Selection of the seat of arbitration and attempts of judicial interference

Eventually, on July 17, 2008, Division IV of the Federal Court of Appeals on Administrative Matters (the Court) found jurisdiction to decide on whether the ICC Court had properly ruled on the respondent‘s challenge against the arbitrator Andrés Rigo Sureda, award rendered in the “National Grid Transco plc (United Kingdom) v. Argentine Republic (Argentine) UNC 72/CCO” case, pending before ICSID under the UNCITRAL Arbitration Rules.[1] 

The appeal for annulment of the award was filed in June 2007 when the ICC Court declared that challenge and the subsequent request of replacement inadmissible. The Argentine Government had also requested an injunction to suspend the arbitration proceedings, an interim measure that was ordered on July 3, 2007.

Nevertheless, as Washington D.C. was the seat of the arbitration, the Court did not have jurisdiction to decide on that interim measure, and Argentine Procedure Law was not applicable either. Therefore, arbitral proceedings continued despite the judicial order.

The same will probably occur with the new court–appointed judicial order of suspension, under warning of economic sanctions, and the Court decision finding jurisdiction to decide on the request for annulment of the award; both ruled this year in the decision in question. It will not have effects in the course of arbitral proceedings thanks to Washington D.C. having been previously selected as the seat of arbitration. 

Therefore, any recourse filed by the parties during the proceedings, or after the award, shall be submitted to the procedural law and jurisdiction of the place of the arbitration (lex arbitri and lex fori). 

Even though parties to an arbitral case may challenge awards —within the legal framework decided in the arbitral clause or agreement—, particularly when those challenges involve public interests, it is curious that, on the one side, the Argentine Government has agreed jurisdiction deferral to Washington DC judges when selecting the seat of arbitration but, on the other side, it has filed an appeal for setting aside the interlocutory award in Buenos Aires.

This case puts forth a reflection about the importance of the seat of arbitration, since its choice determines the lex fori and the lex arbitri —being advisable to have a complete knowledge of their scope—, and about the value of arbitral agreements and “pacta sunt servanda” principle.