Awards and Decisions

Mass claim in Argentine bond dispute is granted ICSID jurisdiction
Abaclat and Others (Case formerly known as Giovanna A Beccara and Others) and The Argentine Republic, Decision on Jurisdiction and Admissibility, ICSID Case No. Arb/07/5

Damon Vis-Dunbar

An ICSID tribunal has accepted jurisdiction to hear a claim by tens of thousands of Italians who claim to hold securities linked to Argentine sovereign bonds.

Two members of the three-person tribunal (Professor Pierre Tercier and Professor Albert Jan van den Berg) ruled that Argentine government bonds are a protected investment under the Argentina-Italy BIT and the ICSID Convention.

Professor Georges Abi-Saab dissented from the majority decision. However, his decision had not been released by the time ITN went to print.

The dispute relates to Argentina’s sovereign debt restructuring in the wake of the country’s financial crisis. Argentina’s deep recession reached a crisis point in 2001, when it deferred over US$100 billion of external bond debt.

Some US$13.5 billion worth of Argentina bonds was held by Italians, many thousands of who are seeking restitution through the World Bank’s ICSID arbitration system. The original claim brought together 180,000 claimants; however, the number was brought down to 60,000 after many of the original claimants agreed to an exchange offer with Argentina.

Mass claims under ICSID

Argentina argued that mass claims are incompatible with the ICSID arbitration system; pointing out, for instance, that the tribunal could not keep track of the individual circumstances of the claimants, given their sheer volume.

However, in the opinion of Professors Tercier and Albert Jan van den Berg, the question was not whether the ICSID Convention offered consent to mass claims. As the majority explained, “Assuming that the tribunal has jurisdiction over the claims of several individual Claimants, it is difficult to conceive why and how the Tribunal could lose jurisdiction where the number of Claimants outgrows a certain threshold”.

Rather, the majority considered whether ICSID arbitration procedures could be adapted to handle mass claims. It considered that question to be one of “admissibility”, rather than of jurisdiction, and therefore dealt with the issue after accepting jurisdiction over the claim.

The majority acknowledged the limitations of handling such a large number of claims; the tribunal could not give claimants the same level of individual consideration as it would with single claimants; and both the claimants and Argentina’s procedural rights would need to be limited (for example, Argentina could not bring detailed arguments against individual claimants).

However, the majority weighed these shortcomings against the alternative of requesting each claimant to file an individual claim, which would be “practically impossible”. Moreover, the majority found the claims to be sufficiently similar to allow for a simplified process of examination.

The majority also rejected Argentina’s policy-related reasons for rejecting the claim. In particular, Argentina argued that allowing the claim would complicate current efforts to modernize sovereign debt restructuring.

In the majority’s view, such arguments are “inapposite”, explaining that “the real question is whether the investment at stake is protected under a BIT providing for ICSID arbitration in case of breach of such protection. If this is the case … it would be wrong to hinder the effective exercise of such jurisdiction … based purely on policy considerations.”

Are sovereign bonds an investment?

Before addressing the question of whether mass claims are admissible, the majority had already agreed that Argentina’s sovereign bonds could be considered an “investment” under the relevant BIT and the ICSID Convention.

The Argentina-Italy BIT protects a broad range of investments, including financial “obligations”, which the majority decided could include government bonds.

In contrast to most BITs, the ICSID Convention is famously silent on the question of how to define the term ‘investment’. Some tribunals have relied on the so-called Salini test—four criteria used by the tribunal in Salini v. Morocco to help define an ‘investment.

However, the majority in this case rejected the Salini test. In its view, the ICSID Convention aims to encourage investment, and gives countries the “tools” (i.e., investment treaties) “to further define what kind of investment they want to promote”.

It also rebuffed Argentina’s argument that the investment was not “made in Argentina”. As Argentina argued, the purchase price for the Argentine security entitlements went to various intermediaries, such as Italian commercial banks, rather than into Argentine territory.

But the majority countered that, in the case investments of a purely financial nature, the actual place where funds are transferred is less important than “where and/or for the benefit of whom the funds are ultimately used.”

Contract vs. Treaty claims

Argentina also argued that the dispute is essentially a contractual matter, with disputes to be settled under the terms of the bonds.

In dismissing that argument, the majority countered that, as a sovereign state, Argentina is different than private debtors; namely, it has the ability to write its own legislation to restructure its debt obligations.

In the majority’s view, when Argentina implemented legislation that allowed it to avoid its debt obligations, it acted outside of the particular contractual arrangement outlined in the bond agreements.

As the majority explained, “… the present dispute does not derive from the mere fact that Argentina failed to perform its payment obligations under the bonds but from the fact that it intervened as a sovereign by virtue of its State power to modify its payment obligations towards its creditors in general, encompassing but not limited to the Claimants.”

Consultations and domestic litigation

The Italy-Argentina BIT calls for the disputing parties to try to settle their dispute amicably through a period of consultation. It also calls on claimants to first try to resolve complaints through the courts of the host country for 18 months, before resorting to international arbitration.

The claimants argued that these are not mandatory steps that must be followed, but rather a list of options for resolving a dispute. The tribunal disagreed, siding with Argentina. The BIT does not allow claimants to “pick and choose” among these options; rather, it sets out a hierarchy of steps as means to settle dispute.

Nonetheless, the majority went on to admit the claim, despite the fact that the claimants did not pursue their complaint in Argentine courts.

In effect, the majority reasoned that Argentina was not deprived of a fair chance to resolve the dispute thought its own courts. For a variety of reasons, the majority concluded that Argentina “was not in a position to adequately address the present dispute within the framework of its domestic legal system.” As such, it ruled that it would be unfair to bar the claim for not complying with the domestic litigation requirement.

Merits phase

In contrast with common practice, Professor Abi-Saab did not submit his dissenting opinion at the same time as the majority decision. Nonetheless, with the majority of the tribunal accepting jurisdiction, the case will proceed to a consideration of the merits.

Given the complexity of the case, the tribunal will consider the merits in two stages: a first phase to identify the core issues to be resolved, and a second phase in which it will focus on settling these issues.

The decision on jurisdiction and admissibility in Abaclat and Others (Case formerly known as Giovanna a Beccara and Others) v. Argenine Republic is available at :

Tribunal confirms that Venezuela’s investment law does not open door to ICSID
Brandes Investment Partners, LP v. The Bolivarian Republic of Venezuela, (ICSID Case No. ARB/08/3)

Damon Vis-Dunbar

A tribunal hearing a dispute between Brandes Investment Partners and the government of Venezuela has declined jurisdiction on the grounds that Venezuela’s foreign investment law does not offer general consent to arbitration at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

The 2 August 2011 decision on jurisdiction marks the third ruling by an ICSID tribunal to reach the same conclusion.

In all three cases the claimants have argued that Article 22 of Venezuela’s Law on the Promotion and Protection of Investments (LPPI) offers Venezuela’s consent to ICSID arbitration.[1]

Both Brandes and Venezuela put forward a grammatical analysis of Article 22 to support their respective cases. While Brandes argued that the Article clearly offers Venezuela’s general consent to ICSID arbitration, Venezuela countered that the Article only affirms consent where it already exists in an investment treaty or agreement.

However, these efforts to unravel the meaning of Article 22 were put aside by the tribunal. In its view, “the LPPI is confusing and imprecise”, preventing the ability to discern its meaning based on a grammatical interpretation.

Instead, the tribunal considered the context, circumstances and goals of the LPPI and its Article 22.  In all three sets of analysis, it failed to identify a clear consent to ICSID arbitration.

The tribunal acknowledged that the LPPI contains language that is similar to BITs, offering, for example, entitlement to fair and equitable treatment and national treatment. But the tribunal would remark that the clarity of these provisions stood in contrast to the confusing language of Article 22.

The claimant bolstered its argument by stressing that the goal of the LPPI was to attract foreign investment, and pointed out that Venezuela’s publicized its openness to arbitration as means to entice investors (for example, it drew attention to Venezuela’s embassy websites for several countries, including the United States, which make reference to arbitration for foreign investors). The tribunal, however, failed to see consent to ICSID arbitration in these promotional texts.

The tribunal also failed to understand why Venezuela would consent unilaterally to ICSID arbitration in its domestic law at a time when it was at loggerheads politically with the United States. “This point of view is especially difficult to accept considering that many of the prospective investors would have been companies of the United States,” notes the tribunal.

The Brandes Investment v. Venezuela decision comes on the heels of a 30 December 2010 jurisdictional ruling in Cemex v. Venezuela, in which that tribunal also ruled that the LPPI’s article 22 does not provide consent to ICSID arbitration.[2] However, CEMEX, a company incorporated in the Netherlands, is protected under the Netherlands-Venezuela BIT, which provides consent to ICSID arbitration. The CEMEX tribunal has accepted jurisdiction on that basis.

Also in 2010, a claim by ExxonMobil against Venezuela was partially excluded on jurisdictional grounds when the tribunal similarly determined that Article 22 did not grant access to ICSID.[3] However, other parts of the ExxonMobile claim, which related to events occurring after the company’s shares were transferred to a Dutch-controlled entity, were allowed to proceed under the Netherlands-Venezuela BIT.

In contrast, Brandes is registered in the United States, which does not have a BIT with Venezuela.

The tribunal in Brandes Investment Partners v. Venezuela was Rodrigo Oreamuno (president) Karl-Heinz Böckstiegel (claimant’s appointee) and Brigitte Stern (respondent’s appointee).

The award in Brandes Investment Partners, LP v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/08/3, is available at:

Argentina found liable in water-concession dispute, but tribunal divided on MFN provision
Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17

Lise Johnson

In an award issued on 21 June 2011, the tribunal in Impregilo S.p.A. v. Argentina determined that Argentina breached the fair and equitable treatment (FET) obligation under the Argentina-Italy BIT.

Argentina has been ordered to pay Impregilo some US$21 million plus interest as compensation.

In what seems to be a growing trend in investor-state arbitrations, two of the three arbitrators issued separate opinions, concurring with and dissenting from various aspects of the award.


Impregilo was an indirect minority shareholder in AGBA, a company that operated a water and sewerage services concession in the Province of Buenos Aires. Shortly after AGBA obtained the concession in 1999, it struggled to raise necessary financing, collect fees from customers, and meet its contractual obligations to invest in, expand and improve water and sanitation services in the concession area.

In 2006, provincial authorities terminated the contract and transferred the concession to a state-owned entity, listing a host of contract breaches by AGBA as justification for its decision.

In response, Impregilo initiated an investor-state arbitration under the Argentina-Italy BIT, alleging that various actions by provincial authorities frustrating and terminating AGBA’s performance of the concession breached provisions of the BIT, including the obligations on FET and expropriation.

Opinions diverge on scope of the MFN provision

Argentina mounted three jurisdictional objections. The arbitrators unanimously dismissed Argentina’s arguments that the BIT does not cover derivative claims, adding Impregilo to the line of investor-state decisions allowing shareholders to bring cases based on alleged harms to the companies in which they hold interests.

The tribunal also unanimously disagreed with Argentina’s contention that Impregilo’s claims were merely contract violations over which the tribunal had no jurisdiction. It determined it had the power to hear allegations of contract breaches to the extent that they also amounted to breaches of the BIT.

The third objection, however, resounded with at least one of the arbitrators and, consequently, adds even more fodder to the current controversy surrounding the proper use and meaning of the most-favoured nation (MFN) provisions.

In this case, diverging opinions on the MFN provision emerged with respected to the Argentina-Italy BIT’s requirement that investors pursue their claims before domestic courts for 18 months before bringing the dispute to international arbitration. Impregilo ignored that requirement. It argued that it could bypass the treaty’s waiting period without consequence because the MFN provision in the Argentina-Italy BIT allowed it to rely on a “more favourable” dispute settlement provision from the Argentina-US treaty that did not similarly impose an 18-month “cooling off” period.

Two of the arbitrators, Judge Hans Danelius and Judge Charles N. Brower, joined what they characterized as the bulk of investment treaty decisions on the matter and accepted Impregilo’s argument on this point.

Professor Brigitte Stern, however, disagreed and wrote a separate opinion elaborating on her reasoning.

In her dissenting opinion, Professor Stern echoed concerns raised in response to other cases such as Siemens v. Argentina[4] and RosInvestCo v. Russia[5] that the MFN provision is being used by investors to “pick and choose” from provisions in the host state’s treaties and use the selected clauses to create agreements that in fact do not exist. Professor Stern then devoted a significant portion of her dissenting opinion to developing a legal argument for why MFN provisions should not be used to expand a tribunal’s jurisdiction as Impregilo and other cases have permitted.

Tribunal critical of Argentina’s conduct during its financial crisis

Although Professor Stern wrote that she would not have accepted jurisdiction over the matter, she nonetheless proceeded to evaluate the merits of the claim. In doing so, she joined the other two arbitrators in determining that the government breached the FET obligation. The tribunal explained that the government’s offensive conduct was in failing to adjust the terms of the concession contract in order to accommodate for difficulties AGBA faced during Argentina’s financial crisis when the government de-pegged the peso from the dollar and allowed the value of the Argentine peso to float.

Judge Brower wrote separately to explain that he viewed many more aspects of the government’s conduct toward the investment as being in breach of the BIT. He also added that he believed that the government’s actions had expropriated the investor’s property, dissenting from the other two tribunal members’ decision to reject that claim.

Raising the profile of another emerging topic and point of contention in investment law, Judge Brower’s separate opinion took particular issue with what he characterized as “political” conduct by government officials. Argentinean authorities, he believed, harmed the investment in order to terminate the concession and transfer it back to state control.

In contrast, the majority ruled that even if the government had the “political” goal of transferring water and sewerage services back to public entities, that fact did not establish a breach of the BIT. The majority quoted AES v. Hungary[6] in support of its stance, stating that “the fact that an issue becomes a political matter … does not mean that the existence of a rational policy is erased.”  To Judge Brower, however, the political nature of the government’s conduct was apparent and damning, and the line from AES v. Hungary inapposite.

The tribunal was united in rejecting Argentina’s defense of “necessity” under both the treaty and international law. The treaty provision relied on by Argentina requires governments to grant foreign investors who suffered losses as a result of war or emergency equal treatment as domestic investors. According to the tribunal, this provision imposes a non-discrimination obligation on host governments, and is not an exception that could absolve them from liability.

Turning to the defense of “necessity” under customary international law, which the tribunal determined remained available even though no reference was made to it in the treaty, Judge Danelius and Judge Brower concluded it did not apply because Argentina’s own economic policies had contributed to the economic crisis it suffered. Professor Stern also agreed that the defense did not apply, but on the basis that the wrongful conduct continued even after the crisis had dissipated.

The award, Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, is available at

The Concurring and Dissenting Opinion of Judge Charles N. Brower is available at:

Concurring and Dissenting Opinion of Professor Brigitte Stern is available at:

Chinese investor receives compensation for expropriation of fish meal business by Peru
Tza Yap Shum v. Republic of Peru, ICSID Case No. ARB/07/6

Fernando Cabrera

An ICSID tribunal has unanimously ordered Peru to pay approximately US$ 1 million including interest to the Chinese investor Tza Yap Sum in compensation for the expropriation of his fishmeal company, TSG del Perú S.A.C.

The 6 May 2011 decision was only a partial victory for the claimant, who had sought approximately US$25 million.

The tribunal found that Peru’s tax authority, SUNAT, acted arbitrarily when it asked banks in the country in January of 2005 to freeze TSG funds and hand them over to the National Bank in order to pay back taxes and fines allegedly owed by the company.  SUNAT’s actions effectively led to the company’s collapse, which the tribunal held was an indirect expropriation under the 1994 China-Peru BIT.

Although the tribunal accepted the claim for expropriation, it disagreed with the claimant’s attempt to quantify damages using the Discounted Cash Flow method. According to the tribunal, TSG lacked a sufficient history of positive results to assume it would have continued to make profits into the future.  Instead, the tribunal adopted an Adjusted Book Value approach as argued by Peru, sharply reducing the amount of damages awarded to the claimant.


Mr. Tza Yap Shum, a Hong Kong-based businessman, established TSG in 2001, investing approximately US$400,000 for a 90% stake in the company. TSG began operations the following year, and according to the claimant, between 2002 and 2004 had sales of over US$20 million per year.

TSG bought fish from Peruvian fishing vessels and had it delivered directly to processing plants on shore, where the fish was processed into fishmeal and exported to Asian markets. Given this business model, TSG never held physical inventory.

In February 2004, SUNAT launched a routine audit of TSG to verify its payments of income and sales taxes. SUNAT determined that TSG had not kept the required up-to-date inventory of its raw materials (fish, and fish meal). Under Peruvian regulations SUNAT was then allowed to estimate TSG’s sales and corresponding tax bill, not based on the company’s records, but by relying on assumptions and other company and third-party information.

SUNAT determined that TSG had underreported its sales of fishmeal in 2002 and 2003, and had failed to report sales of fish oil during the same years.  Based on this conclusion, SUNAT informed TSG on 7 January 2005 that it owed approximately US$ 3.3 million in back taxes and fines.

On 26 January 2005 TSG appealed the decision. TSG argued that it was a marketer, rather than a producer, and therefore did not keep an inventory. Furthermore, the company said it provided SUNAT with contracts it had with the fishing vessels and the processing plants that detailed how much fish it bought and how much fish meal was produced and exported.

Two days later SUNAT imposed precautionary measures on TSG’s assets, informing banks to freeze the company’s assets in order to pay the debt.

TSG filed for arbitration in September of 2006 alleging violations China-Peru BIT protections concerning fair and equitable treatment, free transfer of funds, protection of the investment, and expropriation.

Peru objected to the tribunal’s jurisdiction on several grounds. In a June 2009 decision on jurisdiction, the tribunal confirmed its jurisdiction but limited it to the expropriation claim because the dispute resolution provision of the China-Peru BIT only grants consent to arbitration for claims of expropriation.

Tribunal’s reasoning

The tribunal began its reasoning by acknowledging that great deference must be given to sovereign states when they exercise their regulatory and administrative powers. However such exercise of regulatory power must be carried out in accordance with reasonable legal processes and not in a confiscatory, abusive or discriminatory manner.

The tribunal noted that Article 56 of the Peruvian Tax Code lists thirteen “exceptional circumstances” under which precautionary measures are allowed. Yet the tribunal found that, in violation of its own procedures, SUNAT’s audit department asked for precautionary measures without providing evidence that TSG’s behavior had met any of the exceptional circumstances enumerated in the law. In doing so SUNAT acted arbitrarily in the view of the tribunal.

SUNAT’s actions led to the collapse of TSG’s business as the company was shut out of the Peruvian banking system. This, according to the tribunal, resulted in the indirect expropriation of the company in violation of the China-Peru BIT.

The tribunal went on to add that TSG did not have access to adequate local legal venues to appeal SUNAT’s decision.  In particular, the Peruvian tax court, to which the claimant appealed, simply looked at whether SUNAT had the authority to ask for precautionary measures and not whether it had exercised this authority properly, the tribunal found.

Each party was ordered to pay their own legal costs, while the arbitration costs were split evenly.

The tribunal was made up of Hernando Otero of Colombia (claimant’s appointee), Professor Juan Fernández-Armesto (respondent’s appointee), and tribunal president Judd Kessler, chosen by ICSID after the parties failed to agree on a third member.

The award Tza Yap Shum v. Republic of Peru, ICSID Case No. ARB/07/6, is available in Spanish at:


Moldova on the hook for charges levied in free economic zone
Yury Bogdanov v. Republic of Moldova, SCC Arbitration No. V (114/2009)

Damon Vis-Dunbar

The government of Moldova breached the Russia-Moldova BIT when it levied new customs-related fees on a company operating in a free economic zone (FEZ), according to a March 2010 award submitted under the auspices of the Stockholm Chamber of Commerce.

The Russian claimant, Yury Bogdanov, owned a chemical company, Grand Torg LLC, which was registered in a FEZ, where Moldovan law guaranteed that the customs regime applied to the company would not change for a period of ten years. Mr. Bogdanov complained that the introduction of new custom fees broke that stability law, and in turn violated Moldova’s investment treaty obligations.

In reply, Moldova countered that the charges were administrative, and should not be considered as customs duties.

However, the sole arbitrator, Bo G.H. Nilsson, a Swedish arbitration specialist, rejected that argument, concluding that the charges were of a considerable scale, and were “quite obviously designed to fulfill the purposes typical for customs duties …”

The tribunal also found Moldova’s actions to be discriminatory, on the grounds that the fees appeared to only apply to Mr. Bogdanov’s company (Moldova offered no evidence to demonstrate that other companies were similarly charged).

Mr. Bogdanov was awarded 475, 386 Moldovan Leu (approx. US$ 41, 000). His original plea for damages was 15% higher, but Moldova argued that any additional income earned by the claimant would have been taxed.

Concluding that “the parties have accordingly each been partly successful in the arbitration, but Mr. Bogdanov … more successful,” the arbitrator ordered Moldova to pay two thirds of the arbitration costs, and Mr. Bogdanov one third.

As first reported in Investment Treaty News, the same claimant initiated four separate arbitrations against Moldova in 2004-2005.[7] As far as ITN is aware, only one of the awards in those cases has been made public: a dispute related to a paint-manufacturing company, named Agurdino, which was purchased under a privatization scheme. In that case, the sole arbitrator, Prof. Giuditta Cordero Moss, found Moldova in breach of the fair and equitable treatment standard of the Russia-Moldova BIT.

Notably, the Moldovan government did not participate in the Agurdino arbitration. However, the independent reporting service Investment Arbitration Reporter has reported that Moldova later complied with the 70,000 euro award.[8] The same news service also reports that Moldova has complied with the most recent arbitration over the fees levied on Grand Torg.

The award Yury Bogdanov v. Republic of Moldova, SCC Arbitration No. V (114/2009) is available at:

Tribunal accepts jurisdiction over contract claims against Ecuador, but treaty-based jurisdiction yet to be determined
Perenco Ecuador Ltd. v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No. ARB/08/6

Vyoma Jha

In a 30 June 2011 decision an ICSID tribunal ruled that it has the competence to hear the contract claims brought by Perenco against Ecuador. On the point of jurisdiction over the treaty claims, however, the tribunal deferred its decision to the merits phase of the proceeding.

Perenco alleges that a series of legislative measures enacted by Ecuador breached obligations under the France-Ecuador BIT, as well as contractual obligations under two ‘Participation Contracts’ that it entered into for the exploration and exploitation of oil reserves in certain designated areas.

Notably, the tribunal declined jurisdiction with respect to the second respondent, Ecuador’s state oil company, Petroecuador, on the grounds that it was not an independent party to the contracts. It was of the view that Petroecuador was an agent of the State, which administered and supervised contract performance on behalf of Ecuador without receiving any economic benefit.

BackgroundThe dispute arose in 2006 out of Ecuador’s “Law 42”, which obliged contractors with oil participation contracts, such as Perenco, to grant Ecuador a share of their “extraordinary income” from oil sales. Later, a 2007 Decree further increased Ecuador’s participation on unforeseen surpluses from 50% to 99%. Perenco filed a request for arbitration against Ecuador and Petroecuador with the ICSID on 20 April 2008.

In 2009, Ecuador and Petroeuador started coercive measures to collect the outstanding Law 42 payments from Perenco. Following an application by Perenco, the tribunal ordered Ecuador to refrain from collecting the windfall levies, but the order was promptly ignored by Ecuador

Treaty-based jurisdiction is complicated by question of nationality

Ecuador objected to the tribunal’s jurisdiction under the France-Ecuador BIT on the grounds that Perenco was a company incorporated in the Bahamas and not controlled by French nationals.

Perenco, on the other hand, asserted that a chain of corporate ownership led Perenco’s ultimate parent company to being controlled by the late Hubert Perrodo, a French national. It argued that the shares of Perenco International Limited belong to the heirs of the late Mr. Perrodo and therefore are “indirectly” controlled by French nationals.

Interestingly, the tribunal noted that “[i]n this case it is the investment rather than a French investor that has brought the claim and it has sought to adduce evidence of how it is controlled by four non-parties to the arbitration who are nationals of France”.[9]

The tribunal deferred its decision on the nationality of Perenco, following the submission of any travaux preparatoires of the BIT from France. It also directed the claimant to file further evidence in support of its argument that the shares in Perenco’s ultimate parent company form a part of the estate of the late Mr. Perrodo under French Law.

Contract claims advance despite Ecuador’s objections 

The second contentious issue related to the tribunal’s competence over the claimant’s contract claims.

According to the arbitration provisions of the ‘Participation Contracts’, only technical and/or economic matters could be brought before an ICSID tribunal.

Ecuador contended that Perenco’s claims were primarily of a “legal” nature and failed to constitute “disagreements on technical matters involving economic aspects, or vice-versa”. However, the tribunal had “no doubt” in deciding that the dispute concerning participation percentages of oil revenues qualifies as an “economic dispute relating to the Participation Contract”.  Thus, Perenco’s contract claims were held to fall within the jurisdiction of the ICSID and competence of the tribunal.

Finally, the tribunal decided that the claimant’s request to enjoin Ecuador from applying “Law 42” was “premature” as it did not belong to the jurisdictional phase. It, thus, refrained from deciding what remedies might be available should it find that Ecuador breached its treaty obligations.

The determination of the proceeding’s costs, like the decision on the tribunal’s competence over the treaty claims, was deferred to a later stage of the arbitration.

The tribunal was made up of Judge Peter Tomka (President), Mr. Neil Kaplan (appointed by Perenco Ecuador Ltd.) and Mr. J. Christopher Thomas (appointed by the Respondents).

The award on jurisdiction in Perenco Ecuador Ltd. v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) is available at:

[1] Article 22 reads: “Disputes arising between an international investor, whose country of origin has in effect with Venezuela a treaty or agreement for the promotion and protection of investments, or disputes to which are applicable the provisions of the Multilateral Investment Guarantee Agency (MIGA), or the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID), shall be submitted to international arbitration, according to the terms of the respective treaty or agreement, if it so provides, without prejudice to the possibility of using, if appropriate, the dispute resolution means provided for under the Venezuelan legislation in effect, when applicable.”

[2] CEMEX Caracas Investments B.V. and CEMEX Caracas II Investments B.V. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/08/15

[3] Mobil v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27

[4] Siemens AG v. Argentina, ICSID Case No. ARB/02/8, Decision on Jurisdiction, Aug. 3, 2004.

[5] RosInvestCo v. Russian Federation, SCC Arbitration V (079/2005), Award, 12 Sept. 2010.

[6] AES Summit Generation Ltd. v. Hungary, ICSID Case No. ARB/07/22, para. 10.3.23.

[7] “Russian investor pursues multiple treaty arbitrations against Moldova in Stockholm”, by Damon Vis-Dunbar and Luke Eric Peterson, Investment Treaty News, 17 February 2006

[8] “Moldova loses another treaty arbitration with Russian investor, but shows signs of cooperation with the arbitration system”, by Jarrod Hepburn, Investment Arbitration Reporter, Vol. 4, No. 7

May 20, 2011

[9] Paragraph 97 of the Decision