In Azurix v. Argentina, an ICSID tribunal found the Argentine Republic liable for breaching its obligations under the 1991 Argentina-United States Bilateral Investment Treaty (BIT) in connection with a water concession in the Province of Buenos Aires. The dispute arose from provincial measures that undermined the investment made by Azurix Corp., a U.S. corporation, through its local subsidiary. In its 2003 Decision on Jurisdiction, the tribunal established a clear distinction between contract-based claims belonging to the local subsidiary and treaty-based claims belonging directly to the foreign investor, dismissing Argentina's jurisdictional objections. On the merits, the tribunal found that the Province's actions did not constitute an expropriation but did breach several other key BIT protections. It held that a 'pervasive conduct' by the Province violated the fair and equitable treatment (FET) standard. This conduct included politicizing the tariff regime, publicly encouraging customers not to pay their bills, and creating an unstable regulatory environment. The tribunal affirmed that FET is an objective standard protecting an investor's legitimate expectations. Similarly, it found a breach of the full protection and security (FPS) standard, interpreting it as extending beyond physical security to the maintenance of a stable legal and business environment. It also held that several provincial actions were arbitrary and impaired the investment. The tribunal dismissed the claim under the umbrella clause, reasoning that the underlying Concession Agreement was not a direct obligation between Argentina and the claimant investor. In its 2006 Award, the tribunal ordered Argentina to pay Azurix US$165,240,753 in compensation plus interest. It based damages on the fair market value of the investment but rejected Azurix's claim for the full recovery of its US$438 million canon payment, calculating a significantly reduced value (US$60 million) and adding Azurix's other capital contributions. Argentina subsequently applied for the annulment of the Award, alleging the tribunal was improperly constituted, manifestly exceeded its powers, seriously departed from a fundamental rule of procedure, and failed to state its reasons. In a Decision dated September 1, 2009, the ad hoc Committee unanimously dismissed Argentina’s application in its entirety. The Committee rejected the claim of improper constitution, holding that its review was limited to procedural compliance and it could not re-examine the merits of the original arbitrators' decision to reject a challenge to the President. It also dismissed the argument that the tribunal had manifestly exceeded its powers by hearing Azurix’s “derivative” claims, concluding that the BIT’s broad definition of investment permitted a shareholder to bring such claims. Furthermore, the Committee found no manifest excess of power in the tribunal’s application of international law to the treaty claims or in its damages methodology. Finally, it rejected the claim of a serious procedural departure, finding the tribunal’s management of evidence requests was within its discretion. The dismissal upheld the original Award and terminated the stay of enforcement.