INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES
In the annulment proceeding between
CASINOS AUSTRIA INTERNATIONAL GMBH AND CASINOS AUSTRIA
AKTIENGESELLSCHAFT
Respondents on Annulment
and
ARGENTINE REPUBLIC
Applicant on Annulment
ICSID CASE NO. ARB/14/32
Annulment Proceeding
Members of the Committee
Mr. Toby Landau KC, President
Prof. Andrea Bjorklund, Member
Mr. Felipe Bulnes Serrano, Member
Secretary of the Committee
Ms. Alicia Martín Blanco
Date of dispatch to the Parties: 13 January 2023
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Representing Casinos Austria International KNOETZL HAUGENEDER NETAL |
Representing the Argentine Republic: Dr. Carlos A. Zannini |
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1. This Decision addresses the Request for a Continued Stay of Enforcement of the Award made by the Argentine Republic (“Argentina” or the “Applicant”).
2. This Decision is structured as follows:
3. On 5 November 2021, the Tribunal rendered its Award, which included a Decision on Jurisdiction, as well as two dissenting opinions by Arbitrator Santiago Torres Bernárdez: one dissenting opinion regarding the Decision on Jurisdiction and a second dissenting opinion regarding the Award.
4. In the Award, the Tribunal found that Argentina had breached certain provisions of the Agreement between the Republic of Austria and the Republic of Argentina for the Promotion and Protection of Investments, which was signed on 7 August 1992 and entered into force on 1 January 1995 (the “BIT” or “Treaty”). In particular, the Tribunal decided as follows:
(1) Respondent has breached Article 4(1) and (2) of the Argentina-Austria BIT by subjecting Claimants to an unlawful expropriation.
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(2) The Tribunal makes no findings as to the claimed breaches by Respondent of Articles 4(3) and 2(1) of the Argentina-Austria BIT, as any such breaches would be consumed by the finding under (1).
(3) Respondent is liable to pay compensation to Claimants in the amount of USD 21,660,000 plus interest at a rate of 4% per annum compounded annually from 13 August 2013 until full payment thereof.
(4) Respondent shall pay to Claimants for the costs incurred in connection with the proceedings, the fees and expenses of the members of the Tribunal, and the charges for the use of the facilities of the Centre (i) USD 1,736,131.62 and (ii) EUR 3,725,134.37, plus interest at a rate of 4% per annum compounded annually on both (i) and (ii) from the date of the Award until full payment thereof.
(5) The Tribunal rejects all other claims.
5. On 4 March 2022 Argentina filed its Application for the Annulment of the Award (“Application for Annulment”) pursuant to Article 52 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention” or “Convention”) and Rule 50 of the ICSID Rules of Procedure for Arbitration Proceedings (“Arbitration Rules”).
6. In the Application for Annulment, Argentina requested a stay of enforcement of the Award until the Committee decided on its Application for Annulment, and submitted that:
i. the Tribunal manifestly exceeded its powers under Article 52(1)(b) of the Convention;
ii. there has been a serious departure from fundamental rules of procedure under Article 52(1)(d) of the Convention; and
iii. the Award has failed to state the reasons on which it is based under Article 52(1)(e) of the Convention.
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7. On 9 March 2022 the Secretary-General of the International Centre for Settlement of Investment Disputes (“ICSID” or “Centre”) registered the Application for Annulment, noted that it contained a request for a stay of the enforcement of the Award, and informed the Parties that the enforcement of the Award was provisionally stayed, in accordance with Article 52(5) of the ICSID Convention and ICSID Arbitration Rule 54(2).
8. The Committee was constituted, and the proceeding was deemed to have begun, on 17 May 2022, pursuant to Arbitration Rules 6 and 53. The Committee is composed of Mr. Toby Landau KC, a national of the United Kingdom, President of the Committee; Prof. Andrea Bjorklund, a national of the United States and permanent resident of Canada; and Mr. Felipe Bulnes Serrano, a national of Chile. Ms. Alicia Martín Blanco, ICSID Legal Counsel, was designated to serve as Secretary of the Committee.
9. On 19 May 2022 the Committee wrote to the Parties proposing dates for the first session of the Committee and the preliminary procedural consultation with the Parties (“First Session”). The Committee further referred to (i) the stay of enforcement request contained in the Application for Annulment; and to (ii) the notice of registration, where the Secretary-General had informed the Parties that the enforcement of the Award was provisionally stayed. The Committee invited the Parties to confer and try to agree on a schedule for submissions on stay of enforcement.
10. The Parties provided their responses on 26 May 2022. Not having been able to agree on a schedule of submissions on stay of enforcement, the Applicant proposed two consecutive rounds of submissions comprising a total of 270 days, and the Respondents proposed one round of submissions and, if required by the Committee, an oral hearing, comprising a total of 42 days such that “the proceedings on the stay of enforcement should be closed by mid-September 2022.”
11. On 31 May 2022 the Committee established a schedule of submissions on stay of enforcement comprising one round of submissions as well as an oral hearing to be held at the same time as the (remote) First Session.
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12. On 7 June 2022, the Parties agreed to extend the 60-day deadline for the First Session until 3 August 2022, as well as to have the hearing on stay of enforcement on the same day (remotely).
13. On 14 June 2022, the Applicant filed a Request for a Continued Stay of Enforcement of the Award, together with factual exhibits AA-1 to AA-56, and legal exhibits ALA-1 to ALA-61 (“Request”).
14. On 4 July 2022, the Respondents filed a Reply to the Request for Continuation of the Stay of Enforcement, together with factual exhibits RA-1 to RA-15, and legal exhibits RLA-0 to RLA-40 (“Reply”).
15. On 12 July 2022, the Committee transmitted a draft Procedural Order No. 1 (“PO1”) and invited the Parties to confer concerning the items addressed therein and to submit a joint proposal by 26 July 2022. The Parties were also invited to try to agree on the schedule for the hearing on stay of enforcement by the same date.
16. On 25 July 2022, the Parties agreed with the Committee's proposal to have court reporting services in real time during both the stay of enforcement hearing (“Hearing”) and the First Session.
17. On 26 July 2022, the Parties submitted their responses on draft PO1, indicating the items on which they agreed as well as their respective comments and proposals.
18. On 3 August 2022, the Committee held the Hearing and the First Session with the Parties by video conference. The following persons were in attendance:
For the Committee
Toby Landau QC, President of the Committee
Andrea Bjorklund, Member of the Committee
Felipe Bulnes Serrano, Member of the CommitteeFor the ICSID Secretariat
Luisa Fernanda Torres Arias, ICSID Legal Counsel
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For the Applicant on Annulment
Mariana Lozza, Procuración del Tesoro de la Nación
María Alejandra Etchegorry, Procuración del Tesoro de la Nación
Cristian De Fazio, Procuración del Tesoro de la Nación
María Rosario Tejada, Procuración del Tesoro de la Nación
Ana Miño Foncuberta, Procuración del Tesoro de la NaciónFor the Respondents on Annulment
Florian Haugeneder, KNOETZL HAUGENEDER NETAL Rechtsanwaelte GmbH
Natascha Tunkel, KNOETZL HAUGENEDER NETAL Rechtsanwaelte GmbH
Michael Czermak, Managing Director Legal Affairs Casinos Austria
Alexandra Baumberger, Head of Department Legal Affairs Casinos Austria International GmbH and Casinos Austria AG
19. On 9 August 2022, the Committee issued PO1, which recorded the Parties’ agreements and the Committee’s decisions on procedural matters. PO1 was accompanied by Annex A containing the electronic file naming guidelines; Annex B containing the procedural calendar; and Annex C containing templates for the lists of exhibits and legal authorities.
20. The Applicant on Annulment requests:
...that the Committee continues the stay of enforcement of the Award imposing no conditions whatsoever while these annulment proceedings are still pending.1
21. The Respondents on Annulment request that the Committee render the following decision:
1. The request for the continuation or granting of a stay is rejected.
in eventu
2.1 The continuation of the stay is granted for 90 days from the date of the Committee's decision.
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2.2 Respondent is ordered to put in place, within 90 days from the date of the Committee's decision, either an escrow agreement or an irrevocable bank guarantee from a reputable bank outside of Argentina by which Respondent provides security to Claimants for the full amount (including costs and interest as at the date of the decision) owed under the Award rendered in ICSID case ARB/14/32 on 5 November 2021.
2.3 Any further continuation of the stay is conditional on the fulfilment of point 2.2 of the Committee's decision.
2.4 The costs of providing security are to be considered as costs of these proceedings, the allocation of which shall be finally determined in the decision on costs. Until such decision, Respondent is ordered to provisionally bear the costs of providing security to Claimants.2
22. The Parties’ positions on each issue are summarised briefly below. Each such summary is not intended to be exhaustive, but rather to reflect the Parties’ principal arguments. For the avoidance of doubt, the Committee has carefully considered the entirety of the Parties’ submissions in arriving at its determination, and the absence of reference to any particular matter should not be taken as an indication that the Committee has not considered them.
23. The Applicant contends that the right to request annulment, of which either Party may avail itself, is essential to preserve the integrity of the system and, in the absence of reasons and evidence to the contrary, must be assumed to have been made in good faith and to constitute a justified exercise of procedural rights of defence.3
3 Request, ¶ 6, relying, among others, on Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶¶ 28, ↩
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24. Any party filing a request concerning the stay of enforcement of the award – not just the party requesting annulment – must specify the circumstances that warrant the request pursuant to ICSID Arbitration Rule 54(4). In this regard, the party requesting the stay does not have “the burden of ‘proving’ that a stay is required” but need only “advance the grounds which, in its views, justify the application.”4
25. As indicated by the Enron and Azurix Committees, “the relevant enquiry is whether in all the circumstances it may be said that there is sufficient doubt as to whether there will be compliance with ICSID Convention obligations on a final award in the event that it is not annulled”.5
26. Neither the ICSID Convention nor the Rules indicate what type of circumstances must be taken into account by a committee when deciding on stay of enforcement, which means that a committee is free to evaluate the arguments taking into account any relevant circumstance.6 Usually, annulment committees have continued the stay of enforcement. In this sense, the Enron Committee determined that this should be the case “unless the
31, 33 (AL A RA 1); CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (1 September 2006), ¶ 37 (AL A RA 2); and Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 47 (AL A RA 4).
4 Request, ¶¶ 7-8, relying on Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 49 (AL A RA 4); Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶¶ 38-39, 44 (AL A RA 1); and Venezuela Holdings, B.V., and others v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/07/27), Procedural Order No. 2 on Stay of Enforcement of the Award (28 July 2015), ¶ 8 (AL A RA 6). ↩
5 Request, ¶ 8, relying on Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 49 (AL A RA 4) (citing Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶¶ 38-39, 44). ↩
6 Request, ¶ 9, relying, among others, on Patrick Mitchell v. Democratic Republic of the Congo (ICSID Case No. ARB/99/7), Decision on the Stay of Enforcement of the Award (30 November 2004), ¶ 23 (AL A RA 7); and CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (1 September 2006), ¶ 35 (AL A RA 2). ↩
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Committee finds that there are very exceptional circumstances why this should not occur.”7 This is so because the finality of awards and a party’s right to enforce do not rank above the opposing party’s right to seek annulment and, in any event, a stay of enforcement is a safeguard of the potential finality of the award.8
27. The Applicant considers that the following particular circumstances of this case warrant the continuation of the stay of enforcement of the Award.
a. There are No Reasons to Doubt the Applicant's Compliance with its International Obligations
28. The Applicant contends that different circumstances evidence its intent to comply with its international obligations and warrant the continuation of the stay of enforcement, namely:
i. The Applicant's domestic legal system and case law concerning the hierarchy of rules adequately guarantee compliance in that international treaties to which Argentina is a party take precedence over domestic laws;9
ii. The Applicant's obligations under investment arbitration awards have been discharged in the past decade by entering into agreements with the holders of rights arising from those awards at the initiative of creditors. Such agreements have resulted
7 Request, ¶ 10, relying, among many others on Amco Asia Corporation, Pan American Development Limited and P.T. Amco Indonesia v. Indonesia (ICSID Case No. ARB/81/1), Decision on Annulment (16 May 1986), ¶ 8 (AL A RA 8); Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 43 (AL A RA 4). ↩
8 Request, ¶¶ 10-11, relying on RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain (ICSID Case No. ARB/13/30), Decision on Stay of Enforcement of the Award (28 October 2020), ¶ 48 (AL A RA 32); and Watkins Holdings S.à r.l. and others v. Kingdom of Spain (ICSID Case No. ARB/15/44), Decision on Stay of Enforcement of the Award (28 June 2021), ¶ 49 (AL A RA 34). ↩
9 Request, ¶¶ 14-16, relying, among others, on Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶ 38 (AL A RA 1). ↩
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in the satisfaction of ICSID and UNCITRAL investment awards in the total amount of approximately USD 1.512 billion between 2013 and 2021;10
iii. In other investment arbitrations the Applicant has succeeded in reaching agreements with investors that resulted in the discontinuation of those proceedings;11 and
iv. The Applicant is in compliance with its obligations concerning sovereign debt, and its macroeconomic performance in the first quarter of 2022 was approved by the International Monetary Fund.12
b. Continuing the Stay of Enforcement Would Not be Detrimental to the Respondents on Annulment
29. According to the Applicant, the only potential harm that could be invoked by the Respondents on Annulment as a consequence of the continued stay of enforcement is the delay in payment of the Award. However, this harm “does not exist”13 given that: (i) any delay would be compensated through the payment of interest provided for in this particular Award;14 (ii) this type of delay is incidental to the system as the award creditor’s rights are expressly subject to a stay if the Committee considers that the circumstances so require and
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thus cannot, per se, constitute prejudice;15 and (iii) the stay of enforcement does not interfere with the finality of the Award.16
c. Lifting the Stay of Enforcement Would be Severely Detrimental to the Applicant
30. According to the Applicant, unlike the Respondents on Annulment, Argentina would suffer serious harm if the stay of enforcement is lifted.17 The Applicant states that there is no strict standard of proof with respect to this issue, and that it need not demonstrate that it would suffer “catastrophic and irreversible consequences” if the stay of enforcement is lifted.18
31. The Applicant contends that it could be deprived of the funds needed to implement public policies;19 that any funds recouped would have accrued no interest;20 and that the amount of the Award exceeds Argentina’s budget allocations for several national plans.21
32. The Applicant further contends that it would face serious difficulties to recoup the funds paid if the annulment is subsequently upheld, regardless of whether the Respondents are a
15 Request, ¶¶ 31-32, relying, among many others, 9REN Holding S.a.r.l v. Kingdom of Spain (ICSID Case No. ARB/15/15), Decision on Stay of Enforcement of the Award (19 November 2021), ¶ 129 (AL A RA 35); Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶ 42 (AL A RA 1); and Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 52 (AL A RA 4). ↩
16 Request, ¶ 33, relying on Watkins Holdings S.à.r.l. and others v. Kingdom of Spain (ICSID Case No. ARB/15/44), Decision on Stay of Enforcement of the Award (28 June 2021), ¶ 49 (AL A RA 34); and RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain (ICSID Case No. ARB/13/30), Decision on Stay of Enforcement of the Award (28 October 2020), ¶ 61 (AL A RA 32). ↩
18 Request, ¶ 36, relying on Caratube International Oil Company LLP and Devincci Salah Hourani v. Republic of Kazakhstan (II) (ICSID Case No. ARB/13/13), Decision on the stay of enforcement of the award (12 December 2019), ¶ 96 (AL A RA 30). ↩
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business conglomerate or solvent.22 According to Argentina, this is (i) because of the “risk of having third parties requesting that an attachment be levied on its right to recover those amounts”; (ii) because Entretenimientos y Juegos de Azar S.A. (“ENJASA”- the Argentine company to whom the licence for the operation of games of chance in the territory of the Province of Salta had been granted, and which became majority owned and controlled by the Respondents on Annulment) has been sanctioned repeatedly for violations of anti-money laundering regulations; and (iii) because ENJASA has called for a shareholders’ meeting to address the early dissolution and liquidation of the company.23
33. According to the Applicant, the Committee lacks the power to impose conditions on the stay, as “the ICSID Convention neither expressly nor implicitly empowers annulment committees to anticipate the satisfaction of an award or to implement enforcement actions to ensure such satisfaction.”24 The Committee’s power is limited to a decision to lift or
22 Request, ¶¶ 35, 37-39, relying, among many others, on NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain (ICSID Case No. ARB/14/11), Decision on the stay of enforcement of the award (6 April 2020), ¶ 88 (AL A RA 31); Dan Cake S.A. v. Hungary (ICSID Case No. ARB/12/9), Decision on the stay of enforcement of the award (25 December 2018), ¶ 62 (AL A RA 29); CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (1 September 2006), ¶ 38 (AL A RA 2); and El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Decision on the Argentine Republic's request for a stay of enforcement of the award (14 November 2012), ¶ 54 (AL A RA 20). ↩
24 Request, ¶ 43, relying on El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Decision on the Argentine Republic's request for a continued stay of enforcement of the award (14 November 2012), ¶¶ 56, 59 (AL A RA 20); and Víctor Pey Casado and Fundación Presidente Allende v. Republic of Chile (ICSID Case No. ARB/98/2), Decision on the Republic of Chile's request of stay of enforcement of the award (5 May 2010), ¶ 34 (AL A RA 16). ↩
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continue the existing stay of enforcement,25 and it does not include ordering security “preventively to ensure enforcement of the awards that are not annulled”.26
34. Conditioning the stay of enforcement would place the Respondents on Annulment in a better position than they were before the annulment proceeding (i) “because they would receive some form of conditional payment”;27 (ii) because this would “turn[ ] the commitment to perform under Article 53 of the ICSID Convention into a financial guarantee”; and (iii) because posting a security circumvents the immunity from execution contemplated in Article 55 of the ICSID Convention.28
35. The Applicant further argues that committees have considered that “any State in a difficult economic situation has compelling arguments to refuse to post a security”;29 and that delay in the collection of an award is incidental to the annulment system and it does not justify the imposition of any security.30
25 Request, ¶ 44, relying on Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), 33- 35 (AL A RA 1). ↩
26 Request, ¶ 49, relying on El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Decision on the Argentine Republic's request for a continued stay of enforcement of the award (14 November 2012), ¶ 56 (AL A RA 20). ↩
27 Request, ¶¶ 45-46, relying, among many others, on Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Republic of Ecuador (ICSID Case No. ARB/06/11), Decision on the stay of enforcement of the award (30 September 2013), ¶ 67 (AL A RA 21); Víctor Pey Casado and Fundación Presidente Allende v. Republic of Chile (ICSID Case No. ARB/98/2), Decision on the Republic of Chile's request for a stay of enforcement of the award (5 May 2010), ¶ 34 (AL A RA 16); and RREEF Infrastructure (G.P.) Limited y RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain (ICSID Case No. ARB/13/30), Decision on the stay of enforcement of the award (28 October 2020), ¶ 70 (AL A RA 32). ↩
28 Request, ¶ 48, relying on CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (1 September 2006), ¶ 39 (AL A RA 2); and MTD Equity Sdn Bhd. & MTD Chile S.A. v. Chile (ICSID Case No. ARB/01/7), Decision on the stay of enforcement of the award (1 June 2005), ¶ 30 (AL A RA 3). ↩
29 Request, ¶ 47, relying on Carnegie Minerals (Gambia) Limited v. Republic of Gambia (ICSID Case No. ARB/09/19), Decision on the stay of enforcement of the award (18 October 2018), ¶ 53 (AL A RA 28). ↩
30 Request, ¶¶ 50-51, relying, among others, on El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Decision on the Argentine Republic's request for a continued stay of enforcement of the award (14 November 2012), ¶ 53 (AL A RA 20). ↩
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36. According to the Applicant, conditioning the stay of enforcement through the posting of a security:
i. Would penalise Argentina for having submitted an application for annulment;31
ii. Would be discriminatory towards developing countries; affect their procedural rights under the Convention; and undermine confidence in the system;32 and
iii. Would cause serious harm to the Applicant derived from (a) the negative consequences of freezing the amount of the Award, the high and irrecoverable costs of obtaining a security, the particular burden of posting a security in a situation where “anti-money laundering rules were repeatedly violated”;33 and from (b) the deprivation of funds intended for the implementation of public policies.34
31 Request, ¶¶ 52-54, 60, relying on El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Decision on the Argentine Republic's request for the continued stay of enforcement of the award (14 November 2012), ¶ 55 (AL A RA 20); and Patrick Mitchell v. Democratic Republic of the Congo (ICSID Case No. ARB/99/7), Decision on the stay of enforcement of the award (30 November 2004), ¶ 40 (AL A RA 7). ↩
32 Request, ¶ 55-56, relying on Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶ 32; see also ibid., ¶ 31-34 (AL A RA 1); and Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's request for a continued stay of enforcement of the award (7 October 2008), ¶ 44 (AL A RA 4). ↩
33 Request, ¶¶ 53, 57, relying on Maritime International Nominees Establishment (MINE) v. Republic of Guinea (ICSID Case No. ARB/84/4), Provisional Orden No. 1 on Guinea's request for a stay of the enforcement of the award (12 August 1988), ¶ 22 (AL A RA 5); and Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's request for the continued stay of enforcement of the award (7 October 2008), ¶ 51 (AL A RA 4). ↩
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37. The Respondents on Annulment state that the Award is “final, binding and immediately enforceable” both under the BIT and under the ICSID Convention. Therefore, the Applicant is under an international obligation to comply with it.35
38. The annulment of an ICSID award is narrowly circumscribed and it constitutes a “limited exception to the principle of the finality of awards”. As a consequence, a request for annulment constitutes “an exceptional remedy”.36
39. In the same vein, a stay of enforcement is an exception to the normal consequence that an award is binding and must be enforced, not an automatic side effect of an application for annulment, and there is no presumption in favour of a stay of enforcement.37
40. The Respondents indicate that opinions to the contrary, such as in the decision in Pey Casado v. Republic of Chile,38 have been characterised as “an outlier”, and that the only automatic stay in the ICSID system is the provisional stay “granted by the Secretary-General upon the filing of an application of annulment until the committee is established”,
35 Reply, ¶¶ 8-12, relying, among others, on Cube Infrastructure Fund SICAV and others v. Kingdom of Spain (ICSID Case No. ARB/15/20), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (17 April 2020), ¶ 131 (CL-001). ↩
36 Reply, ¶¶ 13-14, relying on OI European Group B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/25), Decision on Stay of Enforcement of the Award (4 April 2016), ¶ 82 (CL-004). ↩
37 Reply, ¶¶ 15-17, relying, among many others, on Cube Infrastructure Fund SICAV and others v. Kingdom of Spain (ICSID Case No. ARB/15/20), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (17 April 2020), ¶ 121 (CL-001); Sodexo Pass International SAS v. Hungary (ICSID Case No. ARB/14/20), Decision on the Request for the Continued Stay of Enforcement of the Award (10 February 2020), ¶ 76 (CL-005); Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision of the ad hoc Committee on the Stay of Enforcement of the Award (12 November 2010), ¶ 26 (CL-002;) Burlington Resources, Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Stay of Enforcement of the Award (31 August 2017), ¶¶ 72-73 (CL-006); Unión Fenosa Gas, S.A. v. Arab Republic of Egypt (ICSID Case No. ARB/14/4), Decision on the Applicant's Request for a Continued Stay of Enforcement of the Award (18 October 2019), ¶ 46 (CL-007); SGS Société Générale de Surveillance S.A. v. Republic of Paraguay (ICSID Case No. ARB/07/29), Decision on Paraguay's Request for the Continued Stay of Enforcement of the Award (22 March 2013), ¶¶ 84-85 (CL-00)8; and Libananco Holdings Co. Limited v. Republic of Turkey (ICSID Case No. ARB/06/8), Decision on Applicant's Request for a Continued Stay of Enforcement of the Award (7 May 2012), ¶ 43 (CL-009). ↩
38 Victor Pey Casado and President Allende Foundation v. Republic of Chile (ICSID Case No. ARB/98/2), Decision on the Republic of Chile's Application for a Stay of Enforcement of the Award (5 May 2010), ¶ 25 (CL-018). ↩
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after which a continuation of the stay is contingent upon the existence of circumstances requiring it.39
41. The wording of Article 52(5) does not allow for the interpretation advanced by the Applicant that it need not show that the stay is required or that it need only state the grounds that justify it.40 The burden of proof rests with the Applicant as the party seeking the continuation of the stay.41
42. It is established by case law that the analysis of the circumstances that require a stay of enforcement lies within the discretion of the Tribunal. However, this discretion is not unfettered, must be based on the specific circumstances of the case, and the threshold is high, requiring at least that the circumstances rise above those that are usual or common in annulment proceedings.42 The Applicant’s contention that a stay shall be granted absent exceptional circumstances “finds no support in the overwhelming practice of annulment committees.”43
39 Reply, ¶¶ 18-19, relying on Karkey Karadeniz Elektrik Uretim A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/13/1), Decision on the Stay of Enforcement of the Award (22 February 2018), ¶ 100 (CL-010); Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision of the ad hoc Committee on the Stay of Enforcement of the Award (12 November 2010), ¶ 26 (CL-002). ↩
41 Reply, ¶¶ 30-32, relying, among others, on Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision of the ad hoc Committee on the Stay of Enforcement of the Award (12 November 2010), ¶ 26 (CL-002). ↩
42 Reply, ¶¶ 24-25, relying on Maritime International Nominees Establishment v. Republic of Guinea (II) (ICSID Case No. ARB/84/4), Interim Order No.1: Guinea's Application for Stay of Enforcement of the Award (12 August 1988), ¶ 26 (CL-029); Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V.) v. Kingdom of Spain (ICSID Case No. ARB/13/31), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (21 October 2019), ¶¶ 60, 67 (CL-021); and InfraRed Environmental Infrastructure GP Limited and others v. Kingdom of Spain (ICSID Case No. ARB/14/12), Decision on the Continuation of the Stay of Enforcement of the Award (27 October 2020), ¶ 138 (CL-022). ↩
43 Reply, ¶ 26, relying on Perenco Ecuador Limited v. Republic of Ecuador (ICSID Case No. ARB/08/6), Decision on the Stay of Enforcement of the Award (21 February 2020), ¶ 45 (CL-013); and Bernhard von Pezold and others v. Republic of Zimbabwe (ICSID Case No. ARB/10/15), Decision on Stay of Enforcement of the Award (24 April 2017), ¶ 80 (CL-012). ↩
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a. Dilatory Tactics Do Not Warrant a Stay of Enforcement
43. The Respondents contend that the Applicant’s track record shows that its request for an unconditional stay constitutes a dilatory tactic and is not made in good faith.44 Statistics show that the Applicant systematically files for annulment and requests a stay of enforcement in all its cases and, consequently, that for the Applicant this remedy constitutes standard practice rather than an exceptional remedy. Even when an award is not annulled, the Applicant regularly delays payment until its creditors agree to settle and waive a part of their claim.45
44. In the present case, the Applicant failed to respond to the Respondents’ invitation to pay in February 2022, and then in the annulment proceeding proposed a schedule to address stay of enforcement that spanned over 270 days, in contravention of Rule 54(2). Therefore, “it is manifest that the [Applicant] has no intention to voluntarily comply with its obligations under the award.”46
45. The dilatory nature or lack of good faith warrant the rejection of a stay of enforcement request. If this threshold is not met, “the burden of establishing compelling reasons” rests with the Applicant. A request for a stay based on an application for annulment that “even fails to allege with a sufficient degree of substantiation grounds for an annulment” should not be granted.47
b. There Is a Risk of Non-Compliance
46. The Respondents contend that it is for the requesting party to show that there is no risk of non-compliance, which the Applicant has failed to do with its arguments on the domestic
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hierarchy of rules, settlement of investment claims, and compliance with sovereign debt obligations.48
47. First, the Respondents argue that it is unclear why the hierarchy of rules being observed by Argentina’s courts should provide any comfort, as the Applicant’s primary obligation is of voluntary compliance rather than through recognition and enforcement before Argentina’s courts – the latter being the consequence of non-compliance.49 Furthermore, Argentina’s court system is “notoriously ineffective” in protecting investors’ rights, (i) as the Respondents experienced prior to the initiation of ICSID proceedings; and (ii) as shown by “Argentina’s track record as a whole”.50
48. Second, the Respondents contend that there are no known cases of voluntary compliance by Argentina. As for the settlement agreements cited by Argentina, the Respondents contend that, according to public reports, Argentina only entered into these agreements after the United States “suspended Argentina’s trade status under the United States’ Generalized System of Preferences legislation, blocked the extension of loans by the World Bank and the Inter-American Development Bank, and threatened to block an agreement with the members of the Paris Club to restructure Argentina’s debt.”51 An examination of the cases listed by the Applicant shows that it delayed the underlying proceedings and the effective payment for years and sometimes decades, after which many creditors were willing to settle for less than that to which they are entitled under the award. Such settlements cannot be considered compliance under the ICSID Convention and therefore they cannot constitute reassurance of voluntary compliance.52
49. Third, the Respondents argue that the Applicant’s financial standing and outlook are volatile, as Argentina barely avoided a complete default in early 2022 thanks to the
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International Monetary Fund agreeing to restructure a USD 44 billion loan, and international ratings still consider that there is a serious risk of default.53
c. The Applicant Has Failed to Show Circumstances that Require a Stay
50. According to the Respondents, the test for a stay of enforcement is whether it would have “catastrophic, immediate and irreversible consequences for the award debtor’s ability to conduct its affairs” 54 and, even if the threshold is lowered, “circumstances which are a normal effect of an ICSID Award for a state are not sufficient. Rather, the circumstances must be specific, and allegations of harm must be substantiated by ‘specific evidence and data’.”55 The Applicant fails to meet either threshold.56
51. First, the Respondents contend that the Applicant has failed to substantiate any specific allegation of harm:
i. The Applicant has provided no specific evidence showing that the termination of the stay would result in a reduction of the budget allocated to the illustrative list of social projects provided, or explained why the deductions could not be made from other items in its budget;57 and
ii. The Applicant has not shown that any monetary reallocations would be more onerous that those it would have to undertake if the Award is not annulled.58
54 Reply, ¶ 64, relying, among others, on Maritime International Nominees Establishment v. Republic of Guinea (II) (ICSID Case No. ARB/84/4), Interim Order No.1: Guinea's Application for Stay of Enforcement of the Award (12 August 1988), ¶ 26 (CL-029). ↩
55 Reply, ¶ 65, relying on Karkey Karadeniz Elektrik Uretim A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/13/1), Decision on the Stay of Enforcement of the Award (22 February 2018), ¶ 108 (CL-010). ↩
57 Reply, ¶¶ 67-68, relying on Burlington Resources, Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Stay of Enforcement of the Award (31 August 2017), ¶ 83 (CL-006). ↩
58 Reply, ¶ 69, relying on Carnegie Minerals (Gambia) Limited v. Republic of the Gambia (ICSID Case No. ARB/09/19), Decision on the Gambia's Request for a Continued Stay of Enforcement of the Award (18 October 2018), ¶ 45 (CL-024). ↩
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52. Second, the Respondents argue that there is no risk of non-recoupment in the event that the Award is annulled:
i. The Applicant appears to rely on the theoretical possibility that it may face recoupment difficulties, but it is the natural consequence of the enforcement regime that a respondent may be required to pay now and be reimbursed later;59
ii. None of the risk factors (a creditor that is an individual, a shell company controlled by a sole individual or at legitimate risk of bankruptcy) apply to the Respondents, and the Applicant has not even made (or substantiated) any allegation of a specific risk;60 and
iii. The Applicant only offers “vague allusions that are devoid of logic and context”, but the Respondents (a) are not responsible for the actions of the Applicant’s creditors; (b) the Tribunal held in the Award that there was no money laundering, and it is unclear how fines imposed on the Respondent’s indirect subsidiary ENJASA could increase the risk of non-recoupment from the Respondents; and (c) the liquidation of ENJASA has no bearing on the issue of recoupment, and it is due to the Applicant’s actions that ENJASA must be liquidated.61
d. A Stay of Enforcement Causes Detriment to the Respondents
53. The Respondents contend that the Applicant “does not seem to deny that a stay of enforcement would cause detriment to [the Respondents] per se” but relies on compensation through the payment of interest. According to the Respondents, annulment
59 Reply, ¶¶ 71-72, relying on Cube Infrastructure Fund SICAV and others v. Kingdom of Spain (ICSID Case No. ARB/15/20), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (17 April 2020), ¶ 131 (CL-001). ↩
60 Reply, ¶¶ 73-75 relying, among others, on Karkey Karadeniz Elektrik Uretim A.S. v. Islamic Republic of Pakistan (ICSID Case No. ARB/13/1), Decision on the Stay of Enforcement of the Award (22 February 2018), ¶ 115 (CL-010). ↩
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committees have held that an award of interest is not a ground for granting a stay of enforcement.62
54. In practical terms, the value of the Respondents’ claim is deteriorating due to the current inflation, and once compensatory post-award interest has become payable, the creditor will have already suffered adverse consequences that are not compensable through the time value of money.63
55. Case law has established that a committee has the power to subject a stay of enforcement to conditions based on the broad discretion conferred by Article 52(5) of the ICSID Convention.64 This is confirmed by the 2022 ICSID Rules, the wording of which indicates that a committee shall undertake a balancing exercise between the interests of the parties.65
56. The Respondents consider that the circumstances justify the imposition of conditions if a stay of enforcement is to be granted.
57. First, the Respondents contend that they would suffer detriment if the stay were unconditionally granted. This is because enforcement proceedings should start as soon as possible (i) in light of the Applicant’s volatile financial standing and given that (ii) the
62 Reply, ¶¶ 80-85, relying, among others, on Ioannis Kardassopoulos v. Georgia (ICSID Case No. ARB/05/18), Decision of the ad hoc Committee on the Stay of Enforcement of the Award (12 November 2010), ¶ 43 (CL-002); InfraRed Environmental Infrastructure GP Limited and others v. Kingdom of Spain (ICSID Case No. ARB/14/12), Decision on the Continuation of the Stay of Enforcement of the Award (27 October 2020), ¶ 161 (CL-022); NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain (ICSID Case No. ARB/14/11), Decision on Stay of Enforcement of the Award (6 April 2020), ¶ 93 (CL-014); and Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V.) v. Kingdom of Spain (ICSID Case No. ARB/13/31), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (21 October 2019), ¶ 82 (CL-021). ↩
63 Reply, ¶ 86, relying on Hydro Energy 1 S.à r.l. and Hydroxana Sweden AB v. Kingdom of Spain (ICSID Case No. ARB/15/42), Decision on Stay of Enforcement of the Award (26 March 2021), Decision on Stay, ¶ 96 (CL-032). ↩
64 Reply, ¶ 92, relying, among others, on Víctor Pey Casado and President Allende Foundation v. Republic of Chile (ICSID Case No. ARB/98/2), Decision on the Republic of Chile's Application for a Stay of Enforcement of the Award (5 May 2010), ¶ 28 (CL-018). ↩
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Respondents do not hold the payment as a liquid asset and cannot put it to use; (iii) a stay of enforcement will diminish their temporal priority; and (iv) enforcement proceedings will likely be protracted.66
58. Second, the Respondents argue that, rather than putting them in a privileged position, a conditional stay would be to the advantage, not the detriment, of the Applicant:
i. How the security is provided is the Applicant’s choice, given to it in exchange for the benefit of maintaining the stay of enforcement;67
ii. Imposing a condition does not penalise the Applicant, as the appropriate comparison is with a scenario where annulment is not sought, and the debtor must comply immediately;68
iii. The adverse effect on liquidity would be no different from the requirement to pay the Award, which would be the outcome should the stay be lifted;69 and
iv. The COVID pandemic and the war in Ukraine take their toll globally on states and business alike and should not be taken into consideration.70
59. The Respondents dispute that imposing a condition on the grant of a stay penalises the Applicant for filing for annulment and affects its right of defence: (i) the purpose of an annulment proceeding is not to delay enforcement; (ii) the condition applies to the stay, not
67 Reply, ¶¶ 99-100, relying on Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan (ICSID Case No. ARB/12/1), Decision on Stay of Enforcement of the Award (17 September 2020), ¶¶ 194 et seqq. (CL-023). ↩
68 Reply, ¶ 102, relying on Sempra Energy International v. Argentine Republic (ICSID Case No. ARB/02/16), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (Rule 54 of the ICSID Arbitration Rules) (5 March 2009), ¶ 96 (CL-003). ↩
69 Reply, ¶ 103, relying on Sempra Energy International v. Argentine Republic (ICSID Case No. ARB/02/16), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (Rule 54 of the ICSID Arbitration Rules) (5 March 2009), ¶ 108 (CL-003). ↩
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to the annulment proceedings, and (iii) a stay is not a compulsory element of annulment proceedings.71
60. The Respondents argue that, if a stay is granted, subjecting it to a condition constitutes an appropriate balance of the interests of the Parties, as (i) there is little doubt that payment will not be voluntary, and enforcement entails the risk that other creditors will seek to realise available assets;72 and (ii) the posting of security gives the Applicant the opportunity to demonstrate that it is acting in good faith.73
61. The Respondents propose that the Applicant be required to post security in the amount of the Award or an appropriate portion thereof, to be preferably placed in an escrow account – although they would accept an irrevocable bank guarantee from a reputable bank outside of Argentina. The Respondents consider that an appropriate period should be allowed to put an agreement in place, during which the stay would remain in force. Should the Applicant fail to fulfil the condition within the specified time, the stay should be immediately terminated.74
62. Article 52(5) of the ICSID Convention and Rule 54 of the Arbitration Rules govern the stay of enforcement of an award in the context of annulment proceedings.
63. Article 52(5) of the ICSID Convention provides that:
The Committee may, if it considers that the circumstances so require, stay enforcement of the award pending its decision. If the applicant requests a
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stay of enforcement of the award in his application, enforcement shall be stayed provisionally until the Committee rules on such request.
64. As stated in Article 52(5), a committee’s decision to stay the enforcement of an award depends on whether “it considers that the circumstances so require.” The ICSID Convention neither prescribes nor proscribes the circumstances that may be relevant, and nor does it identify the relative weight to be given to any particular circumstances. Rather, as observed in numerous prior cases, the determination is left entirely to the discretion of each committee.
65. Hence, as identified in the Parties’ submissions, prior ad hoc committees have invoked a wide range of factors in determining whether or not to grant a stay, including (by way of example): the existence of adverse economic consequences on either party; the risk of non-recovery of sums due under the award if the award is annulled; non-compliance with the award if the award is not annulled; any history of non-compliance with other awards or failure to pay advances to cover the costs of arbitration proceedings; and the balance of both parties’ interests.75
66. Rule 54 of the Arbitration Rules (“Stay of Enforcement of the Award”) does not confine the ambit of this discretion. Rather, it simply provides a procedural framework for stay applications. In particular, Rule 54(4) provides that a request for a stay of enforcement:
... shall specify the circumstances that require the stay or its modification or termination.
67. As is the position in many such applications, there has been some debate between the Parties as to whether there is a presumption in favour or against the grant of a stay, or whether a stay ought to be considered as an exceptional measure.
75 See e.g., the list of factors distilled in the Updated Background Paper on Annulment for the Administrative Council of ICSID (5 May 2016), ¶ 56 (AALA-0009 Background Paper on Annulment April 2016). ↩
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68. It is correct that some ad hoc committees have suggested that the grant of a stay pending an annulment is “common practice”,76 and that a stay should ordinarily be continued or granted if requested.77
69. On the other hand, there are also some annulment committees that have proposed that a stay should be exceptional based on the premise that ICSID awards are immediately enforceable.78
70. Further still, there is a (arguably more substantial) body of prior decisions that suggests there is no presumption either way, given the absence of any wording to suggest otherwise in Article 52(5) of the ICSID Convention. Whilst (as quoted above) Rule 54(4) of the Arbitration Rules requires that the applicant for a stay specify the circumstances said to require the stay, the instruction in Article 52(5) is simply that the committee “consider[ ] [whether] ... the circumstances ... require” a stay. 79
76 See e.g., Patrick Mitchell v. Democratic Republic of the Congo (ICSID Case No. ARB/99/7), Decision on the Stay of Enforcement of the Award (30 November 2004), (AL A RA 7), ¶ 23; Elsamex, S.A. v. Republic of Honduras (ICSID Case No. ARB/09/4), Decision on the Continuation of the Stay of Enforcement of the Award (7 January 2014), ¶ 86 (AL A RA 22). ↩
77 See, e.g., Enron Creditors Recovery Corporation (formerly Enron Corporation) and Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement on the Award (7 October 2008), ¶ 43; CMS Gas Transmission Company v. Argentine Republic (ICSID Case No. ARB/01/8), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement on the Award (1 September 2006), ¶ 38; MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Decision on Respondent's Request for a Continued Stay of Execution (1 June 2005), ¶ 29. ↩
78 See e.g., SGS Société Générale de Surveillance S.A. v. Republic of Paraguay (ICSID Case No. ARB/07/29), Decision on Paraguay's Request for the Continued Stay of Enforcement of the Award (22 March 2013), ¶¶ 82-83; Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V.) v. Kingdom of Spain (ICSID Case No. ARB/13/31), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (21 October 2019), ¶¶ 65-67. ↩
79 See, e.g., Ioan Micula, Viorel Micula and others v. Romania (ICSID Case No. ARB/05/20), Decision on Annulment (26 February 2016), ¶ 33; Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Republic of Ecuador (ICSID Case No. ARB/06/11), Decision on the Stay of Enforcement of the Award (30 September 2013), ¶ 47; OperaFund Eco-Invest SICAV PLC and Schwab Holding AG v. Kingdom of Spain (ICSID Case No. ARB/15/36), Decision on the Request for the Continued Stay of Execution of the Award (16 November 2020), ¶¶ 72, 85; ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V. and ConocoPhillips Gulf of Paria B.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/07/30), Decision on the Applicant's Request to Continue the Stay of Enforcement of the Award (2 November 2020), ¶¶ 33, 35-36; InfraRed Environmental Infrastructure GP Limited and others v. Kingdom of Spain (ICSID Case No. ARB/14/12), Decision on the ↩
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71. It is the Committee’s considered view that the third of these approaches is the correct one, namely that there is no presumption either way, and that the Committee is simply mandated to consider all the circumstances of the case before it.
72. Given that under the ICSID Convention regime a stay is not automatic in annulment proceedings, the Committee must start by assessing the circumstances that are said by the Applicant to require such a stay, as identified pursuant to Rule 54(4) of the ICSID Rules.
73. As summarised above, three core factors may be distilled from the Applicant’s submissions, as follows:
i. There are no reasons to doubt the Applicant’s compliance with its international obligations;
ii. Continuing the stay of enforcement would not be detrimental to the Respondents on Annulment;
iii. Lifting the stay of enforcement would be severely detrimental to the Applicant.
74. Each factor is addressed in turn.
75. It is the Applicant’s position that a stay is justified, because there is no basis to doubt that it will comply promptly with the Award in the event that its application for annulment is dismissed. As quoted earlier, the Applicant places emphasis in this regard on the comments
Continuation of the Stay of Enforcement of the Award (27 October 2020), ¶ 139; Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan (ICSID Case No. ARB/12/1), Decision on Stay of Enforcement of the Award (17 September 2020), (CL-023), ¶¶ 131-132.
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of the ad hoc committee in Enron v. Argentina, echoing the ad hoc committee in Azurix v. Argentina – that:
... the relevant enquiry is whether in all the circumstances it may be said that there is sufficient doubt as to whether there will be compliance with ICSID Convention obligations on a final award in the event that it is not annulled.80
76. As cited earlier, the Applicant invokes three factors to establish its likely future compliance, and the absence of any risk to the Respondents in this regard.
77. First, the Applicant cites its track record in settling past disputes over the last decade. As to this, however, the Committee is in difficulty in drawing any conclusions given that it has incomplete information as to the circumstances in which each such prior dispute was ultimately resolved. To this end, the Applicant refers to agreements entered into with the holders of rights arising from awards in October 2013 in respect of five matters;81 in May 2016 in respect of two matters;82 in 2017 in respect of two matters;83 in 2019 in respect of one matter;84 and in 2021 in respect of one matter.85 But without a full understanding as to how and why each such matter was settled, and in particular (a) the situation and perspective of each creditor that made such settlement acceptable, and (b) the specific motivation of the Applicant for each settlement, the Committee considers this inconclusive. Indeed, if anything, it might reflect a pattern of negotiated resolutions rather than straightforward voluntary compliance with each final award itself.
80 Request, ¶ 8, citing Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 49 (AL A RA 4), and Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶¶ 38-39, 44. ↩
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78. The same applies to the Applicant’s reliance on a range of other investment disputes which were discontinued by consent, ahead of any award.86
79. Second, the Applicant relies on the fact that, at present, 99.33% of its gross sovereign debt is in a normal payment condition; that the “percentage accrued during 2022 out of the total of the initial budget for service of the public debt (direct debt of the central administration) is 61.63%”; and that, within the framework of the agreement with the IMF, on 8 June 2022 the IMF approved the performance of the country in the first quarter of 2022.87 However, the Committee does not consider that it is assisted by any of these points. These are all macro-economic performance indicators that provide no indication whatsoever as to whether any particular investment treaty award will be complied with.
80. Third, the Applicant points to its own domestic legal system and case law concerning the hierarchy of rules, and the primacy of international treaties over domestic law, as an adequate guarantee of compliance with its obligations under the Award.88
81. But in its presentation on this aspect, the underlying assumption appeared to be that any demand for payment would have to go through the Argentine Courts. It bears recalling, as the Respondents have emphasised, that the Applicant’s primary obligation under the ICSID Convention is voluntarily to comply with the Award.89 Although emphasis was placed on the fact that the Argentine Republic paid up to US$ 1.512m in settlement agreements on outstanding awards between 2013 and 2021,90 at no point was any undertaking, or indeed firm indication, given that compliance with the Award, if not annulled, would be forthcoming without the need to engage any local legal process. In the absence of any such
87 Request, ¶¶ 26-27; Transcript, p. 101; Applicant’s Presentation, slide 42. ↩
88 Request, ¶¶ 14-16. Transcript, pp. 98-99. ↩
90 Transcript, p. 100; Applicant’s Presentation, slide 41. ↩
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undertaking or firm indication, the Committee does not consider that reliance on this factor provides a compelling ground to continue the stay of enforcement in this case.
82. As summarised earlier, it is the Applicant’s case that a continued stay of enforcement of the Award “would not harm [Respondents on Annulment] in any manner.”91 According to the Applicant, the only potential harm that could be invoked would be delay in the satisfaction of the Award, pending determination of the annulment application. But, so it is argued, this is harm that would be erased by the Respondents’ entitlement to interest, given that the Award provides for interest on all sums due (including costs) until full payment.92
83. The Applicant relies on the decisions of a number of previous ad hoc committees who have stated that the delay in payment of an award is incidental to the ICSID Convention system of annulment and can be remedied by the payment of interest in the event the application for annulment is unsuccessful.93
84. In the circumstances of this particular case, the Committee is unpersuaded, for two reasons.
85. First, as has been emphasised by the Respondents on Annulment, a number of cases have made the point that an entitlement to interest, simpliciter, may not address all types of prejudice, and may not justify a stay. For example:
i. InfraRed v. Spain, at ¶ 161:
[T]he fact that time would pass without the possibility of enforcement is not compensated by the adjudicated post-award interest. And the Committee considers that the Respondents are correct when they state that
93 Request, ¶ 31; Transcript, p.91. ↩
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the post-award interest is ‘compensatory in nature (not punitive) and, hence, it cannot constitute a pretext to undermine the award's finality.’94
ii. NextEra v. Spain, at ¶ 93:
Even then, while post-award interest may provide some relief, it may not adequately compensate for the uncertainty, delay, and deprivation suffered by the award creditor.95
iii. Infrastructure v. Spain, at ¶ 82:
For completeness' sakes, the Committee observes that the payment of interest should not be considered a sufficient remedy for any prejudice caused by a delay in the Award's enforcement. The Committee agrees with the observation in Eiser that the payment of post-award interest is to ‘compensate for the deprivation of the principal until payment of the award, but they are not directly related to the issue of enforcement of the award.’ Given that the prejudice complained of by the Claimants directly relates to difficulties in enforcement (and not the loss of use of the funds under the Award), the payment of interest is not an adequate remedy.96
iv. HydroEnergy v Spain at ¶ 96:
A final and binding arbitral award is an asset. It is an instrument of value and that value is measured by its enforceability. An award that is subject to a stay cannot be enforced and that inevitably will have an impact on its value. As the Claimants have submitted, the purpose of post-award interest is to compensate for non-payment of the Award damages. But once compensatory post-award interest has become payable, the award creditor has already suffered adverse consequences as a result of delayed recovery. Although interest would go some way toward financially compensating the Claimants based on the time value of money, it would not remedy the Claimants' inability to choose how to apply those monies in their own discretion (as the Claimants put it, placing them in the position of ‘effectively being forced to loan money to Spain’).97
94 InfraRed Environmental Infrastructure GP Limited and others v. Kingdom of Spain (ICSID Case No. ARB/14/12), Decision on the Continuation of the Stay of Enforcement of the Award (27 October 2020), ¶ 161 (CL-022). ↩
95 NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain (ICSID Case No. ARB/14/11), Decision on Stay of Enforcement of the Award (6 April 2020), ¶ 93. (CL-014). ↩
96 Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. (formerly Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V.) v. Kingdom of Spain (ICSID Case No. ARB/13/31), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (21 October 2019), ¶ 82 (CL-021). ↩
97 Hydro Energy 1 S.à r.l. and Hydroxana Sweden AB v. Kingdom of Spain, ICSID Case No. ARB/15/42, Decision on Stay of Enforcement of the Award, 26 March 2021, Decision on Stay (CL-032). ↩
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86. Second, and in any event, it is to be noted that the previous decisions invoked by the Applicant for the proposition that delay in payment caused by an annulment request can be compensated by interest 98 proceeded on the basis of a finding by each ad hoc committee that the delay in payment in that particular case would in fact be compensated sufficiently or adequately by the interest due under the award in question. By way of select example:
i. Watkins Holdings S.à r.l. and others v. Kingdom of Spain, at ¶ 49:
This means that for any delay in receiving any money due to them under the Award, the Claimants would be more than adequately compensated by the interest that will have accrued.99
ii. Caratube International Oil Company LLP and Devincci Salah Hourani v. Republic of Kazakhstan (II), at ¶ 97:
As regards the prejudice that Claimants would suffer if the stay is continued, the Committee concludes that Claimants have not demonstrated that they would suffer any prejudice that could not be compensated by the payment of interests accrued upon the delay of the payment of the Award.100
iii. El Paso Energy International Company v. Argentine Republic, at ¶ 53:
While it is true that the decision on the stay of enforcement of the Award will take some time and that this delay could cause harm to the creditor, it is also true that the creditor has the right, if the application for annulment were rejected, to collect the interest accrued until the date when payment of the amount indicated in the Award is made.101
iv. Víctor Pey Casado and President Allende Foundation v. Republic of Chile, at ¶ 32:
99 Watkins Holdings S.à r.l. and others v. Kingdom of Spain (ICSID Case No. ARB/15/44), Decision on Stay of Enforcement of the Award (28 June 2021), ¶ 49 (AL A RA 34). ↩
100 Caratube International Oil Company LLP and Devincci Salah Hourani v. Republic of Kazakhstan (II) (ICSID Case No. ARB/13/13), Decision on Stay of Enforcement of the Award (12 December 2019), ¶ 97 (AL A RA 30). ↩
101 El Paso Energy International Company v. Argentine Republic (ICSID Case No. ARB/03/15), Decision on Argentina's Request for Stay of Enforcement of the Award (14 November 2012), ¶ 53 (AL A RA 20). ↩
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[B]ecause of the Application, the satisfaction of the Award (assuming that the Application is unsuccessful) will be delayed. In the view of the Committee that is the only prejudice which the Claimants can point to. But the provision for compound interest in the ‘dispositif’ of the Award compensates the Claimants adequately for the delay.102
87. But this is not a conclusion that this Committee is able to reach in this case. Given current rates of inflation (put by Respondents at the hearing at 8 or 9%103), there is an evident disparity between the rate of interest specified in the Award (4% per annum compounded annually on all amounts due (including costs) until full payment104) and the current time value of money. As the Respondents on Annulment have stressed, in practical terms, the value of the Award is in fact deteriorating due to current inflation.105
88. It follows that, in the particular circumstances of this case, the Committee considers that if the stay of enforcement is continued, and if the annulment application is unsuccessful, the Respondents on Annulment will in fact suffer harm by reason of the delay in payment of the sums due to them under the Award, notwithstanding their entitlement to the payment of interest. As such, this is a factor that militates against the continuation of the stay.
89. The Committee notes the Applicant’s submission at the hearing that:
... it was [Respondents'] decision to request a fixed interest rate as opposed to Argentina which proposed a variable interest rate. The Tribunal finally decided to establish a fixed interest rate as requested by [Respondents], a bit lower but fixed nonetheless, so [Respondents] made their argument, the Tribunal decided they should not reopen the discussion now. The Tribunal considered that that was the interest rate that more than accurately compensated the passage of time.106
102 Víctor Pey Casado and President Allende Foundation v. Republic of Chile (ICSID Case No. ARB/98/2), Decision on the Republic of Chile's Application for a Stay of Enforcement of the Award (5 May 2010), ¶ 32 (AL A RA 16). ↩
106 Transcript, pp. 146-147. ↩
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90. However, the Committee considers that the Tribunal’s assessment at the time of the Award, in the context of the general time value of money, does not preclude the Committee from considering the concern (or argument) raised by Respondents, given:
i. The change in general interest rates in the meantime. As noted by the Respondents at the hearing:
... the inflation that is currently prevailing is the highest over the last 40 years, so that really makes this case specific because previously, or a couple of years ago, probably nobody would have anticipated that 4 per cent interest compounded annually and the Tribunal Award would be actually below the inflation rate, so that a delay in payment is really a financial damage to the Respondents on annulment, but that is the case now and that really is a new circumstance that makes this case specific.107
ii. The specific, and different, context in which this issue arises, namely the exercise of the Committee’s discretion to continue the stay.
91. The Applicant places reliance on the following statement by the annulment committee in Azurix v. Argentina:
As the ICSID Convention explicitly recognizes that the award creditor’s rights are subject to a stay if an ad hoc Committee considers, as we do, that the circumstances require a stay, then the award creditor’s rights are themselves qualified by the Convention. Accordingly, the rights an award creditor would have had to payment had there been no stay cannot, by definition, constitute the subject of prejudice.108
92. Similarly, the Applicant cites the following observation by the annulment committee in Enron v. Argentina:
[B]ecause Article 52(5) expressly provides that an award creditor’s rights are subject to a stay if an ad hoc committee considers that the circumstances
108 Request, ¶ 31, citing Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (28 December 2007), ¶ 42 (AL A RA 1). ↩
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so require, the postponement of the right to payment of the award caused by a stay cannot, by definition, per se constitute prejudice.109
93. The Committee does not disagree with either statement. But both are premised on a prior finding by each committee that the circumstances of the case require a stay of enforcement. Having concluded that the applicant was entitled to a stay under Article 52(5) of the Convention, each committee then observed that delay in payment consequent upon such stay could not amount, in and of itself, to prejudice.
94. In the Committee’s view, in terms of the prior question in this case, the Applicant’s assertion with respect to harm that may be caused to the Respondents on Annulment leads to the conclusion that there should be no continuation of the stay.
95. The third factor that is said by the Applicant to justify the continuation of the stay of enforcement is the harm that it alleges it will suffer if the stay is lifted.110
96. The Applicant’s case on this issue comprises two distinct strands:
i. Compliance with the Award could deprive the Argentine Republic of funds needed to implement public policies;
ii. The Applicant would face serious difficulties trying to recoup funds if its annulment application is upheld, and any such funds would have accrued no interest.
97. As to the first strand, the Applicant has provided scant explanation and no evidence as to the financial difficulties that compliance with the Award at this juncture would cause it.
109 Request, ¶ 32, citing Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 52 (AL A RA 4). ↩
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This follows its submission that “no strict standard of proof applies” to an allegation as to the impact of the deprivation of funds.111 Instead, the Applicant has pointed to the amount due under the Award, and asserted that this:
(i) exceeds the annual budget allocated to the Urban Social Integration plan.
(ii) far exceeds the total expenditure allocated to actions to support the National Plan Argentina Fights Hunger during the COVID-19 Social-Sanitary Emergency;
(iii) represents slightly less than what is allocated in a year to provide support to unemployed workers in active search for employment through the job training actions program; and
(iv) it accounts for little less than half of the amounts allocated to provide immediate Public Health response to the COVID-19 Pandemic.112
98. The Committee is unpersuaded by this as a factor in favour of continuing the stay.
99. As matters stand, the Applicant has an international liability in the amount of the Award. In the absence of an annulment, the amount found due must be paid, and the extent of the amount obviously has no impact on this.
100. The Applicant argues that: “if the Argentine Republic is forced to pay an award while the decision on the annulment application is pending, it will be deprived of substantial funds earmarked for essential public policies.”113 But despite submitting that almost 67% of the Argentine National Budget is allocated to social services,114 it has presented no evidence to show that termination of the stay would result in a reduction of budget allocated to the public polices and social projects to which it refers. Nor has the Applicant established that
111 Request, ¶ 36, citing Caratube International Oil Company LLP and Devincci Salah Hourani v. Republic of Kazakhstan (II) (ICSID Case No. ARB/13/13), Decision on the stay of enforcement of the award (12 December 2019), ¶ 96 (AL A RA 30). ↩
113 Transcript, p. 94; Applicant’s Presentation, slide 31. ↩
114 Transcript, p. 95; Applicant’s Presentation, slides 33-34. ↩
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deductions could not be made from other items of its budget. As was noted by the ad hoc committee in Burlington v. Ecuador:
The Committee does not question the laudable social objectives pursued by Ecuador and is not in a position to comment from which budget allocation the State would reassign existing allocations to pay the Award. The argument that the termination of the stay would mean reallocation of funds within the budget is inherent to the need to satisfy any financial obligation by a State. It is a general argument that any State could make, which has been rejected in the past and which the Committee does not consider to establish the minimal gravity required to justify a continuation of the stay. A State budget includes funds allocated to many activities, and not only to social projects. It is for the State to determine its priorities and how they will be funded. Evidently, if the Committee does not annul the Award, Ecuador will be obliged to pay it in full irrespective of its budgetary consequences. It is not within the remit of an annulment committee to link the obligation to pay the Award to the effects on the budget of the State concerned.115
101. Further, and importantly, no evidence has been adduced to support the proposition that immediate enforcement of the Award would cause a greater financial hardship than enforcement at a later stage. Rather, the Applicant’s case focuses on a detriment that it will suffer if payment is made pursuant to the Award at any stage. It follows that unless it can be shown that payment now will lead to difficulties in recoupment later (which is addressed below), the Committee considers that this point does not justify the continuation of the stay.
102. As to the second strand, the Committee is unpersuaded by the Applicant’s case as to the likely difficulties in recouping funds from the Respondents on Annulment.
115 Burlington Resources, Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Stay of Enforcement of the Award (31 August 2017), ¶ 83 (CL-006). ↩
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103. The Committee accepts, as has been recognised by numerous ad hoc committees, that the risk of non-recoupment is a relevant factor when considering the continuation of a stay of enforcement.116
104. But it remains incumbent on the Applicant to establish the existence and nature of such risk. As was stated in Cube v. Spain:
General considerations that not continuing the stay might result in money to pass back and forth are not sufficient and should be distinguished from the scenario in which the lifting of a stay would result in an appreciable risk that payment would be irrevocable, such as would be the case of a payment to an insolvent company.117
105. The Applicant asserts that “it could also face serious difficulties to recover those funds if the Award is subsequently annulled”:
(i) because of the still latent risk of having third parties requesting that an attachment be levied on its right to recover those amounts;
116 See e.g., NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain (ICSID Case No. ARB/14/11), Decision on the stay of enforcement of the award (6 April 2020), ¶ 88 (AL A RA 31); Dan Cake S.A. v. Hungary (ICSID Case No. ARB/12/9), Decision on the stay of enforcement of the award (25 December 2018), ¶ 62 (AL A RA 29); RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain (ICSID Case No. ARB/13/30), Decision on the stay of enforcement of the award (28 October 2020), ¶ 64 (AL A RA 32); SolEs Badajoz GmbH v. Kingdom of Spain (ICSID Case No. ARB/15/38), Decision on the stay of enforcement of the award (26 August 2020), ¶ 59 (AL A RA 37); Antoine Abou Lahoud and Leila Bounafeh- Abou Lahoud v. Democratic Republic of the Congo (ICSID Case No. ARB/10/4), Decision on the stay of enforcement of the award (30 September 2014), ¶ 65 (AL A RA 23); Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on Claimant's second request for lifting of the stay of enforcement of the award (20 May 2009), ¶¶ 39-42 (AL A RA 14); MTD Equity Sdn Bhd. & MTD Chile S.A. v. Republic of Chile (ICSID Case No. ARB/01/7), Decision on Claimant's request for a continued stay of enforcement of the award (1 June 2005), ¶ 29 (AL A RA 3); Patrick Mitchell v. Democratic Republic of the Congo (ICSID Case No. ARB/99/7), Decision on the stay of enforcement of the award (30 November 2004), ¶¶ 24, 28 (AL A RA 7); CDC Group PLC c. Republic of Seychelles (ICSID Case No. ARB/02/14), Decision on whether to continue the stay of the award (14 July 2004), ¶ 18 (AL A RA 10); Wena Hotels Limited v. Arab Republic of Egypt (ICSID Case No. ARB/94/4), Procedural Resolution No. 1 issued by the ad hoc Committee on a continued stay of enforcement of the award (5 April 2001), ¶ 7(a) (AL A RA 9); Maritime International Nominees Establishment (MINE) v. Republic of Guinea (ICSID Case No. ARB/84/4), Provisional Orden No. 1 on Guinea's request for a stay of the enforcement of the award (12 August 1988), ¶ 27 (AL A RA 5). ↩
117 Cube Infrastructure Fund SICAV and others v. Kingdom of Spain (ICSID Case No. ARB/15/20), Decision on the Continuation of the Provisional Stay of Enforcement of the Award (17 April 2020), ¶ 131 (CL-001). ↩
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(ii) because [ENJASA] – which operated a gaming license in the Province of Salta, Argentina and in relation to which Claimants made their claim for their indirect shareholdings in it – was repeatedly sanctioned by the Gaming Regulatory Authorities of the Province of Salta (“ENREJA”) as well as by the Financial Information Unit for violation of anti-money laundering regulations; and
(iii) because ENJASA called for a shareholders’ meeting to be held on March 1, 2022 to address the early dissolution and liquidation of the company.118
106. There is no evidence that the Respondents on Annulment are insolvent or likely to become so. At the hearing the Respondents on Annulment noted that their assets amount to “more than US$ 1.2 billion,” with “assets, operations and income in Austria and in many jurisdictions around the globe.”119
107. Neither are the Respondents on Annulment individuals, or shell companies.
108. The Committee has been presented with no evidence to support a risk of attachment by third parties of any credit or the Applicant's right to recover funds, and in any event even if there were such a risk, this is a matter beyond the control or responsibility of the Respondents on Annulment, and so not a basis to continue the stay.
109. As to the imposition of sanctions by ENREJA and the Financial Information Unit on ENJASA for violation of anti-money laundering regulations, the Committee remains unpersuaded that fines imposed on the Respondents' indirect subsidiary constitutes a risk of non-recoupment with respect to the Respondents themselves.
110. As to the Applicant's reliance on a decision to liquidate ENJASA, the Committee finds similarly that this does not ground a risk of recoupment given that ENJASA is an indirectly
118 Request, ¶ 40; Transcript, pp. 96-97. ↩
119 Transcript, p. 127. ↩
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held subsidiary of the Respondents, whereas recoupment would be sought from the Respondents themselves.
111. Further, the Committee notes that during the hearing, and of their own motion, the Respondents represented that if the Award were annulled, they would repay monies to the Applicant voluntarily:
Argentina has mentioned the risk or the need to litigate to recover funds but that actually presupposes non-compliance by the Respondents on Annulment, and in actual fact nothing suggests that. The Respondents on Annulment actually have the habit of complying with their obligations, and of course if there is such an obligation they would comply with it voluntarily.120
112. Importantly, the Committee (Prof Bjorklund) then pursued this further with the following question:
... in the possibility that the Award were to be annulled but Casinos had been able to enforce the Award, I think you implied that Casinos would repay any funds that it had managed to acquire, and I just wondered if that was an accurate understanding of what you suggested?121
113. In response, the Respondents stated on record as follows:
... the next question I believe was would the Respondents on Annulment repay any funds received in compliance of the award if the award is eventually annulled? And yes, of course, and it is here repeated formally, of course if payments are made and subsequently the Award is annulled, these amounts of money would be repaid voluntarily and there would therefore be no need for litigation.
In addition, if the Award is paid voluntarily, the Respondents would be prepared to provide for a security, so in case Argentina opts to pay what is due under the Award, the Respondents would provide adequate security for the situation that the Award ultimately is annulled.
We hope that is clear enough. So this is a very clear statement, I believe.122
120 Transcript, p. 128. ↩
121 Transcript, p. 136. ↩
122 Transcript, pp. 150-151. ↩
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114. The Committee is also unpersuaded by the Applicant's argument that it could not recover interest on any funds it needed to recoup in the event the Award is annulled. The ICSID Convention itself is silent on this issue. The availability of interest would thus depend on the law applicable to any action to recover funds. In at least some legal systems an action for recovery of funds could carry with it the payment of interest. There is thus no reason to assume as a blanket principle that interest could not be recovered or that this argument weighs in favour of continuing a stay.
115. It follows that the Applicant has not established that it will suffer irreparable, or indeed any substantial additional, harm if the stay is lifted.
116. For completeness, the Committee notes that in addition to addressing the three core factors identified above, it has also been argued by the Respondents on Annulment that neither the application to annul the Award nor the request to continue the stay of enforcement has been brought in good faith. This is premised on what is said to be the Applicant's track record of using annulment actions to “systematically delay compliance with its payment obligations under ICSID awards”123 as well as the Applicant's approach to the timetable for consideration of the stay.124
117. The Committee considers that, notwithstanding Respondents' statistical analysis,125 there is no evidence to suggest that either the application to annul the Award or the request to continue the stay of enforcement has been brought in bad faith.
118. As the ad hoc committee stated in Enron Corporation v. Argentine Republic:
123 Reply, ¶¶ 5, 34-36. Transcript, pp. 118-122. ↩
124 Reply, ¶ 38. ↩
125 Transcript, pp. 118-122. ↩
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... in the absence of particular reasons and evidence for concluding otherwise, the Committee must assume that any application for annulment is made in good faith, and that the application for a stay is a justified exercise of the applicant's procedural rights of defence.126
119. Having concluded that there are no circumstances that require the continuation of the stay in this case, the Committee need not consider the detailed submissions of each Party with respect to its power to impose conditions on a stay, and whether such conditions are appropriate in this case.127
120. It follows from the analysis above that, in the Committee's view, and in the words of Article 52(5) of the Convention, the Applicant has failed to establish any circumstances that “require” the continuation of the stay.
121. Given that stays are not automatic on applications to annul, there is nothing in this case which justifies a stay, or which sets this case apart from any other annulment application.
122. If anything, the Committee considers that the circumstances of this case, and in particular the mismatch between the compound interest rate stipulated in the Award and current inflation, militate in favour of lifting the stay.
126 Applicant's Presentation, slide 10, citing Enron Corporation & Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3), Decision on the Argentine Republic's Request for a Continued Stay of Enforcement of the Award (7 October 2008), ¶ 47 (AL A RA 4). ↩
127 The Committee notes in this regard that in the course of the hearing, Mr Bulnes asked each Party to rank in order of preference three possible outcomes of this application, namely: (1) the grant of a stay; (2) the grant of a stay on conditions; and (3) the rejection of a stay (Transcript, pp. 133-134). In response, the Applicant stated that its first preference was (1) the grant of a stay; and that neither (2) the grant of a stay on conditions nor (3) the rejection of a stay could be ranked, as both were highly prejudicial (Transcript, p. 138). However, as between (2) and (3), it emphasised its position that whilst an ad hoc committee may decide to lift or continue a stay, it has no role in the enforcement of awards, and so cannot impose conditions (Transcript, p. 139). To this end, it was not part of its Request affirmatively to seek a stay with conditions. ↩
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123. The Applicant has made no express request regarding the costs of this phase of the proceeding.
124. The Respondents on Annulment have made no express request regarding the costs of this phase of the proceeding. They have merely requested as follows:
The costs of providing security are to be considered as costs of these proceedings, the allocation of which shall be finally determined in the decision on costs. Until such decision, Respondent is ordered to provisionally bear the costs of providing security to Claimants.128
125. The Committee is of the view that costs arising out of the Applicant's Request for a Continued Stay of Enforcement of the Award should be reserved for a subsequent stage of the proceedings.
126. For the reasons set forth above, the Committee decides that:
(1) The Request for a Continued Stay of Enforcement of the Award made by the Argentine Republic is refused.
(2) The costs arising out of the Applicant's Request for a Continued Stay of Enforcement of the Award are reserved for a subsequent stage of the proceedings.
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|
[Signed] Signature Prof. Andrea Bjorklund Member of the Committee Date: 13 January 2023 |
[Signed] Signature Mr. Felipe Bulnes Serrano Member of the Committee Date: 13 January 2023 |
[Signed]
Signature
Mr. Toby Landau KC
President of the Committee
Date: 13 January 2023