AN ABCD of Post-Award Remedies Investment Treaty Forum, 9 May 2008 Matthew Weiniger, Head of Public International Law, Herbert Smith LLP

_12 A is for Annulment B is for Bolivia C is for Constitutional prohibition D is for De facto refusal to enforce

_13 AWARDS AND ANNULMENT Number of ICSID awards Number of applications for annulment

_14 ANNULMENT – WHO SEEKS IT? Annulment Applications Investor Applicant State ApplicantTotal Decided6915 Pending4610 Settlement/ Discounted 213 Total121628

_15 ANNULMENT Inconsistent? And compared to what? Swembalt v Latvia: Denmark/Sweden Stay jurisprudence: CMS and Azurix

_16 BOLIVIA’S WITHDRAWAL FROM ICSID Written Notice of Denunciation notified 2 May 2007, took effect 3 November 2007 What is its effect?

_17 DENUNCIATION AND THE ICSID CONVENTION Article 71 Any Contracting State may denounce this Convention by written notice to the depository of this Convention. The denunciation shall take effect six months after receipt of such notice. Article 72 Notice by a Contracting State pursuant to Articles 70 or 71 shall not affect the rights or obligations under this Convention of that State or of any of its constituent subdivisions or agencies or of any national of that State arising out of consent to the jurisdiction of the Centre given by one of them before such notice was received by the depositary.

_18 EFFECT OF DENUNCIATION Three possible answers: Investor must perfect consent before notice sent Investor must perfect consent before notice takes effect Investor can continue to rely upon consent in BITs ETI Eurotelecom v Bolivia (Arb 07/28)

_19 ECUADOR 23 November 2007: Withdraws consent for disputes arising out of exploitation of natural resources such as petroleum, gas, minerals and others. Murphy Exploration v Ecuador (Arb/08/04)

_110 CONSTITUTIONAL PROHIBITION Vienna Convention on the Law of Treaties Article 27 Internal law of States, rules of international organisations and observance of treaties 1.A State party to a treaty may not invoke the provisions of its internal law as justification for its failure to perform the treaty. 2.An international organization party to a treaty may not invoke the rules of the organization as justification for its failure to perform the treaty. 3.The rules contained in the preceding paragraphs are without prejudice to article 46.

_111 DE FACTO REFUSAL TO ENFORCE Argentina: The Republic of Argentina hereby provides “an undertaking to CMS Gas Transmission Company that, in accordance with its obligations under the ICSID Convention, it will recognize the award rendered by the Arbitral Tribunal in this proceeding as binding and will enforce the pecuniary obligations imposed by that award within its territories, in the event that annulment is not granted”. Where is the catch?

_112 DE FACTO REFUSAL TO ENFORCE Annulment Stay Decision, para 50, understands this as: “This letter irrevocably comments Argentina to enforce the pecuniary obligations imposed upon it by the Award in the event that annulment is not granted. In the Committee’s view, the letter of Dr. Guglielmino dated 12 June 2006 should dispel the doubts that CMS may legitimately have had in the past.”

_113 WORLD BANK OPERATIONAL MANUAL BANK PROCEDURES BP 7.40, January 1996: 1.When a dispute over default, expropriation, or governmental breach of contract comes to the attention of a Bank staff member, the staff member informs the country department (CD) director and the Legal Department (LEG). In consultation with LEG, the CD director recommends a Bank position to the Regional vice president (RVP). If, on this basis, the RVP decides not to make any new loans to the country, the RVP informs the relevant managing director and the Senior Vice President and General Counsel. 2.If, at the time a loan is presented to the executive directors for approval, there are any substantial amounts in dispute between the borrowing country and suppliers or lenders to, or investors in, that country, the matter is mentioned in the Memorandum and Recommendation of the President/President’s Report. 3.If the Bank decides to lend while a dispute over default or expropriation is pending, staff monitor the situation during project implementation to assess progress toward a settlement or decision.