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Tag Archives: icsid

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

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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