{"id":422,"date":"2010-01-12T14:28:00","date_gmt":"2010-01-12T20:28:00","guid":{"rendered":"http:\/\/itn.mattrock.ca\/2010\/01\/12\/cemex-v-venezuela-challenges-to-icsid-arbitrators-must-be-made-%e2%80%9cpromptly%e2%80%9d\/"},"modified":"2013-01-24T02:45:47","modified_gmt":"2013-01-24T08:45:47","slug":"cemex-v-venezuela-challenges-to-icsid-arbitrators-must-be-made-promptly","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2010\/01\/12\/cemex-v-venezuela-challenges-to-icsid-arbitrators-must-be-made-promptly\/","title":{"rendered":"Cemex v. Venezuela: challenges to ICSID arbitrators must be made “promptly”"},"content":{"rendered":"

By Elizabeth Whitsitt<\/span><\/strong><\/p>\n

January 13, 2010<\/span><\/strong><\/p>\n

On November 6, 2009 two members of an ICSID<\/span> arbitral tribunal – Judge Gilbert Guillaume (President) and Professor Georges Abi-Saab – dismissed Venezuela\u2019s challenge to the tribunal\u2019s third member, Mr. Robert B. von Mehren.\u00a0 In a decision only recently made public, the two-man tribunal confirms that proposals to disqualify ICSID arbitrators must be made \u201cpromptly\u201d.<\/span><\/p>\n

Arbitral proceedings between Cemex Caracas Investments B.V., Cemex Caracas II Investments B.V. (Cemex) and Venezuela began in October 2008 some seven months after Hugo Chavez, President of the Bolivarian Republic, announced the nationalization of the country\u2019s cement industry.\u00a0 In the context of a state-wide housing shortage and concerns about unaffordable housing, President Chavez\u2019s nationalization of Venezuela\u2019s cement industry was reportedly done to increase the availability and affordability of construction supplies to Venezuela\u2019s domestic market.*<\/span><\/p>\n

According to a press release dated August 20, 2008, the world\u2019s third largest cement-producer asserts that the nationalization of its investment \u201chighlight[s] a lack of respect for the principles of international law and the treaties relating to the reciprocal protection of investments which forbid the occupation of goods and deprivation of rights without fair and effective compensation and without an expropriation procedure.\u201d**<\/span><\/p>\n

With the tribunal\u2019s first session set to take place in Paris in mid-November 2009, Venezuela filed a formal proposal for disqualification of Mr. von Mehren on October 26, 2009 only three weeks before the tribunal\u2019s scheduled first session and almost three months after the tribunal was constituted.<\/span><\/p>\n

Venezuela\u2019s challenge to Mr. von Mehren focused on his relationship with Debevoise & Plimpton LLP, a law firm representing swiss-based Holcim Ltd., another one of the world\u2019s leading cement suppliers, in a similar dispute against Venezuela that was registered by ICSID on April 10, 2009.\u00a0 Counsel for Venezuela did acknowledge that Mr. von Mehren was a retired partner of the law firm.\u00a0 However, counsel also noted that the US national maintained significant connections with the firm as Mr. von Mehren was still listed on Debevoise website, and maintained an office, administrative services and an email account through the firm.\u00a0 Given such ties, Venezuela expressed doubts about whether Mr. von Mehren would \u201cexercise independent judgment\u201d in the dispute and whether his relationship to Debevoise \u201ccreate[d] a risk of disclosure of confidential information.\u201d<\/span><\/p>\n

The substance of those concerns is not addressed in the two-man tribunal\u2019s decision, however.\u00a0 Judge Guillaume and Professor Abi-Saab instead focused their reasoning on the timing of Venezuela\u2019s proposal to disqualify Mr. von Mehren.\u00a0 Relying on Rule 9(1) of the ICSID Arbitration Rules, the two men confirmed that proposals for the disqualification of an arbitrator must be made \u201cpromptly\u201d and dismissed Venezuela\u2019s challenge on that basis.<\/span><\/p>\n

Specifically, Judge Guillaume and Professor Abi-Saab determined that \u201cevery material element of [Venezuela\u2019s] application for disqualification was well known to it\u201d by the time parallel proceedings were initiated by Holcim Ltd. against Venezuela on April 10, 2009, at least six months prior to its proposal for disqualification.\u00a0 Having waited too long, both men held that Venezuela had \u201cwaived its right\u201d to request the disqualification of Mr. Mehren.<\/span><\/p>\n

Sources:<\/span><\/p>\n

* \u201cChavez Plans to Nationalize Venezuela Cement Industry,\u201d By Steven Bodzin and Thomas Black, Bloomberg.com, 4 April 2008.<\/span><\/p>\n

** Cemex Company Press Release dated 20 August 2008, available on the company\u2019s website at: <\/span>http:\/\/www.cemex.com\/qr\/mc_pr_082008.asp<\/span><\/a><\/p>\n