Summary

Source: icsid.worldbank.org

DECISION ON ANNULMENT

TABLE OF CONTENTS

I. INTRODUCTION
II. PROCEDURAL HISTORY
III. RELEVANT FACTUAL BACKGROUND
IV. GROUND 1: MANIFEST EXCESS OF POWERS - ART 52(1)(B)
A. THE PARTIES' POSITIONS
(1) ARGENTINA
a. The Standard
b. Challenges
1. Exercise of Jurisdiction
(i) Taking on the role of an appellate court
(ii) Non-compliance with the terms of Argentina's offer to arbitrate
(iii) Turning a domestic contract dispute into a claim under the BIT
(iv) Failure to hear or analyze Argentina's defence regarding the License revocation
2. Failure to Apply the Law Applicable to the Dispute
(2) CASINOS
a. The Standard
b. Challenges
1. Exercise of Jurisdiction
(i) Taking on the role of an appellate court
(a) The assessment of the actions of ENREJA under international law
(b) The Tribunal's conclusion on jurisdiction
(c) The treatment of Argentina's claims as treaty claims under the BIT
(d) Police powers
2. Failure to Apply the Law Applicable to the Dispute
B. THE COMMITTEE'S ANALYSIS
(1) THE STANDARD
(2) CHALLENGES
1. Exercise of Jurisdiction
(i) Taking on the role of an appellate court
(a) The assessment of ENREJA's actions
(b) The Tribunal's conclusion on jurisdiction
(c) The treatment of Argentina's claims as treaty claims under the BIT
(d) Police powers
2. Failure to Apply the Law Applicable to the Dispute
(i) Failure to apply Argentine law by relying on the "sole effects" doctrine
(ii) Failure to apply Argentine law on the powers conferred upon ENREJA
(iii) Replacement of Argentine law with the standard of "systematic disregard"
(iv) Applying a test of "systematic disregard" found in neither Argentine nor international law
(v) Failure to apply Article 8(6) of the BIT
(vi) Failure to apply international law in failing to analyze Casinos' contribution to the injury
(vii) Failure to apply applicable rules of customary international law governing the regulatory and police powers of sovereign States
V. GROUND 2: SERIOUS DEPARTURE FROM A FUNDAMENTAL RULE OF PROCEDURE - ART 52(1)(D)
A. THE PARTIES' POSITIONS
(1) ARGENTINA
a. The Standard
b. Challenges
1. Burden of Proof
2. Failure to Consider Evidence
(2) CASINOS
a. The Standard
b. Challenges
1. Burden of Proof
2. Failure to Consider Evidence
B. THE COMMITTEE'S ANALYSIS
(1) THE STANDARD
(2) CHALLENGES
1. Burden of Proof
(i) The obligations of ENJASA under the regulatory framework and the consequences of a breach
(ii) The sanctions for ENJASA's failure to apply for an authorization to hire third party operators
(iii) The revocation of the License as a breach of the BIT. ............... 121 2. Failure to Consider Evidence
(i) ENJASA's administrative breaches
(ii) Previous acknowledgement of breaches and previous warnings
(iii) The evidence of Mr Biagosch regarding payment by cheque
(iv) The testimony of the Parties' experts on the notion of "operator"
(v) Argentina's allegations on "final beneficiaries"
VI. GROUND 3: FAILURE TO STATE REASONS - ART 52(1)(E)
A. THE PARTIES' POSITIONS
(1) ARGENTINA
a. The Standard
b. Challenges
1. Contradictory Reasons
(i) Reasoning on lack of proportionality
(ii) Reasoning on arbitrariness
(iii) Reasoning on domestic law
(iv) Reasoning on expropriation
2. Failure to State Reasons
(i) ENJASA's breaches & "systematic disregard"
(ii) Reasoning on Proportionality
3. Frivolous Reasons
(i) International law requirements and the "sole effects" doctrine
(ii) Normalizing of ENJASA's breaches
(2) CASINOS
a. The Standard
b. Challenges
1. Contradictory Reasons
(i) Reasoning on lack of proportionality
(ii) Reasoning on arbitrariness
(iii) Reasoning on domestic law
(iv) Reasoning on expropriation
2. Failure to State Reasons
(i) ENJASA's breaches and "systematic disregard"
(ii) Reasoning on Proportionality
3. Frivolous Reasons
(i) International law requirements and the "sole effects" doctrine
(ii) Normalizing of ENJASA's breaches
B. THE COMMITTEE'S ANALYSIS
(1) THE STANDARD
(2) CHALLENGES
1. Contradictory Reasons
(i) Reasoning on lack of proportionality
(ii) Reasoning on arbitrariness
(iii) Reasoning on domestic law
(iv) Reasoning on expropriation
2. Failure to State Reasons
(i) ENJASA's breaches and "systematic disregard"
(ii) Reasoning on Proportionality
3. Frivolous Reasons
(i) International law requirements and the "sole effects" doctrine
(ii) Normalizing of ENJASA's breaches
VII. COSTS
A. THE PARTIES' POSITIONS
(1) ARGENTINA
a. The Standard
b. Allocation of Costs
c. Assessment of Costs
d. Interest
(2) CASINOS
a. The Standard
b. Allocation of Costs
c. Assessment of Costs
d. Interest
B. THE COMMITTEE'S ANALYSIS
(1) THE STANDARD
(2) ALLOCATION OF COSTS
(3) ASSESSMENT OF COSTS
(4) INTEREST
VIII. DECISION

I. INTRODUCTION

1. This annulment proceeding concerns an application for annulment (the "Application") of the Award rendered on 5 November 2021 in the arbitration proceedings between Casinos Austria International GmbH and Casinos Austria Aktiengesellschaft, and the Argentine Republic (ICSID Case No. ARB/14/32) (the "Award") rendered by a Tribunal composed of Prof. Dr. Hans van Houtte, Prof. Dr. Stephan W. Schill, and Dr. Santiago Torres Bernárdez. The Award incorporated and attached a Decision on Jurisdiction dated 29 June 2018.1

2. The Award addressed a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the Republic of Austria and the Argentine Republic for the Promotion and Protection of Investments, which was signed on 7 August 1992 and entered into force on 1 January 1995 (the "BIT" or the "Treaty"), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").

3. In the Award, the Tribunal found that the Republic of Argentina had breached certain provisions of the BIT. In particular, the Tribunal decided as follows:

(1) Respondent has breached Article 4(1) and (2) of the Argentina- Austria BIT by subjecting Claimants to an unlawful expropriation.

(2) The Tribunal makes no findings as to the claimed breaches by Respondent of Articles 4(3) and 2(1) of the Argentina-Austria BIT, as any such breaches would be subsumed by the finding under (1).

(3) Respondent is liable to pay compensation to Claimants in the amount of USD 21,660,000 plus interest at a rate of 4% per annum compounded annually from 13 August 2013 until full payment thereof.

(4) Respondent shall pay to Claimants for the costs incurred in connection with the proceedings, the fees and expenses of the members of the Tribunal, and the charges for the use of the facilities of the Centre (i) USD 1,736,131.62 and (ii) EUR 3,725,134.37, plus interest at a rate of 4% per annum compounded annually on both (i) and (ii) from the date of the Award until full payment thereof.

(5) The Tribunal rejects all other claims.

4. The Argentine Republic has applied for annulment of the Award on the basis of Article 52 of the ICSID Convention, identifying three grounds for annulment: (i) manifest excess of powers (Article 52(1)(b)); (ii) serious departure from a fundamental rule of procedure (Article 52(1)(d)); and (iii) failure to state reasons (Article 52(1)(e)).

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VIII. DECISION

563. For the reasons set forth above, the ad hoc Committee decides as follows:

(1) Argentina's Application for Annulment is dismissed in its entirety.

(2) Argentina shall bear the entire costs of the proceeding, including the fees and expenses of the Members of the Committee, ICSID's administrative fees and direct expenses in the amount of USD 629.781,53;

(3) Argentina shall, within thirty days of the date of dispatch of this Decision, pay to Casinos the sum of USD 618,285.92 in respect of the latter's legal fees and expenses;

(4) Argentina shall pay interest at a rate of 5 percentage points above the 12-month SOFR rate per annum, compounded annually, on USD 618,285.92 from 30 days after the date of dispatch of this Decision until payment.

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Footnotes omitted