issues between the parties
To the extent that a dispute relates to the existence, scope or violation of an investor's right under an IIT, there is a legal dispute within the meaning of Article 25 ICSID Convention
Jurisdiction Ratione Personae
Natural Persons
Defining Nationality According to National Law and International Law
As Article 25 ICSID Convention does not provide any specification regarding the question of nationality, the requirement may be determined by the contracting parties to the Convention
Juridical Persons
Further Problems
Neither the definition in the Italy-Argentina BIT, nor Article 25 ICSID Convention limit the scope of eligible entities to those having full legal capacity; entities enjoying limited civil capacity are protected inasmuch as they have the capacity to make an investment, sue and be sued
Arbitration (Articles 36-55)
Article 36
The scope of examination by the ICSID Secretary-General is limited; the question of who are the claimants is not definitely dealt with by him or her, but is subject to the examination by the tribunal
Article 36 ICSID Convention does not prohibit that the lack of relevant information in the request for arbitration may be cured before its registration; thus, claimants may be added after the filing of the request for arbitration
Article 42
General Remarks
The question of the existence and validity of consent within the meaning of Article 25(1) ICSID Convention is not subject to the law applicable to the merits (i.e. Article 42 ICSID Convention or an IIT's choice of law clause), but rather to Article 25 ICSID Convention itself
Article 44
Article 44 ICSID Convention and Rule 19 ICSID Arbitration Rules express the inherent power of any tribunal to resolve procedural questions in the event of lacunae
When resolving procedural questions in the event of lacunae, a tribunal should make adaptations based on the object and purpose of the ICSID Convention
The silence of the ICSID framework regarding mass-claim arbitration is not a qualified silence categorically prohibiting collective proceedings; the silence has to be considered as a gap, which a tribunal in principle has the power fill according to Article 44 ICSID Convention
While a tribunal may resolve procedural questions in the event of lacunae, it must not modify existing rules or attempt to complete/improve the ICSID framework in general
The respondent's advantage of not having to arbitrate thousands of individual cases justifies limiting its procedural rights in a mass-claim arbitration
Claimants may consciously waive certain procedural rights vis-à-vis a third party when entering a mass-claim arbitration
Rejection of a mass-claim arbitration may amount to a denial of justice; thus, a tribunal has to find the right balance between effective protection of the investment and preserving the parties' individual procedural rights, as certain issues will necessarily have to be examined collectively
Group examination of claims is acceptable where claims raised by a multitude of claimants are to be considered identical or at least sufficiently homogeneous
Article 45
The "withdrawal" of claimants in a mass-claim arbitration after the date of the Notice of Registration may be interpreted as requests for discontinuance pursuant to Rule 44 ICSID Arbitration Rules or as announcement of default within the meaning of Article 45 ICSID Convention
ICSID Arbitration Rules
Rule 18
Objections regarding the formal invalidity of a power of attorney may be relevant under Rule 18 ICSID Arbitration Rules; they do not, however, affect the validity of claimant's consent to arbitration
Rule 19
Article 44 ICSID Convention and Rule 19 ICSID Arbitration Rules express the inherent power of any tribunal to resolve procedural questions in the event of lacunae
When resolving procedural questions in the event of lacunae, a tribunal should make adaptations based on the object and purpose of the ICSID Convention
While a tribunal may resolve procedural questions in the event of lacunae, it must not modify existing rules or attempt to complete/improve the ICSID framework in general
The respondent's advantage of not having to arbitrate thousands of individual cases justifies limiting its procedural rights in a mass-claim arbitration
Rejection of a mass-claim arbitration may amount to a denial of justice; thus, a tribunal has to find the right balance between effective protection of the investment and preserving the parties' individual procedural rights, as certain issues will necessarily have to be examined collectively
Group examination of claims is acceptable where claims raised by a multitude of claimants are to be considered identical or at least sufficiently homogeneous
Rule 44
As Rule 44 ICSID Arbitration Rules does not provide a rule for the allocation of costs, a tribunal must turn to Article 61(2) ICSID Convention
Discontinuance means that the proceedings involving the claimants who are withdrawing will terminate; in mass-claim arbitration, discontinuance does not, however, mean the termination of the entire proceedings
The "withdrawal" of claimants in a mass-claim arbitration after the date of the Notice of Registration may be interpreted as requests for discontinuance pursuant to Rule 44 ICSID Arbitration Rules or as announcement of default within the meaning of Article 45 ICSID Convention

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