In this post, MARIA ATHANASIOU questions the majority decision in Abaclat v. Argentina, which held that a condition for prior domestic litigation is not a jurisdictional issue for an investment arbitration tribunal.
In the recent Decision on Jurisdiction and Admissibility in Abaclat and others v Argentina the majority of the ICSID tribunal affirmed its jurisdiction over claims alleging breach of the Argentina-Italy BIT of approximately 60,000 Italian investors. The tribunal affirmed its jurisdiction despite the undisputed fact that the claimants had not submitted their dispute to Argentine courts for 18 months prior to commencing ICSID arbitration as required by the dispute resolution clause (Article 8 ) of the BIT. In fact the tribunal treated pre-arbitration requirements in international investment arbitration disputes as matters of admissibility as opposed to ones of jurisdiction and as such, placed itself in the minority that views the 18-month domestic litigation requirement as anything but a condition of the host state’s consent to international investment arbitration.
Thus far, ICSID and non-ICSID tribunals have by majority treated prior domestic litigation requirements as matters of jurisdiction. For example Maffezini v Spain (Decision on Jurisdiction); Wintershall v Argentina (Award); Impregilo v Argentina (Award; holding that the 18-month domestic litigation requirement of the Argentina-Italy BIT is “a mandatory – but limited in time – jurisdictional requirement before a right to bring a case to ICSID can be exercised” and that therefore, non-compliance with such requirement leads to lack of jurisdiction). These tribunals followed an approach that is geared by the operation of the notion of consent: that dispute resolution clauses are only one element of the consent, that is, they are the offer of consent to international investment arbitration by the host-State; when a dispute resolution clause contains pre-arbitration requirements to international investment arbitration disputes, those requirements are conditions to such offer of consent; as consent can only be perfected when the offer and the acceptance coincide, consent is perfected only when the investor complies with the requirements set forth in dispute resolution clauses or differently, when the investor accepts the conditioned offer of the host-State. The operation of the notion of consent therefore, is perhaps a strong argument to suggest that such pre-arbitration requirements should be dealt with as matters which pertain to the jurisdiction of an international investment arbitral tribunal. This approach is also in line with the practice of the International Court of Justice (for example see: Armed Activities on the Territory of the Congo, Judgment on Jurisdiction and Admissibility; Case Concerning Application of the International Convention on the Elimination of All Forms of Racial Discrimination, Judgment on Preliminary Objections.
How did the Abaclat tribunal come to the conclusion that the 18-month domestic litigation requirement found in Article 8 of the Argentina-Italy BIT is a matter of admissibility of the claim as opposed to a matter of jurisdiction of the tribunal itself? The tribunal noted that it had to examine whether such requirement was “an element which draws the limits of the consent, or [instead merely] a modality of the consent”. In specific, it raised the following question:
“What is conditional? Respondent’s consent to ICSID jurisdiction or the implementation of such consent in a case as the present one? Indeed, there is a difference between conditioning its consent to ICSID jurisdiction to the fulfilment of a pre-condition, and conditioning the effective implementation of such consent, i.e. the possibility to resort to ICSID arbitration, to the fulfilment of such pre-condition”.
The tribunal continued by stating that the question was not “has Argentina consented to ICSID jurisdiction” but “under what circumstances will ICSID arbitration be possible under the terms of Argentina’s consent”. It concluded that the 18-month domestic litigation requirement was a “condition for implementation of Argentina’s consent to ICSID jurisdiction and arbitration” – a matter of admissibility – and did not concern “the fundamental question of whether Argentina consented to ICSID jurisdiction and arbitration” – a matter of jurisdiction.
The Abaclat tribunal appears to be somewhat confusing in its distinction between the notions of jurisdiction and admissibility when it came to pre-arbitration requirements in international investment arbitration disputes. Firstly, the tribunal talks about “limits of consent” which it implies to be a jurisdictional limit and then of a “modality of the consent” which it implies not to be a jurisdictional limit. Secondly, the tribunal states that it is not about whether consent exists altogether (an issue of jurisdiction) but “under what circumstances” the existing consent will be able to vest the tribunal with jurisdiction (an issue of anything but of jurisdiction?). Finally, it makes a distinction between the existence of consent (a matter of jurisdiction) and the implementation of consent (perhaps the power to exercise jurisdiction and hence a matter of admissibility). Somehow in the first two, the tribunal’s distinctions between the notions of jurisdiction and admissibility are very subtle. One may fail to appreciate as to how a “modality” or a specific “circumstance” attached to a host-State’s offer of consent cannot be treated as an issue of jurisdiction. Equally, one – like the Impregilo tribunal – may fail to see how the “implementation” of consent cannot relate to a jurisdictional requirement which is “limited in time”.
What is more troubling however, is not the Abaclat tribunal’s distinctions between the notions of jurisdiction and admissibility when it came to pre-arbitration requirements in international investment arbitration disputes, but the lack of argumentation as to why the 18-month domestic litigation requirement of the Argentina-Italy BIT should be sheltered under the admissibility spectrum as opposed to that of jurisdiction. And this lack of argumentation takes place at the same time when the tribunal explicitly recognises the importance of making the distinction between the concepts of jurisdiction and admissibility because of the consequences that a decision on each concept carries (in terms of review of the decision and resubmitting the claim before the same body).
Therefore, one cannot but ask the following questions: What was the legal basis that defeated the operation of the notion of consent in international investment arbitration in order for the Abaclat tribunal to hold that the 18-month domestic litigation requirement was a matter of admissibility? Did the Abaclat tribunal deprive Argentina of its right to challenge a decision which dispensed the Italian investors from complying with a condition of Argentina’s consent? Did the Abaclat tribunal tell Argentina that it has no choice but to proceed to an international investment arbitration that it has never consented to? It remains to be seen whether what was until now the majority view on the issue (that is, treating such requirements as matters of jurisdiction) will be subject to change subsequent to the Abaclat Decision on Jurisdiction and Admissibility.