Luke Peterson provides the basic details:
A review panel at the International Centre for Settlement of Investment Disputes (ICSID) has annulled a 2007 arbitral award rendered in favour of the Enron corporation and Ponderosa Assets L.P. (hereinafter Enron”) in a dispute arising out of the Argentine financial crisis.
The July 30, 2010 ruling by a three-member ad-hoc annulment committee is the second in recent months to find serious fault with the work of a prior arbitration tribunal in a case involving the Republic of Argentina.
He then offers some context:
At first glance, the annulment of the Enron award marks the latest in a string of upheavals which have lent some uncertainty to the resolution of disputes between Argentina and foreign investors.
The June 29, 2010 annulment ruling*** in the Sempra v. Argentina case came as a particular shock to many observers, not least as the ICSID’s review process is touted as a limited one which does not subject awards to a full appeal or provide for mere errors of law to be overturned.
However, viewed in context, the annulment of the Sempra award, as well as the sharp criticism (but non-annulment) of an earlier award in the CMS v. Argentina case, both pertained to a legal approach spearheaded by a single tribunal chairman: Prof. Francisco Orrego Vicuna. What’s more, annulment committees took issue (to different degrees) with a failure of Prof. Orrego Vicuna and his co-arbitrators to take seriously Article XI of the US-Argentina BIT as a stand-alone defence separate from the necessity defence under customary international law.
In this sense, criticism of the Sempra and CMS awards seemed of less relevance to the myriad of other claims against Argentina, a number of which arise out of differently-drafted investment treaties.
While it might be tempting to view the annulment of the Enron v. Argentina award, as yet another instance where an annulment committee has simply found problems with Prof. Orrego Vicuna’s approach to the US-Argentina BIT, it should be stressed that the recent Enron annulment decision hinges on the interpretation and application of the customary international lawdefence of necessity – a defence which is relevant to the full cross-section of Argentine crisis arbitrations.
Todd Tucker of Global Trade Watch has this take:
In the Sempra case from earlier this summer, however, the annulment committee, in an apparent last-ditch effort to save the dying legitimacy of the BIT system, sided with Argentina and annulled the $128 million award. And now, with this Enron annulment committee decision earlier this week on the $106 million award, we have a similar tactic occurring.
Is that right? Would the annulment committee really be thinking like that? I can't find a quote, but I feel like I've heard the same thing said about the Methanex and Loewen NAFTA Chapter 11 tribunals: they rejected the claims because they were trying to perserve the system. I don't know how to prove or disprove that kind of theory, though.
ADDED: Here's a Loewen quote:
Loewen was widely panned in the arbitration community as a mistake and an accommodation of anti–NAFTA sentiment in Congress ["A 'Completely Appalling' Decision," Focus Europe , Summer 2004]. " Loewen was just a travesty," says Potter. "I think there's a very broad consensus on that." Another leading figure in investment arbitration comments: "I think the outcome would have been very different if the U.S. had not been the respondent in that case. [But] if Loewen had won, we might not have a Chapter 11 today, and maybe that's why the tribunal decided the way it did."
