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The International Centre for Settlement of Investment Dipsutes: Daimler Financial Services AG v. Argentine Republic

  • Karen Halverson Cross (a1)

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1 Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Award (Aug. 22, 2012), available at http://italaw.com/sites/default/files/case-documents/ital082.pdf [hereinafter Daimler].

2 Treaty on the Encouragement and Reciprocal Protection of Investments, Ger.-Arg., arts. 3, 4(4), Apr. 9, 1991, 1910 U.N.T.S. 198 [hereinafter Germany-Argentina BIT].

3 These members were the two party-appointed arbitrators, Judge Charles N. Brower and Professor Domingo Bello Janeiro.

4 See Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/8, Decision on Jurisdiction, ¶¶ 102-03 (Aug. 3, 2004).

5 See Daimler, supra note 1, ¶ 36.

6 Id. ¶ 38.

7 Id. ¶ 39.

8 Id. ¶¶ 41-42.

9 Id. ¶ 44.

10 Id. ¶¶ 42, 44.

11 Id. ¶ 158 (referring to Germany-Argentina BIT, supra note 2, art. 10).

12 Id. ¶ 175.

13 Id. ¶ 191.

14 Id. ¶¶ 193-94.

15 Id. ¶ 220.

16 Id. ¶ 221.

17 Id. ¶ 228.

18 Id. ¶ 230.

19 ICS Inspection & Control Services Ltd. (United Kingdom) v. Argentine Republic, PCA Case No. 2010-9, Award on Jurisdiction (Feb. 10, 2012), available at http://italaw.com/sites/default/files/case-documents/ita0416.pdf.

20 Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Dissenting Opinion of Judge Charles N. Brower (Aug. 15, 2012), available at http://italaw.com/sites/default/files/case-documents/ital083.pdf [hereinafter Brower Dissent].

21 Id. ¶¶ 3-11.

22 Id. ¶ 13.

23 Id. ¶ 34.

24 Id. ¶ 38.

25 Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Opinion of Professor Domingo Bello Janeiro (Aug. 16, 2012), available at http://italaw.com/sites/default/files/case-documents/ita1084.pdf.

26 See Maupin, Julie A., MFN-Based Jurisdiction in Investor-State Arbitration: Is There Any Hope for a Consistent Approach?, 14 J. Int’l Econ. L. 157 (2011).

27 Cf. Daimler, supra note 1, ¶ 268, with Brower Dissent, supra note 20, ¶¶ 23-26.

28 Daimler, supra note 1, ¶ 113.

29 Id. ¶¶ 144-46.

30 Id. ¶¶ 151-53.

31 Abaclat & Others v. Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility (Aug. 4, 2011), available at http://italaw.com/documents/Abaclat-DecisiononJurisdiction.pdf.

32 Daimler, supra note 1, ¶ 160.

Endnotes

1 Claimant’s Request for Arbitration, para 1.

2 Ibid. At the time of the filing of the Request for Arbitration, the Claimant and its Parent Company were known, respectively, as DaimlerChrysler Services AG and DaimlerChrysler AG. The reference to Chrysler was dropped subsequent to the breakup of the Daimler and Chrysler corporations in 2007, and the Claimant’s corporate name was eventually changed to Daimler Financial Services. The case name in the present proceedings has been adjusted accordingly. Nonetheless, portions of the parties’ pleadings make reference to the old names, and the Tribunal, where necessary, has followed the lead of the parties in referring to the Claimant variably as DFS and DCFS. The details of the corporate break-up between Daimler and Chrysler have no bearing upon the jurisdictional questions now before the Tribunal.

3 Exhibit B to Claimant’s Request for Arbitration.

4 Exhibit G to Claimant’s Request for Arbitration.

5 Claimant’s Request for Arbitration, paras 39-40.

6 Respondent’s Reply Memorial on Jurisdiction, paras 24-27 and corresponding footnotes; Claimant’s Exhibit 80, Core Bundle 16.

7 Signed by Argentina on 21 May 1991, entered into force 18 November 1994.

8 Claimant’s Request for Arbitration, Exhibit I; Claimant’s Memorial, paras 61-65.

9 Claimant’s Memorial, paras 34-36.

10 Ibid at para 35 (emphasis in original).

11 Claimant’s Request for Arbitration, para 7.

12 Ibid at paras 52, 57.

13 Ibid at para 75.

14 Claimant’s Memorial, paras 58-59.

15 Claimant’s Memorial at para 60.

16 Ibid.

17 Ibid at para 98.

18 The Tribunal need not, for purposes of its jurisdictional findings, probe the precise counters of the crisis or its causes.

19 Respondent’s Counter-memorial, Part VI.B.

20 Claimant’s Request for Arbitraiton, para 72.

21 Ibid at paras 64-71 and Exhibit J.

22 Ibid at para 66.

23 Ibid.

24 Claimant’s Memorial at para 121.

25 Ibid at para 125.

26 Claimant’s Request for Arbitration, paras 73-74; Claimant’s Memorial, para 132.

27 Claimant’s Memorial at paras 130-131.

28 Ibid at paras 164-172.

29 Ibid at paras 173-191.

30 Claimant’s Request for Arbitration, para 76.

31 Ibid at paras 79-81.

32 Ibid at paras 91-102.

33 Claimant’s Exhibit 70.

34 Ibid at Article 5(2).

35 See Part V of this award below.

36 Above note 7.

37 Above note 1.

38 Unless otherwise specified, all citations to the German-Argentine BIT refer to the agreed English translation of the BIT as prepared by the disputing parties. In the context of the present quote, the Tribunal notes that the disputing parties’ agreed translation is not entirely accurate. The phrase “other agreements made between the parties” actually refers to other treaties in force between the Contracting State Parties (Spanish: “otros tratadoes vigentes entre les Partes” ; German: “anderer zwischen den Vertragsparteien geltender Übereinkünfte”).

39 See below, paras 134-139.

40 Both parties have urged the Tribunal to embrace the solutions adopted by particular previous tribunals and to disregard the solutions adopted by others.

41 Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal S.A. v. The Argentine Republic, ICSID Case No. ARB/03/19 and AWG Group v. The Argentine Republic (UNCITRAL) (jointly decided), Decision on Liability (30 July 2010), para 189.

42 Respondent’s Memorial on Jurisdiction, part IV.B; Respondent’s Reply on Jurisdiction, part II.B.

43 Respondent’s Memorial on Jurisdiction, part IV.C; Respondent’s Reply on Jurisdiction, part II.C.

44 Respondent’s Memorial on Jurisdiction, paras 86-87, 93,108-110; Respondent’s Reply on Jurisdiction, paras 90-97.

45 Respondent’s Memorial on Jurisdiction, paras 88-89.

46 Ibid at paras 97-104.

47 Respondent’s Reply on Jurisdiction, para 86.

48 The question as to whether the Claimant may bring “indirect” claims on behalf of its Argentine subsidiary is addressed separately in the next part of the award.

49 Respondent’s Reply on Jurisdiction, paras 76-77, and 85.

50 Ibid at para 78.

51 Ibid at paras 78 and 80.

52 Ibid at para 85.

53 Claimant’s Counter-Memorial on Jurisdiction, Point II.

54 Ibid at para 113. The Tribunal notes that the Claimant, in its submissions, does not always distinguish between its own contractual rights and those of its Argentine Subsidiary. The relevance of such a distinction for purposes of this claim is addressed in part IV.B. of the Award below.

55 Ibid at paras 110, 112-114.

56 Ibid at para 111.

57 Ibid at para 112.

58 This argument is further elaborated in the Claimant’s Rejoinder on Jurisdiction, Point II.

59 Claimant’s Counter-Memorial on Jurisdiction, paras 116-122.

60 Ibid at Point III; see also Claimant’s Rejoinder on Jurisdiction, Point III.

61 Claimant’s Counter-Memorial on Jurisdiction, paras 115,125.

62 Ibid at para 126.

63 Ibid.

64 The same is true of the lease and loan contracts between DCS Argentina’s own subsidiaries and their respective customers.

65 The question as to whether the Claimant, as shareholder, may make claims for damages suffered by reason of the abrogation of contractual rights held by its Argentine Subsidiary is addressed in the next part of this Award.

66 Claimant’s Request for Arbitration, paras 91-102.

67 Emphasis added.

68 Article 7(2) of the German-Argentine BIT provides that “[e]ach Contracting Party shall fulfill any other obligation it has assumed with regard to investments in its territory by investors of the other Contracting Party.”

69 See e.g. SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision on Jurisdiction (6 Aug 2003) [hereinafter “SGS v. Pakistan”]; Salini Construttori S.p.A. and Italsttade S.p.A. v. The Hashemite Kingdom of Jordan, ICSID Case No. ARB/02/13, Decision on Jurisdiction (12 Nov 2004) [hereinafter “Salini”]; and Joy Mining Machinery Limited v. The Arab Republic of Egypt, ICSID Case No. ARB/03/11, Decision on Jurisdiction (6 August 2004).

70 See above note 68.

71 As noted by the Siemens tribunal:

“At this stage of the proceedings, the Tribunal is not required to consider whether the claims under the Treaty made by [the Claimant] are correct. This is a matter for the merits. The Tribunal simply has to be satisfied that, if the Claimant’s allegations would be proven correct, then the Tribunal has jurisdiction to consider them.”

Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/03/07, Decision on Jurisdiction (3 Aug 2004) [hereinafter “Siemens”], para 180.

72 Respondent’s Memorial on Jurisdiction, paras 119, 121-122.

73 Ibid at para 120.

74 Ibid at para 121.

75 Ibid at paras 123-124. Article 10(5) of the German-Argentine BIT is set forth above in para 50 of this award.

76 Respondent’s memorial on Jurisdiction, paras 125-126.

77 Unless otherwise noted, all English language quotations from the German-Argentine BIT reproduced in this award are taken from the disputing parties’ agreed English translation of the Spanish and German original texts.

78 Respondent’s Memorial on Jurisdiction, paras 132-134.

79 Ibid at para 127.

80 Ibid at para 134.

81 Ibid.

82 Ibid at paras 137-140.

83 Ibid at para 141.

84 Ibid at para 142.

85 Ibid at para 144.

86 Ibid at para 147.

87 Barcelona Traction, Light and Power Company, Limited, Judgment, I.C.J. Reports 1970, p. 3, at p. 37, para 47.

88 Respondent’s Memorial on Jurisdiction, para 149.

89 Ibid.

90 Ibid.

91 Ibid at IV.D.4.b).

92 Ibid at para 151, citing Schreuer, Christoph H., The ICSID Convention: A Commentary (Cambridge University Press, 2001) p. 291 (internal references omitted). The Tribunal notes, however, that the Respondent appears to have taken this quote out of context. In fact, Professor Schreuer states that this suggestion was discarded only because “this would not be feasible where shares are widely scattered and their owners are insufficiently organized.” Professor Schreuer was nonetheless unequivocal in stating that Article 25(2)(b) was included because a majority of the delegates who participated in the drafting of the Convention “found that it would be unwise to exclude locally incorporated but foreign controlled companies”. Schreuer, Christoph H., The ICSID Convention: A Commentary, 2d Ed (Cambridge University Press, 2009), with Malintoppi, Loretta, Reinisch, August, and Sinclair, Anthony [hereinafter “Schreuer–2009”], p. 297 (internal references omitted).

93 Respondent’s Memorial on Jurisdiction, para 152.

94 Ibid.

95 Ibid at para 153.

96 Ibid.

97 Ibid at para 154.

98 Respondent’s Reply on Jurisdiction, paras 106-118.

99 Ibid at paras 119-128.

100 Respondent’s Memorial on Jurisdiction, Part IV.D.5.

101 Ibid at para 155.

102 Ibid at para 158.

103 Respondent’s Reply on Jurisdiction, para 98.

104 Ibid at para 99.

105 Ibid at para 100.

106 Ibid at para 101. Argentina did not document its source for this assertion. Section V of the Respondent’s Rejoinder on the Merits, however, indicates that the Argentine subsidiary allegedly harmed by Argentina’s sovereign measures (DCSA S.A.) and the Argentine subsidiary to which the parent company transferred that subsidiary’s shares in 2005 (DC Arg. S.A.) are two separate companies.

107 This seems to be the implication of paras 102-103 of the Respondent’s Reply Memorial on Jurisdiction.

108 Ibid at para 105.

109 Respondent’s Rejoinder on the Merits, paras 67-69.

110 Claimant’s Counter-Memorial on Jurisdiction, point IV.

111 Ibid at para 127. The Tribunal notes, however, that according to the documents filed by the Claimants, DFS owned 99% of each of the three Argentine Subsidiaries, with the other 1% belonging to a Mr. Macarenhas. Claimant’s Exhibit 70.

112 Claimant’s Counter-Memorial on Jurisdiction, para 127.

113 Ibid at para 129, citing: Lanco International Inc. v. The Argentine Republic, ICSID Case No. ARB/97/6, Decision on Jurisdiction (8 December 1998), paras 9-10; CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Decision on Jurisdiction (17 July 2003) [hereinafter “CMS – Jurisdiction”], paras 59, 63-65; CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Decision on Annulment (25 September 2007) [hereinafter “CMS – Annulment”], paras 68-76; Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/ 12, Decision on Jurisdiction (8 December 2003), para 73; Enron Corporation and Ponderosa Assets, L.P. v. The Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (14 January 2004), para 39; Enron Corporation and Ponderosa Assets, L.P. v. The Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (Ancillary Claim) (2 August 2004), paras 16-22, 25-46; Siemens, above note 71 at paras 137-140; AES Corporation v. The Argentine Republic, ICSID Case No. ARB/02/17, Decision on Jurisdiction (26 April 2005) [hereinafter “AES”], paras 86-89; Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16, Decision on Jurisdiction (11 May 2005), paras 67-79; Camuzzi International S.A. v. The Argentine Republic, ICSID Case No. ARB/03/2, Decision on Jurisdiction (11 May 2005) [hereinafter “Camuzzi 1”], paras 67-79; Camuzzi International S.A. v. The Argentine Republic, ICSID Case No. ARB/03/2, Decision on Jurisdiction (10 June 2005) [hereinafter “Camuzzi 2”], paras 43-46; LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc. v. The Argentine Republic, ICSID Case No. ARB/02/1, Decision on Jurisdiction (30 April 2004), paras 60-63; Continental Casualty Company v. The Argentine Republic, ICSID Case No. ARB/03/9, Decision on Jurisdiction (22 February 2006), paras 84-87; Gas Natural v. The Argentine Republic, ICSID Case No. ARB/ 03/10, Decision of the Tribunal on Preliminary Questions on Jurisdiction (17 June 2005) [hereinafter “Gas Natural”], paras 33-35; National Grid PLC v. The Argentine Republic, UNCITRAL, Decision on Jurisdiction (20 June 2006) [hereinafter “National Grid”], paras 155-160; Pan American Energy LLC and BP Argentina Exploration Company v. The Argentine Republic, ICSID Case No. ARB/03/13 and BP American Production Company et al v. The Argentine Republic, ICSID Case No. ARB/04/8 (jointly decided), Decision on Preliminary Objections (27 July 2006), paras 217-218; Suez, Sociedad General de Aguas de Barcelona S.A., and Inter Aguas Servicios Integrales del Agua S.A. v. The Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction (16 May 2006) [hereinafter “InterAguas”], paras 50-51; Suez, Sociedad de Aguas de Barcelona S.A., and Vivendi S.A. v. The Argentine Republic, ICSID Case No. ARB/03/19 and AWG Group Limited v. The Argentine Republic (UNCITRAL Rules) (jointly decided), Decision on Jurisdiction (3 Aug 2006) [hereinafter collectively “AWG”], paras 50-51; Total S.A. v. The Argentine Republic, ICSID Case No. ARB/04/01, Decision on Objections to Jurisdiction (25 August 2006), paras 77-81; Metalpar S.A. and Buen Aire S.A. v. The Argentine Republic, ICSID Case No. ARB/03/5, Decision on Jurisdiction (27 April 2006), paras 86-98; El Paso Energy International Company v. The Argentine Republic, ICSID Case No. ARB/03/15, Decision on Jurisdiction (27 April 2006), paras 137-139; and Compañia del Aguas del Aconquija S.A. and Vivendi Universal S.A. v. The Argentine Republic, ICSID Case No. ARB/97/3, Decision on Jurisdiction (14 November 2005) [hereinafter Vivendi II – Jurisdiction], paras 36-41, 88-94. Note that while the Claimant specifically cited to each of these cases, the Tribunal has in some instances altered the citation formats and paragraph references, both to clarify the citations and to more precisely identify what the Tribunal considers to be the relevant passages. The Claimant also appears to have cited to one additional award in error, as the passage cited deals with the calculation of interest and not the question of foreign shareholders' rights under the ICSID Convention or BITs.

114 Claimant’s Counter-Memorial on Jurisdiction at para 130, citing: Asian Agricultural Products Ltd (AAPL) v. Republic of Sri Lanka, ICSID Case No. ARB/87/3, Final Award (27 June 1990) [hereinafter AAPL v. Sri Lanka]; American Manufacturing and Trading, Inc. v. Republic of Zaire, ICSID Case No. ARB/93/1, Award (21 February 1997); Antoine Goetz et consorts c. République du Burundi, ICSID Case No. ARB/ 95/3, Award (10 February 1999); Alex Genin and others v. Republic of Estonia, ICSID Case No. ARB/99/2, Award (25 June 2001); CME Czech Republic B.V. v. Czech Republic, UNCITRAL, Partial Award (13 September 2001); GAMI Investments Inc. v. the Government of the United Mexican States, UNCITRAL/NAFTA, Final Award (15 November 2004); and Maffezini v. Spain, ICSID Case No. ARB/97/7, Decision on Jurisdiction (25 Jan 2000) [hereinafter “Maffezini”].

115 Ibid at para 131.

116 Claimant’s Counter-Memorial on Jurisdiction, Point IV.A.

117 Ibid at para 134.

118 Ibid at para 133; see also Siemens, above note 71 at para 137.

119 Ibid at para 136, quoting Siemens, above note 71 at para 140.

120 Ibid at para 141.

121 Ibid.

122 Ibid at Point IV.B.

123 Ibid at para 142.

124 Ibid.

125 Ibid at paras 143-144.

126 Ibid at Point IV.C.

127 Ibid at para 148.

128 Ibid.

129 Ibid.

130 Ibid.

131 Ibid at para 149.

132 Ibid.

133 Ibid at note 158.

134 See para 63 above.

135 Emphasis added.

136 Also broadly defined by Article 1(2) of the BIT to include “amounts yielded by an investment and includes profits, dividends, interests, license fees, and other remunerations”.

137 On this point, see the analysis by the Siemens tribunal, which considered a nearly identical objection by Argentina in relation to the same German-Argentine BIT. Siemens, above note 71 at paras 136-144.

138 Emphasis added.

139 Emphasis added.

140 See part III of the award above.

141 See above para 49.

142 Barcelona Traction, above note 87 at paras 30-31.

143 Ibid at paras 61-63.

144 CMS – Annulment, above note 113 at para 69 (quoting CMS – Jurisdiction, above note 113 at para 48).

145 See above notes 113 and 114.

146 Indeed, none of the considerations mentioned above in para 53 of this Award would justify the Tribunal in adopting a different resolution of the question in this case.

147 Respondent’s Memorial on Jurisdiction, para 160.

148 Ibid at paras 164 & 165.

149 Ibid at paras 162 & 164

150 According to the agreed English translation, the relevant phrase of the BIT’s preamble reads: “Recognizing that the encouragement and contractual protection of such investments are apt to stimulate private business initiative and to increase the prosperity of both States … ”.

151 Respondent’s Memorial on Jurisdiction, para 163.

152 Ibid at para 166.

153 Ibid.

154 Ibid at para 168.

155 Ibid at para 167, quoting CMS – Jurisdiction, above note 113 at para 27.

156 Ibid.

157 See para 58 of the Award above.

158 Above, para 65.

159 Respondent’s Reply Memorial on Jurisdiction, para 135.

160 Ibid at paras 136-137.

161 Claimant’s Counter-Memorial on Jurisdiction, para 152.

162 Ibid.

163 Claimant’s Memorial on the Merits at paras 212-213.

164 Ibid at para 214.

165 Ibid at para 215.

166 Ibid at para 217.

167 Ibid at para 222.

168 Claimant’s Counter-Memorial on Jurisdiction, para 155.

169 Ibid.

170 Ibid at para 156.

171 Ibid.

172 Ibid.

173 AES, above note 113 at para 57 (emphasis added).

174 Respondent’s Reply on Jurisdiction, para 100. These facts are summarized at para 45 above.

175 The Tribunal notes that at the time, of the share purchase agreement, the Claimant was called DaimlerChrysler Services, AG. Sometime later, however, pursuant to the break-up between the Daimler and Chrysler companies, the Claimant changed its name to Daimler Financial Services (DFS). This is how the Claimant has referred to itself throughout these proceedings.

176 Respondent’s Rejoinder on the Merits, paras 67-68.

177 Ibid at para 69.

178 Respondent’s Post-Hearing Legal Submissions, pp. 6-7, citing Case Concerning the Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzigovina v. Serbia and Montenegro), ICJ, Judgment of 26 Feb 2007, paras 118, 127.

179 Claimant’s Post-Hearing Submissions of Fact, paras 1211-1212.

180 Claimant’s Post-Hearing Legal Submissions, para 68.

181 The Claimant first disclosed the sale in its 7 August 2007 Memorial on the Merits, at para 160. It submitted a copy of the disputed Share Purchase Agreement (Claimant’s Exhibit CX 70) on the same date. This was nearly a year before the 5 May 2008 filing of Argentina’s Reply Memorial on Jurisdiction and more than two years before Argentina’s 27 October 2009 Rejoinder on the Merits, in which Argentina first clarified its objection concerning the SPA.

182 See e.g. Claimant’s Request for Arbitration at para 20, stating “this is a legal dispute arising directly out of an investment in Argentina by DCS in its wholly-owned subsidiary, DCS Argentina … ”.

183 Respondent’s Post-Hearing Summary of Arguments, para 2.

184 Exhibit CX 70, “Share Purchase and Assignment Agreement”, Article 1(1) (parenthetical in original) (emphasis added by the Tribunal) (quoted by Argentina in its Post-Hearing Submissions of Fact, p. 69).

185 Respondent’s post-hearing SPA submission of 28 Sep 2010, part I, para 1. Unless otherwise noted, all paragraph numbers referring to this submission refer to the paragraph numbers appearing in parts I-V of the submission and not to the paragraphs appearing in the introduction to the submission (which are separately numbered).

186 Ibid at paras 2-3, 20-21.

187 Ibid at paras 5-9 (citing the ICJ’s Barcelona Traction, Nottebohm, and South West Africa cases).

188 Ibid at para 23 (citing Schreuer - 2009, above note 92 at p. 92, section 36).

189 Ibid at paras 24-26 (citing CSOB v. Slovakia, ICSID Case No. ARB/97/4, Decision on Jurisdiction (24 May 1999), para 31; and Vivendi II – Jurisdiction, above note 113, paras 60-63). The text of Article 10(5) of the BIT is set forth in para 50 of this award.

190 Respondent’s post-hearing SPA submission of 28 Sep 2010, at paras 18-19.

191 Ibid at paras 10-11.

192 Article 10(4) of the SPA, Claimant’s Exhibit CX-70.

193 Respondent’s post-hearing SPA submission of 28 Sep 2010, at para 12, citing expert opinion of Prof. Wurmnest.

194 Ibid at paras 13-16, 22.

195 Ibid at paras 29-30.

196 Ibid at para 31.

197 Ibid at paras 23, 27.

198 Respondent’s Observations on the New Evidence Presented by Daimler Together with its Responses to the Tribunal’s Additional Post-Hearing Questions, 3 December 2010, at para 24.

199 Ibid at paras 25-28.

200 Ibid at para 29.

201 Ibid at para 2. These claims are further elaborated in, inter alia, paras 16-21 and 41-43. The Respondent also complains of certain formal defects in the Claimant’s evidence (ibid at paras 13-16), which the Tribunal finds unnecessary to address in light of its below decision.

202 Respondent’s Observations on the New Evidence Presented by Daimler Together with its Responses to the Tribunal’s Additional Post-Hearing Questions, 3 December 2010, at para 24.

203 Claimant’s Post-Hearing Submissions of Fact, para 1199.

204 Ibid.

205 Ibid.

206 Claimant’s post-hearing SPA submission, para 3.

207 Ibid at paras 8-16.

208 Ibid at para 17.

209 Ibid at para 20.

210 Ibid.

211 Ibid at para 19.

212 Ibid at para 19.

213 Ibid at paras 36-42.

214 Statement of Wolfgang Bauder, Senior Counsel of Daimler AG, at para 5(c).

215 Ibid at paras 25-36, 40-41, and Claimant’s post-hearing SPA submission at paras 90-118.

216 Article 8(3) of the SPA states: “All amendments and supplements to this Agreement including this clause must be in writing in order to be legally effective … ”. The Claimant stressed the validity of the subsequent Interpretive Agreement in its Post-hearing SPA submission at paras 70-73.

217 Claimant’s Post-Hearing Legal Submissions, Part III.A.(d).

218 Ibid at paras 59, 61, 65, & 66.

219 Ibid at paras 59, 64.

220 Ibid at paras 69-84.

221 Ibid at para 60.

222 Ibid at para 62.

223 Ibid at para 64.

224 Claimant’s post-hearing SPA submission at para 34.

225 Ibid at paras 60-63.

226 Claimant’s Post-Hearing Legal Submissions at paras 66-67.

227 Ibid at para 63.

228 Ibid at para 33.

229 Ibid at para 45. See also paras 57-64.

230 Claimant’s Post-Hearing SPA Submission at para 75.

231 Ibid at paras 77-83, 88.

232 Ibid at paras 84-86.

233 Ibid at para 89.

234 See above, Part III.

235 Expert Opinion of Prof. Dr. Wolfgang Wurmnest, at para 18.

236 Ibid at para 20.

237 Ibid at para 21 (emphasis added).

238 Ibid at para 22.

239 Ibid at para 23.

240 Ibid at para 24 (emphasis added).

241 See ibid at para 9, stating: “This Opinion will limit itself to issues of conflict-of-laws under German law. It will not touch upon issues pertaining to international law or Argentine law.”

242 Kielmanovich Statement on SPA at para 1 (emphasis added).

243 Nissen Statement on SPA at para 2 (emphasis added).

244 See Kielmanovich Statement on SPA at para 5, stating: “[i]f DFS brought a claim in its capacity as shareholder of the two Argentine subsidiaries and it currently (in fact, since 2002) is not a shareholder thereof, it would lack procedural standing to make its claim”; and Nissen Statement on SPA at para 22(3), stating:

“Pursuant to Argentine law, in order to file a claim for alleged damages directly suffered by the corporation, a person who alleges having suffered said damages in his or her capacity as shareholder for the same cause that affected the corporation and who, after filing the claim, ceased to be a shareholder as a result of relinquishing his or her shares do not have any legal standing.”

245 Professor Kielmanovich, in fact, explicitly acknowledges the possibility that DFS might still retain other claims deriving from other sources of law. He notes that if DFS is attempting to bring a claim before ICSID not in its capacity as a shareholder but rather by virtue of “those rights that remained in its equity once the assignment was completed”, 245 then the feasibility of the claim would “depend on the relevant jurisdiction and admissibility rules; that is, the rules allowing the submission of disputes to international arbitration proceedings by relying on the Argentina-Germany BIT and the ICSID Convention. In this report, I do not pose an opinion on the scope and interpretation of these international law instruments.”

246 See the Tribunal’s discussion in part IV.B.3. above.

247 Ibid.

248 See e.g. Christoph H. Schreuer, The ICSID Convention, A Commentary (2009), at p. 92, section 36, stating:

“Apart from specific rules about critical dates, the date of the commencement of the proceedings is decisive. It is an accepted principle of international adjudication that jurisdiction will be determined by reference to the date on which judicial proceedings are instituted. This means that on that date all jurisdictional requirements must be met. It also means that events taking place after that date will not affect jurisdiction.”

249 EnCana Corporation v. Ecuador, Award, LCIA Case No. UN3481, ILC 91 (3 February 2006), para 131.

250 See Mondev Int’l Ltd v. United States, ICSID Case No. ARB(AF)/99/2, Award (11 October 2001) at para 91, finding that the international protection of investment should not “be overshadowed by technical questions of the application of local property laws and the classification of local property interests affected by foreclosure or other action subsequent to the failure of the investment.”

251 The Loewen Group Inc. and Raymond L. Loewen v. United States of America, ICSID Case No. ARB(AF)/98/3, Award (26 June 2003), at paras 225-238.

252 See e.g. Emmanuel Gaillard, la Jurisprudence du Cirdi 788 (2004); Maurice Mendelson, The Runaway Train: The “Continuous Nationality” Rule from the Panavezys-Saldutiskis Railway case to Loewen, in International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Biltateral Treaties and Customary International Law (Todd Weiler ed., 2005); Noah Rubins, Loewen v. United States: The Burial of an Investor-State Arbitration Claim, 21 ARB. Int’l 1 (2005); Jan Paulsson, Continuous Nationality in Loewen, 20 ARB. Int’l 213 (2004).

253 Andrea K. Bjorkland, “The Emerging Civilization of Investment Arbitration”, 113 Penn State L. Rev 169 (2009) at p. 1280 (citing International Law Commission, Report to the International Law Commission on Diplomatic Protection, A/ CN.4/506/Add.l (April 20, 2000)).

254 This follows from the nationality requirement of the ICSID Convention and most BITs, as well as from the fact that most BITs afford standing to bring ICSID claims only to “nationals” or “companies” of the other State Party which made an investment in the Respondent State prior to the advent of the facts or circumstances giving rise to the dispute.

255 Exceptions may exist in certain circumstances, for example where the parties’ intentions violate a peremptory norm of international law, but no such exceptions arise on the present facts.

256 Sapphire v. National Iranian Oil Co., Arbitral Award (15 March 1963), I.L.R. 1967, 136 at 181.

257 Statement of Wolfgang Bauder on SPA at para 5(b).

258 Ibid at para 16 (Dr. Bauder’s translation).

259 Ibid at para 15.

260 Ibid at para 16.

261 Ibid at para 17.

262 Statement of Gösta Dobler on SPA at para 6.

263 Statement of Thomas Gruber on SPA at para 9.

264 Claimant’s Post-Hearing SPA Submission at para 114.

265 Ibid at para 70.

266 Ibid at para 71.

267 The Claimant’s damages estimates under various different theories of liability range anywhere from $US 45.7 million to €272.7 million in 2002 currency, not including relevant interest up to the present date.

268 Respondent’s Memorial on Jurisdiction, Part IV.A.

269 Ibid at paras 7-13.

270 Ibid at paras 8,9, & 11; Respondent’s Reply on Jurisdiction, paras 70-75.

271 Respondent’s Memorial on Jurisdiction, para 12; Respondent’s Reply on Jurisdiction, paras 54-69.

272 Respondent’s Reply on Jurisdiction, paras 5-17.

273 Ibid at paras 18-28.

274 Respondent’s Memorial on Jurisdiction, part IV.A.2.a); Respondent’s Reply on Jurisdiction, paras 47-50.

275 Respondent’s Memorial on Jurisdiction, part IV.A.2.b); Respondent’s Reply on Jurisdiction, paras 51-52.

276 Respondent’s Memorial on Jurisdiction, part IV.A.3.

277 Ibid. Argentina raised the Wintershall decision, which was issued after the parties’ jurisdictional submissions had already been made, on the first day of hearings. See Hearing Transcripts, day 1, pp. 148ff.

278 Respondent’s Memorial on Jurisdiction, paras 42-49.

279 Respondent’s Reply on Jurisdiction, Part II.A.2.

280 Claimant’s Memorial, part III.E.

281 Claimant’s Counter-Memorial on Jurisdiction, Point I.A.

282 Claimant’s Rejoinder on Jurisdiction, Point I.A.1.

283 Ibid at Point I.A.2.

284 Ibid at Point I.A.3.

285 Ibid at Point I.A.4.

286 Claimant’s Memorial on Jurisdiction, Point I.B.

287 Claimant’s Memorial, para 235.

288 Claimant’s Counter-Memorial on Jurisdiction, Point I.C.

289 Claimant’s Rejoinder on Jurisdiction, Point I.C. The Tribunal notes that this submission was lodged prior to the publication of the Wintershall decision, which found to the contrary.

290 Claimant’s Counter-Memorial on Jurisdiction, Point I.D.

291 Ibid at Point I.E.

292 Claimant’s Rejoinder on Jurisdiction, Point I.B.

293 Claimant’s Counter-Memorial on Jurisdiction, Point I.F. This argument is further developed in the Claimant’s Rejoinder on Jurisdiction, Point I.E.

294 Claimant’s Counter-Memorial on Jurisdiction, para 96.

295 Ibid at paras 97-102.

296 Ibid at para 104. See also ibid at para 107.

297 Ibid at para 105.

298 Claimant’s Rejoinder on Jurisdiction at Point I.D.

299 Claimant’s Counter-Memorial on Jurisdiction at para 105.

300 Ibid at paras 107-108.

301 Claimant’s Rejoinder on Jurisdiction, paras 62-69.

302 For an overview of the divided case law, see Julie A. Maupin, “MFN-based Jurisdiction in Investor-State Arbitration:

Is There Any Hope for a Consistent Approach?,” Journal of International Economic Law 14(1), 157-190 (March 2011).

303 It will be noted that portions of the analysis contained in this section overlap with the recently issued decision in ICS Inspection and Control Services Limited (United Kingdom) v. the Argentine Republic, PCA Case No. 2010-9 (UNCITRAL Rules), Award on Jurisdiction (10 February 2012) [hereinafter ICS v. Argentina]. This is because the two tribunals shared the same President, who presided over the drafting of the two awards during the same time period and elected not to burden the parties with duplicative drafting costs in respect of certain general points of law common to both cases.

304 For instance, in the Maffezini case, the investor was an Argentine citizen and the Host State was Spain, not the contrary. Maffezini, above note 114.

305 J. Paulsson, “Arbitration Without Privity,” (1995) ICSID Review – Foreign Investment Law Journal 232. See also A. El-Kosheri, “ICSID Arbitration and Developing Countries”, (1998) ICSID Review – Foreign Investment Law Journal 107.

306 The International Court, as far back as the PCIJ’s Wimbledon decision, has consistently emphasized that international treaties are exercises – and not abdications – of State sovereignty, and for this reason, the will of the contracting State parties must be respected:

“The Court declines to see in the conclusion of any Treaty by which a State undertakes to perform or refrain from performing a particular act an abandonment of its sovereignty. No doubt any convention creating an obligation of this kind places a restriction upon the exercise of the sovereign rights of the State, in the sense that it requires them to be exercised in a certain way. But the right of entering into international engagements is an attribute of State sovereignty.”

Case of the S.S. “Wimbledon”, Judgment of 17 August 1923, Permanent Court of International Justice, Ser. A, no. 1, p. 16, 25.

307 de Visscher, Charles, Theory and Reality in Public International Law (revised ed.), translated from the French by Corbett, P.E., (New Jersey, Princeton, 1968), p. 395.

308 Ibid at p. 396. It should be noted that the teleological method of interpretation was also soundly rejected by the International Law Commission in its drafting work concerning the law of treaties, which eventually culminated in the text of the 1969 Vienna Convention on the Law of Treaties. See ILC Commentary on Draft Article 27 of the law of treaties, Yearbook of the International Law Commission, 1966, Vol. II, Reports of the Commission to the General Assembly [hereinafter “ILC Commentary on Draft Articles on the Law of Treaties”], at pp. 220ff.

309 Renta4 S.V.S.A. v The Russian Federation, Arbitration Institute of the Stockholm Chamber of Commerce, Award on Preliminary Objections to Jurisdiction (20 Mar 2009) [hereinafter “Renta4”], para 93 (emphasis added).

310 Even in the case of customary international law, it can be argued that consent, or at least the consent of a majority of the world’s states, underlies all of the norms reflected in customary international law. Without such consent (as demonstrated by the combination of a sufficiently broad, lasting and consistent state practice and supported by opinio juris), those norms would not have evolved into customary law in the first place. The Dissenting Opinion correctly points out that the consent underlying customary international law is of an implied and not express nature. It stresses that “established rules of customary international law can bind States that never granted, explicitly or otherwise, consent to individual acts of the type that gave rise to the principles in question.” (Dissenting Opinion of Charles N. Brower at note 8). Yet the existence of the persistent objector doctrine – which allows states not in agreement with an evolving customary norm to avoid becoming legally bound by it – demonstrates that consent is nevertheless fundamental to customary international law. The only major exception to the foundational nature of state consent within public international law arises in the context of peremptory norms, among which a state’s submission to the jurisdiction of an international arbitral tribunal cannot be counted.

311 Whether or not these articles reflected customary international law at the time of their drafting is of course open to debate. Even so, most scholars would concede that they have by now attained customary law status.

312 See eg Inter Aguas, above note 113 at para 59 (“the Tribunal finds no reason for interpreting the most-favored-nation treatment clause any differently from any other clause in the Argentina-Spain BIT”) and para 64 (“dispute resolution provisions are subject to interpretation like any other provisions of a treaty, neither more restrictive nor more liberal”). An identically composed tribunal made nearly identical statements in a joint award concerning two closely related matters in AWG, above note 113 at paras 59-60. Further examples of such statements can be found in: Siemens, above note 71 at para 81; and Renta4, above note 309, Separate Opinion of Charles N. Brower at paras 7-9.

313 Amco Asia Corporation v. Indonesia (Jurisdiction), 1 ICSID Reports 389 (1983), Award of 25 Sept. 1983 (B. Goldman, I. Foighel and E. Rubin, arbs), reprinted in 22 I.L.M. 351, 359 [1983] (emphasis in original) [hereinafter “Amco I ”].

314 Mondev, above note 250 at para 43 (citing Amco I, ibid, at p. 394 of ICSID Reports); and Ethyl Corporation v. Canada, UNCITRAL/NAFTA, Award on Jurisdiction (24 June 1998) [hereinafter Ethyl], at para. 55.

315 Oil Platforms (Islamic Republic of Iran v. United States of America), Preliminary Objections, I.C.J. Reports 1996, p. 857, para 35. It is important to note, however, that Judge Higgins was not specifically addressing whether compromissory clauses should be read more narrowly than other treaty clauses. Rather, she was arguing that the Court should make its jurisdictional findings in the same manner as its findings on the merits – namely, on a definitive (as opposed to provisional) basis.

316 Articles 11-15, 17.

317 ILC Commentary on Draft Articles on the Law of Treaties, above note 308 at p. 221. The Dissenting Opinion adds, and the Tribunal agrees, that the good faith principle is also “meant to encapsulate well-established principles such as effet utile, honesty, fairness and reasonableness in interpreting a treaty, protection of legitimate expectations [those of the Contracting State Parties, that is, and] avoidance of abuse of rights” (Dissenting Opinion of Charles N. Brower at para 7).

318 Status of Eastern Carelia Case, Advisory Opinion, (1923) P.C.I.J. Series B. No. 5, p. 27.

319 Ambatielos case (merits: obligation to arbitrate), Judgment of May 19th, 1953: I.C.J. Reports 1953, p. 10, 19 [hereinafter “Ambatielos /”].

320 Case of the monetary gold removed from Rome in 1943, Preliminary Question, Judgment of June 15th, 1954, I.C.J. Reports 1954, p. 19, 32.

321 See Rights of Minorities in Upper Silesia (Minority Schools), Judgment, 1928 PCIJ (ser. A) No. 15 (26 April), p. 24, stating:

“[T]here seems to be no doubt that the consent of a State to the submission of a dispute to the Court may not only result from an express declaration, but may also be inferred from acts conclusively establishing it.” (Emphasis added.) Note 34 of the Dissenting Opinion cites this passage with approval. The Tribunal notes that the Noble Energy decision, also cited in note 34 of the Dissenting Opinion, is not to the contrary, finding as it did that “consent is manifest from a number of elements which the Tribunal will review … ”. NobleEnergy, Inc. and Machala Power Cia Ltd. v. Ecuador and Consejo Nacional de Electricidad, ICSID Case No ARB/05/12, Decision on Jurisdiction (5 May 2008), para 194 (emphasis added).

322 Case of the S.S. Lotus, P.C.I.J. Series A. No. 10 (7 Sep 1927), p. 18.

323 Case concerning the Aerial Incident of July 27th, 1955 (Israel v. Bulgaria), Preliminary Objections, Judgment of May 26th, 1959: I.C.J. Reports 1959, p. 127, at 142.

324 East Timor (Portugal v. Australia), Judgment, I.C.J. Reports 1995, p. 90, at 102, para 29.

325 The Dissenting Opinion attempts to draw a neat dividing line between the establishment of consent to be bound by a specific dispute resolution mechanism and the scope of that consent, suggesting that the former can be founded on purely “formal indicia” such as the fact of signature and ratification of a treaty, while the latter is a matter of textual interpretation (Dissenting Opinion at n. 15). This distinction is a red herring. If the interpretive analysis reveals that the scope of Argentina’s consent to submit to the jurisdiction of an international arbitral tribunal does not extend to the matter at hand, it is difficult to understand in what sense the State’s consent to submit to that jurisdiction will have nevertheless been “established” on the basis of the State’s mere signature and ratification of the Treaty. The relevant question is not whether the Treaty was ratified – which it was – but what precisely the States consented to in ratifying the Treaty. See e.g. Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v. France), Judgment, I.C.J. Reports 2008, p. 177, at paras 65ff (finding it necessary to determine the “extent of the consent given by the Parties to the Court’s jurisdiction”).

326 This appears to have been done by the United Kingdom in some of its BITs. See eg Article 3(3) of the Agreement Be-tween the United Kingdom of Great Britain and Northern Ireland and Bosnia and Herzegovina for the Promotion and Protection of Investments, signed 2 Oct 2002, which stipulates:

“For the avoidance of doubt it is confirmed that the treatment provided for in paragraphs (1) and (2) above [MFN treatment] shall apply to the provisions of Articles 1 to 11 of this Agreement.”

327 Vienna Convention on the Law of Treaties, art. 31(1).

328 Vienna Convention on the Law of Treaties, art. 32.

329 Disputing Parties’ agreed English translation of the German-Argentine BIT (emphasis added).

330 Wintershall Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14, Award (8 Dec 2008) [hereinafter “wintershall”], para 119 (emphasis in original).

331 See ibid at paras 121-122.

332 SGS v. Pakistan, above note 69 at para 184 (quoted in Claimant’s Counter-Memorial on Jurisdiction, para 101).

333 Claimant’s Counter-Memorial on Jurisdiction, paras 98-102.

334 Ibid at para 104.

335 Ibid.

336 SGS v. Pakistan, above note 69 at para 107.

337 See e.g. Ronald S. Lauder v. Czech Republic, UNCITRAL, Final Award (3 Sep 2001), paras 187-91 (waiving waiting period “in the circumstances of this case“ because the respondent had failed to accept the claimant’s invitation to enter into negotiations and had in fact not responded in any manner to the claimant’s original notice of dispute prior to the filing of the request for arbitration); Bayinder Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction (14 Nov 2005), paras 97-102 (finding government had sufficient actual notice of the dispute and numerous opportunities to engage in negotiations, which it declined to do); Link-Trading Joint Stock Company v. Moldova, UNCITRAL, Award on Jurisdiction (16 Feb 2001), pp. 5-6 (noting respondent’s refusal to respond to claimant’s complaints and fact that more than a year had passed since registration of arbitration without any settlement); Ethyl, above note 314 at paras 84-85 (evidence suggested no negotiations were possible and no purpose would be served by requiring claimant to wait, since 6-month waiting period had in any event lapsed in the meantime); Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on Jurisdiction (29 June 1999), 41 ILM 881, 885-86 (2002) (respondent had, in any event, withdrawn the objection as to the 3-month waiting period on the grounds that it could have been easily rectified).

338 See generally ibid.

339 Enron Corporation and Ponderosa Assets L.P. v. The Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction, (14 Jan 2004), para 88. At least two other ICSID tribunals have recently taken a similar position. See Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/ 08/5, Decision on Jurisdiction (2 June 2010), paras 310-318; and Murphy Exploration and Production Company International v. Republic of Ecuador, ICSID Case No. ARB/08/4, Award on Jurisdiction (15 December 2010), paras 140-157.

340 Professor Schreuer, upon whom the Claimant also relies, concludes:

“It would seem that the decisive question is whether or not there was a promising opportunity for a settlement. There is little point in declining jurisdiction and sending the parties back to the negotiating table if negotiations are obviously futile. Negotiations remain possible while the arbitration proceedings are pending. Even if the institution of arbitration was premature, the waiting period will often have expired by the time a decision on jurisdiction is rendered. Under these circumstances, compelling the claimant to start the proceedings anew would be uneconomical. A better way to deal with noncompliance with a waiting period is a suspension of proceedings to allow additional time for negotiations if these appear promising.”

Schreuer – 2009, above n. 92 at p. 239.

341 As should be evident from this analysis, the Tribunal agrees with Judge Brower’s objection, in para 14 of his Dissenting Opinion, that the analogy between the 18-months proviso and “cooling-off” or “good faith negotiation” periods is not an apt one. The Tribunal nevertheless finds it necessary to discuss this analogy because the Claimant has specifically raised it in its pleadings.

342 Expert Opinion of Javier Errecondo dated 4 June 2008 (submitted with Claimant’s Rejoinder on Jurisdiction); Claimant’s Rejoinder on Jurisdiction, paras 65-80.

343 Respondent’s evidentiary submissions A RA 20 (“Judgments of the Argentine Supreme Court”) and A RA 22 (“Final Judgments”), both submitted with the Respondent’s Reply Memorial on Jurisdiction.

344 If the ability to reach a final decision within 18 months were the relevant metric, then the present Tribunal would be forced to declare its own proceedings futile, along with the proceedings of the vast majority of investor-State arbitration tribunals. See below at n. 430 (noting the average length of proceedings in ICSID cases).

345 The recent Hochtief award makes much of the fact that Article 10(2) of the German-Argentine BIT allows either disputing party to “request“ that the dispute be referred to the domestic courts. The suggestion seems to be that Argentina’s failure to institute proceedings against the claimant in its domestic courts constituted a waiver of its right to subsequently invoke the BIT’s 18-month proviso. See Hochtief AG v. The Argentine Republic, ICSID Case No. ARB/07/31, Decision on Jurisdiction (24 October 2011) [hereinafter Hochtief – Majority Opinion], paras 35-37, 89. This argument overlooks the fact that Argentina most likely lacked a cause of action with which to seize its domestic courts. In the context of a treaty-based investor-State dispute, it is the claimant, and not the respondent, whose treaty rights have allegedly been violated. Thus, the only practicable way for Argentina to “request” a referral to the domestic courts is to exercise its right to insist that the claimant satisfy the BIT’s 18-month proviso before instituting arbitral proceedings. If Argentina had wished to waive its right to object to the arbitral tribunal’s jurisdiction on these grounds, it could have done so in terms of Article 10(3)(b) of the BIT.

346 Such is the case with the doctrines of ripeness, forum non conveniens, etc.

347 Wintershall, above note 330 at p. 99, para 160(2) (parenthetical in original).

348 See in this regard Case Concerning Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v. Russian Federation), Preliminary Objections (Decision of 1 April 2011), available at: http://www.icj-cij.org/docket/files/140/16398.pdf, at paras 115-184 (finding that the relevant treaty’s requirement of good faith negotiations between the parties constituted a procedural condition for the seisin of the Court and further finding that the Court had no jurisdiction because this precondition had not been met).

349 Plama v. Republic of Bulgaria, Decision on Jurisdiction (8 Feb 2005), ICSID Case No. ARB/03/24 [hereinafter “Plama”], para 224.

350 Respondent’s Reply on Jurisdiction, para 54.

351 Ibid at para 55.

352 It may be argued that such a policy would be akin to placing a tax on certain nationalities of foreign investors for the purposes of developing the Argentine judicial system. This may well be so. But this does not change the fact that the development of a Host State’s judiciary cannot be assailed as an illegitimate or arbitrary – let alone nonsensical – policy goal. Instead, the decision to saddle only particular groups of foreign investors with the costs of that development would clearly be discriminatory and therefore compensable under the BIT to the extent that these costs exceed the costs of otherwise directly available investor-State arbitration under other BITs. The Tribunal will return to this issue below.

353 Nor can the subjugation of a sovereign State to the jurisdiction of an international arbitral tribunal be said to constitute a peremptory norm of international law.

354 The imprudence of engaging in debates as to the desirability of particular treaty provisions within the context of international arbitral deliberations was neatly demonstrated in the recent Hochtief matter. There, the majority found the procedure prescribed in Articles 10(2)-(3) of the German-Argentine BIT to be “pointless” and of “no necessary benefit”, while the dissent was able to point out several sensible justifications for the 18-month proviso. Contrast Hochtief – Majority Opinion, above note 345, paras 51 & 87-88 with the Separate and Dissenting Opinion of J. Christopher Thomas, Q.C., paras 4-10.

355 This in no way implies that the word “shall’ in Article 10 of the BIT somehow trumps the word ‘shall’ in Article 3 [one of the MFN clauses] of the same treaty.” (Dissenting Opinion of Charles N. Brower at para 13.) First, the Tribunal’s underscoring of the word “unless” stresses that the MFN clause may well provide the Tribunal with jurisdiction to hear the case. The Award’s separate analysis of both Article 10 (the dispute resolution clause) and Articles 3 and 4 (the MFN clauses) as independent potential bases for the Tribunal’s jurisdiction evinces no “trump” of one type of clause over the other. Second, the word “shall” in the context of the MFN clauses relates to Argentina’s obligation to provide protected German investors and investments with treatment, in the territory of the Host State, which is no less favorable than the treatment provided to investors and investments from other countries. Argentina’s obligation to observe this commitment toward German investors and investments (an obligatory “shall”) remains in force irrespective of whether or not a particular German claimant fulfills the necessary conditions precedent to institute an international arbitration proceeding against Argentina under Article 10. Thus, both “shalls” retain their obligatory character within their respective spheres of operation.

356 Anglo-Iranian Oil Co. case (jurisdiction), Judgment of July 22nd, 1952: I.C.J. Reports 1952, p. 93.

357 Ibid p. 108.

358 Ibid p. 108. The 1857 Treaty appears to have related to consular protection, while the 1903 Treaty was a “Commercial Convention.” Both parties accepted that the Government of Iran was legally bound by the treaties in question as the legal successor to Persia under international law.

359 The important point to note here is that – just as in the proceedings before the present Tribunal – the ICJ would have had jurisdiction over disputes arising out of the comparator treaty but did not have jurisdiction over disputes arising out of the basic treaties. It was for this reason that the basic treaty’s MFN clause could not be invoked.

360 Ibid p. 109 (emphasis added).

361 The core problem in Anglo-Iranian was one of ratione temporis. That is, the ICJ did not have jurisdiction over disputes arising out of the two pre-1932 basic treaties because Iran’s declaration was limited to disputes arising out of its post-1932 treaties. The ratione temporis problem in the present arbitration differs in that the present Respondent chose to tie its prospective consent to the Tribunal’s jurisdiction not to a specific date (as was done in Anglo-Iranian) but rather to the satisfaction of a time-bound condition precedent to arbitration. This difference in form does not, however, give the present Tribunal license to disregard the temporal constraint laid down by the Contracting State Parties to the German-Argentine BIT. The principle illustrated by the Anglo-Iranian Oil case remains apposite. Namely, a tribunal must have jurisdiction under the basic treaty in order for a claimant to invoke the MFN clause of that treaty and thereby reach the more favorable provisions of a comparator treaty.

362 The English translation of the article reads: (1) Investments by nationals or companies of a Contracting Party shall enjoy full legal protection and security in the territory of the other Contracting Party. (2) Investments by nationals or companies of a Contracting Party may not be expropriated, nationalized, or subjected to any other measure the effects of which would be tantamount to expropriation or nationalization in the territory of the other Contracting Party except for the public benefit and against compensation. Such compensation shall be equivalent to the market value of the expropriated investment before the date on which the actual or threatened expropriation, nationalization, or comparable measure has become publicly known. The compensation shall be paid immediately and shall carry interest at a normal commercial rate until the time of payment; it shall be effectively realizable and freely transferable. The legality of any such expropriation, nationalization, or comparable measure and the amount of compensation shall be subject to review by due process of law. (3) Nationals or companies of either Contracting Party whose investments suffer losses in the territory of the other Contracting Party owing to war or other armed conflict, revolution, state of national emergency, or revolt, shall not be accorded treatment less favorable by such other Contracting Party than that which the latter Contracting Party accords to its own nationals and companies as regards restitution, indemnification, compensation, or other consideration. Such payments shall be freely transferable. (4) Nationals or companies of a Contracting Party shall enjoy most-favored-nation treatment in the territory of the other Contracting Party in respect of the matters provided for in this Article.

363 Ambatielos Claim (Greece, United Kingdom of Great Britain and Northern Island), decision of the Commission of Arbitration (6 March 1956), United Nations Reports of International Arbitral Awards, Vol. XII p. 83 [hereinafter “Ambatielos II” to distinguish it from the ICJ matter (Ambatielos I), in which the Court upheld the UK’s agreement to arbitrate with Greece], at p. 107.

364 Draft Articles on Most-Favoured-Nation Clauses, with Commentaries, text adopted by the International Law Commission at its thirtieth session, Yearbook of the International Law Commission, 1978, vol. II, Part Two [hereinafter “ILC Commentary on Draft MFN Articles”], at p. 27.

365 Ibid.

366 Ibid at p. 30, paras 10-11 (internal citations omitted).

367 The dispute resolution provisions of the invoked Comparator BIT are set forth in note 427 below.

368 The Tribunal notes that the ejusdem generis rule does not require the overall subject matter of the basic and comparator treaties to be identical, but only the subject matter of the invoked clauses of the basic and the comparator treaties. As the ILC Commentary notes:

“It is also not proper to say that the treaty or agreement including the clause must be of the same category (ejusdem generis) as that of the benefits that are claimed under the clause. To hold otherwise would seriously diminish the value of a most-favoured-nation clause.”

ILC Commentary on Draft MFN Articles above note 364 at p. 30, para 12 (emphasis in original).

369 Ibid at p. 30, para 11. An interpreter can require no more than a substantial identity between the subject matters of the two clauses. For if the complete identity between the clauses were required, there would be no need to invoke the MFN clause in the first place.

370 As to the connection between the subject matter of the overall treaties and the subject matter of the specific clauses in relation to which MFN treatment is invoked, the Arbitral Commission in the Ambatielos II matter observed more than 50 years ago:

“It is true that ‘the administration of justice,” when viewed in isolation, is a subject-matter other than ‘commerce and navigation,” but this is not necessarily so when it is viewed in connection with the protection of the rights of traders. Protection of the rights of traders naturally finds a place among the matters dealt with by Treaties of commerce and navigation.

Therefore it cannot be said that the administration of justice, in so far as it is concerned with the protection of these rights, must necessarily be excluded from the field of application of the most-favoured-nation clause, when the latter includes ‘all matters relating to commerce and navigation’. The question can only be determined in accordance with the intention of the Contracting Parties as deduced from a reasonable interpretation of the Treaty.”370

The same logic prevails here, although there are some important differences between the Ambatielos matter (which involved the domestic administration of justice) and the present one (which involves international dispute settlement).

371 Ambatielos II, above note 363 at p. 107.

372 ILC Commentary on Draft MFN Articles, above note 364 at p. 30, para 11.

373 “Treatment” is used in arts 1(1), 2(l)-(4), 4(3)-(4), 7(1), and Protocol para (2)(a).

374 InterAguas, above note 113 at para 55.

375 Siemens, above note 71 at para 85.

376 There appears to be broad consensus among the community of scholars, as well as between the disputing parties in this case, that the term “treatment“ in treaties relating to international trade, investment, and commerce generally encompasses most, if not all, of the so-called substantive protections of such treaties. In the case of BITs, this would typically comprise guarantees relating to expropriation, fair and equitable treatment, etc – provided, of course, that the MFN clause in question does not itself indicate limits to its subject matter scope. The question at hand, however, is whether the term treatment as used in MFN clauses, or more precisely the German-Argentine BIT’s MFN clauses, also extends to its international dispute resolution provisions.

377 See, in this regard, the comments of the Renta4 tribunal, above note 309 at paras 88-101, and especially its conclusion in para 101, stating: “Rights and obligations may be classified as substantive or jurisdictional or procedural. Such classifications are not watertight and in any event primarily of pedagogical use.”

378 In this respect, the Tribunal agrees with the Dissenting Opinion’s position that “it is difficult to imagine a more fundamental aspect of an investor’s ‘treatment’ by a host Government than that investor’s ability to exercise and defend its legal rights by prompt access to dispute settlement mechanisms, and fair and efficient administration of justice.” Dissenting Opinion of Charles N. Brower at para 20. This uncontroversial observation does not however imply an automatic entitlement to initiate international dispute settlement against a State.

379 AAPL v. Sri Lanka, above note 114.

380 Fouchard, Gaillard, Goldmann, On International Commercial Arbitration, Kluwer Law Int’l (1999), 197-217; S. Schwebel, International Arbitration: Three Salient Problems, 2 (1987); P. Sanders, “L’autonomie de la clause compromissoire,” in Hommage à Frédéric Eisemann 32 (1978); C.M. Svernlöv, The Current Status of the Doctrine of Separability, Journal of International Arbitration, 1991, Vol. 8, N° 4, 37-50.

381 World Bank, Guidelines on the Treatment of Foreign Direct Investment (1992) [hereinafter “World Bank Guidelines”], available at; http://ita.law.uvic.ca/documents/WorldBank.pdf.

382 World Bank Guidelines, above note 381, Part III.2.

383 Ibid at Part 111.3(a).

384 Ibid.

385 Ibid at Part III.3.(b).

386 Ibid at Part 111.5(a).

387 Ibid at Part 111.5(b).

388 Including salaries earned by foreign personnel, debt payments related to the investment, liquidation proceeds of the investment, and any amounts paid to the investment by reason of the Host State’s expropriation of or other interference with the rights of the investment. Ibid at Part III.6.1(a)-(e).

389 Ibid at Part III.7.

390 Ibid at Part III.8.

391 The Dissenting Opinion points out that the concept of fair and equitable treatment “includes proper and timely access to dispute settlement, as well as observance of judicial and administrative due process. Relatedly, there is no doubt that under customary international law as well as modern investor-State jurisprudence denial of justice is closely linked to, if not a part of, the fair and equitable treatment requirement.” (Dissenting Opinion of Charles N. Brower at para 20.) The Tribunal agrees. Yet this does not alter the fact that these concepts, along with all of the case law to which the Dissenting Opinion points in its footnotes 59-60, concern States’ obligations in carrying out the domestic administration of justice. There is no basis for asserting that the inability of a claimant to proceed directly to international arbitration against a State constitutes a denial of justice, or that the 18-months proviso somehow prevents claimants from obtaining proper and timely access to dispute settlement or otherwise violates Argentina’s duty to observe judicial and administrative due process.

392 In a most classical way, Section V of the Guidelines provides for the possible resolution of investment disputes either by recourse to national courts or to “the agreed mechanisms including conciliation and binding independent arbitration”, the latter including “any ad hoc or institutional arbitration agreed upon in writing by the State and the investor or between the State and the investor’s home State where the majority of the arbitrators are not solely appointed by one party to the dispute”.

393 The Dissenting Opinion suggests that, because the overall document title is “World Bank Guidelines on the Treatment of Foreign Direct Investment,” this somehow implies that each and every topic discussed within the Guidelines constitutes a type of “treatment”. This suggestion is puzzling. A document’s title cannot function as more than a summary of its general topic, let alone an exhaustive statement of its entire contents. Shakespeare’s Hamlet, for example, contains many passages which do not directly refer to the fictional person in question.

394 The English translation of Article 4(4), as prepared by the disputing parties, faithfully conveys the territorial limitation of the original languages, translating the German (“genießen … im Hoheitsgebiet der anderen Vertragspartei Meistbegünstigung”) and Spanish (“gozorán en el territorio de la otra Parte Contratante del trato de la nación más favorecida”) as “shall enjoy most-favored-nation treatment in the territory of the other Contracting Party”. In Articles 3(1) and 3(2), however, the disputing parties' English translation misconstrues the qualifier “in its territory” by attaching it to the word “investments” rather than to the word “treatment”. The mistake is perhaps understandable, as the translation was prepared primarily from the German original, which – because of the highly complex sentence structure of the German language – arguably renders the intended reference point of the phrase “in its territory” uncertain. By contrast, Articles 3(1) and 3(2) of the Spanish text both clearly attach the phrase “in its territory” to the word “treatment”. Since the final sentence of the BIT states that both the Spanish and German versions of the text are equally “binding” or “authentic”, this minor inconsistency is easily resolved by Article 33(3) of that Vienna Convention, according to which the terms of a treaty are presumed to have the same meaning in each authentic text. In case of difference, Article 33(4) directs that the meaning which “best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted.” Applying these rules to the present discrepancy: since the Spanish text is clear as to the proper placement of the qualifier “in its territory” while the German text leaves the question open, the interpretation given by the Spanish text must be preferred.

395 The sole exception is the MFN clause in the Belgium/Luxembourg-Soviet BIT discussed in Vladimir Berschader and Moise Bershcader v. The Russian Federation, Case No. 080/ 2004, Arbitration Institute of the Stockholm Chamber of Commerce, Award (21 April 2006) [hereinafter “Berschader”] (Todd Weiler dissenting). That BIT states rather generically that “the most favoured nation clause shall be applied to investors of the other Contracting Party in all matters covered by the present Treaty ”, without bothering to define the content of “the most-favoured nation clause“ so referenced. However, given that the words “in its territory” have been consistently included in nearly all other BITs’ MFN clauses, it seems at least likely that the BelgoLux-Soviet BIT’s reference to “the MFN clause” also implicitly incorporates this phrase.

396 Despite its professed affinity for the Roman law maxim expressie unius est exclusio alterius, the Dissenting Opinion overlooks this problem with the Claimant’s proposed interpretation of the MFN clauses.

397 The Ambatielos dispute provides a classic example of a case falling squarely within the bounds of the traditional territorial limitation on the operation of MFN clauses. In Ambatielos, Greece invoked an MFN clause in order to obtain for its national a type of treatment in the domestic courts of the Host State (the UK) which the UK had accorded by treaty to the nationals of certain third states and which Greece alleged to be more favorable than the treatment accorded to Greek nationals within the UK’s domestic courts.

398 Under a State responsibility analysis, there is no doubt that a number of principles of treatment – including in particular the non-discrimination and fair and equitable treatment principles – bind Host States not only during the period of the carrying out of the investment but also after it, if and when the occasion for dispute resolution arises. This much is certain at least in so far as the adjudicative bodies engaged in this dispute resolution are acting at the national level. In other words, a State must be held responsible for any breach of the rules of treatment binding upon it which has been committed by any of its organs, including its national courts when acting at the “procedural” stage. If, knowing of the investor’s claim, a national court ignores one of the rules of treatment binding upon the Host State, it will create a situation giving rise to the international responsibility of that State toward the other State party to the BIT. Within the framework of a treaty claim under a BIT, this implies that the Host State also becomes directly internationally responsible toward the foreign investor having the nationality of the other State.

399 Article 4 states: “the conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions … ” (emphasis added).

400 The present Claimant has not alleged that it would receive less favorable treatment than other foreign investors within the Argentine courts.

401 Indeed, many international treaties are concluded in locations lying outside of the territory of both of the contracting state parties. They are not, for this reason, any less binding, nor is their territorial application altered by the place of their conclusion.

402 The Maffezini tribunal appears to have erred in this respect when it cited Spain’s practice of pursuing direct access to international arbitration for Spanish investors abroad as evidence of its intent to allow direct access to international arbitration for foreign investors in Spain (in circumvention of the basic BIT’s clear 18-month domestic remedies requirement). Whatever may have been Spain’s practices in soliciting protections for its own investors abroad, those were activities which occurred outside the territory of Spain, and thus could not possibly run afoul of either the MFN standard or the national treatment standard. In the BIT that was under consideration in Maffezini, both of those standards contained the usual limiting territorial phrase. See Maffezini, above note 114 at paras 61 and 64.

403 For the same reason, the Tribunal cannot accept the Hochtief majority’s recent characterization of Argentina’s decision to invoke the Treaty’s 18-months proviso as an act taking place within the territory of Argentina. (See Hochtief – Majority Opinion, above note 345, paras 107, 111.) If sovereign states are free to conclude international treaty provisions amongst themselves, then surely they are entitled to rely upon those treaty provisions without this reliance itself constituting a treaty-violating or treaty-altering type of “treatment“ of third party beneficiaries. The Hochtief tribunal posited an alternative ground for finding that the German-Argentine BIT’s territorial limitation was satisfied – namely, because the consequences or effects of the domestic courts proviso would be felt by the claimant within Argentina.

403 This argument, though more subtle, is equally misplaced. One can conceive of myriad international agreements whose provisions may impact upon investors operating within the territorial boundaries of Argentina. Examples include treaties addressing climate change, intellectual property rights, financial regulation, competition policy, human rights, peace and security, and countless other topics. Argentina’s negotiation of and adherence to such treaties would not automatically constitute direct “treatment“ of foreign investors by Argentina within its territory merely because they generate some effects which are felt within Argentina.

404 Article 1(1) of the Treaty provides:

“The term ‘investment’ shall include any kind of investment in accordance with the laws of the Contracting Party in whose territory the investment is made in accordance with this Treaty, in particular, but not limited to:

  • moveable and immoveable property and any other property rights such as mortgages and liens;

  • shares or stock in a company or any other form of participation in a company;

  • claims to money which has been used to create an economic value or claims to any performance hailing an economic value;

  • intellectual property rights, in particular copyrights, patents, utility patent models, industrial designs or models, trade or service marks, trade names, trade or business secrets, technical processes, know-how, or goodwill;

  • business concessions under public law, including concessions to search for or exploit natural resources”.

405 Paragraph 2 of the Protocol, reproduced in para 208 above, is careful to emphasize that its broad definition of “activity” is illustrative and not exclusive.

406 The Renta4 tribunal articulated it well:

“Whether MFN treatment is stated in the relevant BIT to relate to investors rather than investments is in principle of no moment. Investors will not claim access to international arbitration by way of MFN treatment in the abstract. They will assert a breach and harm in connection with a qualifying investment under the relevant BIT.”

Renta4, above note 309 at para 101.

407 Examples might include rights to health care, education, pension schemes, or even the right to vote in political elections.

408 For this reason the Tribunal finds it unnecessary to parse the meaning of Article (2)(a) of the BIT’s Protocol. The Tribunal agrees that, “[t]aken in their ordinary meaning, the ‘management use, enjoyment, and disposal of an investment’ necessarily entail the defense and exercise of legal rights via dispute settlement mechanisms” (Dissenting Opinion of Charles N. Brower at para 22). This explains why the MFN clauses must be read as guaranteeing most-favored nation treatment to German investors in respect of Argentina’s domestic administration of justice. But the Protocol nowhere authorizes the Tribunal to jettison the MFN clauses’ clear territorial limitation.

409 This was in particular the view of the Wintershall tribunal, which addressed the interpretation of the very same BIT that is at issue here. See Wintershall, above note 330 at para 172.

410 Maffezini, above note 114 at para 60. See also Gas Natural, above note 113 at para 30; Inter Aguas, above note 113 at para 55. Indeed, even before Maffezini, the arbitral commission in the Ambatielos matter seemed to suggest that this type of phrase might be particularly significant. See Ambatielos II, above note 363at p. 107.

411 See Berschader, above note 395 at paras 184-194.

412 Plama, above note 349 at para 205;

413 Siemens, above note 71 at para 103.

414 See National Grid, above note 113 and Roslnvest v. The Russian Federation, Case No: Arbitration V 079/2005 Arbitration Institute of the Stockholm Chamber of Commerce, Award on Jurisdiction (Oct 2007) [hereinafter “Roslnvest”].

415 See eg National Grid, above note 113 at para 82. See also Inter Aguas, above note 113 at para 56 (applying the principle without naming it); and Siemens, above note 71 at paras 83-86 (same).

416 See Articles 3(3) and 3(4) of the BIT, reproduced in para 206 above.

417 The Dissenting Opinion attempts to explain away this fact, stating: “the Award neglects to mention that most if not all species of allegedly ‘direct’ treatment enumerated as exceptions to MFN treatment in the BIT entail specific mechanisms of dispute settlement, usually outside the territory of the host State” (Dissenting Opinion of Charles N. Brower at para 35). This argument amounts to a sleight of hand, since all of the examples cited by the Dissenting Opinion involve State-to-State international dispute resolution, not investor versus State. There would have been no need for the Contracting State Parties to specify that the BIT’s MFN clauses could not be invoked by investors to reach the State-to-State international dispute resolution provisions of these other treaties. Investors may not initiate such proceedings in any event. It must further be noted that at the time of the conclusion of the German-Argentine BIT, there were no known examples of regional trade agreements containing investor-State dispute settlement provisions. The first such hybrid agreement – the North American Free Trade Agreement – was signed by Canada, the United States and Mexico in 1992 and went into force in 1994. (See generally the materials available at: http://www.ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta). And even the Maffezini tribunal disavowed the invocation of a BIT-based MFN clause to reach the international investor-State dispute settlement provisions of that “highly institutionalized system of arbitration.” (Maffezini, above note 114 at para 63.)

418 The Tribunal addresses this issue in paras 262-279 below (discussing the relevance of prior and subsequent treaty practice).

419 Maffezini, above note 114 and Siemens, above note 71. A variation on this approach was employed by the Renta4 majority, which suggested that since investors rationally believe international arbitration may be more favorable to them than domestic dispute resolution, this necessarily renders “greater access” to international arbitration more favorable. Renta4, above note 309 at paras 86 and 100.

420 See eg Gas Natural, above note 113 at para 31 (“access to [international] arbitration only after resort to national courts and an eighteen-month waiting period is a less favorable degree of protection than access to arbitration immediately upon expiration of the negotiation period”).

421 Inter Aguas, above note 113 at para 55 (emphasis added). See also A WG, above note 113 at para 55 (same quote, but referring to investments rather than investors).

422 ILC Commentary on Draft MFN Articles, above note 364 at p. 22, para 5.

423 Ibid.

424 Ibid.

425 The arbitral commission’s decision in Ambatielos provides a classic example. In that decision, the tribunal undertook a searching comparative analysis of the basic and comparator treaties’ provisions on the administration of justice. It eventually found that the comparator treaties’ provisions were not actually more favorable, and therefore the MFN clause did not apply to the matter before it. Ambatielos II, above note 363 at pp. 107-110. Despite frequently citing to the decision and lauding its finding that dispute resolution provisions may potentially fall within the reach of an MFN clause, many recent investor-State arbitral tribunals seem to have overlooked this crucial aspect of the commission’s approach.

426 As noted by one commentary, “it would be invidious for international tribunals to be finding (in the absence of specific evidence) that Host State adjudication of treaty rights was necessarily inferior to international arbitration.” McLachlan, AA, Shore, AA and Weininger, AA, International Investment Arbitration, Substantive Principles (Oxford University Press, 2008), p. 257.

427 Article X of the Chile-Argentina BIT, titled “Settlement of disputes relating to investments”, provides as follows:

  • “Any dispute relating to an investment within the meaning of the present Treaty, between one Contracting Party and a national or company of the other Contracting Party, shall, to the extent possible, be resolved by amicable consultations between the parties to the dispute.

  • If the dispute has not been resolved within a period of six months from the moment when a complaint was lodged by one or other of the parties, it shall be submitted at the option of the national or company:

    -either to the national jurisdiction of the Contracting Party implicated in the dispute;

    -or to international arbitration in the conditions described in paragraph 3. Once a national or company has submitted the dispute to the jurisdiction of the relevant Contracting Party or to international arbitration, this election of one or the other of these proceedings shall be definitive.

  • In case of recourse to international arbitration the dispute shall be raised before one of the following designated arbitral organs at the election of the national or company:

    -The International Centre for Settlement of Investment Disputes (ICSID), created by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature in Washington the 18th of March 1965, if each State party to the present agreement has ratified that Convention. So long as this condition is not fulfilled, each Contracting Party gives its consent that the dispute may be submitted to arbitration in accordance with the Additional Facility Rules of ICSID;

    -An ad hoc arbitral tribunal established in accordance with the rules of the United Nations Commission on International Trade Law (UNCITRAL).

  • The arbitral tribunal shall decide on the basis of the provisions of the present Treaty, the law of the Contracting Party to the dispute, including its rules on conflict of laws, and the terms of any specific agreement concluded in relation to the investment as well as the relevant principles of international law.

  • The decisions of the arbitral tribunal shall be definitive and binding upon the parties to the dispute.

  • The Contracting Parties shall abstain from pursuing, through diplomatic channels, arguments concerning any arbitration or judicial process in progress and up until after the proceedings have been concluded, unless the parties to the dispute have not complied with the award of the arbitral tribunal or the sentence of the ordinary court under the terms of implementation established in the award or sentence.”

(Tribunal’s translation).

428 See Article X(2) of the Chile-Argentina BIT ibid. The Tribunal notes that the both of the other comparator BITs invoked by the Claimant contain similar fork-in-the-road clauses. See United States-Argentina BIT at Article VII(3)(a) and Panama-Argentina BIT at Article 9(2).

429 A 2005 UNCTAD study (now probably somewhat outdated) stated the following concerning the costs of international investment arbitration:

“A cursory review of cost decisions in recent awards suggests that the average legal costs incurred by Governments are between $1 million and $2 million, including lawyers’ fees, the costs for the tribunal of about $400,000 or more, and the costs for the claimants, which are about the same as those for the defendant.”

“Investor-State Disputes Arising from Investment Treaties: A Review”, UNCTAD Series on International Investment Policies for Development (2005), available at: http://www.unctad.org/en/docs/iteiit20054_en.pdf at p. 8.

430 The present arbitration, which was first registered on 2 August 2004 (nearly 8 years ago), provides a case in point. As a statistical matter, one recent study found that the average duration of ICSID cases decided through 1 July 2009 was 3.6 years (1325 days), with the shortest case lasting 1.2 years and the longest lasting 10.5 years. Sinclair, Fisher, and Macrory, “ICSID Arbitration: How long does it take”, Global Arbitration Review Journal, Vol. 4, Issue 5 (2009). The present arbitration has already exceeded the ICSID average. The Tribunal was not provided with reliable independent information indicating the average duration and cost of domestic Argentine court proceedings. Argentina has asserted, however, that its courts can and do regularly dispose of some matters within less than 18 months. Respondent’s Reply Memorial on Jurisdiction, para 55 and note 81, citing Respondent’s Exhibits: “Judgments of the Argentine Supreme Court” (A RA 20), “Injunctions (A RA 21), and “Final Judgments” (A RA 22).

431 This principle would allow the Tribunal to take account not only of the Claimant’s actual legal costs within the Argentine courts for the duration of the 18-month requirement, but also the opportunity costs associated with the delay in the resolution of the claims. Such a calculation presents its challenges, to be sure, but no more so than the calculation of damages due for the violation of any other treaty provision.

432 Since the treatment received by the Claimant in the Argentine courts would constitute treatment within the territory of the Host State, the territorial limitation of the BIT’s MFN clauses would no longer pose a problem. The subsequently concerned arbitral tribunal could therefore consider, in light of the objective evidence, whether Argentina has violated its MFN commitments by forcing the Claimant – in order to vindicate its legal rights – to incur costs and delays in excess of those faced by similarly situated claimants under third-state BITs. This would, of course, require said tribunal to make a definitive finding to the effect that the treatment of an investor within the Host State’s domestic courts does fall within the purview of the Treaty’s MFN clauses, even if international dispute resolution does not. In this Tribunal’s view, such a finding follows naturally from a plain reading of the MFN clauses.

433 Even if the BIT’s MFN clauses did not provide sufficient protection, Article 2(3) of the BIT provides the Claimant with a second avenue for remedying any less favorable treatment ultimately experienced by reason of its compliance with the 18-month domestic courts requirement. Under Article 2(3):

“Neither Contracting Party shall in any way impair by arbitrary or discriminatory measures the management, use, enjoyment, or disposal of investments of nationals or companies of the other Contracting Party in its territory.”

Requiring German investors to fruitlessly (if such turns out to be the case) expend time and resources in the domestic Argentine courts in order to vindicate their treaty-based legal rights while exempting Chilean investors from the same requirement could be viewed as a discriminatory impairment of German investors’ rights. This is so even if Argentina could articulate a good policy reason for requiring some foreign investors, but not others, to first submit their claims to the domestic courts.

434 It should be noted that this would not require the Claimant to make out a denial of justice claim concerning its treatment in the Argentine courts. Nor would it require the subsequent arbitral tribunal to sit in review over the actions of the domestic courts. Rather, the sole question would be whether the Claimant, in order to vindicate its legal rights, was discriminatorily (on the grounds of its nationality) forced to bear costs in excess of those imposed upon investors from third countries.

435 The Dissenting Opinion expresses concern that if a foreign investor “subjected itself willingly to a process prescribed under the BIT, foregoing MFN protection in the process,” it would then be foreclosed from bringing an MFN claim in a subsequent arbitral proceeding (Dissenting Opinion of Charles N. Brower at para 38). This concern is unfounded, since the claimant would not have “foregone” MFN protection but would have rather fulfilled the necessary condition precedent to claiming such protection before an international tribunal.

436 Case concerning rights of nationals of the United States of America in Morocco, Judgment of August 27th, 1952, I.C.J. Reports 1952, p. 176.

437 Including its MFN rights.

438 Siemens, above note 71 at para 90.

439 Dissenting Opinion of Charles N. Brower at para 36.

440 Whether in the Claimant’s view or that of the Tribunal.

441 For another critique of this investor “choice” argument, see Impregno S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, Award (21 June 2011) [hereinafter “Impregilo”], Concurring and Dissenting Opinion of Brigitte Stern, at paras 11-12 and 105-107.

442 In this regard, the Tribunal notes that the Dissenting Opinion of Judge Brower provides no indication whatsoever that the State Parties consented to submit to the jurisdiction of an international arbitral tribunal in the circumstances raised by this case. The most that can be said is that the word “treatment,” standing on its own, is general enough to potentially encompass international investor-State dispute settlement. But this argument falls away as soon as the word “treatment” is examined in connection with the limiting phrase “in its territory.” Thus, the open-textured nature of the word “treatment“ falls well short of fulfilling the international law requirement that a State’s consent to submit to the jurisdiction of an international tribunal must be established and not merely presumed.

443 See above, paras 241 - 251.

444 Those with Spain, Sweden, the UK, Canada, Italy, Germany, Belgium/Luxembourg, the Netherlands, and Austria. The Tribunal notes that two of these treaties (the Netherlands and South Korea treaties) were negotiated and signed at a time when at last one treaty omitting the 18-month requirement (the Poland treaty) was already in force.

445 The Dissenting Opinion suggests that Argentina’s practice of including the 18-month proviso in some later treaties would not have been pointless, since claimants remain at liberty to comply with the proviso should they so wish (Dissenting Opinion of Charles N. Brower at para 28). This “choice” argument is disingenuous in light of the Dissenting Opinion’s insistence that direct access to international arbitration is inherently more favorable to claimants than international arbitration only following a mandatory 18-month domestic court proceeding. In addition, if, in concluding its later treaties, Argentina understood compliance with the 18-month proviso to have become optional, then it is difficult to understand why it continued to word the proviso in mandatory terms.

446 See also Treaty between the Republic of Chile and the Federal Republic of Germany concerning the promotion and reciprocal protection of investments, signed 21 October 1991, at art. 10 (containing the same 18-month domestic courts requirement), available at: http://www.unctad.org/sections/dite/iia/docs/bits/chile_germany_sp.pdf.

447 See e.g. Treaty between the Federal Republic of Germany and Bolivia concerning the promotion and mutual protection of investments (with protocol), signed 23 March 1987, at art. 11, available at: http://www.unctad.org/sections/dite/iia/docs/bits/germany_bolivia.pdf.

448 Since Argentina had not yet concluded any BITs omitting the 18-month requirement.

449 Contrary to the assertion of the Dissenting Opinion, this does not entail an “abandonment” of the principle of contemporaneity. (Dissenting Opinion of Charles N. Brower at para 27.) Rather, the principle of contemporaneity has revealed that the Contracting States did not likely endorse the Claimant’s proposed interpretation of the MFN clauses’ use of the phrase “treatment in the territory of the host State” at the time of the conclusion of the BIT. The Tribunal now turns to consider whether, in the alternative, the Contracting States have since altered their original understanding of the Treaty’s terms so as to subsequently embrace the Claimant’s proposed interpretation.

450 Maffezini, above note 114 at paras 38-64.

451 See Roslnvest, above note 414 ; Maffezini, above note 114 ; Siemens, above note 71 ; National Grid, Gas Natural, Camuzzi 2, Inter Aguas, and AWG, all above note 113 (in contrast to the dissent, the Tribunal considers the Inter Aguas and AWG awards as comprising only a single finding, as they were issued around the same time by the same panel of arbitrators and are, in large part, nearly verbatim identical); Impregilo above note 441 (Brigitte Stern dissenting); and Hochtief, above note 345 (Christopher Thomas dissenting).

452 See Técnicas Medioambientales Teemed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award (29 May 2003); Salini v. Jordan, above note 69; Plama, above note 349; Berschader, above note 395; Telenor Mobile Communications A.S. v. The Republic of Hungary, ICSID Case No. ARB/04/15 Award (13 Sep 2006); Wintershall, above note 330; Renta4, above note 309 (Charles Brower dissenting), Mr. Tza Yap Sum v. The Republic of Peru, ICSID Case No. ARB/07/6, Decision on Jurisdiction and Competence (19 June 2009); Austrian Airlines v. the Slovak Republic, UNCITRAL, Final Award (9 Oct 2009) (redacted version) (Charles Brower dissenting); and ICS v. Argentina, above note 303.

453 The Wintershall and Siemens tribunals reached opposite conclusions concerning the German-Argentine BIT whose interpretation is at issue in the present case. Most recently, the Hochtief majority came down on the side of the Siemens tribunal, while the dissent sided with the Wintershall outcome.

454 Dissenting Opinion of Charles N. Brower at paras 23-24.

455 Ibid at n. 67.

456 See e.g. Salini, above note 69 at paras 113-115; Plama, above note 349 at paras 216-227; Wintershall, above note 330 at paras 179-184. See also Impregilo, above note 451, Separate Opinion of Brigitte Stern. For scholarly critiques, see Zachary Douglas, “The MFN Clause in Investment Treaty Arbitration: Treaty Interpretation Off the Rails,” Journal of International Dispute Settlement, Vol. 2, No. 1, (2011), pp. 97-113; Brigitte Stern, “ICSID Arbitration and the State’s Increasingly Remote Consent: A Propos the Maffezini Case, ” in Charnovitz, Steve, Steger, Debra and van den Bossche, Peter (EDS) Law in the Service of Human Dignity. Essays in Honour of Florentino Feliciano (Cambridge University Press, 2005), pp. 246260.

457 The Dissenting Opinion criticizes the Wintershall tribunal for expressing concern that expansive interpretations of MFN clauses could allow claimants even to change the Basic Treaty’s designated arbitral forum, e.g. from ICSID to UNCITRAL (Dissenting Opinion of Charles N. Brower at para 25). But the Tribunal notes that the Dissenting Opinion is careful not to disapprove of that possibility. In fact, Judge Brower has on at least one occasion gone so far as to suggest the application of MFN clauses to achieve a still greater feat. Namely, in footnote 6 to his Austrian Airlines dissent (above note 452 ), he stated:

“While we need not decide the point, as it has not been put before us, I pose the question whether, even if the Treaty is interpreted as barring arbitration of all claims for violation of substantive provisions of the Treaty itself, it properly can be construed as precluding an importable ‘new’ substantive provision [an umbrella clause, in that case] from bringing with it an associated right to arbitration.”

In other words, Judge Brower envisions some circumstances wherein an MFN clause may authorize a claimant to engage in international arbitration against a state under a basic treaty which contains no investor-State arbitration clause at all.

458 See Austrian Airlines, above note 452, Separate Opinion of Charles N. Brower (finding, in circumstances where the basic treaty stipulated that the scope of an international arbitral tribunal’s jurisdiction was limited to claims concerning the amount or method of payment of compensation once the occurrence of an expropriation had already been found by the domestic authorities, that an MFN clause nevertheless entitled the tribunal to: 1) determine the preliminary question as to whether an expropriation had occurred, and 2) decide the claimant’s fair and equitable treatment and full protection and security claims); see also Renta4, above note 309, Separate Opinion of Charles N. Brower, at paras 5-24 (reaching the same result on the basis of an MFN clause whose application was expressly limited to the fair and equitable treatment standard).

459 The Tribunal is not aware of any instance in which Germany, as a respondent State in a BIT-based arbitral claim, has had to take a position on the legal question raised by these proceedings.

460 German Model BIT, 2008, available at: http://www.italaw.com/investmenttreaties.htm.

461 National Grid, above note 113 at para 85 (emphasis added).

462 Reprinted in A.R. Ziegler, “The Nascent International Law on Most-Favoured-Nation (MFN) Clauses in Bilateral Investment Treaties (BITs)”, European Yearbook of International Economic Law 77 (Dec 2009), p. 93 (emphasis added). The same “vanishing footnote” was also inserted in the draft text of the Free Trade Area of the Americas, which has yet to be adopted. (See fn. 13 to chap. XVII, Free Trade Area of the Americas, draft of 21 November 2003, FTAA.TNC/w/133/ Rev.3, available at: http://www.ftaa-alca.org/ftaadraft03/ChapterXVII_e.asp.)

463 Ibid at p. 95.

464 Ibid at p. 94. It is of course obvious that this White Paper does not represent settled European policy on the question, since the EU organs are still in the process of charting the future EU-wide investment treaty policy. (See Dissenting Opinion of Charles N. Brower at para 32.) What may nevertheless be observed is that no EU document has yet been issued endorsing the Maffezini approach or suggesting its incorporation into EU policy.

465 The Tribunal notes that the United States recently concluded a review of its 2004 Model BIT. As part of that process, the US State Department commissioned an expert report from the Advisory Committee on International Economic Policy. A sub-group of the Committee members addressed the question of the scope of application of the Model BIT’s MFN clause and recommended that the BIT be revised so as to clarify that the MFN commitment does not extend to any international commitments – whether substantive or procedural – undertaken by the United States in its treaties with third countries.(See Report of the Advisory Committee on International Economic Policy Regarding the Model Bilateral Investment Treaty, presented to the Department of State, 30 Sep 2009, Annex B: Particular Viewpoints of Subcommittee Members, Collective Statement from Sara Anderson, Linda Andres et al, Part III, Recommendation 5, available at: http://www.state.gov/e/eeb/rls/othr/2009/131118.htm#l.) The newly released US Model BIT of 2012, however, includes no new provisions relevant to the proper interpretation of any MFN clauses as may in future appear in any new US treaties to be concluded subsequent to the adoption of the 2012 US Model BIT. It remains to be seen whether the US will adopt the same tactic of incorporating “vanishing footnotes” into its BIT negotiations as it has used when negotiating the investment chapters of its recent preferential trade agreements. In short, no conclusions as to the future state practice of the United States can yet be drawn. All one can say at present is that the US has chosen to disavow the Maffezini holding on at least one occasion.

466 The Dissenting Opinion points to the UK-Bosnia BIT as an example of a post-Maffezini treaty which “explicitly applies that BIT’s MFN clause to that treaty’s dispute settlement provisions” (Dissenting Opinion of Charles N. Brower at para 30). The UK-Bosnia BIT, however, does not appear to constitute a change in or clarification of the UK’s policy, as it appears to have been based on a UK model BIT that was already in effect prior to Maffezini. The UK’s distinctive and consistent policy thus does not imply an evolution in the general understanding shared by the majority of states comprising the international community.

Endnotes

1 As I am in agreement, however, with the Award’s dismissal of the remainder of Respondent’s jurisdictional objections, I do not address them.

2 Award ¶175. The Award does not specify what “affirmative evidence” means, but holds that “it is not possible to presume that consent has been given by a state.” Award ¶ 175. The Award later employs the phrase “demonstrated expression” of consent, apparently equivalent to “affirmative evidence.” Award ¶ 176. The most plausible way of interpreting the Award’s position is that such consent cannot be established by interpretation in accordance with Articles 31 and 32 of the Vienna Convention on the Law of Treaties (“VCLT” or “Vienna Convention”), but that instead a higher level of proof is required. See Vienna Convention on the Law of Treaties, 23 May 1969, 1155 U.N.T.S. 331. As shown infra, the Award has not cited a single relevant authority in support of this standard.

3 See Plama Consortium Ltd. v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Decision on Jurisdiction (8 Feb. 2005) ¶ 204, available at http://icsid.worldbank.org/ICSID/Front-Servlet?requestType=CasesRH&actionVal=showDoc&docId=DC521_En&caseId=C24.The so-called “Plama principle” has been criticized by various tribunals. See, e.g., Suez, Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v. Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction (16 May 2006) ¶ 64, available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC514_En&caseId=C18 (“The Plama tribunal also stated, in its reasons, that an arbitration agreement must be clear and unambiguous, especially where it is incorporated by reference to another text. This Tribunal does not share this statement. As stated above, it believes that dispute resolution provisions are subject to interpretation like any other provisions of a treaty, neither more restrictive nor more liberal.”) (emphasis in original). Even in Berschader, which is usually included in the “Plama line of cases” (over the spirited dissent of one of the panel members), the Award criticized Plama’s ex cathedra interpretive presumption. Berschader v. Russian Federation, SCC Case No. 080/2004, Award (21 Apr. 2006) ¶ 177, available at http://italaw.com/documents/Berschader-FinalAward.pdf (“The Plama tribunal states that an arbitration clause in a BIT is an agreement to arbitrate, and such agreements should be clear and unambiguous. If this means that, generally speaking, arbitration agreements should be construed in a manner which is different in principle from that applied to the construction of other agreements, this Tribunal finds it doubtful whether such a general principle can be said to exist.”); see also Renta 4 S.V.S.A., et al. v. Russian Federation, SCC Case No. 24/2007, Award on Preliminary Objections (20 Mar. 2009) ¶¶ 95-101, available at http://italaw.com/documents/Renta.pdf.

4 Award ¶ 175.

5 See, e.g., Award ¶¶ 170-71 (quoting with approval the Amco Asia Tribunal’s holding that: “[L]ike any other convention, a convention to arbitrate is not to be construed restrictively, nor, as a matter of fact, broadly or liberally. It is to be construed in a way which leads to find out and to respect the common will of the parties; such a method of interpretation is but the application of the fundamental principle pacta sunt servando, a principle common, indeed, to all systems of internal law and to international law.” Amco Asia Corp. v. Indonesia, Award on Jurisdiction (25 Sept. 1983), 1 ICSID Reports 389 (1983), reprinted in 22 I.L.M. 351, 359 (1983)); see also Mondev Int’l Ltd. v. United States, ICSID Case No. ARB(AF)/99/2, Award (11 Oct. 2002) ¶ 43 (Sir Ninian Stephen, Prof. James Crawford, Judge Stephen M. Schwebel), available at http://www.state.gov/documents/organization/l4442.pdf (“In the Tribunal’s view, there is no principle either of extensive or restrictive interpretation of jurisdictional provisions in treaties. In the end the question is what the relevant provisions mean, interpreted in accordance with the applicable rules of interpretation of treaties. These are set out in Articles 31-33 of the Vienna Convention on the Law of Treaties, which for this purpose can be taken to reflect the position under customary international law.”); Oil Platforms (Islamic Republic of Iran v. United States), Preliminary Objections, Separate Opinion of Judge Higgins, 1996 ICJ Rep. at 857 (12 Dec.) (“The Court has no judicial policy of being either liberal or strict in deciding the scope of compromissory clauses: they are judicial decisions like any other.”).

6 Award ¶ 172.

7 Award ¶ 175.

8 The Award’s focus on “affirmative evidence” appears to be in tension with the Award’s observation in note 310 that: “Even in the case of customary international law, it can be argued that consent, or at least the consent of a majority of the world’s states, underlies all of the norms reflected in customary international law. Without such consent… those norms would not have evolved into customary law in the first place.” This statement is accurate insofar as “consent” underlies the individual State acts that, given their sufficiently broad and lasting recurrence (State practice), combined with evidence of the acting States’ view that their actions are based on existing obligations (opinio juris), give rise to customary international law. Ordinarily, however, an individual State need not “consent“ to the establishment of customary international law itself; that “consent“ is inferred via the combination of State practice and opinio juris. See generally Malcolm M. Shawjnternational Law 70-72 (5th ed., 2003). Thus, established rules of customary international law can bind States that never granted, explicitly or otherwise, consent to individual acts of the type that gave rise to the principles in question. Those States’ consent to be bound is presumed. As the Award points out in note 310, a non-consenting State is obliged then to give “affirmative evidence“ of its non-consent via the “persistent objector doctrine.”

9 The Tribunal in Tokios Tokeles made specific reference to the discretion of State Parties in setting the limits of their consent: “We emphasize here that Contracting Parties are free to define consent to jurisdiction in terms that are broad or narrow; they may employ a control-test or reserve the right to deny treaty protection to claimants who otherwise would have recourse under the BIT. Once that consent is defined, however, tribunals should give effect to it ….” Tokios Tokeles v. Ukraine, IC-SID Case No. ARB/02/18, Decision on Jurisdiction (29 Apr. 2004) ¶ 39, available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&dodd=DC639_En&caseId=C220. The Award does not explain how its interpretive presumption of “affirmative evidence” can be reconciled with the ability of State Parties to choose the terms in which they consent to jurisdiction and tribunals’ concomitant obligation to give effect to the terms of that consent in accordance with widely accepted rules of treaty interpretation. See also infra n.34.

10 Of course the absence of the term “consent“ from the Treaty does not obviate the need for such consent. In fact, the Treaty bears on its face the hallmarks of properly granted consent, including, inter alia, signatures of duly authorized representatives of the State Parties; explicit reference to the State Parties having “agreed” to all the terms of the Treaty; and explicit statements to the effect that the terms of the Treaty are “binding” on both State Parties. Neither Party in this arbitration has questioned the validity of the Treaty, or the Treaty’s binding effect on the State Parties. The same cannot be said, however, of a standard such as “affirmative evidence” that would need to be explicitly memorialized in the Treaty or in another source that this Tribunal is bound to respect.

11 Addressing the manner in which consent can be given, the Report includes a non-exhaustive list of examples of validly granted consent:

Consent may be given, for example, in a clause included in an investment agreement, providing for the submission to the Centre of future disputes arising out of that agreement, or in a compromis regarding a dispute which has already arisen. Nor does the Convention require that the consent of both parties be expressed in a single instrument. Thus, a host State might in its investment promotion legislation offer to submit disputes arising out of certain classes of investments to the jurisdiction of the Centre, and the investor might give his consent by accepting the offer in writing.

Nothing in the Report’s treatment of consent sustains the Award’s “affirmative evidence” standard. See Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, International Bank for Reconstruction and Development (18 Mar. 1965) 123, available at http://www.icsid.worldbank.org/.

12 Award ¶ 169.

13 Tellingly, the Vienna Convention’s drafters modified the word “consent” in other ways, e.g., by using “free consent” in the Preamble or “unanimous consent” in Article 8. VCLT Art. 17(2) provides: “The consent of a State to be bound by a treaty which permits a choice between differing provisions is effective only if it is made clear to which of the provisions the consent relates.” (emphasis added). That provision is plainly irrelevant to the question of whether consent must be established by “affirmative evidence,” however, in that or any other circumstance.

14 Award ¶ 173. There is no necessary correlation between the number of times a legal requirement is repeated in relevant legal instruments or sources and the level of proof needed to meet that requirement.

15 The Award fails to distinguish between the establishment and the scope of consent, although the evaluation of the former usually relies on formal indicia of validity (signature, ratification, etc.) while the latter is a matter of textual interpretation. The Award is content merely to note that “[w]hat is true of the very existence of consent to have recourse to a specific international dispute resolution mechanism is also true as far as the scope of this consent is concerned.” Award ¶ 175. The Award’s branding of this note as a “red herring” in its note 325 underscores its misunderstanding of the point, elaborated in the text accompanying the present note, that if “affirmative evidence” be required to establish consent to arbitration, equally it must be required in establishing the scope of consent for which latter proposition the VCLT likewise provides no support.

16 ICSID Convention Art. 46 reads in its entirety:

Except as the parties otherwise agree, the Tribunal shall, if requested by a party, determine any incidental or additional claims or counterclaims arising directly out of the subject-matter of the dispute provided that they are within the scope of the consent of the parties and are otherwise within the jurisdiction of the Centre.

17 See, e.g., Inceysa Vallisoletana SL v. El Salvador, ICSID Case No. ARB/03/26, Award (2 Aug. 2006) ¶¶ 200-07, available at http://italaw.com/documents/Inceysa_Vallisoletana_en_001.pdf (interpreting the plain terms of the definition of investment in the Spain-El Salvador BIT and holding that “this Arbitral Tribunal considers that the consent granted by Spain and El Salvador in the BIT is limited to investments made in accordance with the laws of the host State of the investment”).

18 Award ¶ 173.

19 Mark E. Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties 425-26 (2009). The Award’s express concurrence with this passage in its note 317 is noted.

20 International Law Commission, Draft Articles on the Law of Treaties (1966), Art. 23 cmt.l.

21 Award ¶ 176. To the extent the Award could show that the cases cited reflect a rule of international law, that rule would be relevant to the interpretation of the Treaty under VCLT Art. 31(3)(c) (requiring that in interpreting a treaty “[t]here shall be taken into account, together with the context: … any relevant rules of international law applicable to the relations between the parties”); see also International Law Commission, Draft Articles on the Law of Treaties (1966), Arts. 27 and 28, cmt.16.

22 See Award ¶ 174 (“[i]t is well established in international law that no State can, without its consent, be compelled to submit its disputes … either to mediation or to arbitration, or to any other kind of pacific settlement.”) (citation omitted).

23 Ambatielos case (United Kingdom v. Greece), Merits, Judgment, 1953 I.C.J. Rep. 10, 19 (19 May), available at http://www.icj-cij.org/docket/files/15/1983.pdf.

24 Case of Monetary Gold (Italy v. France et al), Preliminary Question, Judgment, 1954 I.C.J. Rep. 19, 32 (15 June), available at http://www.icj-cij.org/docket/files/19/4761.pdf.

25 Id.

26 Award ¶ 175.

27 Award ¶ 175.

28 Award ¶ 175 (citations omitted).

29 Case of the S.S. Lotus (France v. Turkey), 1927 P.C.I.J. (ser. A No. 10) at 18, available at http://www.icjcij.org/pcij/serie_A/A_10/30_Lotus_Arret.pdf. The French Government was claiming that Turkish courts could not exercise jurisdiction over a French national in charge of a French ship that made port in Constantinople after colliding with a Turkish vessel in the high seas absent a showing that the exercise of such jurisdiction was compatible with international law. Case of the S.S. Lotus, 1927 P.C.I.J. at 5.

30 Case Concerning the Aerial Incident of July 27, 1955 (Israel v. Bulgaria), Preliminary Objections, Judgment, 1959 I.C.J. Rep. 127, 135-36 (27 July), available at http://www.icj-cij.org/docket/files/35/2325.pdf (quoting Article 36, paragraph 5, of the Statute of the International Court of Justice which states as follows: “Declarations made under Article 36 of the Statute of the Permanent Court of International Justice and which are still in force shall be deemed, as between the parties to the present Statute, to be acceptances of the compulsory jurisdiction of the International Court of Justice for the period which they still have to run and in accordance with their terms.”); see also infra the discussion on Anglo-Iranian Oil in ¶ 16.

31 Case Concerning the Aerial Incident of July 27, 1955, 1959 I.C.J. Rep. at 142.

32 Case Concerning East Timor (Portugal v. Australia), Judgment, 1995 I.C.J. Rep. 90, 102 (30 June), available at http://www.icj-cij.org/docket/files/84/6949.pdf.

33 See Award ¶ 258 (“[O]ne must bear in mind that the Contracting State Parties adopted all of the provisions of the Treaty together as a whole. In one fell swoop they nodded their assent not only to the BIT’s objects and purposes, as expressed in the Preamble, but also to the various treatment standards set forth in Articles 1 to 9 (including the MFN clauses) as well as the international dispute resolution procedures set forth in Article 10.”).

34 In fact, both investor-State jurisprudence and ICJ practice include instances of broad or implicit construction of consent for purposes of jurisdiction as well as arbitral procedure. These authorities cannot be reconciled with the Award’s presumption that consent be based on “affirmative evidence” or a “demonstrated expression.” See, e.g.,Ceskoslovenska OchodniBanka A.S. v. Slovak Republic, ICSID Case No. ARB/97/4, Decision on Jurisdiction (24 May 1999) ¶¶ 49-59, available at http://italaw.com/documents/CSOB-Jurisdiction1999_000.pdf (finding that Slovakia had consented to ICSID arbitration by including in a commercial contract reference to a BIT allegedly not yet in force); Rights of Minorities in Upper Silesia (Minority Schools), Judgment, 1928 PCIJ (ser. A) No. 15 at 24 (26 Apr.), available at http://www.icjcij.org/pcij/serie_A/A_15/46_Droits_de_minorites_en_Haute_Silesie_Ecoles_minoritaires_Arret.pdf (“[T]here seems to be no doubt that the consent of a State to the submission of a dispute to the Court may not only result from an express declaration, but may also be inferred from acts conclusively establishing it.”); see also Noble Energy, Inc. and Machala Power Cia Ltd. v. Ecuador and Consejo Nacional de Electricidad, ICSID Case No ARB/05/12, Decision on Jurisdiction (5 May 2008) ¶ 194, available at http://italaw.com/documents/Noblev.EcuadorJurisdiction.pdf (“In the present case, there is in any event an implied consent to have the pending disputes arising from the same overall economic transaction resolved in one and the same arbitration. Even though there is no express language to this effect in the dispute resolution clauses, the consent is manifest from a number of elements which the Tribunal will review.”). Besides, States remain at liberty to define in broad or narrow terms their grant of consent in the applicable instrument(s). See supra n.9. The Award’s concurrence with this note in its note 321 is noted.

35 For purposes of its analysis, the Award has defined the Argentina-Germany BIT as the “Basic Treaty” and the Argentina-Chile BIT as the “Comparator Treaty”. Award ¶ 244. This Opinion uses those terms in the same sense.

36 Award ¶¶ 199-200.

37 Hochtief AG v. Argentine Republic, ICSID Case No. ARB/ 07/31, Decision on Jurisdiction (24 Oct. 2011) ¶ 96, available at http://italaw.com/documents/Hochtief_v_Argentina_Jurisdiction_24Oct201l_En.pdf (majority opinion) (emphasis added).

38 Award” 200-01.

39 The Award’s concurrence with this sentence recorded in its note 341 is noted. Treaty clauses providing for, or even requiring, amicable consultations between the parties prior to engaging in dispute resolution have been considered as matters of procedure and not jurisdiction. See, e.g., Biwater v. Tanzania, ICSID Case No. ARB/05/22, Award (24 July 2008) ¶ 343, available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&dodd=DC1589_En&caseId=C67 (holding that the clause establishing a consultation period was “procedural and directory in nature, rather than jurisdictional and mandatory” because “[i]ts underlying purpose is to facilitate opportunities for amicable settlement … not to impede or obstruct arbitration proceedings, where such settlement is not possible”); SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/10/13, Decision on Jurisdiction (6 Aug. 2003) ¶ 184, available at http://icsid.worldbank.org/ICSID/Front-Servlet?requestType=CasesRH&actionVal=showDoc&docId=DC622_En&caseId=C205 (“Tribunals have generally tended to treat consultation periods as directory and procedural rather than as mandatory and jurisdictional in nature. Compliance with such a requirement is, accordingly, not seen as amounting to a condition precedent for the vesting of jurisdiction.”); see also Lauder v. Czech Republic, UNCITRAL, Award (3 Sept. 2001) ¶ 187, available at http://italaw.com/documents/LauderAward.pdf (“[T]he Arbitral Tribunal considers that this requirement of a six-month waiting period … of the Treaty is not a jurisdictional provision, i.e. a limit set to the authority of the Arbitral Tribunal to decide the merits of the dispute, but a procedural rule.”). The Lauder Tribunal held further that staying the arbitral proceedings to satisfy the waiting period in the BIT would “amount to an unnecessary, overly formalistic approach which would not serve to protect any legitimate interests of the Parties.” Id. ¶ 190. But see Enron Corp. and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (14 Jan. 2004) ¶ 88, available at http://www.asil.org/ilib/Enron.pdf (stating in dicta that the amicable consultations requirement is jurisdictional in nature). Given the divided investor-State jurisprudence on this question, the author of this Opinion is not prepared to accept either the Award’s analogy of time-limited consultation clauses to 18-month clauses, which in any event is useless for purposes of this case, or the Award’s sweeping generalization that “[a]ll BIT based dispute resolution provisions … are by their very nature jurisdictional.” Award ¶ 193.

40 The author of this Opinion is reluctant to accept the analysis of amicable consultation clauses as jurisdictional requirements in Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on Jurisdiction (2 June 2010) ¶ 310 ff.,available at http://icsid.worldbank.orgACSID/Front-Servlet?requestType=CasesRH&actionVal=showDoc&docId=DC1530_En&caseId=C300, and Murphy Exploration and Prod. Co. Int’l v. Republic of Ecuador, ICSID Case No. ARB/08/4, Award on Jurisdiction (15 Dec. 2010) ¶ 140 ff., available at http://icsid.worldbank.org/ICSID/FrontServlet7request-Type=CasesRH&actionVal=showDoc&docId=DC1811_En&caseId=C267. Neither of those cases showed convincingly that such clauses are indeed jurisdictional, or, more critically, addressed the question whether the parties were even remotely likely to reach amicable settlement with respect to the claims that were dismissed for lack of jurisdiction. Thus, their respective rulings on this issue appear formalistic and inefficient. See Murphy Exploration, Partial Dissenting Opinion of Dr. Horacio A. Grigera Naón (19 Nov. 2010), available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC1813_En&caseId=C267 (opining that the Tribunal committed factual error in finding that the consultation period had not been satisfied and observing that “forcing [Claimant], after more than two years and a half in arbitration, to envisage now a negotiating stage of uncertain future given the history of the relationship of the Parties … does not marry well with the concept of a reasonably fast and efficient access to the arbitral instances provided for in the BIT and seriously impairs [Claimant’s] right to access arbitral justice.”).

41 The Ethyl Tribunal found that: “The Tribunal has been given no reason to believe that any ‘consultation or negotiation’ pursuant to Article 1118 … was even possible. It is argued, therefore, that no purpose would be served by any further suspension of Claimant’s right to proceed.” Ethyl Corp. v. Canada, NAFTA/UNCITRAL, Award on Jurisdiction (24 June 1998) ¶ 84, available at http://www.naftaclaims.com/Disputes/Canada/EthylCorp/EthylCorpAwardOnJurisdiction.pdf.

42 Award ¶ 191.

43 See Expert Opinion of Javier Errecondo dated 4 June 2008 (submitted with Claimant’s Rejoinder on Jurisdiction); Claimant’s Rejoinder on Jurisdiction ¶¶ 65-80.

44 See Argentine Republic’s Reply Memorial on the Centre’s Jurisdiction and Tribunal’s Competence, 5 May 2008, Exhs. A RA 20 (“Judgments of the Argentine Supreme Court”) and A RA 22 (“Final Judgments”).

45 For example, Claimant had argued that: “The fact that such proceedings can be resolved within 18 months has no relevance to whether an Argentine Court could determine, in what apparently would be a case of first impression, the rights of a foreign shareholder for a violation of a treaty and the amount of compensation therefore [sic]. The issue is whether [Claimant] could submit its claims against Argentina for breaches of the Treaty and obtain an acceptable quantification of damages for those breaches within an 18-month period, not whether it or any other entity could have contested the constitutionality of the provisions.” See Claimant’s Rejoinder on the Objections of the Argentine Republic to the Centre’s Jurisdiction and the Tribunal’s Competence, 9 June 2008, ¶¶ 76-77.

46 Award ¶ 203.

47 See Técnicas Medioambientales Teemed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award (29 May 2003) ¶ 74, available at http://italaw.com/documents/Tecnicas_001.pdf (ruling that the Contracting Parties’ consent to arbitration was premised on the condition, contained in a temporal limitation clause, that such arbitration commence within three years from the time of the claimant’s injury; consequently, claimant could not circumvent the temporal limitation by operation of the MFN clause).

48 World Bank, Guidelines on the Treatment of Foreign Direct Investment (1992), reprinted in 31 I.L.M. 1363 (1992) (“World Bank Guidelines” or “Guidelines”), available at http://ita.law.uvic.ca/documents/WorldBank.pdf (emphasis added).

49 See VCLT Art. 31; see also International Law Commission, Draft Articles on the Law of Treaties (1966), Arts. 27-28 (from which VCLT Articles 31 and 32 emerged virtually unchanged), cmt. 8 (“Once it is established … that the starting point of interpretation is the meaning of the text, logic indicates the ‘ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’ should be the first element to be mentioned. Similarly, logic suggests that the elements comprised in the ‘context’ should be the next to be mentioned since they form part of or are intimately related to the text. Again, it is only logic which suggests that … a subsequent agreement regarding the interpretation, subsequent practice establishing the understanding of the parties regarding the interpretation and relevant rules of international law applicable in relations between the parties – should follow and not precede the elements in the previous paragraphs.”).

50 See VCLT Art. 32.

51 The analysis of the Treaty’s “object and purpose” near the end of the Award’s analysis of the MFN clause (see Award ¶¶ 254-60) illustrates starkly the Award’s failure to comply with the interpretive framework of the Vienna Convention.

52 See infra n.67.

53 The Guidelines’ preamble states that “these guidelines are not ultimate standards but an important step in the evolution of generally acceptable international standards which complement, but do not substitute for, bilateral investment treaties.” World Bank Guidelines, Preamble (emphasis added).

54 Award ¶¶ 220, 222-24.

55 Award ¶¶ 223-24.

56 The Award’s only response to this point is to say in its note 393 that “ [t]his suggestion is puzzling“ since “ [a] document’s title cannot function as more than a summary of its general topic, let alone an exhaustive statement of its entire contents.”

57 Award ¶ 223 (citations omitted).

58 Award ¶ 223 (emphasis added).

59 The Award’s “agree[ment]” with this sentence and the following one in its note 391 is noted. That note’s distinction between domestic and international proceedings, however, is not accepted by the author of this Opinion as being relevant. See Draft Convention on Responsibility of States for Damage Done in Their Territory to the Person or Property of Foreigners (1929) (also known as the “1929 Harvard Draft Convention”) (identifying as elements of the minimum standard of treatment, inter alia, responsibility for denial of justice, including delay or obstruction of access to courts and gross deficiency in the administration of the judicial or remedial process); The Loewen Group, Inc. and Raymond L. Loewen v. United States, ICSID Case No. ARB(AF)/98/3, Final Award (26 June 2003) ¶ 123, available at http://naftaclaims.com/Disputes/USA/Loewen/LoewenFinalAward.pdf (reasoning in the context of the fair and equitable treatment requirement under NAFTA that: “[It is] the responsibility of the State under international law and, consequently, of the courts of a State, to provide a fair trial of a case to which a foreign investor is a party. It is the responsibility of the courts of a State to ensure that litigation is free from discrimination against a foreign litigant and that the foreign litigant should not become the victim of sectional or local prejudice.”); Metalclad v. Mexico, ICSID Case No. ARB(AF)/97/l, Award (30 Aug. 2000) ¶¶ 85-101, available at http://naftaclaims.com/Disputes/Mexico/Metalclad/MetalcladFinalAward.pdf (holding, inter alia, that the absence of a transparent and predictable framework of administrative issuance and review of construction permits violated the NAFTA’s fair and equitable treatment standard); Pey Casado and President Allende Foundation v. Chile, ICSID Case No. ARB/ 98/2, Award (22 Apr. 2008) ¶¶ 650-63, available at http://italaw.com/documents/Peyaward.pdf (holding that a sevenyear delay in the adjudication of claimant’s claims in the first instance before the Chilean courts constituted a fair and equitable treatment violation); OECD, Directorate for Financial and Enterprise Affairs, Fair and Equitable Treatment Standard in International Investment Law (Sept. 2004) at 28-36, available at http://www.oecd.org/dataoecd/22/53/33776498.pdf (discussing the fair and equitable treatment standard and its interpretation by tribunals as requiring open access to courts and efficient and fair administration of justice).

60 See, e.g., Mondev lnt’l Ltd. v. United States, ICSID Case No. ARB(AF)/99/2, Award (11 Oct. 2002) ¶ 127, available at http://www.state.gov/documents/organization/14442.pdf (“In the end the question is whether, at an international level and having regard to generally accepted standards of the administration of justice, a tribunal can conclude in the light of all the available facts that the impugned [US court] decision was clearly improper and discreditable, with the result that the investment has been subjected to unfair and inequitable treatment.”); see also Loewen, Award ¶ 137 (“[In this case] the whole trial and its resultant verdict were clearly improper and discreditable and cannot be squared with minimum standards of international law and fair and equitable treatment.”).

61 To the extent the Award means to raise the familiar argument that “treatment” applies to “primary rules” such as substantive protections, and not to “secondary rules” such as remedies, the Renta 4 Tribunal has addressed and rejected that argument convincingly:

It may be that some international lawyers reflexively adopt the dichotomy of primary/secondary obligations made familiar by the International Law Commission. This might explain the temptation to consider “treatment” a matter of primary or substantive rules and thus distinct from “secondary” rules – such as remedies – in the event of a breach.

There is no authority for the proposition that MFN is limited to “primary“ rules. The established proper criterion is rather ejusdem generis.

Renta 4 ¶¶ 99-100. Certain tribunals have opined that dispute settlement actually is a substantive protection covered by the MFN clause. See, e.g., Gas Natural SDG, S.A. v. Argentine Republic, ICSID Case No. ARB/03/10, Decision on Jurisdiction (17 June 2005) ¶ 31, available at http://italaw.com/documents/GasNaturalSDGDecisiononPreliminaryQuestionsonJurisdiction.pdf (“The Tribunal holds that provision for international investor-state arbitration in bilateral investment treaties is a significant substantive incentive and protection for foreign investors.”).

62 The Award’s approval of this “uncontroversial observation” in its note 378 is noted. See also Siemens, Decision on Jurisdiction ¶ 102 (ruling that a “distinctive feature” of BITs is “special dispute settlement mechanisms not normally open to investors. Access to these mechanisms is part of the protection offered under the Treaty. It is part of the treatment of foreign investors and investments.”); Suez, Decision on Jurisdiction ¶ 57 (“From the point of view of the promotion and protection of investments, the stated purposes of the Argentina-Spain BIT, dispute settlement is as important as other matters governed by the BIT and is an integral part of the investment protection regime that two sovereign states, Argentina and Spain, have agreed upon.”); Gas Natural, Decision on Jurisdiction ¶ 49 (“We remain persuaded that assurance of independent international arbitration is an important – perhaps the most important – element in investor protection.”); Hochtief, Decision on Jurisdiction ¶¶ 68, 72 (“The Tribunal considers that the provisions of Article 10, which on any interpretation confer upon investors the possibility of recourse to arbitration in addition to the right to have recourse to national courts, are a form of protection that is enjoyed within the scope of ‘the management, utilization, use and enjoyment of an investment’ … Article 10 is a benefit conferred on investors and designed to protect their interests and the interests of a State Party in its capacity as a host State party to a dispute with an investor: it is a protective right that sits along side the guarantees against arbitrary and discriminatory measures, expropriation, and so on … Accordingly, the Tribunal is satisfied that the MFN provision is in principle applicable to the pursuit of dispute settlement procedures.”).

63 In this respect it is telling that the Guidelines consider “most favored nation” and “fair and equitable” as different protections pertaining to the same “treatment.” World Bank Guidelines at 3-5. Notably, the Respondent in this case has not argued, based on Art. 31 (4) of the VCLT or any other evidence, that a “special,” more restrictive meaning should be given to the term “treatment” for purposes of applying the MFN clause as opposed to the “fair and equitable treatment“ clause. The burden of showing the applicability of a “special” meaning of a term lies with the party pleading such a meaning. See Legal Status of Eastern Greenland (Denmark v. Norway), 1933 PCIJ (ser. A/B) No. 53 at 49 (5 Apr.), available at http://www.icjcij.org/pcij/serie_AB/AB_53/01_Groenland_Oriental_Arret.pdf (holding that “[i]f it is alleged by one of the Parties that some unusual or exceptional meaning is to be attributed to [a treaty term], it lies on that Party to establish its contention”).

64 See RosInvestCo v. Russian Federation, SCC Arbitration No. V 079/2005, Award on Jurisdiction (Oct. 2007) ¶ 130, available at http://italaw.com/documents/RosInvestjurisdiction_decision_2007_10_001.pdf (holding, in the context of the UK-Russia BIT, that “the submission to arbitration forms a highly relevant part of the corresponding protection for the investor by granting him, in case of interference with his ‘use’ and ‘enjoyment,” procedural options of obvious and great significance compared to the sole option of challenging such interference before the domestic courts of the host state”).

65 Award ¶ 268.

66 Award ¶ 268.

67 Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/ 7, Decision on Jurisdiction (25 Jan. 2000); Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/8, Decision on Jurisdiction (3 Aug. 2004); Camuzzi Int’l S.A. v. Argentine Republic, ICSID Case No. ARB/03/7, Decision on Jurisdiction of 10 June 2005; Gas Natural SDG, S.A. v. Argentine Republic, ICSID Case No. ARB/03/10, Decision on Jurisdiction (17 June 2005); Suez, Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v. Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction (16 May 2006); National Grid pic v. Argentine Republic, UNCITRAL, Decision on Jurisdiction (20 June 2006); Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal S.A. v. Argentine Republic/AWG Group Ltd. v. Argentine Republic, ICSID Case No. ARB/03/19, Decision on Jurisdiction (3 Aug. 2006); Impregilo S.p.A v. Argentine Republic, ICSID Case No. 07/17, Award (21 June 2011); Hochtief AG v. Argentine Republic, ICSID Case No. ARB/ 07/31, Decision on Jurisdiction (24 Oct. 2011). All the above decisions are available at http://italaw.com.

68 Wintershall Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14, Award (8 Dec. 2008), available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC1492_En&caseId=C39; ICS Inspection and Control Services Limited v. Argentine Republic, UNCITRAL, Award on Jurisdiction (10 Feb. 2012), available at http://italaw.com/documents/ICS_v_Argentina_AwardJurisdiction_10Feb2012_En.pdf.

69 See Wintershall ¶ 174 (holding that the Basic Treaty “provides for ICSID as the ultimate and only arbitration forum,” while the dispute resolution provision in the Comparator BIT “prescribes ‘a different system of arbitration’ – it gives a Claimant … a choice of fora viz, either ICSID or UNCITRAL”).

70 Wintershallf ¶ 18.3 (quoting Claimants’ Request for Arbitration ¶ 41) (emphasis added).

71 Wintershall ¶ 121 (“[D]isputes between the parties in the terms of this Article, shall be submitted by mutual agreement if the parties to the dispute had not otherwise agreed, either to an arbitral proceeding under the terms of the Convention on the Settlement of Investment Disputes between States and Nationals of other States … or to an arbitral tribunal ad hoc established in accordance with the Arbitration Rules of the [UNCITRAL]. If no agreement were reached following a three-month term from the date that any of the Parties had applied for the initiation of arbitration proceedings, the dispute shall be submitted to an arbitration proceeding in the terms of the Convention on the Settlement of Investment Disputes between States and Nationals of other States, of March 18, 1965, provided that both Contracting Parties be part of such Convention. Otherwise the dispute will be submitted to the arbitral tribunal ad hoc mentioned above”) (quoting Article 10(4) of the Argentina-Germany BIT) (emphasis omitted).

72 The purpose of the Award’s note 457, frankly, is obscure.

73 Award ¶ 284.

74 Award ¶ 268 (emphasis added).

75 See RosInvestCo, Award on Jurisdiction ¶ 42 (“[T]he main focus of… [the Tribunal’s] attention has to be not the policies which either one or the other Contracting Party brought to the negotiating table (and which might of course have been widely different from one another) but what they agreed on, as embodied in the terms of their treaty.”).

76 Award ¶ 263-64.

77 Award ¶ 263. The Award’s criticism of this sentence and paragraph 28 at its notes 445 and 449 is premised on conclusions of the Award which this Opinion rejects.

78 See Award, Appendix 1. Dates of entry into force, set forth in Appendix 2 to the Award, are of little use, since, as the Appendix demonstrates, entry into force is rarely contemporaneous with signature.

79 The Award in its note 445 brands this point “disingenuous.” It overlooks: (1) the fact that this Opinion agrees with other awards that a choice among alternative dispute settlement procedures is more favorable than no choice; and (2) the fact that “shall” in the 18-month provision is predicated on a party invoking it, which neither did.

80 Award ¶ 272. Ironically, the Award quotes the National Grid decision as factual support for the exchange of notes between Panama and Argentina. The Tribunal in that case, however, dismissed those same notes for purposes of interpreting the Argentina-UK BIT in the following categorical terms: “The Tribunal has not been furnished with any evidence that at any point in time an interpretation of such nature was considered by either party to the [Argentina-UK] Treaty. Neither has the Tribunal received any evidence that the Argentine Republic adopted similar interpretations of the MFN clause incorporated in the more than 50 bilateral investment treaties concluded with other States parties.” National Grid, Decision on Jurisdiction ¶ 85.

81 Award ¶ 272.

82 One possible explanation for this confusion is that the Award assumes that the provisions of the Comparator Treaty relate to the jurisdiction of this Tribunal, which they certainly do not. See International Law Commission, Draft Articles on Most-Favoured-Nation Clauses (1978), Art. 8 (“The right of the beneficiary State to most-favoured-nation treatment arises only from the most-favoured-nation clause … in force between the granting State and the beneficiary State.”); see also id. Art. 8, cmt. 1 (the MFN clause “is the source of the beneficiary State’s rights”); id. Art. 8, cmt. 3 (“the right of the beneficiary State to a certain advantageous treatment does not derive from the treaty concluded between the granting State and the third State”); id. Art. 8, cmt. 7 (“The root of the right of the beneficiary State is obviously the treaty containing the clause. The extent of the favours to which the beneficiary of that clause may lay claim will be determined by the actual favours extended by the granting State to the third State.”).

83 Award ¶ 273.

84 See Bilateral Investment Treaties United Nations Conference on Trade and Development,available at http://www.unctadxi.org/templates/docsearch 779.aspxThe Award’s note 466 stating that this neither “constitute[d] a change in or clarification of the UK’s policy” nor can it “imply an evolution in the general understanding shared by the majority of states” is of no effect. Clearly a State continuing its MFN practice in BITs following Maffezini implies acceptance of its results. This Opinion obviously rejects the Award’s notion that there is a “majority of states” favoring this Award’s conclusions.

85 Award ¶ 276 (emphasis added). The Award has swept along the United States as one of the “capital exporting countries” that allegedly share the Award’s theory of the scope of MFN. See Award ¶ 277. According to 2010 data, the United States is by far the world’s highest capital exporter as measured by Foreign Direct Investment, with more such investment than France and the United Kingdom combined. See https://www.cia.gov/library/publications/theworld-factbook/rankorder/2199rank.html. As the Award implicitly concedes, however, at its note 465, no clarity exists currently as to United States policy on the MFN issue.

86 Award ¶ 273-76.

87 See supra n.85.

88 In fact, nothing in the European Commission’s recently published Proposed Regulation on Transitional Arrangements for Bilateral Investment Agreements suggests the official establishment of an EU-wide policy on MFN similar to that recounted in the Award. See Proposal for a Regulation of the European Parliament and of the Council establishing transitional arrangements for bilateral investment agreements between Member States and third countries (7 July 2010), available at http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146308.pdf. Even if such a policy were established today, it would have been irrelevant for purposes of interpreting the BIT, which dates to 1991. The fact, as the Award states, in its note 464, that “no EU document has yet been issued endorsing the Maffezini approach or suggesting its incorporation into EU policy” is, accordingly, a non-sequitur.

89 Award ¶ 274. The Award fails to recognize that its finding of a “clarification” in 2006 does not preclude that prior to 2006, which includes the relevant period for purposes of interpreting the Germany-Argentina BIT, Switzerland and Colombia did extend MFN protection to dispute settlement. In any case, there is credible evidence that the Award’s understanding of Swiss investment policy is simply wrong – and ultimately irrelevant to the interpretation of the BIT, as it is based on ex post evidence. See Anne K. Hoffmann, Bilateral Investment Treaty Overview – Switzerland (2008) § B. 1, available at http://www.investmentclaims.com (“The Swiss authorities maintain that there is no particular policy concerning the BITs concluded by Switzerland. It continues to negotiate BITs, thereby further enlarging its already extensive treaty network. Most favoured nation (‘MFN’) as well as umbrella clauses are constant features of Swiss BITs and will continue to be.”).

90 Award ¶¶ 226-32. While discussing the meaning of “in its territory“ the Award engages in piecemeal application of the Vienna Convention without acknowledging its primacy as interpretive guide.

91 Award ¶ 228.

92 Hochtief, Decision on Jurisdiction fill.

93 Cf. supra n.82. Thus it is not, as the Award states in its note 396, a question of this writer’s lapsed “affinity for the Roman law maxim expressio unius est exclusio alterius.”

94 The Award adds that “the absence of the expression ‘all matters’ … [in the Treaty] is consistent with the conclusions which the Tribunal has already reached on the basis of its analysis of the terms ‘treatment’ and ‘in its territory’ Award ¶ 236. The author of this Opinion, to the contrary, finds that the absence of such language does not affect this analysis, a conclusion the Award agrees was reached by the Siemens, National Grid, and Roslnvest Tribunals. Award nn. 413-14 and accompanying text.

95 Award ¶ 238.

96 Award ¶ 238.

97 Award ¶ 239.

98 See Treaty Establishing a Common Market between the Argentine Republic, the Federal Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay, Protocol of Ouro Preto (17 Dec. 1994), Chapter VI, arts. 43-44, available at http://www.sice.oas.org/trade/mrcsr/ourop/ourop_e.asp (providing that disputes between the State Parties shall be settled in accordance with the Brasilia Protocol for the Settlement of Disputes, which provides, inter alia, for international arbitration).

99 See Consolidated Version of Treaty on European Union Art. 35, appended to Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and related Acts, Off. J. C 340 (10 Nov. 1997), available at http://eur-lex.europa.eu/en/treaties/dat/11997D/htm/11997D.html#014501Q077 (providing that “[t]he Court of Justice of the European Communities shall have jurisdiction, subject to the conditions laid down in this Article, to give preliminary rulings on the validity and interpretation of framework decisions, and decisions on the interpretation of conventions established under this Title and on the validity and interpretation of the measures implementing them”); UK/Argentina Double Taxation Convention (3 Jan. 1996), ratified 1 Aug. 1997, Art. 26, available at http://www.hmrc.gov.uk/international/argentina-dtc.pdf (“Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, address his case to the competent authority of the Contracting State of which he is a resident, or … to that of the Contracting State of which he is a national.”) (emphasis added). This latter Convention, providing as it does for a resident investor-taxpayer to “address his case to the competent authority” of his host State, refutes the statement in note 417 of the Award that “all of the examples cited by the Dissenting Opinion involve State-to-State international dispute resolution, not investor versus state.”

100 Renta 4 ¶ 92.

101 Hochtief, Decision on Jurisdiction ¶ 100.

102 Award ¶ 245.

103 Even if the determination of whether the 18-month clause constitutes “less favorable treatment” required consideration of case-specific evidence, as the Award seems to suggest, its arguments on the issue are feeble. Similar to its futility analysis (see supra ¶ 15 and n.43) the Award fails completely to take into account expert evidence in the record, uncontradicted by any expert evidence submitted by Argentina, showing the highly burdensome and ultimately fruitless ordeal Claimant would have to undergo in the Argentine courts before ending up precisely where it currently finds itself: in international arbitration proceedings. The evidence submitted by Claimant here shows that requiring it to resort to the Argentine courts for 18 months is an exercise in waste and futility—which, despite evidence of delay and cost cited by the Award (Award ¶ 246 and n.430) — cannot be said of international arbitration.

104 Award n.426.

105 Award ¶¶ 247-50. In this regard, notes 431-34 are especially noteworthy — for two reasons. First, the Award constructs a hypothetical scenario under which Claimant would recover under the MFN clause for actual delay and costs caused by the Argentine courts. Such a scenario, however, is mere fanciful conjecture that misunderstands the manner in which MFN protections operate. At the outset, an advocate for the host State would point out that Claimant waived the objection with respect to the 18-month clause being “less favorable” treatment by not raising it prior to appearing before local courts. Moreover, a complaint about “less favorable treatment” within the court system is different from arguing that the requirement to resort to the court system itself constitutes “less favorable treatment.” All foreign investors that end up in the Argentine courts, for example, likely face the same obstacles, while Argentine litigants by definition cannot bring the same types of claims as foreign investors. Consequently, Claimant could not prove “less favorable treatment” based on nationality, and its MFN claim would simply be rejected on the merits. Second, as part of applying MFN to domestic court “treatment” the Award finds the MFN clause’s territorial requirement satisfied, in direct contradiction to its actual holding. Other than the Award’s reference to an actual incurrence of costs by the Claimant, which does not affect the manner in which MFN is applied, the Award does not and cannot explain the difference between its analysis of “in its territory” in ¶¶ 225-31 of the Award and the hypothetical scenario mentioned in notes 431-34. The Award finds that this concern is “unfounded” in its note 435. It misses the point, namely that the foreign investor, having been treated equally with other foreign investors, could not prove discrimination.

106 Award n.434.

107 See supra ¶ 18 and n.52.

108 See Siemens, Separate Opinion of Professor Bello Janeiro (30 Jan. 2007), available at http://italaw.com/documents/Siemens-Argentina-Opinion.pdf.

109 Professor Bello Janeiro’s asserted reliance in changing his mind on the examples he cites of Professors Albert Jan van den Berg and Gabrielle Kaufmann-Kohler is, however, clearly misplaced. The fact of the former joining in awards arriving at totally contrary conclusions was not a product of a change of mind, but rather of his declared practice of nemine dissente in investor-State disputes. Compare Enron, Decision on Jurisdiction (14 Jan. 2004) (holding, inter alia, that Argentina could not rely on the necessity defense to avoid liability for acts relating to its 2001 crisis) with LG&E v. Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability (3 Oct. 2006), available at http://icsid.worldbank.org/ICSID/Front-Servlet?requestType=CasesRH&actionVal=showDoc&docId=DC627_En&caseId=C208 (holding, inter alia, that Argentina could rely on the necessity defense with respect to certain acts relating to its 2001 crisis that it committed within a specific period of time); see van den Berg, Albert Jan, Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration, in Arsanjani, Mahnoush et al.(Eds.), Looking to the Future: Essays in International law in Honor of Reisman, W. Michael 822, 828 (2010) (arguing that dissenting opinions by party-appointed arbitrators in investment arbitration not only undermine “the neutrality of the arbitrator and the development of investment law,” but also “weaken the authority of the award”); id. at 836 (adopting as an “aspired principle” the rule “nemine dissentiente”). Yet, precisely because of his devout adherence to this rule, Professor van den Berg was challenged, albeit unsuccessfully, by Argentina in the UNCITRAL case BG Group Pic v. Argentine Republic. See Peterson, Luke Eric, Analysis: Decrying past “cqntradictory” rulings, Argentina challenges arbitrator, Investment Treaty News (1 Apr. 2008), available at http://www.investmenttreatynews.com. Argentina later moved to set aside the award in the United States District Court for the District of Columbia, arguing, inter alia, that: (i) Professor van den Berg’s stance in treating Argentina’s necessity defense evidenced partiality against Argentina; and (ii) the appointing authority had exceeded its authority in rejecting Argentina’s challenge to Professor van den Berg. See Republic of Argentina v. BG Group Pic, U.S. District Court for the District of Columbia, Petition to Vacate or Modify Arbitration Award, Civil Action No. 08485 (RBW), 21 Mar. 2008, ¶ 76. The district court rejected Argentina’s application and ordered that the arbitral award be enforced against Argentina, but this decision was later overturned by the United States Court of Appeals for the District of Columbia Circuit on other grounds. See Republic of Argentina v. BG Group Pic, 665 F.3d 1363 (D.C. Cir. 2012); Republic of Argentina v. BG Group Pic, U.S. District Court for the District of Columbia, Memorandum Opinion, Civil Action No. 08-485 (RBW), 21 Jan. 2011.

Professor Kaufmann-Kohler, on the other hand, cannot be regarded as having changed her mind as regards the possibility of an MFN clause importing into a treaty more favorable dispute resolution provisions of other treaties. She has accepted that an MFN clause is broad enough to encompass dispute resolution, while she also has declined to allow use of the MFN clause in a specific case to expand the tribunal’s arbitral jurisdiction. Compare Suez, Decision on Jurisdiction (16 May 2006) with Austrian Airlines v. Slovak Republic, UNCITRAL, Final Award (9 Oct. 2009), available at http://italaw.com/documents/AustrianAirlinesv.Slovakia.pdf. Although I have expressed disagreement with the merits of Professor Kaufmann-Kohler’s position in the latter case, her view reflects careful consideration of MFN doctrine and jurisprudence and is entitled to respect. See Austrian Airlines, Separate Opinion of Charles N. Brower.

110 Opinion of Professor Domingo Bello Janeiro 8.

111 For the avoidance of doubt, the “direct experience in the Hague International Court of Justice” cited by Professor Bello Janeiro in respect of “Arbitrator Torres-Bernardez,” who sat in the Wintershall and ICS cases, was as Registrar of the Court 1980-86 and subsequently as Judge ad hoc in certain cases.

112 See supra ¶¶ 23-26.

113 See supra ¶¶ 27-32.

1 Maffezini v. Spain, Decision of January 25, 2000, ICSID Case No. ARB/97/7, ICSID Rep. 212 (2001).

2 I followed this case very closely because I found it interesting. In particular, it was the first instance in which the tribunal ruled against a member country of the then OECD (my country, Spain) in a claim brought not by a multinational, as is often the case, but by an individual of Argentine nationality who invested in the Autonomous Community of Galicia, where I live, work and reside. It was the first case in which the Treaty for the Promotion and Reciprocal Protection of Investments between Spain and Argentina was applied. In addition, the Kingdom of Spain was the first European Union country to be ruled against, in a case involving a claim by an Argentine citizen resulting from the creation of a joint venture with Sodiga, the development corporation of the Government of Galicia, for the purpose of constructing a chemical plant in Galicia. Sodiga had used money deposited by the businessman Maffezini to cover project losses and it was decided that Sodiga’s actions constituted unfair and inequitable treatment and that, since it was a public entity, the Spanish Government was responsible for those actions – a responsibility which it indeed assumed.

3 Siemens A. G. v. Argentine Republic (Decision on jurisdiction, August 3, 2004), ICSID Case No. ARB/02/8, 12 ICSID Rep. 174.

4 At the time, I expressed to the other members of the tribunal my view that the ICSID Convention and Rules do not set any time limit for arbitrators to express an opinion, regardless of whether they dissent from the majority. In my case, I explained that I was not saying anything new, since “this opinion has been expressed repeatedly and, indeed, reflected my views at the outset. This opinion should therefore be attached to the award since rule 47, paragraph 3 states that any member may attach his individual opinion to the award. This clearly shows that the text is always attached after the complete award has been signed by the majority or the entire membership, whether or not the opinion dissents from the majority and whether or not it is a statement of dissent. In addition, rule 48, paragraph 2 specifies that the award shall be deemed to have been rendered on the date on which the copies certified by the Secretary-General were dispatched.” This had not yet occurred at the time when my other tribunal colleagues received my individual opinion. The award may include individual opinions and dissenting statements and I had to insist that my individual opinion should be attached to the award and given to the Secretary-General (but not by me directly, so as not to further complicate the issue). I explained the formal problems that might prevent an accurate statement of my wishes, which alter the meaning of my signature of the text as a whole. However, as the other tribunal members are well aware (I have copies of communications between us), this reflects my wishes more accurately. I then stated that “my signature of the entire text is a general expression of consent but not to all the details. Now that I have just received the latest communications by e-mail, as have the other members of the tribunal, I find myself obliged to explain this because I am increasingly confused and wish to express my wishes on the subject in detail, which is why I see no problem including this text.” Admittedly this was at a later stage but it was in any case before the completion of the administrative formalities and it explains my views in greater detail, which I requested at the time should be transmitted to the Secretary-General with the award, so that I would not have to do this myself.

5 See, in particular, the decisions in Salini Costruttori S.p.A. and Italstrade S.p.A v. Hashemite Kingdom of Jordan (Decision on Jurisdiction, November 15, 2004), ICSID Case No. ARB/02/ 13,14 ICSID Rep. 306; Plama Consortium Limited v. Republic of Bulgaria (Decision on Jurisdiction, February 8, 2005), ICSID Case No. ARB/03/24,13 ICSID Rep. 272; Telenor Mobile Communications A.A. v. Republic of Hungary (Award of September 13, 2006), ICSID Case No. ARB/04/15; Vladimir Berschader & Moise Berscharder v. Russian Federation (Award of April 21, 2006), SCC Case No. 080/2004; Wintershall Aktiengesellschaft (Award of December 8, 2008), ICSID Case No. ARB/04/14; Austrian Airlines v. Slovak Republic (Award of October 9, 2009), UNCITRAL. See also Renta 4 S.V.S.A et al. v. Russian Federation (Award on preliminary objections, March 20, 2009) SCC Case No. 024/2007.

6 ICSID Case No. ARB/02/1.

7 ICSID Case No. ARB/01/3.

8 ICSID Case No. ARB/03/19 (Decision on jurisdiction, August 3, 2006).

9 Arbitral Precedent: Dream, Necessity or Excuse? The 2006 Freshfields Lecture. Arbitration International, vol. 23, No. 3, LCIA, 2002, pp. 357-378.

10 Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v. France), Jurisdiction and Admissibility, Judgment of June 4, 2008, paragraph 62.

11 Case Concerning Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v. Russian Federation), Preliminary Objection, Judgment of April 1, 2011, paragraphs 133 to 135.

12 In Wintershall, the tribunal stated: “That an investor could choose at will to omit the second step [the 18-month domestic courts requirement is simply not provided for nor even envisaged by the Argentina-Germany BIT – because (Argentina’s) the Host State’s “consent” (standing offer) is premised on there first being submitted to the courts of competent jurisdiction in the Host State the entire dispute for resolution in local courts.”

13 ICSID Case No. ARB/07/31, Decision on Jurisdiction, October 24,2011, and Separate and Dissenting Opinion of J. Christopher Thomas.

14 McLachlan, Campbell Q.C., Shore, Laurence and Weiniger, Mathew, International Investment Arbitration: Substantive Principles, Oxford University Press, 2007, p. 257.

15 Christoph Schreuer, The ICSID Convention: A Commentary, Cambridge University Press, 2001, para. 356, p. 238.

16 Renta 4 S. V.S.A. v. The Russian Federation, Arbitration Institute of the Stockholm Chamber of Commerce, Award on Preliminary Objections to Jurisdiction (March 20,2009) [hereinafter “Renta 4”], para. 93. The tribunal specifically explained that speculation or readings based on speculation regarding a text create a risk of encroachment on fundamental policy determinations. The same is true when “confirmation“ of a hypothetical intension is said to be found in considerations external to the text. It is then concluded that the duty of the tribunal is to discover and not to create new meaning for the context of a text under consideration.

17 International Court of Justice, Advisory Opinion in Competence of the General Assembly for the admission of a State to the United Nations, ICJ Reports 1950, pp. 4 and 5. If the relevant words [of a treaty] in their natural and ordinary meaning make sense in their context, that is the end of the matter or the purpose and ultimate conclusion of their content.

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The International Centre for Settlement of Investment Dipsutes: Daimler Financial Services AG v. Argentine Republic

  • Karen Halverson Cross (a1)

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