Pursuing the analysis of the negotiating history and commentary of the ICSID Convention, as well as the "overwhelming" practice of the Member States, Vivendi ascertains that the State’s compliance required under the ICSID Convention "is unaffected by any procedure for collection" (paragraphs 106—125, pp. 43—52).
As to Vivendi, Argentina argues that it cannot be considered "suffering a damage derived from implementing a remedy especially provided for in the ICSID Convention..." paragraph 43). Over and above, payment of interest "constitutes a compensation that safeguards Vivendi’s asset(s) against any hypothetical damage it might go through due to a stay of enforcement of the award" paragraph 49).
For Vivendi, the Committee has to look "for reasonable assurances of compliance", and in the present circumstances "the only reasonable assurance of Argentina’s compliance is a financial guarantee. This is because Argentina has stated clearly and on the record before this Committee that it will not directly comply with the Award. Argentina has stated that, instead, it intends to put Claimants (and all other ICSID award — creditors) through the scrutiny of its own legal system, which, according to Argentina’s own lawyers, holds out the possibility of reviewing, nullifying or reducing payment under the Award" paragraph 22, Claimants’ post-hearing brief.
Consequently, Vivendi concludes that: "Argentina’s legal system does not provide any assurance of compliance with ICSID awards... [i]t most certainly cannot be substituted for, or constitute a reasonable assurance of, compliance with the direct obligation to abide by and comply with ICSID awards under Article 53 of the ICSID Convention" paragraph 57, Claimants’ post-hearing brief.
In addition Argentina presented arguments to the effect that the "termination of the stay of enforcement and/or the imposition of a guarantee or the setting up of an Escrow account would result in irreparable harm" paragraphs 25—30, Respondent’s post-hearing brief.
In this respect, Argentina particularly emphasized the "cascading effect’ impacting on the country "not only in this case but also in the other 40 cases which started as a result of the economic crisis which affected all the Argentine population across -the- board. It would mean setting a precedent for the other Committees to require the same procedure, thus multiplying expenses, costs and consequences. We would no longer be speaking about US$171 million, but billions of dollars resulting in an unquestionably irreparable harm" paragraph 29, Respondent’s post-hearing brief.
On the other hand, Argentina ascertains that the stay of enforcement of the Award does not cause any harm to the Claimants paragraphs 31 —37, Respondent’s post-hearing brief, in reliance mainly in citations from the CMS and Azurix decisions on this precise subject.
(1) That the first annulment in the Vivendi case was not requested by Argentina;
(2) The possibility of having a split outcome as what took place in the CMS annulment case;
(3) That Argentina’s legal system provides adequate assurances of compliance rendering unnecessary any financial guarantee;
(4) The "hardships" to be suffered if required to provide a financial security in order to obtain the stay of enforcement;
(5) The risk of being unable to recover the Award payment from the Claimants in the event annulment is decided;
(6) Argentina’s compliance with all its international obligations under the ICSID Convention, with a record of no failure committed;
(7) Posting a bank guarantee or other financial security could place Claimants in a more advantageous position than they would be if Argentina had not used the right of recourse to annulment, i.e. "being penalized for exercising a legitimate right’ page 16, Respondent’s post-hearing brief); and finally
(8) Claiming that "the requirement for a guarantee and/or any other type of precautionary measure are not consistent with the ICSID Convention" page 17, Respondent’s post-hearing brief.
"1. Either party may request annulment of the award by an application in writing addressed to the Secretary-General on one or more of the following grounds:
(a) that the Tribunal was not properly constituted;
(b) that the Tribunal has manifestly exceeded its powers;
(c) that there was corruption on the part of a member of the Tribunal;
(d) that there has been a serious departure from a fundamental rule of procedure; or
(e) that the award has failed to state the reasons on which it is based." (Emphasis added).
Clearly the remedy envisaged in this opening paragraph is a restricted "annulment" process applicable equally to the foreign investor and the host State as the case may be, once the losing party invokes one or more of the grounds for annulment provided for in this paragraph.
"[...] may, if it considers that the circumstances so require, stay enforcement of the award pending its decision. If the applicant requests a stay of enforcement of the award in his application, enforcement shall be stayed provisionally until the Committee rules on such request". (Emphasis added).
According to the rule stated therein, if the applicant for annulment requests in his application a stay of the enforcement of the attacked award, this has two consequences: (a) there is a provisional stay of enforcement until the Committee once constituted rules on the request, and (b) in the exercise of its discretionary power, as reflected by the word "may", the ad hoc Committee continues the stay of enforcement only "if it considers that the circumstances so require". The continuation of the stay is therefore of an exceptional nature.
Article 53 reads:
"1. The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of the Convention, (Emphasis added).
2. For the purposes of this Section, "award" shall include any decision interpreting, revising or annulling such award pursuant to Articles 50, 51 or 52."
The basic uncontested rule provided for under the first paragraph of this article confirms an absolute logical premise according to which an award rendered under the ICSID Convention has to be considered "binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in the Convention". The only qualification in this respect relates to the "extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention", which includes evidently the stay of enforcement in case of an annulment request under Article 52.
Consequently, whenever the stay of enforcement comes to an end such as upon the rejection of the annulment request, the "binding inherent character of the "award" becomes mandatory without any need or requirement for any other action to be undertaken. This rule constitutes a cardinal pivot upon which the entire structure of the ICSID system is based.
Addressed to all States that adhere to the ICSID Convention, and therefore not limited to the parties to the said arbitration dispute which led to the issuance of the "award" that become finally "binding on them, Article 54 stipulates:
"1. Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such as award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state. (Emphasis added).
2. A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation. (Emphasis added).
3. Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought."
In close association with the rules contained in Article 54 addressed to all States members of the ICSID Convention, Article 55 provides:
"Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution."(Emphasis added).
Undoubtedly, one of the fundamental issues which the drafters of the ICSID Convention were keen to achieve was a total divorce from the recognition and enforcement system which prevailed under domestic laws or under the 1958 New York Convention governing commercial arbitration in the Member States. The domestic and the New York systems understandably require some recourse to domestic courts in order to obtain what is commonly known as an "exequatur", after engaging into judicial procedures that could be lengthy. To eliminate state intervention in the field of investment disputes, and as a necessary consequence of creating an international mechanism to adjudicate such investment disputes under the auspices of ICSID, all sort of recourse to domestic courts (in cases other than those provided by the Convention itself) was to be avoided in all States who are Members of the ICSID Convention, including the host State, in respect of the recognition or enforcement of a finally binding ICSID award rendered against a given State.
Articles 54 and 55 were adopted for that precise purpose and were worded in a manner that excludes any possible court intervention in all States that adhered to the ICSID Convention, particularly the judicial organs of the State which was party to the dispute adjudicated under the ICSID rules.
This basic approach should always be kept in mind in the implementation of the rules provided for under Articles 54 and 55. In other words, the obligation explicitly provided for under the first paragraph of Article 54 according to which: "Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligation imposed by that award within its territories as if it were a final judgment of a court in that State", should be applied in the same manner whether the State in question is the State against which the recognition and enforcement is sought or is another State on whose territory certain assets are present and the pecuniary aspects of the award could be enforced upon.
The second paragraph of Article 54 merely organizes the logistics of seeking the recognition and enforcement, through the identification of a given judicial or other authority whose function is merely administrative, in the sense of undertaking the operation of receiving the copy of the award "certified by the ICSID Secretary-General" as required under Article 49, paragraph 1 of the ICSID Convention. This is the substitute for obtaining an "exequatur" in international commercial arbitrations.
In the opinion of the Committee, it would be contrary to the interpretation provisions of the Vienna Convention on the Law of Treaties to pretend that any organ of the host State can extend an administrative certification function to exercise any possible control over the enforcement process of pecuniary obligations under a finally binding ICSID award. Such activity would contradict the declared objectives of the ICSID Convention. Any possible intervention by a judicial authority in the host State is unacceptable under the ICSID Convention, as it would render the awards simply a piece of paper deprived from any legal value and dependent on the will of state organs. In French legal terminology, they would merely be "obligations potestatives" which are meaningless under all modern legal systems.
Therefore, the Committee cannot adopt a prima facie presumption in favor of maintaining the initial provisional stay of enforcement, leaving only to the Committee the task of deciding whether the stay has to be with or without providing financial security. The Committee has to be convinced first that within the context of the pending case continuation of the stay of enforcement is justified.
As indicated in the CMS v. Argentina Committee’s Decision of 1 September 2006 (paragraph 36, pp. 10-12), a review of the attitudes adopted in previous cases from Amco I and II to Repsol case (Decision of 22 December 2005), leads to the conclusion that there was a general pattern in favor of imposing the posting of a bank guarantee as condition for the stay of enforcement. However, this was not the outcome in the MINE v. Guinea case in 1988, in the Patrick Mitchell v. DRC case in 2004, nor in the MTD v. Chile case in 2005.
The CMS committee considered that Dr. Guglielmino, Procurador del Tesoro de la Nación Argentina, duly represents Argentina as provided for in Rule 18 of the ICSID Arbitration Rules, and that he has the authority to commit Argentina according to what had been decided in many comparable cases by international courts and arbitral tribunals (references cited at paragraph 49 of the CMS Decision, pp. 15-16). Consequently, the ad hoc committee in that case considered as a sufficient reasonable assurance the letter dated 12 June 2006, signed by Dr. Guglielmino, under which Argentina gave 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 as binding and will enforce the pecuniary obligations imposed by that award within its territories, in the event that annulment is not granted" (paragraph 47, CMS Decision, page 15).