On 8 February 2013, the majority of the tribunal in the famous Abaclat and Others v Argentina case issued its 17th procedural order. The first such order dates back to 2008 and this will no doubt not be the last. As is now well known, in 2011, a divided tribunal found that it had jurisdiction to deal with a mass claim brought by 60,000 Italian bondholders in relation to a sovereign debt default by Argentina in 2001 during its financial crisis. In its procedural orders, the tribunal has sought to “reconcile equal treatment of the Parties with considerations of efficiency and the right to be heard“.
This order is particularly significant in that it deals with the appointment of an expert (Dr Wühler) and the scope of his mission to review information in relation to all of the separate entities bringing the claim. As such, it paves the way for the case to proceed. There is, of course, huge pressure for the tribunal to make the case workable in the wake of so much criticism of the Decision on Jurisdiction and Admissibility (the Decision) and in light of so much speculation as to how the procedure will be managed. How will the procedure be formulated within an ICSID framework that does not, on its face, accommodate mass claims?
By way of background, on 4 August 2011, the tribunal held that the case was admissible under the ICSID Rules (Rule 19) and the ICSID Convention (Art 44) and that it was consistent with their spirit to seek to establish a procedure to deal with claims collectively. Many commentators (and a dissenting tribunal member, Georges Abi-Saab) argued that it did so despite the fact that neither these nor the BIT on which the claim was based, made any mention of collective proceedings and, as such, they fell outside the scope of ICSID arbitration and the consent given in the BIT.
For further information about the facts or the Decision, please see our earlier blog post here.
The Tribunal decided that the process of ‘Database Verification’ proposed was in line with the principles in its Decision. In so doing, it rejected Argentina’s objections and confirmed the appointment of the expert and his team to deal with the process.
Initially, the Claimants had proposed a sampling of 50 claimants so that the analysis of information could be somewhat circumscribed. However, the tribunal made an alternative proposal that the expert examine all documents in the database without restricting the review to a sample and it is this proposal that it has endorsed. Inevitably this has an impact on time and costs. Even though the tribunal has factored in a review of only 6 minutes per Claimant, it has concluded that the review will be possible using a team of 16 personnel alongside the expert and take longer than it had originally anticipated in its earlier procedural order.
Both the Claimants and Argentina had objections to this approach. The Claimants were of the view that a wider review would delay the procedural timetable and also that the resultant costs should be shared by Argentina. Costs in 2011 when the Decision was reached, had already exceeded US$31 million. For its part, Argentina maintains that the expert’s review will be too limited: it will not look further than the specific issues covered by the database to determine jurisdiction, namely nationality/incorporation, residence, date of purchase of security entitlements. It will not cover the validity of signatures or the circumstances of claims. In its view, each claim should be dealt with individually in full with respect to jurisdiction as well as the merits.
The Tribunal rejected these objections on the basis that:
- it had already decided that it could handle claims collectively; and
- individual issues such as falsifications of signatures can still be addressed later if specific issues arise, although they are outside the scope of the initial review process.
We will continue to follow the progress of the case with interest as the procedural complexities play out. It seems inevitable that there will be challenges as the tribunal attempts to fill in gaps in the procedure set out in the ICSID Rules. Needless to say, we do not expect a final award on the merits any time soon.