By Damon Vis-Dunbar
16 January 2009
The Illinois-based Continental Casualty Company has moved to annul an ICSID award that was largely in favour of the Republic of Argentina.
In a 5 September 2008 ruling, Continental Casualty was awarded US$2.8 million, a small part of the US$112 million that the firm claimed from Argentina after its investment in an insurance company plummeted in the midst of the Argentine financial crisis.
Argentina had successfully applied the essential security provision found in the United States-Argentina bilateral investment treaty, which states that the treaty does not prevent the parties from undertaking measures necessary for maintaining peace, public order or essential security. The award stands in contrast to some earlier ICSID rulings involving Argentina, where tribunals have held the government to a higher standard of “state of necessity” found under customary international law.
In its effort to annul the award, Continental Casualty argues that the tribunal “manifestly exceeded its powers” and the award “failed to state the reasons on which it is based.” These form part of the narrow grounds on which an ICSID award may be annulled.
More specifically, however, Continental Casualty argues that the tribunal: (i) failed “to apply the well-developed customary international law governing the defense of necessity …”; (ii) failed to properly apply the governing international law by not holding Argentina responsible for compensation for measures taken during its financial crisis, in spite of the essential security defense; (iii) erred by finding that Argentina had breached the Fair and Equitable Treatment provision of the BIT, but then declining to consider if Argentina was also liable for damages for expropriation, even though the amount of damages for the latter should have been higher; (iv) and finally, failed to properly apply the BIT when it determined that Continental Casualty did not have a right to compensation after its investment was prevented from transferring certain assets out of Argentina.
The ICSID secretariat registered Continental Casualty’s annulment application on 14 January 2009, and will now be responsible for forming an ad-hoc committee to hear the request.