ARTICLES
2. Investment Treaty Arbitration (ITA) Argentina’s default on its coupon payments have also triggered a trilogy of investment disputes – Abaclat v Argentine Republic (Abaclat),180 Ambiente Ufficio v Argentine Republic (AU)181 and Alemanni v Argentine Republic (Alemanni).182 This generated a significant body of commentary183 and attracted the attention of other investors to use ITA in order to enforce their “investment” claims.184 These arbitrations arose from the bondholders’ refusal to participate in the exchange offer proposed by Argentina in 2010.185 While the decisions hitherto concernthe only jurisdiction of the tribunals and admissibility of the claims,186 three key issues which were ventilated give the investors insightinton the viability of ITAs.187 180 Abaclat and others v Argentine Republic (Abaclat), ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility (4 August 2011). 181 Ambiente Ufficio SpA and others v Argentine Repulic (AU), ICSID Case No ARB/08/9, Decision on Jurisdiction and Admissibility (8 February 2013). 182 Alemanni and others v Argentine Republic (Alemanni), ICSID Case No ARB/07/8, Decision on Jurisdiction and Admissibility (17 November 2014). 183 See, for example, Michael Waibel, Sovereign Defaults before International Courts and Tribunals (CUP 2011); Ellie Norton, ‘International Investment Arbitration and the European Debt Crisis’ (2012) 13 Chicago JIL 291; Jessica Beess und Chrostin, ‘Sovereign Debt Restructuring and Mass Claims Arbitration before the ICSID, The Abaclat Case’ (2012) 53 Harvard International LJ 505; Joanna Simões, ‘Arbitration as a Method of Settling Disputes Arising under Sovereign Bonds’ (2012) XI(33) Revista Brasileira de Arbitragem 9; S I Strong, ‘Mass Procedures as a Form of “Regulatory Arbitration” – Abaclat v Argentine Republic and the International Investment Regime’ (2013) 38(2) Journal of Corporation Law 259; Felipe Suescun de Roa, ‘Investor-State Arbitration in Sovereign Debt Restructuring: The Role of Holdouts’ (2013) 30(2) Journal of International Arbitration 131; Youngjin Jung and Sangwook Daniel Han, ‘Sovereign Debt Restructuring under the Investor-State Dispute Regime’ (2014) 31(1) Journal of International Arbitration 75; Ryan McCarl, ‘ICSID Jurisdiction over International Mass Investment Arbitrations – Due Process and Default Rules’ (2015) 51(2) Stanford Journal of International Law 173; Wirtz (n 148) 260; Anna O Mitsou, ‘Greek Debt Restructuring and Investment Treaty Arbitration: Jurisdictional Stumbling Blocks for Bondholders’ (2016) 33(6) Journal of International Arbitration 687. 184 Wirtz (n 148) 260; See generally, Strong (n 183). 185 Norton (n 183) 297. 186 Alemmani (n 182) para 252; Wirtz (n 148) 261. 187 Norton (n 183) 298; Wirtz (n 148) 261; See also, Karen H Cross, ‘Sovereign Arbitration’, in Rosa M Lastra and Lee C Buchheit (eds), Sovereign Debt Management (OUP 2014)
a. “Investment” The first issue concerns whether the sovereign bonds fell within the definition of “investment” within the bilateral investment treaty (BIT) and the Convention on the Settlement of Disputes Between States and Nationals of Other States (ICSID Convention), where applicable.188 The Abaclat tribunal held the sovereign debt must satisfy with the conditions in both the Italy-Argentina BIT and ICSID Convention to constitute a protected “investment”.189 The tribunal held the BIT’s broad definition of investment includes “obligations, private or public title or any other right to performance or services having economic value”,190 including financial instruments.191 The only criterion for the bonds to qualify as an “investment” is that they must “create the value” which State Parties intended to protect under the BIT.192 Thus, purchasing sovereign bonds were considered an “investment” under the Italy-Argentina BIT and ICSID Convention. However, this approach to defining “investment” is not uncontroversial. In his dissenting opinion, Prof Abi-Saab highlighted two reasons why the sovereign bonds were not “investments” for the purposes of the Italy-Argentina BIT and the ICSID Convention. First, he considered the term “investment” to be capable of a much narrower “core” meaning which cannot be contracted out of by means of a BIT.193 AbiSaab also dissented on the basis that there was no territorial jurisdictional link between the sovereign bonds bought by funds on the secondary market and Argentina.194 He opined that since para 12.22 (highlighting only the first two issues). 188 Convention on the Settlement of Disputes Between States and Nationals of Other States (ICSID Convention) 575 UNTS 159. 189 Abaclat (n 180) para 344. 190 Abaclat (n 180) para 352 (emphasis added). 191 Abaclat (n 180) para 353, citing Article 1(1)(c) of the Italy-Argentina BIT. 192 Abaclat (n 180) para 365. 193 Abaclat and others v Argentine Republic (Abaclat), ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility, Dissenting Opinion of Professor Georges AbiSaab (28 October 2011) para 46. 194 Abaclat, Dissenting Op (n 193) para 75, citing the
99