The ad hoc Committee constituted within the International Centre for Settlement of Investment Disputes to consider a request for annulment filed by the Argentine government decided to continue in force the stay of the enforcement of an award until the request for annulment be resolved.
In a recent decision[1], the ad hoc Committee constituted within the International Centre for Settlement of Investment Disputes (“ICSID”) to consider the request for annulment filed by the Argentine government against the award rendered in May 2005 in favor of CMS Gas Transmission Company (“CMS”)[2] decided to continue in force the stay of the enforcement of said award until the request for annulment be resolved.
In addition, the ad hoc Committee rejected CMS’ request[3] to terminate the stay unless Argentina provided adequate assurances as to the payment of the award, such as an irrevocable bank guarantee, in the event its application for annulment failed.
As the basis for such request, CMS had argued that Argentina had not met the test previously established in MTD v. Chile[4], in which case the ad hoc Committee determined that the respondent – who was seeking a remedy under the ICSID Convention – should demonstrate that, for its part, it would comply with it and, should there be doubt in that regard, the Committee might order the provision of a bank guarantee as a condition of a stay of enforcement of the award.
In such respect, and quoting several Argentine public officials’ press reports, CMS contended that Argentina not only had never given any assurance that it would comply with the award voluntarily if the annulment application failed but, on the contrary, it had consistently expressed it’s intention to subject final ICSID awards to a new domestic review mechanism before the Argentine Supreme Court or other fora.
Considering the criterion established in MTD v. Chile, CMS argued that there was doubt as to whether Argentina would comply with article 54 of the ICSID Convention, on recognition and enforcement of the award[5], in the event that the award was not annulled by the ad hoc Committee.
In view of the above, the ad hoc Committee requested Argentina to file a written statement committing to comply with the award under the ICSID Convention, in the event that the award was not annulled. Such written statement was prepared by Argentine Attorney General, Dr. Osvaldo C. Guglielmino.
CMS contended that the Attorney General’s letter did not bind Argentina, since – in its view – only the President had the power for such purpose, and that the statement of Dr Guglielmino could be disregarded by his successor.
However, the ad hoc Committee held that under the provisions of the ICSID Convention[6] the Attorney General does have authority to commit Argentina[7] and that the letter of Dr Guglielmino irrevocably committed Argentina to enforce the pecuniary obligations imposed upon it by the award, in the event that the annulment was not granted. Consequently, the ad hoc Committee decided to grant the stay without requesting Argentina to provide a bank guarantee.
[2] Shareholder of Transportadora de Gas del Norte S.A. Argentina filed a request for the annulment of the award under Article 52 (1) of the ICSID Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”), specifically claiming that the Arbitral Tribunal had manifestly exceeded its powers and that the award had failed to state the reasons on which it was based.
[3] Pursuant to ICSID Arbitration Rules, rule 54(2): “(2) If an application for the revision or annulment of an award contains a request for a stay of its enforcement, the Secretary-General shall, together with the notice of registration, inform both parties of the provisional stay of the award. As soon as the Tribunal or Committee is constituted it shall, if either party requests, rule within 30 days on whether such stay should be continued; unless it decides to continue the stay, it shall automatically be terminated.”
[4] MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7). Decision of the ad hoc Committee’s on the Respondent’s request for a Continued Stay of Execution of June 1, 2005. Published on
http://www.worldbank.org/icsid/cases/MTD.pdf
(1) Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state.
(2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.
(3) Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought.
[6] On which it stated: “… under the Argentine Constitution, the Convention is consequently part of Argentine domestic law. As a consequence, in the opinion of the Committee, it has not been shown that Argentina needed to take any further step to give effect to the Convention and in particular to its Article 54”.
[7] ICSID Arbitration Rules, Rule 18. Representation of the Parties:
(1) Each party may be represented or assisted by agents, counsel or advocates whose names and authority shall be notified by that party to the Secretary-General, who shall promptly inform the Tribunal and the other party.
(2) For the purposes of these Rules, the expression "party" includes, where the context so admits, an agent, counsel or advocate authorized to represent that party.
