Case Overview

In Alemanni v. Argentina, 183 Italian individuals and legal entities (later reduced to 74) initiated ICSID arbitration against the Argentine Republic under the Italy-Argentina BIT (1990). The dispute arose from Argentina's default on its sovereign bonds in 2001 and the subsequent restructuring efforts, including the 2005 and 2010 Public Offers of Exchange (POE) and the enactment of Law 26,017 (the "Ley Cerrojo"), which the Claimants alleged amounted to an expropriation and a breach of fair and equitable treatment.

Procedural History

The Request for Arbitration was filed on December 22, 2006, and registered by ICSID on March 27, 2007. The Tribunal was constituted on July 3, 2008, comprising Sir Franklin Berman (President), Professor Karl-Heinz Böckstiegel, and Mr. J. Christopher Thomas QC. The proceedings were bifurcated into a preliminary jurisdictional and admissibility phase and a merits phase. A hearing on jurisdiction was held in Paris on June 7-8, 2011. The Tribunal issued its Decision on Jurisdiction and Admissibility on November 17, 2014. Following this decision, the Centre requested advance payments which were not fulfilled. Consequently, the proceedings were suspended on February 6, 2015, and the Secretary-General later moved to discontinue the case.

Key Issues and Positions

Jurisdiction

Argentina raised several preliminary objections to the Tribunal's jurisdiction and the admissibility of the claims. The Respondent argued that the ICSID Convention and the BIT did not permit "mass claims" or collective actions without specific consent. Argentina also contended that the Claimants had not validly consented to arbitration due to defects in their powers of attorney and the involvement of a third-party funder, North Atlantic SAM (NASAM). Furthermore, Argentina asserted that the security entitlements held by the Claimants did not qualify as "investments" made "in the territory of Argentina" under the BIT or the ICSID Convention. Finally, the Respondent argued that the Claimants failed to comply with the mandatory 18-month domestic litigation requirement under Article 8 of the BIT. The Claimants maintained that their claims were admissible as a multi-party proceeding, that their consent was validly given, that sovereign bonds constituted protected investments, and that pursuing domestic remedies in Argentina would have been futile due to the Ley Cerrojo and decisions of the Argentine Supreme Court.

Tribunal/Court Reasoning and Holdings

Jurisdiction

The Tribunal rejected the majority of Argentina's preliminary objections. It held that the ICSID Convention does not preclude multi-party arbitrations, finding no basis to imply the words "but only one" into Article 25(1)'s reference to "a national of another Contracting State." The Tribunal concluded that the Claimants had validly consented to arbitration by filing the Request through duly authorized counsel, dismissing the Respondent's arguments regarding the invalidity of the powers of attorney under Italian law and the role of NASAM. Regarding the requirement to pursue domestic litigation for 18 months, the Tribunal agreed with the Claimants that such a step would have been futile. The Tribunal found that the Ley Cerrojo and the Argentine Supreme Court's jurisprudence demonstrated that the Argentine judicial system was not reasonably capable of providing effective relief for the bondholders' claims. However, the Tribunal decided to join to the merits the Respondent's objections concerning the multiplicity of claimants and the existence of an investment in the territory of Argentina. The Tribunal reasoned that determining whether the multiple claims constituted a single "dispute" and whether the specific security entitlements qualified as protected investments required a detailed examination of the facts and the nature of the property rights, which was inextricably linked to the merits of the case.

Costs

In its Order Discontinuing the Proceeding, the Tribunal addressed the Parties' competing requests for costs. The Tribunal concluded that under Article 61(2) of the ICSID Convention and Arbitration Rule 47(1)(j), the obligation and power to allocate costs only arise when an arbitral proceeding is brought to a definitive end through an award. Because the Tribunal was discontinuing the case rather than issuing a final award, it found it did not possess the power to make the requested costs orders. Furthermore, the Tribunal noted that even if it had such power, it would likely not have exercised it due to failings in co-operation by both Parties and the parallel nature of the claims.

Disposition / Relief

The Tribunal initially rejected the Respondent's preliminary objections based on the absence of consent, the nature of legal representation, the failure to pursue prior steps, and due process considerations. The objections based on the multiplicity of claimants and the absence of an investment in the territory of Argentina were rejected in part and joined to the merits. The Tribunal declared the claims admissible and reserved its decision on the allocation of costs. Arbitrator J. Christopher Thomas QC appended a Concurring Opinion regarding the multi-party nature of the proceeding. Ultimately, on December 14, 2015, the Tribunal issued an Order Discontinuing the Proceeding pursuant to ICSID Administrative and Financial Regulation 14(3)(d) due to the Parties' failure to pay the required advances, making no order as to costs.