Ambiente Ufficio S.p.A. and others v Argentine Republic (ICSID Case No ARB/08/9)

In Ambiente Ufficio S.p.A. and others v Argentine Republic, an ICSID tribunal held that it had general jurisdiction over a multi-party claim commenced by 90 distinct Italian nationals against Argentina in respect of harm said to result from Argentina’s default and later partial restructuring of its sovereign debt. It might at first blush appear that the tribunal’s willingness to admit a 90-party claim is an affirmation of the favourable approach to so-called “mass claims" taken by its "sister tribunal" in Abaclat (and others) v The Argentine Republic. However, the number of claimants in those two cases differs markedly, and the tribunal avoided deliberating on the correctness of the Abaclat award.

Background

In 2001, in the midst of the Argentine economic crisis, Argentina defaulted on its sovereign debt and suspended payment of government bonds.

In Abaclat (and others) v The Argentine Republic (ICSID Case No ARB/07/5), an ICSID tribunal confirmed its jurisdiction over a “mass claim” advanced by around 60,000 claimants.

Facts

The Ambiente Ufficio arbitration concerns claims, advanced by 90 claimants, that by issuing and subsequently defaulting on government bonds, Argentina breached its international obligations under the Agreement between the Argentine Republic and the Republic of Italy for the Encouragement and Protection of Investments of 22 May 1990 ("Argentina-Italy BIT").

Argentina raised preliminary objections to the tribunal’s jurisdiction, arguing that it had not consented to multi-party proceedings in ICSID arbitration.

Decision

The tribunal issued a majority Decision on Jurisdiction and Admissibility dismissing Argentina’s preliminary objections in their entirety. The tribunal distinguished the "dimension" of the "multi-party" claim in Ambiente Ufficio from the "class-action- or mass claim-type collective proceedings" in Abaclat, the former "being merely one thousandth of the latter". Moreover, the tribunal rejected the suggestion that the number of claimants might in itself call, as it did in Abaclat, for the modification or adaptation of procedural arrangements to guarantee the manageability or fairness of the case.

Having clarified what it called the "terminological imbroglio" of multi-party proceedings, and having firmly refuted any suggestion that the arbitration involved a "mass claim" or "class action", the tribunal proceeded to review its jurisdiction by asking the question:

"whether, within the framework of the ICSID Convention, the original submission of a multi-party claim requires an act of consent on the part of the Respondent beyond the general jurisdictional requirement of written consent pursuant to Art. 25(1) of the Convention".

The tribunal answered this question in the negative, finding that multi-party proceedings are "perfectly compatible" with the ICSID Convention in the absence of explicit consent. The tribunal arrived at this conclusion via the following considerations:

1. Article 25 of the ICSID Convention is silent regarding the admissibility of multi-party proceedings. As noted in Abaclat, this silence could be considered a "qualified silence" (an intended silence indicating that multi-party proceedings are not permissible) or a "gap" (an unintended silence which the tribunal has the power to fill). Article 25 is prima facie susceptible to either interpretation.
2. The travaux preparatoires to the ICSID Convention indicate that inconclusive discussions took place regarding the possibility of multi-party proceedings. This weakened Argentina's claim that accepting multi-party arbitrations would extend jurisdiction "way beyond the 'horizon of foreseeability' of the drafters of the ICSID Convention".
3. The civil procedural laws of both Argentina and Italy were familiar with multi-party proceedings when those countries gave consent to the ICSID Convention and the Argentina-Italy BIT.
4. There have been dozens of ICSID cases involving multiple claimants, thereby rendering multi-party arbitration a "common feature" in ICSID arbitration. (For example, there were 46 claimants in Bayview and others v Mexico and 137 claimants in Alasdair Ross Anderson and others v Costa Rica). According to the tribunal, the silence of respondents and tribunals regarding the number of claimants in these cases might indicate that a multitude of claimants is not an obstacle for ICSID cases to proceed.
5. The admissibility of multi-party proceedings is accepted by commentators, most notably in Professor Schreuer's Commentary on the ICSID Convention.
6. Bonds by their nature tend to involve a high number of investors, and generally require collective relief in order to provide effective protection. This suggested that the authors of the Argentina-Italy BIT, by the very act of specifically including bonds as a protected investment, envisaged a high number of potential claimants.

As to the scope of Argentina's consent to multi-party proceedings, the tribunal doubted whether there could be a potential cut-off point based on a maximum number of claimants; in any event, in the tribunal's opinion, 90 claimants did not exceed any applicable threshold.

The tribunal also rejected the proposition that claimants require a contractual link in order to commence a multi-party proceeding, citing with approval the Abaclat ratio that "[t]he only relevant question is whether Claimants have homogeneous rights of compensation for a homogeneous damage caused to them by potential homogeneous breaches by Argentina of homogeneous obligations provided for in the BIT". The tribunal found that, while there were certain differences between the claimants regarding the dates and the series of bonds under which the different security entitlements were acquired, there was sufficient homogeneity between the claims to justify a single proceeding.

Comment

The Abaclat decision to admit 60,000 claimants sparked considerable controversy and a withering Dissenting Opinion by Professor Georges Abi-Saab; the Tribunal in Ambiente Ufficio clearly sought to distance itself from that debate. It is unlikely that the outcome in Ambiente Ufficio will attract the same degree of criticism as Abaclat. The highly homogeneous nature of the claims, including near-identical factual and investment backgrounds, is likely to be manageable. Moreover, as the tribunal emphasised, bond investments will naturally give rise to large numbers of claimants (contrast, for example, shareholder claims, which do not generally require collective relief in order to provide effective protection). These and other issues will likely be addressed in the forthcoming dissenting opinion of Dr Santiago Torres Bernárdez.

A version of this article has previously been published by Philip Devenish, Herbert Smith Freehills LLP on PLC Arbitration.