* Foreign Attorney Licensed in New York, White and Case. Adjunct Professor, Georgetown University Law Center.

1 CMSv. Argentina (2005) 44 ILM 1205.

2 The Convention only allows for five grounds for annulment. Art. 52(1) reads: ‘’ Either party may request annulment of the award by an application in writing addressed to the Secretary- General on one or more of the following grounds: (a) that the Tribunal was not properly constituted; (b) that the Tribunal has manifestly exceeded its powers; (c) that there was corruption on the part of a member of the Tribunal; (d) that there has been a serious departure from a fundamental rule of procedure; or (e) that the award has failed to state the reasons on which it is based.“

3 Decision, ¶ 45.

4 Id.

5 Decision, ¶¶ 30-40. 6 Treaty Between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment, 14 November 1991 (entry in force: 20 October 1994).

7 CMS. Argentina (Jurisdiction) (2003) 7 ICISD Reports 494, (ILM?).

8 Decision, ¶¶ 38-39.

9 ‘'Investment shall at all times be accorded fair and equitable treatment, shall enjoy full protection and security and shall in no case be accorded treatment less than that required by international law.“

10 ‘'Each Party shall observe any obligation it may have entered into with regard to investments.“

11 ‘'This Treaty shall not preclude the application by either Party of measures necessary for the maintenance of public order, the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the Protection of its own essential security interests.”

12 Argentina's submissions that the Tribunal manifestly exceeded its powers related to five issues: first, the Tribunal's decision to exercise jurisdiction over claims by a company's shareholder for income lost by the company; second, a misreading of the umbrella clause (Art. II(2)(c) of the Treaty; third, the failure to apply Article XI of the Treaty and thus transforming the “fair and equitable” and “umbrella” clause of the Treaty into strict liability provisions; fourth, rejecting Argentina's defense of necessity under international customary law; and sixth, failure to apply the governing law. Decision, ¶¶ 46-48.

13 Argentina's submission that the Tribunal had failed to state reasons concerned two findings of the Tribunal: its finding on the Treaty and customary international law of necessity, and the calculation of damages. Before delving into the analysis of the Award, the Committee clarified that many other Committees had already looked at the issue and held that annulment for failure to state reasons should only occur in clear cases, when the reasoning on certain points of fact and law cannot be followed. Decision, ¶¶ 53.

14 Decision, ¶¶ 41-45, citing CAA & Vivendi Universal v. Republic of Argentina (2006) and MTD Equity and MTD Chile v. Republic of Chile (Annulment) (2007) (“MTD“).

15 Decision ¶¶ 46-52. The Committee cited other ad hoc Committees in support of this distinction, including Maritime International Nominees Establishment v. Republic of Guinea (1989) (“MINE“) and MTD.

16 Decision, ¶¶ 86-100.

17 Enron Corporation and Ponderosa Assets V.Argentina Republic (2007) and Sempra Energy International v. Argentine Republic (2007). In another case against Argentina, the Tribunal rejected the argument of the Claimant (a US water services company) based on an alleged breach of the same umbrella the contracts which it had alleged Argentina to have breached. See Azurix Corporation v. Argentine Republic (2006), award presently submitted to annulment proceedings.

18 “Necessity: 1. Necessity may not be invoked by a State as a ground for precluding the wrongfulness of an act not in conformity with an international obligation of that State unless the act: (a) Is the only way for the State to safeguard an essential interest against a grave and imminent peril; and (b) Does not seriously impair an essential interest of the State or States towards which the obligation exists, or of the international community as a whole. 2. In any case, necessity may not be invoked by a State as a ground for precluding wrongfulness if: (a) The international obligation in question excludes the possibility of invoking necessity; or (b) The State has contributed to the situation of necessity.

19 Decision, ¶ 103.

20 Decision, ¶ 104.

21 Decision, ¶ 110.

22 Decision, ¶¶ 110-127.

23 Decision, ¶¶ 128-134.

24 Decision, ¶ 135.

25 Decision, ¶¶ 137-144.

26 Decision, ¶ 45.

27 Decision, ¶¶ 62-76.

28 Decision, ¶¶ 81-85.

29 Decision, ¶ 154.

* This text was reproduced and reformatted from the text appearing at the ICSID website: (visited December 3, 2007) <http://www.worldbank.org/icsid/cases/pdf/arb0108_Annulment_Decision.pdf>

1 Argentina, Supreme Court, Ekmekdjian, Miguel Ángel v. Sofovich, Gerardo y otros, Fallos: 315:1492 (7 July 1992).

2 CMS v. Argentina (2005) 44 ILM1205, 1211 (para. 57) (“Award“).

3 From March 2002 onwards the official exchange rate for the peso was in the region of 3-3.85 per US$1, a devaluation of more than 60%.

4 CMS v. Argentina (Jurisdiction) (2003) 7 ICSID Reports 494, 521-522 (para. 131) (“Jurisdictional Decision“).

5 Treaty between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment, 14 November 1991 (in force 20 October 1994).

6 Award, sub-para. 1 of the dispositif.

7 Ibid., sub-para. 5 of the dispositif.

8 CAA & Vivendi Universal v. Republic of Argentina (2002) 6 ICSID Reports 340, 357-8 (paras. 62, 64) ﹛“Vivendi“). 9.See Klöckner Industrie-Anlagen GmbH & Others v. United Republic of Cameroon (1985) 2 ICSID Reports 95, 119-120 (para. 61) (“Klöckner“); Amco Asia Corporation and Others v. Republic of Indonesia I (1986) 1 ICSID Reports 509, 515 (para. 23); Maritime International Nominees Establishment v. Republic of Guinea (1989) 4 ICSID Reports 79,87 (para.5.04), 88 (para. 5.08) (“MINE“); Amco Asia Corporation & Others v. Republic of Indonesia (1992)

9 ICSID Reports 9, 39 (para. 7.19), 51 (para. 8.08); Wena Hotels v. Arab Republic of Egypt (2002) 6 ICSID Reports 129,135 (para. 18) (“Wena Hotels“); CDC Group v. Republic of the Seychelles (2005) 11 ICSID Reports 237,248-250 (paras. 34-37); Patrick Mitchell v Demo-cratic Republic of Congo, Decision of 1 November 2006, para. 21; MTD Equity & MTD Chile v. Republic of Chile, Decision on Annulment, 21 March 2007, para 52 (“MTD v. Chile“); Hussein Nuaman Soufraki v. United Arab Emirates, Decision on Annulment, 5 June 2007, para. 20.

10 Argentina's Annulment Memorial, para. 10.

11 Ibid., paras. 4, 10.

12 MTD v. Chile, para. 54.

13 Argentina's Annulment Memorial, p. 25.

14 Ibid., p. 34.

15 Klöckner, para. 4.

16 Argentina's Annulment Memorial, p. 52.

17 Ibid., paras. 170-180.

18 Ibid., paras. 181-205.

19 MINE,paras. 5.03-5.04.

20 MTD Chile, para. 47.

21 Argentina's Annulment Memorial, paras. 166-171, 206-223.

22 Vivendi, paras. 64-65.

23 MINE,para. 5.09.

24 Ibid., para. 5.08.

25 Wena Hotels, para. 81.

26 Ibid., para. 83.

27 Jurisdictional Decision, 502 (para. 41)

28 Ibid.

29 Ibid., 502-508 (paras. 42-65).

30 Ibid., 502 (para. 42).

31 Ibid., 504 (para. 48).

32 Ibid., 506 (para. 56).

33 Ibid., 508 (para. 65).

34 Ibid., 508 (para. 68).

35 Ibid.

36 Ibid.

37 Argentina's Annulment Memorial, para. 68.

38 Ibid., 25.

39 Ibid., para. 77.

40 Ibid.

41 Ibid.

42 Ibid., para. 82 (emphasis in the original).

43 Ibid., para. 86.

44 Ibid., paras. 86-93.

45 Ibid., para. 92.

46 Argentina's Annulment Memorial, para. 92, citing Vienna Convention on the Law of Treaties, 23 May 1969,1155 UNTS331.

47 CMS’ Annulment Counter-Memorial, para. 25.

48 Ibid., para 31.

49 CMS’ Annulment Rejoinder, para. 21.

50 Ibid., para. 28.

51 Jurisdictional Decision, 502 (para. 42).

52 See e.g. Azurix Corporation v. Argentine Republic (2003) 43 LM 262, 276 (para. 72) (“Azurix“); Siemens AG v. Argentine Republic (2004) 44ILM138,161-162 (para. 141); Continental Casualty Company v. Argentine Republic, Decision on Jurisdiction, 22 February 2006, para. 82 (“Continental Casualty“).

53 Jurisdictional Decision, 502 (para. 42).

54 Case concerning the Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain), ICJ Reports 1970, p. 3.

55 Case concerning Elettronica Sicula S.p.a. (United States of America v. Italy), ICJ Reports 1989, p. 15.

56 This distinction was clearly recognised by the International Court in Case concerning Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo) (Preliminary Objections), Judgment of 24 May 2007, paras. 87-88.

57 Jurisdictional Decision, 503 (para. 44).

58 Ibid., 504 (para. 48).

59 Ibid.

60 See e.g. AES Corporation v. Republic of Argentina, Decision on Jurisdiction, 26 April 2005, para. 88; Azurix, para. 73; Enron Corporation v. Republic of Argentina, Decision on Jurisdiction, para. 44 (“Enron“); Sempra Energy International v. Republic of Argentina, Decision on Jurisdiction, 11 May 2005, para. 93 (“Sempra Energy“).

61 See e.g. Camuzzi International S.A. v. Republic of Argentina, Decision on Jurisdiction, 11 May 2005, para. 81; Enron, para. 44; LG&E v. Republic of Argentina, Decision on Liability, 3 October 2006, para. 78; Sempra Energy, para. 93.

62 See e.g. Continental Casualty, para. 86; Enron, para. 49.

63 Award, para. 274.

64 Ibid., para. 275.

65 Ibid., para. 281.

66 Argentina's Annulment Memorial, paras. 189-200.

67 Conseil d'Etat, Compagnie Générale d'Eclairage de Bordeaux, Rec. 125, 30 March 1916.

68 Argentina's Annulment Reply, para. 43.

69 Ibid., para. 44.

70 Argentina's Annulment Memorial, para. 117.

71 Ibid., para. 123.

72 Ibid., paras. 123-124.

73 CMS’ Annulment Counter-Memorial, para. 52.

74 Ibid., para. 59.

75 Award, para. 273.

76 Ibid., para. 274.

77 Ibid., para. 276.

78 Ibid., para. 277.

79 Ibid., paras. 200-227.

80 Ibid., para. 228.

81 Ibid., para. 275.

82 Ibid.

83 Ibid., paras. 127-151.

84 Ibid., paras. 53-67, 152-166.

85 Ibid., para. 281.

86 The Committee would only note that the fair and equitable standard has been invoked in a great number of cases brought to ICSLD arbitration and that there is some variation in the practice of arbitral tribunals in this respect. See Christoph Schreuer,’ ‘Fair and Equitable Treatment in Arbitral Practice'’ (2005) 6 Journal of World Investment and Trade 357.

87 Award, para. 296.

88 Ibid., para. 299.

89 Ibid., para. 303.

90 Argentina's Annulment Memorial, para. 96.

91 Ibid., para. 97.

92 CMS’ Annulment Rejoinder, para. 32.

93 Ibid., para. 32.

94 Ibid., paras. 34-36.

95 See MTD v. Chile, paras. 67-69.

96 See Hearing on annulment proceedings, 27 March 2007, 206-209, 242-244; also CMS’ Annulment Rejoinder, para. 15.

97 Hearing on annulment proceedings, 27 March 2007, 246; 28 March 2007, 514.

98 See Award, paras. 132, 148, 299, and cf. Jurisdictional Decision, para. 65.

99 Award, paras. 127-151.

100 See above, paragraph 90.

101 Wena Hotels, para. 81.

102 Vivendi, para. 68.

103 Award, para. 378.

104 Ibid., para. 304.

105 Ibid., para. 308.

106 Articles on Responsibility of States for Internationally Wrongful Acts, annexed to UNGA Resolution 56/83, 14 December 2001.

107 Award, para. 315.

108 Ibid., paras. 319-322.

109 Ibid., para. 324.

110 Ibid., para. 358.

111 Ibid., paras. 325, 358.

112 Ibid., para. 358.

113 Ibid., para. 355.

114 Ibid., para. 354.

115 Ibid., para. 329.

116 Ibid., para. 331.

117 Ibid.

118 Ibid., para. 332.

119 Ibid., para. 359.

120 Ibid., para. 361.

121 Ibid., para. 373.

122 Ibid., para. 374.

123 Argentina's Annulment Memorial, para. 125.

124 Ibid., para. 126.

125 Ibid., para. 127.

126 Ibid., para. 131.

127 Ibid., paras. 136-144.

128 Ibid., para. 155.

129 Ibid., para. 180.

130 Ibid., para. 170.

131 Ibid., para. 175 (emphasis in original).

132 Ibid., para. 176.

133 Ibid., para. 178.

134 CMS’ Annulment Counter-Memorial, para. 81.

135 Ibid., para. 91.

136 Ibid., paras. 115-121.

137 Ibid., para. 120.

138 Ibid., para. 84.

139 Ibid., para. 82.

140 Ibid., para. 91.

141 Ibid.

142 Award, para. 359.

143 Ibid., para. 374.

144 Statement by Professor Anne Marie Slaughter, Hearing on Merits, 18 August 2004, 1844-1847.

145 Statement by Professor Jose E. Alvarez, 17 March 2004, para. 32.

146 Hearing on Merits, 9 August 2004, 110.

147 Ibid., 295, 300.

148 See Award, paras. 308, 374.

149 Ibid., 320, 323, 324, 329, 355, 356.

150 Hearing on Annulment Proceedings, 27 March 2007, 179- 182.

151 Argentina's Annulment Memorial, para. 131.

152 Argentina's Merits Counter-Memorial, paras. 716-742; Argentina's Merits Reply, paras. 841-996; Hearing on Merits, 9 August 2004, 100-112, 295-296.

153 Hearing on Annulment Proceedings, 27 March 2007, 339- 340; 28 March 2007, 69-70, 177.

154 Case concerning Oil Platforms (Islamic Republic of Iran v. United States of America), Judgment on Merits, 6 November 2003, para 34.

155 See the discussion reported in ILC Ybk 1999 vol 11(2), 73-74, 85; ILC, Commentary to Part 1, Chapter V, paras. (2)-(4), (7).

156 Award, para. 390.

157 Award, para. 382. The Tribunal had already decided that the crisis period came to an end “sometime between late 2004 and early 2005” (para. 250).

158 Award, para. 392.

159 Award, para. 419.

160 Argentina's Annulment Memorial, para. 162.

161 Ibid., para. 161.

162 Ibid., para. 160.

163 Ibid., para. 160.

164 CMS’ Annulment Counter-Memorial, para. 93.

165 Ibid., para. 94.

166 Ibid., para. 96.

167 Ibid., para. 100.

168 See the ILC's commentary on Article 27, paras. (1), (6): Yearbook of the International Law Commission 2001, vol. 11(2), 209, 211.

169 Award, para. 468.

170 Ibid., sub-para. 3 of the dispositif.

171 Ibid., paras. 470-471.

172 Argentina's Annulment Reply, para. 99.

173 Ibid., para. 101.

174 Ibid., para. 100.

175 CMS’ Annulment Counter-Memorial, paras. 170-173.

176 Ibid., paras. 173-174.

177 Award, para. 410.

178 Ibid.

179 Ibid., para. 411.

180 Ibid., paras. 430-433.

181 Ibid., para. 422.

182 Award, sub-para. (3) of the dispositif, and see paragraph 10 above.

183 See MTD v. Chile, para. 110 (fn 139).