Client Alerts

ITLOS grants request for provisional measures in the “ARA LIBERTAD” case (Argentina v. Ghana)

Volterra Fietta Client Alert
21 December 2012

On 15 December 2012, the International Tribunal for the Law of the Sea (“ITLOS” or the “Tribunal”) granted Argentina’s request for provisional measures in the “ARA Libertad” case. In so doing, the Tribunal ordered that Ghana unconditionally release the Argentine frigate ARA Libertad and its crew from the Ghanaian port of Tema where they had been held since 2 October 2012.

Background to the “ARA Libertad” dispute

Ghana’s retention of the Argentinean military vessel, the ARA Libertad, is the latest episode in a decade-old struggle between Argentina and its creditors who seek money owing under defaulted Argentinian bonds. In 2001, Argentina defaulted on approximately US$95 billion of debt, the largest default in history. The majority of its creditors (some 93%) accepted a restructuring of their loans in 2005 and 2010, reportedly receiving approximately 25-35% of their original investment. However, some hold-out creditors refused this arrangement, and have litigated against Argentina for payment of the full amount.

Elliot Capital Management (“ECM”) is one of the leading hold-out investors, and has been awarded judgments against Argentina in courts in the United States and United Kingdom. NML Capital Limited (“NML”) is a subsidiary of ECM. In December 2006, the United States District Court for the Southern District of New York entered judgment in favour of NML for over US$284 million. NML sought to have this decision enforced in the UK, and in July 2011 the UK Supreme Court upheld that judgment.

On 2 October 2012, NML was granted an injunction in the Ghana High Court to detain the ARA Libertad as collateral against the amount owing under the New York judgment. This is the 29th Argentinian asset impounded by hold-out investors – all 28 prior attempts on Argentinian assets (including the presidential aircraft) have been successfully avoided.

The ARA Libertad and its seizure

The ARA Libertad is a tall ship used by the Argentine Navy for cadet training trips, and was described by Argentina in the hearing before ITLOS as Argentina’s “Ambassador” on the world’s seas. In June 2012, the ARA Libertad departed Argentina on a “good-will tour” of thirteen countries in the South Atlantic, Caribbean, Europe and Africa. It was scheduled to return to Argentina on 8 December 2012.

The ARA Libertad arrived at the port of Tema in Ghana on 1 October 2012 as part of an official visit. It was scheduled to depart the port on 4 October 2012. However, on 2 October 2012, the Ghana High Court (Commercial Division) granted NML an interlocutory injunction and interim preservation order against the vessel. The Court ordered that the vessel be held at the port of Tema, unless Argentina paid a bond of US$20 million for its release. This bond was not paid, and the vessel remained at the port staffed by a 45 person skeleton crew. On 24 October 2012, an Air France flight was chartered (due to fears that an Aerolineas Argentinas or military airplane could also be seized by court order) to return the other 281 crew members to Argentina.
Challenges to Ghanaian jurisdiction

On 5 October 2012, Argentina filed a motion challenging the jurisdiction of the Ghana High Court and requesting an annulment of the injunction. Argentina argued that the vessel was protected by sovereign immunity as a military asset under the 1961 Vienna Convention on Diplomatic Relations. This application was dismissed on 11 October 2012, the High Court finding that Argentina had waived any immunity under the terms of the 1994 Fiscal Agency Agreement (“FAA”) pursuant to which the bonds were issued. The FAA provided that to the extent Argentina or any of its assets were entitled to any immunity from suit, Argentina “irrevocably waived such immunity to the fullest extent permitted by the laws of such jurisdiction”.

Argentina made a further attempt to challenge jurisdiction, seeking a procedural order changing its status from an “unconditional” to a “conditional” defendant. This application was also rejected on 21 November 2012.
Diplomatic efforts

Argentina made a number of diplomatic efforts to secure the release of the ARA Libertad in October 2012. An Argentinian State delegation met with Ghanaian officials in mid-October, but was unsuccessful in its efforts to regain the vessel. On 22 October 2012, Argentinian Foreign Minister Timerman began lobbying at the United Nations. Timerman met with acting Security Council President Gert Rosenthal, who noted that the dispute was not a matter for the Security Council.

Relocating the vessel

A dispute also arose in relation to the Ghana Port Authority’s attempt to relocate the vessel from berth 11 to berth 6, ostensibly seeking to relieve congestion at the port. The Port Authority filed a motion to this effect on 19 October 2012, and the Ghana High Court authorised the move on 5 November 2012. Pursuant to that order, the Port Authority sought to move the vessel on 7 November 2012. However, Argentinian sailors reportedly threatened to open fire if such an attempt was made. In response, the Port Authority cut off electricity and water to the vessel, which was later re-established on 14 November 2012. The ARA Libertad was not relocated, and a contempt of Court Order against the captain of the ARA Libertad was issued following the events of 7 November 2012.

The Case before ITLOS

Argentina and Ghana are both parties to the United Nations Convention on the Law of the Sea (“UNCLOS” or the “Convention”). Upon ratification of the Convention, Argentina had entered a declaration excluding the jurisdiction of the Tribunal to hear disputes concerning “military activities by government vessels … engaged in noncommercial service”. On 26 October 2012, however, Argentina modified its declaration, effectively opting back in to the jurisdiction of the Tribunal over such matters.

Under Article 287 of UNCLOS, when signing, ratifying or acceding to the Convention, a State is free to choose, by way of a written declaration, one or more prescribed means for the settlement of disputes concerning the interpretation or application of the Convention. These means include ITLOS and the International Court of Justice. However, whilst Argentina accepted the jurisdiction of ITLOS first in order of preference for the settlement of such disputes, Ghana had not chosen any preference of means for the settlement of such disputes. Therefore, in accordance with the default procedure contained in Article 287(5) of UNCLOS, the dispute could be submitted only to arbitration in accordance with Annex VII of the Convention. On 30 October 2012, Argentina submitted its Notification and Statement of Claims to Ghana, instituting arbitral proceedings in relation to the detention of the ARA Libertad pursuant to Annex VII of the Convention.

Pending the constitution of an Annex VII arbitral tribunal, Argentina elected to make a request for provisional measures. Under Article 290(5) of UNCLOS:

“Pending the constitution of an arbitral tribunal to which a dispute is being submitted under this section, any court or tribunal agreed upon by the parties or, failing such agreement within two weeks from the date of the request for provisional measures, the International Tribunal for the Law of the Sea … may prescribe, modify or revoke provisional measures in accordance with this article if it considers that prima facie the tribunal which is to be constituted would have jurisdiction and that the urgency of the situation so requires.”

Accordingly, on 14 November 2012, Argentina requested ITLOS to adopt the following provisional measure:
“that Ghana unconditionally enables the Argentine warship Frigate ARA Libertad to leave the Tema port and the jurisdictional waters of Ghana and to be resupplied to that end.”

In its Notification and Statement of Claims, Argentina requested ITLOS to declare that Ghana had violated a number of its international obligations by detaining the vessel, adopting judicial measures against it and not allowing it to refuel. First, Argentina submitted that Ghana had violated its obligation to respect the immunities from jurisdiction enjoyed by warships under Article 32 of UNCLOS and Article 3 of the 1926 Convention for the Unification of Certain Rules concerning the Immunity of State-owned Vessels, as well as customary international law. Secondly, Argentina’s Notification and Statement of Claims argued that Ghana had prevented the exercise of the right of the ARA Libertad to “sail out of the waters subject to the jurisdiction of the coastal State and the right of freedom of navigation”, pursuant to Articles 18, 87 and 90 of the Convention.

The Tribunal’s Order of 15 December 2012

In its Order of 15 December 2012 (the “Order”), the Tribunal determined that the Annex VII tribunal to be constituted would have prima facie jurisdiction over the dispute. The Tribunal found that a difference of opinion existed between Argentina and Ghana as to the applicability of Article 32 of the Convention. Consequently, this indicated a dispute between the parties concerning the interpretation or application of UNCLOS, and thus afforded a basis for the Annex VII tribunal to exercise prima facie jurisdiction.

In a separate Declaration, Judge Paik noted that there was a “rather low threshold” for establishing prima facie jurisdiction (but that this was counter-balanced by stricter requirements, such as urgency and irreparability). In their Joint Separate Opinion, Judges Wolfrum and Cot noted that there were “valid considerations” which would preclude the Annex VII arbitral tribunal from deciding that prima facie it had jurisdiction. However, in their view, Ghana’s position was “fraught with contradictions” and was estopped from objecting to the provisional measures prescribed, having given its official assurances to Argentina for the visit of the ARA Libertad.

As to the urgency of the situation, the Tribunal found that the attempts by the Ghanaian authorities on 7 November 2012 to board the vessel and move it by force to another berth, demonstrated the “gravity” of the situation and underlined the “urgent need” for the institution of provisional measures. Judge Paik noted that any dispute involving a warship “has the potential to disrupt peace and security”, and the fact that this dispute involved an unarmed training vessel “did not affect the gravity of the situation”.

Having established both prima facie jurisdiction and that the urgency of the situation required the prescription of provisional measures, the Tribunal unanimously prescribed the following provisional measure under Article 290(5) of the Convention, such that:

“Ghana shall forthwith and unconditionally release the frigate ARA Libertad, shall ensure that the frigate ARA Libertad, its Commander and crew are able to leave the port of Tema and the maritime areas under the jurisdiction of Ghana, and shall ensure that the frigate ARA Libertad is resupplied to that end.”

Pursuant to the Rules of the Tribunal, Argentina and Ghana are required to submit an initial report and information on compliance with the provisional measure prescribed no later than 22 December 2012.

Compliance

Ghana has now released the ARA Libertad pursuant to the Tribunal’s Order. On 19 December 2012, the Supreme Court of Ghana invalidated the decision of the Ghana High Court granting the injunction. A statement issued by the Deputy Minister of Foreign Affairs noted that Ghana had never considered itself to be in a dispute with Argentina, but that the dispute is between Argentina and a private foreign company. The statement also noted that the Government of Ghana had been bound to respect the decision of the High Court to detain the vessel, due to the separation of powers and independence of the judiciary. The vessel is expected to arrive in Mar del Plata on 9 January 2013.

Comment

Argentina’s success in obtaining this Order from ITLOS demonstrates how UNCLOS, through the prescription of provisional measures, can provide a practical and effective tool for States in situations of urgency where a dispute arises out of violations of the Convention.

As to Ghana’s argument that the executive was to have regard to the independence of the judiciary, as noted in the Separate Opinions of Judges Cot, Lucky, Rao and Wolfrum, such an argument cannot absolve Ghana from its State responsibility under international law. A State cannot hide behind its domestic law in order to justify its failure to meet its international obligations.

Looking ahead, the case should now proceed to the merits phase before an Annex VII arbitral tribunal. Assuming that it does so, one of the main legal issues in dispute will be the application of Article 32 of UNCLOS. This provision stipulates that nothing within the Convention shall affect the immunity of warships, such as the ARA Libertad. Whilst Argentina interprets Article 32 as reflective of customary international law and offering complete immunity for warships, Ghana maintains that this immunity is reserved for the territorial sea only, with internal waters and ports excluded from the scope of the Convention.

In prescribing the unconditional release of the ARA Libertad, ITLOS has in essence granted the principal relief being sought by Argentina on the merits. In its Notification and Statement of Claims, Argentina also requested that Ghana pay “adequate compensation for all material losses caused”, offer a “solemn salute to the Argentine flag” in order to satisfy moral damage caused, and impose “disciplinary sanctions” on the Ghanaian officials directly responsible. It remains to be seen whether Argentina will continue to pursue these additional requests for relief through the merits phase and, if it does, how they will fare before the Annex VII arbitral tribunal dealing with the merits of the case.