Procedural Posture

This document is the Final Award in PCA Case No. 2015-12, an arbitration conducted under the UNCITRAL Rules 2010 and the 1990 Agreement between the United Kingdom and the Argentine Republic for the Promotion and Protection of Investments (the "BIT"). The dispute arose from a 1998 contract between the Claimant, a UK company, and Argentina for the provision of auditing services related to a pre-shipment inspection programme for imports.

Principal Legal and Procedural Issues

The principal issues addressed by the Tribunal included whether Argentina breached Article 2(2) of the BIT—specifically the fair and equitable treatment (FET) standard, full protection and security (FPS), the prohibition against unreasonable or discriminatory measures, and the Umbrella Clause. The Claimant alleged breaches based on Argentina's application of a 10% fee cap, the forced conversion of US dollar-denominated invoices into Argentine Pesos ("pesification"), a 13% reduction of fees pursuant to Decree 1060/01, and the non-payment for alleged "Special Services." The Respondent raised preliminary defenses of acquiescence, estoppel, good faith, and extinctive prescription, alongside a defense of necessity under customary international law.

Parties' Positions

The Claimant argued that the 10% fee cap was inapplicable because Argentina failed to implement a functioning selection system for the audits. It further contended that its remuneration was a value obligation in US dollars, rendering pesification unlawful, and that it never consented to the 13% fee reduction. The Respondent maintained that its actions were strictly consistent with the Contract and Argentine law, arguing that the Claimant had tacitly consented to the fee cap and reductions by continuing to provide services. The Respondent further invoked the 2001-2002 Argentine financial crisis to support its necessity defense.

Tribunal's Reasoning and Findings

The Tribunal dismissed the Respondent's preliminary defenses, finding no factual basis for acquiescence, estoppel, or extinctive prescription. On the merits, the Tribunal determined that the Umbrella Clause encompassed the Contract. It held that the Claimant was contractually entitled to amounts exceeding the 10% fee cap because Argentina's failure to implement a workable selection system rendered compliance impossible. Regarding pesification, the Tribunal found that the Claimant's remuneration constituted a value obligation in US dollars, placing it outside the scope of the Emergency Law and Decree 214/02. The Tribunal also concluded that the 13% reduction under Decree 1060/01 was inapplicable, as the Claimant had not consented and the Contract had already expired. Concerning the Special Services, the Tribunal found that certain reports qualified for additional remuneration under Resolution 1106/98, though it applied a discount due to defective proof of costs. Because the Tribunal concluded that the Claimant's contractual entitlements fell outside the scope of the emergency measures, it deemed it unnecessary to decide on the Respondent's necessity defense.

Decision and Relief

The Tribunal declared that the Respondent violated the Umbrella Clause of the BIT. It ordered Argentina to pay the Claimant compensation in the principal amount of USD 9,661,390.80. Furthermore, the Tribunal awarded pre-award compound interest at an annual rate of 12.8 percent, reflecting the Respondent's median cost of borrowing. The Tribunal ordered that each party bear its own legal costs and half of the arbitration costs.