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Overview of the ICSID annulment process

Overview of the ICSID annulment process. Ruth Mackenzie Centre for International Courts and Tribunals Faculty of Laws, UCL. Post-award proceedings under the ICSID Convention. Article 53

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Overview of the ICSID annulment process

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  1. Overview of the ICSID annulment process Ruth Mackenzie Centre for International Courts and Tribunals Faculty of Laws, UCL

  2. Post-award proceedings under the ICSID Convention Article 53 (1) The award shall be binding on the parties and shall not be subject to any appealor to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention.

  3. Article 49(2): Supplementary award and rectification The Tribunal upon the request of a party made within 45 days after the date on which the award was rendered may after notice to the other party decide any question which it had omitted to decide in the award, and shall rectify any clerical, arithmetical or similar error in the award.Its decision shall become part of the award and shall be notified to the parties in the same manner as the award. The periods of time provided for under paragraph (2) of Article 51 and paragraph (2) of Article 52 shall run from the date on which the decision was rendered.

  4. Articles 50 and 51: Interpretation and Revision Interpretation • Dispute as to meaning or scope of award • Application in writing to Secretary-General • If possible, request submitted to the original Tribunal Revision • On ground of discovery of some fact of such a nature as decisively to affect the award, provided that when the award was rendered that fact was unknown to the Tribunal and to the applicant and that the applicant's ignorance of that fact was not due to negligence • Application in writing addressed to Secretary-General • Within 90 days after the discovery of such fact and in any event within 3 years after date on which award rendered • If possible, request submitted to the original Tribunal

  5. Article 52: Annulment • 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.

  6. Annulment procedure (Article 52(2)-(6) and ICSID Arbitration Rules 50-55) • Application must be made within 120 days after the date award is rendered unless annulment requested on grounds of corruption (within 120 days after discovery of corruption and in any event within 3 years of date award rendered) • Application must (a) identify the award to which it relates; (b) indicate the date of the application; (c) state in detail the grounds on which it is based (d) be accompanied by the payment of a fee for lodging the application.

  7. Establishment of the ad hoc Committee • Chairman appoints ad hoc Committee of three persons from the Panel of Arbitrators • Limitations on membership of Committee set out in Article 52( 3) • Committee has the authority to annul the award or any part thereof on any of the grounds set forth in Article 52(1)

  8. Procedure • The provisions of Articles 41-45, 48, 49, 53 and 54, and of Chapters VI and VII shall apply mutatis mutandis to proceedings before the Committee (Article 52(4)). • The provisions of ICSID Arbitration Rules apply mutatis mutandis to any procedure relating to annulment of an award and to the decision of the Committee (Rule 53). • Committee may be asked to rule on application for stay of enforcement (or continuation, modification or termination of stay)

  9. Annulment practice 28 annulment requests registered to date: • 15 annulment decisions issued • 1 discontinued • 2 settled during annulment phase • 10 pending

  10. Annulment requests Completed annulment proceedings CaseRequest registeredDecision Klöckner Industrie-Anlagen GmbH v Cameroon (I)* 16 February 1984 3 May 1985 Amco Asia Corporation v. Indonesia (I)* 18 March 1985 16 May1986 MINE v. Guinea** 30 March 1988 22 December 1989 Klöckner Industrie-Anlagen GmbH v. Cameroon (II) 1 July 1988 17 May 1990 Amco Asia Corporation v. Indonesia (II) 20 February 1991 17 December 1992 Southern Pacific Properties v. Egypt 27 May 1992 Settled/discontinued *Case resubmitted after annulment proceeding. Annulment of second award requested. ** Case resubmitted after annulment proceeding. Case settled after resubmission.

  11. Annulment requests(continued) Completed annulment proceedings CaseRequest registeredDecision Philippe Gruslin v. Malaysia 19 December 2000 Discontinued Wena Hotels Limited v. Egypt 24 January 2001 5 February 2002 CAA/Vivendi Universal v. Argentine Republic (I)*** 23 March 2001 3 July 2002 *** Case resubmitted after annulment proceeding. Second annulment proceedings pending.

  12. Annulment requests(continued) Completed annulment proceedings CaseRequest registered Decision Consortium R.F.C.C. v. Morocco 30 April 2004 18 January 2006 CDC Group plc v. Seychelles 30 April 2004 29 June 2005 Patrick Mitchell v. DR of Congo 15 July 2004 1 November 2006 Repsol YPF Ecuador S.A. v. Petroecuador 15 July 2004 8 January 2007 MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Chile 30 September 2004 21 March 2007 Hussein Nuaman Soufraki v. United Arab Emirates 12 November 2004 5 June 2007 Joy Mining Machinery Limited v. Egypt 22 December 2004 Settled/discontinued Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Peru 1 July 2005 5 September 2007 CMS Gas Transmission Company v. Argentine Republic 27 September 2005 25 September 2007

  13. Annulment requests Pending CaseRequest registered Azurix Corp. v. Argentine Republic 11 December 2006 Siemens A.G. v. Argentine Republic 16 July 2007 Malaysian Historical Salvors, SDN, BHD v. Malaysia 17 September 2007 Ahmonseto, Inc. and others v. Arab Republic of Egypt 2 November 2007 M.C.I. Power Group, L.C. and New Turbine, Inc. v. Ecuador 6 December 2007 CAA/Vivendi Universal v. Argentine Republic (II) 19 December 2007 Fraport AG Frankfurt Airport Services v. Philippines 8 January 2008 Sociedad Anónima Eduardo Vieira v. Republic of Chile 24 January 2008 Sempra Energy International v. Argentine Republic 30 January 2008 Enron and Ponderosa Assets v. Argentine Republic 7 March 2008

  14. Ad Hoc Committee approaches to Article 52: General • Annulment grounds exhaustively set out in Article 52 • Annulment proceeding is not an appeal • No presumption in favour of or against annulment (Vivendi)

  15. Manifest excess of powers • Lack of jurisdiction • Failure to exercise jurisdiction (Vivendi) • Failure to apply applicable law under Article 42 • Distinction between failure to apply proper law and error in application of law • Must be manifest

  16. Seriousdeparturefrom a fundamental rule of procedure • Serious departure • Fundamental rule • Deprive party of benefit or protection which the rule was intended to provide (MINE v Guinea); such as to lead to a substantially different outcome? (Wena Hotels v Egypt; CDC v Seychelles) • Due process/procedural fairness

  17. Failure to state reasons • Lack of qualifiers in Article 52(1)(e) • Test relates to absence of reasons, not adequacy of reasons (MTD v Chile) • MINE v Guinea: ‘the requirement that the award has to be motivated implies that it must enable the reader to follow the reasoning of the Tribunal on points of fact and law. It implies that and only that . . . the requirement to state reasons is satisfied as long as the award enables one to follow how the Tribunal proceeded from Point A to Point B and eventually to its conclusion, even if it made an error of fact or law. ‘ • Vivendi: (i) the failure to state reasons must leave the decision on a particular point essentially lacking in any expressed rationale; (2) that point must itself be necessary to the tribunal’s decision • Contradictory or frivolous reasons • Failure to answer questions • Article 49(2) • Intelligibility of award/effect on award (MINE v Guinea)

  18. Stay of enforcement • Applicant may request stay of enforcement in application for annulment - provisional stay until ad hoc Committee ruling (Article 52(5)) • Either party may request stay at any time before final disposition of the application (Arbitration rule 54) • Is a guarantee or security required for grant of stay of enforcement?

  19. Costs of annulment proceedings • In almost all annulment proceedings to date, ad hoc Committee has ordered the parties to share equally costs incurred by the Centre (including fees and expenses of the ad hoc Committee), and to bear their own expenses. However, • CDC v Seychelles: Seychelles ordered to bear entirety of costs of ICSID and the Committee. Committee observed that the annulment application was ‘fundamentally lacking in merit’ and ’to any reasonable and impartial observer, most unlikely to succeed’ (para.89) • Repsol v Petroecuador: Petroecuador ordered to bear all costs incurred by ICSID, including fees and expenses of Committee, and to bear half of fees and expenses incurred by Repsol in the annulment proceeding. (paras. 86-88)

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