January 20, 2017 Practice Points

Mass Arbitration Consent Award Is Finalized

By S.I. Strong

The consent award in Abaclat v. Argentina (ICSID Case No. ARB/07/5 December 29, 2016), a "mass" arbitration involving a joint investment claim by 60,000 Italian bondholders against Argentina, recently was finalized, thereby bringing the dispute officially to an end. However, there is much for commentators and practitioners to consider in the documents, thereby ensuring that the larger debate is not over.

First, the consent award indicates that, in ending the dispute, the parties make no admission as to the jurisdiction of International Center for the Settlement of Investment Disputes (ICSID). Although the existence of a settlement and consent award means that there will be no internal ICSID appeal (annulment procedure) of the earlier decisions of the tribunal, including the much-discussed preliminary award allowing the claimants to go forward jointly, the reservation about the jurisdiction of ICSID means that Argentina can in the future make the same objections to mass or large scale proceedings that it made in Abaclat without running into problems of inconsistency and waiver. This does cast something of a pall on the preliminary award in Abaclat, although two subsequent tribunals (Ambiente Ufficio and Alemanni) have embraced much of the reasoning in that award, which provides some consistency and continuity.

Second, the process of using a consent award to terminate an investment arbitration may be of interest to those debating the need for a new UNCITRAL instrument concerning the enforceability of settlement agreements arising out of international arbitration. While the discussion about a new instrument has been focusing primarily on commercial matters (rather than investment matters), there is some overlap in expertise in the room, and the Abaclat consent award will be uppermost in the minds of the delegates at the upcoming Working Group II meeting of the United Nations Commission on International Trade Law. The primary question faced by the delegates will be why a new instrument is needed if a consent award suffices (of course, we don't know whether a consent award suffices in all circumstances, particularly in the commercial context, where the method of objecting to an award is different than in the investment context, but that may not stop the question from arising).

Third, the Argentinian-appointed arbitrator issued a somewhat unusual "additional declaration" indicating among other things that he would not have signed the consent award had the reservation about jurisdiction not been included in the document. His statement goes on for five single-spaced pages. In response, the majority issued a single-page additional declaration indicating that they believed the statement by the state-appointed arbitrator

contains information which is largely irrelevant to this Consent Award, relies on a unilateral and partly inaccurate presentation of facts and is in breach of the principle of secrecy of the deliberations.

The party-appointed arbitrator then issued another declaration, stating that he did not agree with the declaration of the majority. This back-and-forth between the members of the tribunal is unfortunate for a number of reasons and will doubtless be fodder for future commentary.

Keywords: mass arbitration, consent award, investment arbitration, international, Argentina, Italian bondholders

S.I. Strong is the Manley O. Hudson Professor of Law at the University of Missouri School of Law, in Columbia, Missouri.

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