UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
| In Re Application of Webuild S.p.A. and Sacyr S.A., Applicants, To Obtain Discovery for Use in an International Proceeding | Case No. 1:22-mc-140-LAK |
|
September 15, 2022 |
Carolyn B. Lamm David Hille Counsel for Webuild S.p.A |
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Webuild hereby submits this Consolidated Sur-Reply in Opposition to Panama and WSP’s
motions to vacate the Court’s May 19, 2022 Order and quash the WSP Subpoena (ECF 15, 23).
This Sur-Reply is supported by the Second Expert Report of Christoph Schreuer (“Schreuer II”).1
For years, in multiple fora, Panama has actively avoided production of the documents that
Webuild seeks in its § 1782 Application. It now seeks to intervene in this action to prevent Webuild
from obtaining those documents from a third party. Panama’s primary argument, however, rests
on an overly narrow and incorrect interpretation of the Supreme Court’s decision in ZF Automotive
(“ZF”), 142 S. Ct. at 2084–86, and should be rejected.
The parties agree that the proper test under ZF for deciding whether a tribunal is a “foreign
or international tribunal” for purposes of § 1782 is to determine whether the tribunal is “imbued
with governmental authority” by one nation or multiple nations. 142 S. Ct. at 2087. But the
Supreme Court declined to provide an exhaustive list of such indicia of governmental authority,
and expressly did not “attempt to prescribe” how tribunals imbued with such authority should be
structured. Id. at 2090–91. Thus, even if ICSID tribunals lacked some of the features that the
Supreme Court identified, they possess several others that demonstrate they are imbued with
governmental authority, and which materially distinguish them from ad hoc tribunals.
As explained (Opp’n 12–25, ECF 39), representatives of the ICSID Member States and of
the World Bank drafted the ICSID Convention, which establishes a comprehensive framework for
the formation and operation of ICSID tribunals to resolve investor-state disputes. Panama’s
attempt to exclude ICSID tribunals from § 1782 rests on the flawed assertion that ICSID tribunals
1 Webuild interprets the Court’s order (ECF 55) as permitting its submission of the Second Schreuer Report because ↩
the Report is an attachment to the Sur-Reply and is offered only in support of the ZF issues. If Webuild is mistaken
in its interpretation, it understands that the Court will disregard the Second Schreuer Report and consider only this
Sur-Reply memorandum.
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should be examined divorced from their origins in the ICSID Convention and their relationship to
ICSID itself. But ICSID tribunals are governed and guided by the structure and rules prescribed
by Member States in the ICSID Convention and the arbitral rules promulgated thereunder. And
ultimately, if annulment is sought, their awards are reviewed by arbitrators appointed to the Panel
by the Member States. ICSID tribunals thus differ in precisely the manner contemplated in ZF—
they are imbued with governmental authority by the ICSID Member States.
The ICSID Convention and the ICSID Arbitration Rules. The ICSID Convention was
drafted by representatives of ICSID’s Member States and of the World Bank, Opp’n 13–14, and
restricts the parties’ “free[dom] to structure” ICSID arbitrations in significant ways. ZF, 142 S. Ct.
at 2089. Panama is wrong to say (Reply 18–19, ECF 42) the ICSID Convention reflects the same
level of governmental authority as the UNCITRAL Rules applicable to ad hoc arbitrations because
the latter are also drafted by an intergovernmental organization, the U.N. General Assembly. The
UNCITRAL Rules provide only a framework of procedural rules that the parties may (or may not)
choose to apply to their ad hoc arbitration, and which can be modified by the parties’ agreement
alone. Unlike the ICSID Convention and Rules, the UNCITRAL Rules do not regulate the
jurisdiction or the annulment and enforcement of ad hoc awards. ICSID Convention, art. 25(1);
Schreuer II, 5–6. Nor do the UNCITRAL Rules create a permanent body like ICSID to administer
arbitrations. The Member States’ influence over ICSID tribunals is thus more significant than the
U.N. General Assembly’s influence over ad hoc tribunals.
The ICSID Administrative Council, Centre, and Secretary-General. Contrary to
Panama’s suggestion (at 19), important aspects of ICSID tribunals’ operation are dictated by
ICSID’s Administrative Council, through which Member States participate in ICSID governance.
For example, only the Council enacts and amends the ICSID Arbitration Rules. Opp’n 15. And,
arbitrators not appointed by the parties are appointed by the Chairman of the Council from the
Panel of Arbitrators, designated by the Member States. Id. at 16–17. Critically, the Chairman
appoints arbitrators from the Panel to sit on annulment committees—in a self-contained system
for oversight—that decide all petitions to annul ICSID awards. Id. at 17; Annex I.
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Panama also wrongly contends (at 20) that ICSID (i.e., the Centre itself) is irrelevant to
ICSID tribunals’ governmental authority. But while ad hoc tribunals may operate with or without
an administering institution, ICSID tribunals may not operate without the administrative support
of the Centre. Notably, the Convention imbues the Centre with legal personality to ensure “the
proper functioning of proceedings under the auspices of the Centre[,]” indicating that the Centre
is directly relevant to the function of ICSID tribunals. Opp’n 15 (quoting ICSID Convention
Preliminary Draft at 200). Thus, Panama’s attempt (at 20 n.12) to compare the role of the Centre
in ICSID arbitration with the role of the Permanent Court of Arbitration (“PCA”) in ad hoc
arbitrations is wrong. If the parties to ad hoc arbitration appoint the PCA as an administering
institution, the PCA is limited to providing administrative support to the ad hoc tribunal. The
PCA’s administrative council does not designate panels that have the authority to review awards,
nor can it mandate the application of procedural rules different from those selected by the parties.
The PCA member states further did not participate in drafting a treaty, like the ICSID Convention,
that governs the conduct of ad hoc arbitration. ICSID Convention, art. 25(1); Schreuer II, 5–6, 12.
Contrary to Panama’s contention (at 10), ICSID tribunals’ governmental authority is also
indicated by the fact that the ICSID Member States are responsible under the Convention for
funding ICSID in case the Centre’s expenses exceeds its income. Opp’n 15. Other than a filing fee
by the parties, the Member States, not the parties, must bear the expenses of the Centre. Panama’s
expert omits that only once in the past ten years, in 2021, have the parties’ fees fully covered
ICSID’s expenses. For every other year in the last decade, ICSID has depended on income from
its publications, investments and in-kind contributions from the World Bank to cover its expenses.
See ICSID Annual Reports, available at https://icsid.worldbank.org/resources/publications. This
directly contrasts with party-funded ad hoc arbitrations discussed in ZF. 142 S. Ct. at 2090.
The jurisdictional screening of every request for arbitration by the Secretary-General of the
Centre (who is appointed by the Member States) is also an indicator of governmental authority.
Opp’n 19. Panama disagrees, contending (at 22) that an ICSID tribunal’s jurisdiction is determined
by the consent of the parties, which the Secretary-General may not “override.” But while the
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parties’ consent is one requirement for an ICSID tribunal’s jurisdiction, the Secretary-General may
reject a request for arbitration (and thus “override” the parties’ consent) for manifestly failing to
comply with one of the Convention’s additional requirements, such as the requirement the host
State and investor’s home State be ICSID Member States. ICSID Convention, art. 25(1); Schreuer
II, 12–14. The Member States thus retain a measure of control over the jurisdiction of ICSID
tribunals, not only by participating in drafting the Convention’s jurisdictional provisions, but also
by electing the official in charge of screening arbitration requests for compliance with those
provisions. In other arbitral institutions, such screening is conducted by private individuals not
appointed by sovereign States. Governance, ICC, available at https://iccwbo.org/about-
us/governance/; SCC Arbitration Rules, Appendix I, Art. 4 (2017); Schreuer II, 11–12.
Formation and Composition of ICSID Tribunals. Panama contends (at 12) that ICSID
tribunals lack governmental authority because they are not “standing or pre-existing” bodies. But
ZF was clear that nothing in its analysis “foreclose[d] the possibility” that a body formed solely to
decide a particular dispute could be imbued with governmental authority. 142 S. Ct. at 2091.
Moreover, Panama’s argument artificially separates ICSID tribunals from the framework in which
they operate and ignores the influence that ICSID, a permanent institution, has on the functioning
and administration of ICSID tribunals.
Panama claims (at 13–14) that ICSID tribunals lack governmental authority because parties
may select their own arbitrators. But the Member States still retain influence over arbitrator
appointments in ways that do not feature in ad hoc arbitration. Opp’n 16–18. Panama itself notes
(at 13) one such way: the Convention’s requirement that the majority of arbitrators on an ICSID
panel not have the same nationality as either of the parties, unless the parties agree otherwise.
ICSID Convention, art. 39. And more significantly, the Convention requires that, absent agreement
otherwise, any arbitrators not appointed by the parties must be appointed by ICSID’s Chairman
from the Panel of Arbitrators designated by the Member States, and all arbitrators appointed to an
annulment panel must be appointed by the Chairman from the Panel. Id. at 16–17; Annex I. Indeed,
the fact that the Member States entrust arbitrators appointed from the Panel with the sole authority
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to adjudicate the annulment of ICSID awards—a function exercised by domestic judges in ad hoc
arbitrations—demonstrates that the Panel is not of “limited significance,” as Panama contends (at
14). As Panama acknowledges (at 24), the Panel members ensure ICSID awards comply with
“fundamental principles of law.” See History of the ICSID Convention, vol. II-2, at 854–55.
Finally, Panama suggests (at 21) that the immunities granted to arbitrators on ICSID
tribunals are unremarkable because rules applicable to private arbitrations confer equivalent
immunities. But the protections granted by the Convention are significantly broader—they do not
merely limit the liability of arbitrators, but also grant them absolute immunity from legal process.
ICSID Convention, art. 21; Schreuer II, 8–9. This broad grant of immunity is comparable to that
granted to judges of intergovernmental courts, such as the ICJ. Schreuer I, 8 n.28.2 While these
broad immunities apply to every ICSID arbitrator by virtue of the Convention, arbitrators in ad
hoc tribunals only enjoy any degree of partial immunity if the parties select procedural rules that
confer such immunities. Panama’s contention (at 20) that the immunities granted to ICSID
arbitrators were intended to ensure that they “would act with independence” only underscores
Member States’ agreement to confer protections on ICSID arbitrators, which stem from the States’
sovereign authority to ensure the proper functioning of ICSID tribunals.
The Jurisdiction and Operation of ICSID Tribunals. Unlike ad hoc tribunals, whose
jurisdiction is purely a function of the parties’ consent to arbitration, the jurisdiction of an ICSID
tribunal requires—in addition to consent—that both the host State and the investor’s home State
be signatories to the Convention. Opp’n 18–19. Far from a “distinction without a difference”
2 Panama is mistaken (at Reply 4 n.6, ECF 42) that Professor Schreuer’s first opinion (ECF 38) is an inadmissible ↩
legal opinion. Under Federal Rule of Civil Procedure 44.1, courts may admit legal opinions on matters of foreign law.
Bugliotti v. Republic of Argentina, 952 F.3d 410, 413 (2d Cir. 2020); In re Initial Public Offering Securities Litig.,
174 F. Supp. 2d 61, 65 (S.D.N.Y. 2001). Numerous courts have extended Rule 44.1 to questions of international law,
and have permitted legal experts to submit opinions on matters such as the interpretation of international human rights
and international treaties, among others. See, e.g., Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 143 n. 47 (2d
Cir. 2010); U.S. v. Jurado-Rodriguez, 907 F. Supp. 568, 574 (E.D.N.Y. 1995)); Sunglory Maritime Ltd. v. PHI, Inc.,
No. 15-896, 2016 WL 9414283, at *3–4 (E.D. La. Mar. 15, 2016). Professor Schreuer’s first and second opinions are
admissible under Rule 44.1 as an opinion on the ICSID Convention and the inner-workings of ICSID tribunals—i.e.,
matters of international law—and on the effect of that international law on matters before this Court.
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(Reply 17), the Convention’s jurisdictional restrictions evidence sovereign states’ influence on the
formation and operation of ICSID tribunals. See History of ICSID Convention, vol. II-1, at 37
(describing ICSID tribunals’ jurisdiction derives from “the consent of the parties” and the
“applicability of the Convention,” and explaining that while the “first interests only the parties, the
second is of interest to the Contracting States”).3 The Convention further restricts the types of
claims that may be brought before an ICSID tribunal, requiring that they are a legal dispute arising
directly out of an investment. Opp’n 18.4 While Panama notes (at 21) that the authority to hear
investment claims arising from state actions is not exclusive to ICSID tribunals, this restriction
emphasizes that ICSID tribunals, unlike ad hoc tribunals, may not be convened by private parties
to decide private commercial disputes.
Panama also suggests (at 16) that confidentiality requirements for ICSID tribunals
undermine any suggestion of governmental authority. But not all governmental courts publish their
decisions. Schreuer II, 18.5 And in any event, ICSID tribunals are subject to transparency rules
that are not present in ad hoc arbitration. Ad hoc tribunals are not required to publish any part of
their decisions unless the parties agree to transparency rules in their arbitration agreement. ICSID,
in contrast, is required to publish excerpts of all ICSID awards, including the tribunal’s reasoning.
ICSID Rules (2022), Rule 62; Schreuer II, 18–19. The new ICSID Rules, effective as of July 1,
2022, in fact presume the parties’ consent to the publication of awards unless the parties timely
object, and require the publication of all interim orders and decisions by ICSID tribunals. Id.
Above all, the Member States’ intent to imbue ICSID tribunals with governmental
authority is reflected in ICSID’s unique, self-contained mechanisms for annulling and enforcing
3 As an analogous example, the ICJ’s jurisdiction requires both compliance with the requirements of the ICJ Statute— ↩
such as the requirement the parties be states—and specific consent of the parties to a dispute. ICJ Statute, Art. 36(1).
4 In the relevant instrument (BIT or contract), the Member States also specify the applicable law and types of claims ↩
to which they consent.
5 See, e.g., El Ameir Noor et al., Legal Systems in the United Arab Emirates: Overview, Thomson Reuters Practical ↩
Law (2021), available at https://uk.practicallaw.thomsonreuters.com; Saudi Arabia Law of Criminal Procedure, art.
183, available at http://hrlibrary.umn.edu/research/saudiarabia/criminal_procedure.html.
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ICSID awards. Opp’n 19–24. The Convention (art. 54(1)) imbues ICSID tribunals with the
authority to issue awards that must be enforced by Member States as if they were a final judgment
of the States’ own courts. Once issued, an ICSID award may be reviewed only by Annulment
Committees composed of arbitrators appointed by the Chairman of the Council from the Panel of
Arbitrators, who are designated by the Member States. ICSID Convention, art. 52. The exclusive
grounds for annulling ICSID awards are set out in the Convention. Id. at 52(1).
Panama attempts to minimize these critical features, asserting (at 22) that mechanisms for
annulling and enforcing awards are irrelevant to whether a tribunal is clothed with governmental
authority. But this argument ignores that the Convention directly confers on ICSID tribunals and
Annulment Committees certain powers otherwise reserved to governmental courts—namely, the
authority to issue awards equivalent to domestic court judgments, and the authority to review
awards, respectively. Opp’n 19–22. In contrast, national courts retain the sole authority to review
ad hoc awards, and may deny enforcement of such awards on substantive grounds. Id. at 21–24.6
In imposing ICSID’s unique system of annulment and enforcement, the Member States
significantly restrict the parties’ “free[dom] to structure” ICSID arbitration “as they see fit[,]”
indicating an exercise of governmental authority over how ICSID tribunals operate. ZF, 142 S. Ct.
at 2089. Unlike parties to ad hoc arbitration, parties to ICSID arbitrations do not control which
courts have authority to review their awards, or the legal grounds for review, by selecting the
arbitration seat.7 Indeed, as Panama notes, ICSID parties are bound by the “Member States’
decision” to accord ICSID awards the same “high degree of finality” as domestic judgments. Reply
25; see also Mobil Cerro, 863 F.3d at 117; History of the ICSID Convention, vol. II-1, at 272
(explaining Article 54(1) was intended to “[go] beyond any known forms of recognition of foreign
6 Panama notes (at 22) that the Supreme Court in ZF did not consider enforcement and annulment mechanisms in its ↩
analysis of ad hoc and commercial tribunals, but this is unsurprising given that such mechanisms are unique to ICSID
and the Court was clear it had not provided an exhaustive list. ZF, 142 S. Ct. at 2091.
7 Panama points (at 24 n.13) to “exceptional circumstances” in which parties to ICSID arbitration may request that ↩
ICSID replace an Annulment Committee member with another candidate, such as when the arbitrator has a conflict
of interest. But even in these exceptional circumstances, the replacement Annulment Committee member is appointed
by the Chairman from the Panel of Arbitrators. Background Paper on Annulment, ICSID (April 2016), ¶ 37.
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judgments in requiring that the award of the tribunal be treated as final”).
Regarding annulment, Panama is wrong (at 24–25) to minimize the authority of ICSID
Annulment Committees by contending they may only annul ICSID awards on narrow grounds. As
Panama’s expert concedes, the grounds for annulling ICSID awards significantly overlap with
grounds applied by national courts reviewing ad hoc awards. Legum ¶¶ 92–94.8 In any event, the
scope of review is irrelevant; the point is that the Convention imbues Annulment Committees with
the sole authority to review ICSID awards, such that Committees take the place of domestic courts
for purposes of annulment.9 Nor is it relevant, as Panama contends (at 24), that Annulment
Committees are not “standing” bodies. ZF holds that bodies imbued with governmental authority
may “take many forms,” 142 S. Ct. at 2091, and Panama’s logic does not square with the fact that
U.S. appellate panels, for example, also are not “standing” bodies.
Regarding enforcement, Panama contends (at 25) that ICSID awards are not equivalent to
domestic judgments because their enforcement is not automatic. Relying on Mobil Cerro, which
describes the procedure for enforcing ICSID awards in U.S. courts, Panama observes that parties
seeking to enforce ICSID awards must still file an action for enforcement in a national court, where
defenses of sovereign immunity remain available. Id.; Legum ¶ 82. This argument is misleading.
To take Panama’s example, 22 U.S.C. § 1650a(a) requires U.S. courts to enforce ICSID awards
by granting them “the same full faith and credit as if the award were a final judgment” of a U.S.
state court. Referring to this provision, Mobil Cerro holds that an action must be filed in U.S. court
to enforce an ICSID award only to the extent that an action would also need to be filed to enforce
the judgment of a state court entitled to full faith and credit. 863 F.3d at 116–18. Thus, while the
ICSID award creditor must file an enforcement petition in a U.S. court and furnish a certified copy
8 Specifically, the grounds for annulment contained in Article 52 of the ICSID Convention are very similar to those ↩
found in Article 34 of the UNCITRAL Model Law and in Article V of the New York Convention. The only key
difference between the two is that Article 52 does not permit annulment for public policy concerns. Compare ICSID
Convention, Art. 52, with New York Convention, art. V and UNCITRAL Model Law, Art. 34, available at
https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/06-54671_ebook.pdf.
9 Indeed, U.S. courts routinely stay enforcement proceedings pending a decision by an ICSID Annulment Committee. ↩
Opp’n 24. ICSID Annulment Committees even have their own power to stay the parties from seeking enforcement of
an award while they conduct annulment proceedings. ICSID Convention, art. 52(5).
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of the award, the award debtor can challenge only the U.S. court’s own jurisdiction to enforce the
award—for instance, on venue or sovereign immunity grounds; the enforceability of the award
itself may not be challenged on substantive grounds. Mobil Cerro, 863 F3d at 117–18. By contrast,
a U.S. court, once assured of its jurisdiction, may deny enforcement of an ad hoc international
arbitration award on any of the substantive grounds provided in the New York Convention or other
relevant treaty, including that the award violates a public policy of the United States. Opp’n 19.
Finally, Panama notes (at 24–26) that the Convention drafters had various motivations in
designing ICSID’s annulment and enforcement mechanisms, such as a desire to compel the parties
to participate in annulment, ensure arbitrators’ objectivity in deciding annulment, and guarantee
ICSID awards’ finality. But these purported intentions are not inconsistent with an intent to imbue
ICSID tribunals and Annulment Committees with governmental authority. They only emphasize
the Convention drafters imposed their own standards of fairness, objectivity, and finality onto the
review and enforcement of ICSID awards, rather than leave such decisions to the parties.
As an ICSID tribunal, the Webuild Tribunal possesses all of the features described above
which demonstrate it is imbued with governmental authority. Panama nevertheless suggests (at
12) that specific features of the Webuild Tribunal, and in particular the role of the Panama-Italy
BIT in its formation, make the Webuild Tribunal “materially indistinguishable” from the ad hoc
tribunal analyzed in ZF (the Fund v. Lithuania tribunal). Panama is wrong.
To begin, Panama is incorrect (at 16) that the Webuild Tribunal, like the Fund v. Lithuania
tribunal, is a creature of the parties’ consent. As explained in § I.A., the Webuild Tribunal is not a
creature solely of the parties’ consent, but also of Italy and Panama’s consent as sovereign states
to the applicability of the ICSID Convention, and their participation in the framework as Member
States. See Jagusch & Sullivan, A Comparison of ICSID and UNCITRAL Arbitration, in The
Backlash against Investment Arbitration (2010) (explaining the ICSID Convention contains
“jurisdictional requirements, which simply do not come into play under the UNCITRAL Rules”).
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Panama is also wrong to assert (at 12) that the treaties that form the Webuild Tribunal do
not themselves “create the [tribunal]” and instead “simply reference[] the set of rules that govern
the panel’s formation and procedure.” As noted, the Webuild Tribunal was created by the Italian
investor’s acceptance of Panama’s offer to arbitrate in the BIT, and Italy and Panama’s ratification
of the Convention. By Panama’s own admission (at 12), the Convention itself “govern[s] the
panel’s formation and procedure.” Unlike the Convention, the Russia-Lithuania BIT did not
govern the formation or procedure of the Fund v. Lithuania tribunal, but merely referenced a
separate set of framework procedural rules (the UNCITRAL Rules) to guide the proceeding.
The fact that the Panama-Italy BIT includes domestic courts as an alternate option to ICSID
arbitration does not undermine the conclusion that the Webuild Tribunal is imbued with
governmental authority. See Reply 16–17. Various tribunals imbued with governmental authority,
like the Mixed Claims Commissions and I’m Alone tribunal discussed in ZF, function as
alternatives to domestic courts. 142 S. Ct. at 2091. That the Panama-Italy BIT includes both ICSID
and ad hoc arbitration (ECF 7-18, art. IX(3)) just as easily could be used to highlight the differences
between ICSID and ad hoc tribunals. If the options were so similar, the BIT would not need to
include both.10 Likewise, Panama’s comparison (at 17) of ICSID arbitration to the state-to-state
arbitration mechanism available under the Panama-Italy BIT only underscores the “higher level of
governmental involvement” in ICSID arbitration as compared to ad hoc. ZF, 142 S. Ct. at 2090
n.4. Just as state-to-state tribunals are “funded by the two contracting parties,” id., ICSID tribunals
depend on Member States to fund the Centre. And while the parties to state-to-state arbitration
under the BIT may “ask” the ICJ President to make appointments “if no other arrangements are in
place” (ECF 7-18, art X(4)), the ICSID Convention goes further to require the ICSID Chairman
make appointments from the Panel of Arbitrators if the parties do not agree otherwise.
For the foregoing reasons and those stated in Webuild’s Opposition, Webuild respectfully
requests that the Court deny Panama and WSP’s motions.
10 Panama contends (at 17 n.10) that both options are included in the BIT to account for the more limited scope of ↩
ICSID tribunals’ jurisdiction, but nothing in the BIT or its public negotiating history indicates that this was the BIT
drafters’ intent, as opposed to a perceived difference in the authority of ICSID and ad hoc tribunals.
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September 15, 2022
Respectfully submitted,
Signature
Carolyn B. Lamm
Hansel T. Pham
Matthew Drossos
Nicolle Kownacki
WHITE & CASE
701 Thirteenth St. NW
Washington, DC 20005
Phone: (202) 626-3600
[email protected]
[email protected]
[email protected]
[email protected]
David Hille
WHITE & CASE
1221 Avenue of the Americas
New York, NY 10020
Phone: (212) 819-8200
Fax: (212) 354-8113
[email protected]
Counsel for Applicant Webuild S.p.A.