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Category Archives: INVESTMENT ARBITRATION

NEWSFLASH: WHITE INDUSTRIES’ INVESTMENT CLAIM PREVAILS AGAINST INDIA

There is no official confirmation or announcement. However, IA Reporter has – true to its reputation – broken the news. It seems White Industries’ claim for violation of India-Australia BIT due to protracted delays in the Indian judiciary (which has kept a 2002 ICC award against Coal India of around Aus. $ 4 million in the limbo till date) have been accepted. This case is extremely interesting as the cause of action arises from the delay in enforcement of an international commercial arbitration award. Investment arbitration becoming the final ‘court of appeal’ for international commercial arbitration is something that has been on the radar of academicians for sometime – and this award will give some food for thought. We will report in more detail on the case once it is available in the public domain.

In the meantime, you may be interested in some background to the dispute – we refer you to this post at Practical Academic blog. Probably, there is no other more comprehensive source of information on the background available on the internet.

Readers may be interested to know that the White Industries appeal against Coal India is one of the cases pending at the Indian Supreme Court and tagged in the Bhatia International review which is considering whether Indian courts have jurisdiction to entertain challenge of foreign awards.

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DOES THE 2G LICENSE CANCELLATION AMOUNT TO EXPROPRIATION BY INDIA?

In this post, SUMIT RAI speculates on a possible investment treaty claim against India for the cancellation of 2G licenses following the Supreme Court decision of 2nd February 2012.

In 2011, the issue of corruption at the highest levels of governance dominated political and social debates in India. Allegations of loss to the exchequer to the tune of 300 billion rupees in the 2008 allotment of 2G spectrum for mobile telephony, shocked the nation. This probably also came as a shock to a large number of foreign investors – by then having infused huge capital in telecom companies. The telecom minister was made to resign and since has been in jail. Many corporate heads of Indian telecom companies also visited prison for a brief time and are now out on bail pending final investigation and prosecution.

Some citizens and NGOs filed a writ petition in the Indian Supreme Court under Art. 32 of the Constitution alleging that the grant of 122 2G spectrum licenses in 2008, following a first-cum-first-serve policy and at 2001 prices was in violation of citizens’ fundamental rights of the Constitution. On 2nd February 2012, the Indian Supreme Court upheld the petitioners’ contentions and cancelled all 122 licenses (the judgment in Centre for Public Interest Litigation v. Union of India is available here). The Court held that 2G spectrum is a natural resource and that “the State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good”. Read the rest of this entry

ALLOCATION OF COSTS IN SUMMARY PROCEEDINGS UNDER R. 41(5), ICSID RULES

In this post, MARIJA SOBAT, questions the principle of ‘pay-your-own-way’ applied to allocation of costs in summary proceedings under ICSID Rules.

Rule 41 (5) came to life with the 2006 amendments to the ICSID Arbitration Rules. It is beyond the scope of this post to delve in great detail into the Rule itself. It suffices here to say that the provision was introduced to allow a party to raise an objection in limine litis that a claim is “manifestly without legal merit” and to ask a tribunal to summarily dismiss such patently frivolous claim by a reasoned award. The rationale behind this Rule was, among other things, to shorten duration of the proceedings and reduce the costs where a party is bringing a patently frivolous claim. It is interesting to see how ICSID tribunals, which confirmed frivolity of the claim, had decided on allocation of costs (Trans-Global v Jordan, Global Trading v Ukraine, RSM Production v Grenada) and what impact these decisions may have on the future application of the Rule. In this post I will explain how the proper allocation of costs in summary proceedings could influence on reducing the number of manifestly frivolous claims brought before the ICSID tribunals.

According to Article 61 (2) of the ICSID Convention and Rule 28 of the ICSID Arbitration Rules, in the absence of the parties’ prior agreement, ICSID tribunals have discretion to decide about allocation of costs of the proceedings between parties. In the vast majority of cases, the ICSID tribunals followed “pay-your-own-way” approach. The exception to the rule, ie, allocation of the costs to the loser of the proceedings, occurred in those cases where the tribunals established that a claim was manifestly without legal merit or observed bad faith from a party. Read the rest of this entry

ARGENTINA v. BG GROUP PLC: THE U.S. COURT OF APPEAL’S (MISTAKEN?) DECISION

In this post, MARIA ATHANASIOU analyzes the US Court of Appeals decision (17.01.2012) which vacated the investment tribunal award in BG Group PLC v. Argentina.

On 17 January 2012, the U.S. Court of Appeals for the District of Columbia Circuit  reversed the orders of the U.S. District Court for the District of Columbia (Republic of Argentina v BG Group PLC, 715 F.Supp.2d 108 (D.D.C.2010); Republic of Argentina v. BG Group PLC, 764 F. Supp. 2d 21 (D.D.C. 2011) at  denying the Republic of Argentina’s motion to vacate and granting BG Group’s cross-motion to confirm, the Final Award rendered against the Republic in the international investment arbitration case of BG Group PLC v The Republic of Argentina, and vacated said Award (Republic of Argentina v. BG Group PLC , D.C. Cir. Jan. 17, 2011).  The Court of Appeals heeded Argentina’s argument that the arbitral Tribunal had exceeded its authority (a ground for annulment under Section 10(a) of the Federal Arbitration Act) by ignoring the terms of the parties’ agreement in the form of the Bilateral Investment Treaty between Argentina and the U.K – holding that the Tribunal had disregarded the conditions set forth in Article 8(2)(a) of the Argentina-U.K. BIT when it dispensed BG Group with the obligation to commence litigation before Argentine courts for 18 months prior to initiating international investment arbitration proceedings. Read the rest of this entry

CHEVRON – TWO DECADES OF LITIGATION: IS IT FINALLY OVER?

In this Guest Post, VERONICA ARROYO from Ecuador reports on the never-ending Chevron-Ecuador battle.

2012 began here in Ecuador with a major jolt for Chevron Texaco. On 3rd January, a court in Sucumbios upheld the ruling against Chevron Texaco, through which it ratified the payment of 18 billion dollars against Chevron for environmental damages caused in Ecuador’s rainforest between 1972 and 1990 when Texaco operated in the forest. Texaco became a subsidiary of Chevron in 2001. Chevron has long claimed that a 1998 agreement between Texaco and Ecuador, after a cleanup of 40 million dollars, absolves it of liability. Chevron has also been ordered to publicly apologize for the incident by 1st March 2012, or else face a judgment for double the sum.

 The oil company appealed the initial judgment on the ground that the process had been marked by corruption. While for the plaintiffs, the amount of compensation was not enough to remedy the damage. A bench of three judges heard both the appeals for almost a year and rejected them. Read the rest of this entry

Abaclat v. Argentina: Condition of Prior Domestic Litigation a Mere Admissibility Issue?

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). Read the rest of this entry