Majority of ICSID Tribunal finds jurisdiction over multi-party claim against Argentina

On 8 February 2013, an ICSID tribunal (the “Tribunal“) handed down its Decisionon Jurisdiction and Admissibility in Ambiente Ufficio S.P.A. and others vs. Argentine Republic (ICSID Case No. ARB/08/9) (the “Decision“). The majority of the Tribunal held that it possessed jurisdiction to hear claims brought by 90 Italian nationals (the “Claimants“) under the Argentina-Italy bilateral investment treaty (the “BIT“) and dismissed Argentina’s objections to jurisdiction and admissibility in their entirety. The dissenting opinion of the third arbitrator, Dr. Santiago Torres Bernárdez, was published on 11 June 2013.


The Decision concerns the claims initiated by the Claimants against Argentina in relation to Argentine bonds which significantly lost value when Argentina defaulted on its sovereign debt in 2002. When Argentina started to restructure its economy in the 1990s, one of the measures taken in order to encourage growth and reduce debt and inflation was the issuance of sovereign bonds. From 1991 to 2001, Argentina placed billions of dollars in sovereign bonds across domestic and international capital markets. However, by the late 1990s, Argentina began to suffer a severe economic crisis, causing it to incur additional debt. In 2001, Argentina took various measures in order to reduce its debt but they did not prove successful. In December 2001, Argentina defaulted by announcing the deferral of over US $100 billion of external bond debts owed to both Argentine and non-Argentine creditors, including the Claimants. On 26 June 2008, the Claimants submitted their Request for Arbitration to ICSID.

The Decision

The Claimants asserted that Argentina had breached the terms of the BIT and international law by failing to ensure fair and equitable treatment and full protection and security for their “investment” and that Argentina had expropriated that “investment” without prompt, adequate and immediate compensation. As in Abaclat v. Argentine Republic (ICSID Case No. ARB/07/5) (“Abaclat“), Argentina challenged the jurisdiction and admissibility of the claims brought by the Claimants.

Multi-party proceedings
The Parties agreed that neither the ICSID Convention and Rules, nor the BIT, addressed the subject of multi-party proceedings in ICSID arbitration. However, the Parties disagreed as to how this silence should be interpreted (paragraph 126). In Argentina’s view, this was “an attempt by a great number of unrelated Claimants to jointly arbitrate their claims against a State” which should be dismissed for lack of jurisdiction (paragraph 68). The Tribunal was therefore faced with determining “whether, within the framework of the ICSID Convention, the original submission of multi-party claims requires a specific or additional act of consent on the part of the Respondent beyond the general consent requirement pursuant to Art. 25(1) of the Convention” (paragraph 145).

In the majority of the Tribunal’s view, “not only are multi-party proceedings not excluded by the pertinent provisions of ICSID law, but they are perfectly compatible with them” (paragraph 146). The Tribunal observed that there had been many ICSID cases involving several or even multiple claimants, thus rendering multi-party proceedings a “common feature in ICSID arbitration” (paragraph 135). Further, whilst Argentina had asserted that the acceptance of multi-party proceedings would extend jurisdiction “way beyond the ‘horizon of foreseeability’ of the drafters of the ICSID Convention”, the Tribunal held that this assertion was arguably weakened by the travaux preparatoires of the ICSID Convention, which demonstrated that discussions on this subject had taken place, but had been inconclusive (paragraph 132). Dissenting, Dr. Bernárdez observed that whilst “90 Claimants [was] not unmanageable for the Tribunal”, the present proceedings were “defective” as they required the Respondent’s consent or acquiescence “which was not delivered and continues to be missing” (dissent, paragraph 105).

With regards to the terms of the BIT itself, the Tribunal followed the reasoning adopted by the tribunal in Abaclat and observed that the inclusion of “mass instruments such as bonds” within the BIT’s definition of “investment” suggested that “the authors of the BIT… were envisaging a high number of potential claimants” (paragraph 144).

The Tribunal therefore concluded that “[i]n view of this unambiguous result, the Tribunal sees no benefit in engaging in a policy or efficiency reasoning of any kind… the ICSID Convention, Argentina-Italy BIT and other applicable rules in the present dispute are not opposed to a plurality of claimants jointly submitting a claim to the Centre” (paragraph 146). Further, without reaching a definitive conclusion, the Tribunal also expressed doubt as to whether there could be a potential cut-off point for ICSID arbitration based on a maximum number of claimants: “it is hard to accept the proposition that there is a certain limitation… which cannot be exceeded without jurisdiction being eliminated or forfeited” (paragraph 150).

Contractual link not required amongst claimants bringing a treaty claim
Further, dismissing Argentina’s submission that such multi-party claims must be “intimately linked” (paragraph 152), the Tribunal held that there was no indication in the ICSID Convention or Rules, BIT or arbitral practice which suggested that multi-party proceedings could not be brought by “contractually unrelated claimants with similar claims” (paragraph 156). Indeed, emphasising that its’ Decision must be based on the BIT as an instrument of international law, the Tribunal observed that the Claimants were “correct in arguing that the necessary link among them exists in terms of the treaty claim they jointly submit in the present arbitration” which resulted from the “same illegality” committed by Argentina (paragraph 161).

The meaning of “investment”
The Parties were in agreement that the jurisdiction rationae materiae of ICSID must be founded on Article 1(1) of the BIT and Article 25(1) of the ICSID Convention which states that ICSID’s jurisdiction “shall extend to any legal dispute arising directly out of an investment”.

The Claimants asserted that their “investment” under Article 25 of the ICSID Convention was “the overall loan which made funds available to finance Respondent’s budgetary needs and which is represented by the bonds issued in respect thereof” (paragraph 384). Argentina, however, argued that the Claimants’ “investment” did not meet the requirements of Article 25 and therefore was not entitled to protection under the ICSID Convention.

At the outset of its’ Decision on this point, the Tribunal observed that the meaning of “investment” had become a “heated controversy” in the present case (paragraph 419). Speaking more broadly, the Tribunal also recognised that the term “investment” had been the subject of “intensive debate, not to say controversy” amongst academics and in arbitral decisions and that its’ meaning was “far from being clear” (paragraph 442).

The majority of the Tribunal accepted the Claimants’ categorisation of their “investment”, noting that “to split up bonds and security entitlements… would ignore the economic realities, and the very function, of the bond issuing process” (paragraph 425). Further, the Tribunal held that the bond issuing process must be seen as “an economic unity embodying a single act of investment” (paragraph 433), rejecting Argentina’s argument that the Claimants lacked standing to bring their claims.

Having conducted an analysis of Article 25 of the ICSID Convention under the 1969 Vienna Convention on the Law of Treaties, the Tribunal concluded that the term “investment” should be given a broad meaning and expressed “no doubt” that bonds and security entitlements “such as those at stake in the present proceedings” fell within that definition (paragraphs 470-471).

Regarding the meaning of “investment” under the BIT, the Tribunal equally had “no doubt” that bonds or security entitlements were covered (paragraph 490). Addressing the requirement for an “investment” to be made “in the territory” of the host State, the Tribunal observed that given the character of the investments concerned, physical location in Argentina could not prove decisive (paragraph 498). Rather, the Tribunal determined that one must look at the State which “benefits from this investment” and in this instance, “the whole bond process… was devised – and specifically intended by the Respondent itself – to raise money for the budgetary needs of Argentina” (paragraphs 499-500). Dissenting, Dr. Bernárdez noted that the requirement for an investment to be made “in the territory” of the host State was “expressly and clearly manifested in the text of the BIT” and therefore could not be “put aside in an interpretation of the common intention of Argentina and Italy on the issue of the ‘protected investments’ when they concluded the BIT” (dissent, paragraph 303).

Relevance of the Salini test
Having determined that the term “investment” in Article 25 of the ICSID Convention should “not be subjected to an unduly restrictive interpretation”, the majority of the Tribunal added that “the Salini criteria, if useful at all, must not be conceived of as expressing jurisdictional requirements stricto sensu” (paragraph 479). Even if applied to the Claimants’ “investment” in the present case, the majority of the Tribunal was satisfied that these criteria had been met (paragraphs 482-487). In the view of the majority of the Tribunal, the five Salini criteria (i.e., (i) a certain duration; (ii) a regularity of profit and return; (iii) an assumption of risk; (iv) a substantial commitment by the investor; and (v) significance for the host State’s development) could “still prove useful, provided that they are treated as guidelines and that they are applied in conjunction and in a flexible manner” (paragraph 481). In his dissenting opinion, Dr. Bernárdez criticised this “meaningless” approach, describing it as “mere lip service to objectivity” (dissent, paragraph 266).


The Tribunal’s Decision supplements a growing arbitral jurisprudence concerning the treatment of financial instruments in the fallout of the global financial crisis. As with that of Professor Georges Abi-Saab in Abaclat, the lengthy dissenting opinion of Dr. Bernárdez in the present case once again highlights the divisive nature of such instruments; intense disagreement exists over whether they should constitute a qualifying “investment” within both the BIT framework and the ICSID Convention.

The majority of the Tribunal highlighted the “substantial parallels” between the Abaclat case and the present case (paragraph 10), as well as the “substantial overlap of the questions of fact and law the two Tribunals are confronted with in their respective cases” (paragraph 11). Nonetheless, the Tribunal appears to have been keen to distance itself from the earlier, controversial decision in Abaclat where possible. For instance, the entire Tribunal rejected the terminology of “class action” or “mass claims” utilised in Abaclat, preferring “multi-party action” or “multi-action proceeding” (paragraphs 114-122; dissent, paragraph 72):
“[S]ince a class action mechanism in any technical meaning of the word neither exists under the ICSID Convention nor was it the Claimants’ intention to submit such class action to the Tribunal, the Tribunal is certainly not in the presence of a class action or anything close to it” (paragraph 116).

Further, the Tribunal pointedly distinguished the respective scale of the two sets of claims:
“[T]he “mass claim” concept was commonly relied upon in the context of the Abaclat proceedings with its initially 180,000 and now still 60,000 claimants. Whilst the Tribunal does not take any stand on the question of the appropriate terminology to be used in that case, it would emphasize that the dimension of the Claimants in the case to be decided by the present Tribunal can in no way be compared to the Abaclat case, being merely one thousandth of the latter” (paragraph 120).

Notwithstanding these efforts to distinguish its’ Decision, the majority of the Tribunal frequently re-affirmed the Abaclat majority’s approach in establishing jurisdiction and in suggesting the diminishing relevance of rigid adherence to the Salini criteria in determining whether financial instruments constitute an “investment” under the ICSID Convention.

A third claim by Italian nationals against Argentina in Giovanni Alemanni and others v. Argentine Republic (ICSID Case No. ARB/07/8) was registered on 27 March 2007. Whilst Argentina has again raised preliminary objections concerning jurisdiction and admissibility, the tribunal’s decision is still pending.