Annulment Counter-Memorial | Eiser Infrastructure Limited and Energía Solar Luxembourg S.à r.l.'s Counter-Memorial on Annulment dated June 11, 2018 |
Annulment Hearing | Hearing on Annulment held on March 14 and 15, 2019 in Paris |
Annulment Memorial | Spain's Memorial on Annulment dated March 8, 2018 |
Annulment Rejoinder | Eiser Infrastructure Limited and Energía Solar Luxembourg S.à r.l.'s Rejoinder on Annulment dated November 6, 2018 |
Annulment Reply | Spain's Reply on Annulment dated August 24, 2018 |
Application for Annulment | Spain's Application for Annulment of the Award dated July 21, 2017 |
Arbitration Rules | ICSID Rules of Procedure for Arbitration Proceedings |
Award | Award rendered by the Arbitral Tribunal on May 4, 2017 |
Brattle Group/ Brattle | The Brattle Group, the Eiser Parties' quantum and regulatory experts in the Underlying Arbitration |
Committee | The ad hoc Committee composed of Prof. Ricardo Ramírez Hernández (President), Mr. Makhdoom Ali Khan, and Judge Dominique Hascher |
CSP Plant | Concentrated Solar Power Plant |
Dr. Alexandrov | Dr. Stanimir A. Alexandrov, member of the Arbitral Tribunal in the Underlying Arbitration |
EC | European Commission |
ECT | Energy Charter Treaty, which entered into force on April 16, 1998 for Luxembourg, the United Kingdom and the Kingdom of Spain |
Eiser Parties/ Claimants | Eiser Infrastructure Limited and Energía Solar Luxembourg S.à r.l. |
Ex. C-[#] | Eiser Parties' Exhibit |
Ex. CL-[#] | Eiser Parties' Legal Authority |
Ex. R-[#] | Spain's Exhibit |
Ex. RL-[#] | Spain's Legal Authority |
First Brattle Quantum Report | Expert Report of The Brattle Group – Financial Damages to EISER, dated October 30, 2014 submitted in the Underlying Arbitration |
First Brattle Regulatory Report | Expert Report of The Brattle Group – Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated October 29, 2014 submitted in the Underlying Arbitration |
ICSID Convention | Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 |
ICSID or Centre | International Centre for Settlement of Investment Disputes |
Mr. Lapuerta | Mr. Carlos Lapuerta (Principal of The Brattle Group), expert on economic analysis and financial valuation in the Underlying Arbitration |
Second Brattle Quantum Report | Second Expert Report of The Brattle Group – Rebuttal Report: Financial Damages to EISER, dated September 17, 2015 submitted in the Underlying Arbitration |
Second Brattle Regulatory Report | Second Expert Report of The Brattle Group – Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated September 17, 2015 submitted in the Underlying Arbitration |
Sidley Austin | Sidley Austin LLP |
Spain/ Applicant/ Respondent | the Kingdom of Spain |
Tr. Day [#] [speaker], [page:line] | English transcript of the Annulment Hearing (as revised by the Parties on May 9, 2019) |
Tribunal | Arbitral Tribunal composed of Prof. John R. Crook (President), Dr. Stanimir A. Alexandrov, and Prof. Campbell McLachlan |
Underlying Arbitration | Arbitration proceedings between Eiser Infrastructure Limited and Energía Solar Luxembourg S.à r.l. and the Kingdom of Spain, ICSID Case No. ARB/13/36 |
Vienna Convention | Vienna Convention on the Law of Treaties. United Nations Treaty Series, Vol. 1155, p. 331 (May 23, 1969) |
For the Applicant :
Counsel
Mr. José Manuel Gutiérrez Delgado Abogacía del Estado, Ministerio de Justicia
Ms. María José Ruiz Sánchez Abogacía del Estado, Ministerio de Justicia
Mr. Pablo Elena Abad Abogacía del Estado, Ministerio de Justicia
Ms. Patricia Elena Froehlingsdorf Nicolás Abogacía del Estado, Ministerio de Justicia
Ms. Gabriela Álvarez Ávila Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Benard Preziosi Curtis, Mallet-Prevost, Colt & Mosle LLP
Ms. Arianna Sanchez (by Curtis, Mallet-Prevost, Colt & Mosle LLP videoconference)
Mr. Ricardo Mier y Terán Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Mariana Gómez Vallin Curtis, Mallet-Prevost, Colt & Mosle LLP
For the Eiser Parties :
Counsel
Mr. Jeffrey Sullivan Gibson, Dunn & Crutcher LLP
Mr. Rahim Moloo Gibson, Dunn & Crutcher LLP
Ms. Ceyda Knoebel Gibson, Dunn & Crutcher LLP
Ms. Ankita Ritwik Gibson, Dunn & Crutcher LLP
Mr. Theo Tyrrell Gibson, Dunn & Crutcher LLP
Court Reporters:
Mr. Dante Rinaldi D-R Esteno
Ms. Dawn Larson Worldwide Reporting
Interpreters:
Ms. Amalia Thaler - de Klemm English/Spanish Interpreter
Ms. Gertrudis Durkop English/Spanish Interpreter
Mr. Daniel Giglio English/Spanish Interpreter
Under Article 52(1)(a) of the ICSID Convention, a party may seek the annulment of an award if the tribunal "was not properly constituted." According to the Applicant, this provision has to be read together with Chapter IV, Section 2 of the ICSID Convention titled "Constitution of the Tribunal", which includes Article 40(2). Article 40(2) states that the arbitrators must possess the qualities listed in Article 14(1), which include impartiality and independence. Thus, under Article 52(1)(a) of the ICSID Convention, an award can be annulled for improper constitution of the tribunal if an arbitrator did not possess the qualities of impartiality and independence.7
Annulment Memorial, ¶¶ 73-75; citing Ex. RL-0102, EDF International S.A., SAUR International S.A. and León Participaciones Argentinas S.A. v. Argentine Republic, ICSID Case No. ARB/03/23, Decision dated February 5, 2016 ("EDF v. Argentina, Decision on Annulment"), ¶¶ 126-127; Ex. RL-0103, Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/03/19, Decision on Argentina's Application for Annulment dated May 5, 2017 ("Suez v. Argentina, Decision on Annulment"), ¶ 77; Annulment Reply, ¶¶ 34-35.
The Applicant rejects the Eiser Parties' argument that Article 52(1)(a) of the ICSID Convention only applies to procedural deficiencies regarding the constitution of the tribunal at the outset of an arbitration. The Applicant's position is based on the following reasons: (i) the Eiser Parties have not provided a single authority that supports such interpretation;9(ii) issues related to the independence and impartiality of the arbitrators can arise throughout the entire proceeding, as supported by Rule 6 of the Arbitration Rules;10 and, (iii) previous committees and commentators have recognized that the tribunal was not properly constituted if an arbitrator did not possess the qualities of independence and impartiality.11
Annulment Reply, ¶¶ 27, 34, 37.
Annulment Reply, ¶¶ 31-32, 38-39, 48.
Annulment Reply, ¶ 37; citing Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 126; Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 77.
The Applicant recognizes that, as a general rule, a party must challenge the arbitrator promptly, when the relevant facts are known and, in any event, before the proceeding is declared closed. However, it has been recognized that a party can still challenge the independence and impartiality of an arbitrator in annulment proceedings if the relevant facts only became known once the arbitration proceedings were closed.12
Annulment Memorial, ¶¶ 76-77, relying on Ex. RL-0106, Christoph H. Schreuer et al., THE ICSID CONVENTION: A COMMENTARY (2nd ed., Cambridge University Press: 2009) ("Schreuer et al., THE ICSID CONVENTION"), p. 937; Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 130.
According to the Applicant, the facts surrounding the close relationship between Dr. Alexandrov and Brattle only came to light after the Award was rendered, when public reports of such relationship emerged in July 2017, as a consequence of a challenge filed in an unrelated arbitration involving Pakistan.13 Therefore, it can still raise the challenge to Dr. Alexandrov's independence and impartiality at the annulment stage.
Application for Annulment, ¶ 31; Annulment Memorial, ¶¶ 70, 72, 77; citing Ex. R-0280, T. Jones, Pakistan challenges arbitrator over valuation method, GLOBAL ARBITRATION REVIEW, July 12, 2017; Ex. R-0281, L. Peterson, As damages phase unfolds in Pakistan mining case, a challenge is lodged against Stanimir Alexandrov – citing his client's alleged interest in a rarely-used valuation method under scrutiny, INVESTMENT ARBITRATION REPORTER, July 11, 2017; Annulment Reply, ¶ 25.
According to the Applicant, to demonstrate the lack of independence and impartiality of an arbitrator, it must prove that a reasonable third party would consider that there were reasonable grounds for an appearance of dependence or bias.14 It is not required, however, to prove actual bias.15 Further, pursuant to Article 57 of the ICSID Convention, the lack of the required qualities must be "evident" or "obvious" but does not need to be "self-evident."16 When the challenge to the independence and impartiality of an arbitrator is raised for the first time in annulment, the committee must approach the question de novo.17
Annulment Memorial, ¶¶ 80-81; Annulment Reply, ¶¶ 49-52, 54, 58; citing, inter alia, Ex. RL-0104, Blue Bank International & Trust (Barbados) Ltd. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/12/20, Decision on the Parties' Proposals to Disqualify a Majority of the Tribunal dated November 12, 2013 ("Blue Bank v. Venezuela, Decision on Disqualification"), ¶¶ 59-60; Ex. RL-0105, Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on the Proposal for Disqualification of Professor Francisco Orrego Vicuña dated December 13, 2013 ("Burlington Resources v. Ecuador, Decision on Disqualification"), ¶¶ 66-67; Ex. RL-0107, Repsol S.A. and Repsol Butano S.A. v. Argentine Republic, ICSID Case No. ARB/12/38, Decision on the Proposal to Disqualify a Majority of the Tribunal dated December 13, 2013 ("Repsol v. Argentina, Decision on Disqualification"), ¶¶ 71-72; Ex. RL-0108, Caratube International Oil Company LLP and Mr. Devincci Salah Hourani v. Republic of Kazakhstan, ICSID Case No. ARB/13/13, Decision on the Proposal for Disqualification of Mr. Bruno Boesch dated March 20, 2014 ("Caratube v. Kazakhstan, Decision on Disqualification"), ¶¶ 54, 57, 77.
Annulment Reply, ¶ 27; Annulment Reply, ¶¶ 53-54.
Annulment Reply, ¶ 52; citing Ex. RL-0175, Raiffeisen Bank International AG and Raiffeisenbank Austria D.D. v. Republic of Croatia, ICSID Case No. ARB/17/34, Decision on the Proposal to Disqualify Stanimir Alexandrov dated May 17, 2018 ("Raiffeisen Bank v. Croatia, Decision on Disqualification"), ¶ 79; Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, ¶ 59; Ex. RL-0105, Burlington Resources v. Ecuador, Decision on Disqualification, ¶ 66; Ex. RL-0107, Repsol v. Argentina, Decision on Disqualification, ¶ 71; Ex. RL-0108, Caratube v. Kazakhstan, Decision on Disqualification, ¶¶ 57, 77; Ex. RL-0173, İçkale İnşaat Limited Şirketi v. Turkmenistan, ICSID Case No. ARB/10/24, Decision on Claimant's Proposal to Disqualify Professor Philippe Sands dated July 11, 2014 ("İçkale v. Turkmenistan, Decision on Disqualification"), ¶ 117; Ex. RL-0174, BSG Resources Limited, BSG Resources (Guinea) Limited and BSG Resources (Guinea) SARL v. Republic of Guinea, ICSID Case No. ARB/14/22, Decision on the Proposal to Disqualify All Members of the Arbitral Tribunal dated December 28, 2016 ("BSG Resources v. Guinea, Decision on Disqualification"), ¶ 57; Ex. CL-0291, Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan, ICSID Case No. ARB/12/1, Decision on the Respondent's Proposal to Disqualify All Members of the Tribunal dated February 5, 2018 ("Tethyan Copper v. Pakistan, Decision of ICSID Administrative Council Chairman"), ¶ 98.
Annulment Memorial, ¶ 78; Annulment Reply, ¶¶ 41-45, relying onEx. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 132.
First, according to the Applicant, during the course of his 15 years at Sidley Austin's Washington, D.C. office, where Dr. Alexandrov was a partner and co-head of the firm's international arbitration practice, Dr. Alexandrov and his team appointed the Brattle Group in numerous cases where he served as counsel, including, but not limited to, nine investor-State arbitrations, including eight at ICSID alone, and numerous commercial arbitrations.21 In four of these cases Mr. Lapuerta was the testifying expert.22
The Applicant refers to: (i) Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29 (Stanimir Alexandrov as counsel for the claimant, Brattle as the claimant's damages expert); (ii) PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Şirketi v. Republic of Turkey, ICSID Case No. ARB/02/5 (Stanimir Alexandrov as counsel for the respondent, Brattle (Carlos Lapuerta) as the respondent's damages expert); (iii) Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/04/5 (Stanimir Alexandrov as counsel for the claimants, Brattle as the claimants' damages expert); (iv) Alapli Elektrik B.V. v. Republic of Turkey, ICSID Case No. ARB/08/13 (Stanimir Alexandrov as counsel for the respondent, Brattle (Carlos Lapuerta) as the respondent's damages expert); (v) Pluspetrol Peru Corporation and others v. Perupetro S.A., ICSID Case No. ARB/12/28 (Stanimir Alexandrov as counsel for the respondent, Brattle (Carlos Lapuerta) as the respondent's damages expert); (vi) LSF-KEB Holdings SCA and others v. Republic of Korea, ICSID Case No. ARB/12/37 (Stanimir Alexandrov as counsel for the claimants, Brattle as the claimants' damages expert); (vii) Bear Creek Mining Corporation v. Republic of Peru, ICSID Case No. ARB/14/21 (Stanimir Alexandrov as counsel for the respondent, Brattle as the respondent's damages expert); and (viii) Veolia Environnement and others v. Republic of Lithuania, ICSID Case No. ARB/16/3 (Stanimir Alexandrov as counsel for the claimants, Brattle as the claimants' damages expert). In addition to these cases, Dr. Alexandrov revealed that "Brattle has been engaged by a client in an investor-state arbitration that is at an initial stage" and that "the parties have entered into a confidentiality agreement and thus I am not in a position to disclose further information."(Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, pp. 3-4; Ex. R-0321, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated October 12, 2017, p. 1). Annulment Memorial, ¶ 101, fn. 176; citing Ex. R-0282, Embattled over Brattle – Spain's challenge to Alexandrov divides co-arbitrators, GLOBAL ARBITRATION REVIEW, October 24, 2017, p. 2; Annulment Reply, ¶ 79. See also Ex. R-0283, T. Jones, Pakistan challenges entire tribunal over Alexandrov expert ties, GLOBAL ARBITRATION REVIEW, November 29, 2017, p. 2.
The Applicant refers to: (i) PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Şirketi v. Republic of Turkey, ICSID Case No. ARB/02/5; (ii) Alapli Elektrik B.V. v. Republic of Turkey, ICSID Case No. ARB/08/13; (iii) Pluspetrol Peru Corporation and others v. Perupetro S.A., ICSID Case No. ARB/12/28; and (iv) one unidentified commercial arbitration. Annulment Memorial, ¶¶ 98, 101; Annulment Reply, ¶¶ 25, 74-80, 90; citing, inter alia, Ex. R-0282, Embattled over Brattle – Spain's challenge to Alexandrov divides co-arbitrators, GLOBAL ARBITRATION REVIEW, October 24, 2017; Ex. R-0283, T. Jones, Pakistan challenges entire tribunal over Alexandrov expert ties, GLOBAL ARBITRATION REVIEW, November 29, 2017; Ex. C-0316, Letter from ICSID to the parties in SolEs Badajoz v. Spain dated July 26, 2017; Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, p. 3.
In Spain's view, the fact that this took place while Dr. Alexandrov was at Sidley Austin is of particular relevance for two reasons. First, the identity of an arbitrator and his law firm must be considered as one for the purpose of identifying and revealing conflicts of interest. Similarly, individual experts cannot simply be detached from the company for which they work, as the Eiser Parties assert.23 Second, it has been recognized that the fact that an arbitrator is co-head of his firm's worldwide international arbitration practice implies a degree of connection and coordination that creates conflicts even if the arbitrator himself was not involved in the representation.24
Annulment Memorial, ¶¶ 90, 102-103; citing Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, ¶ 66; Annulment Reply, ¶¶ 72-73, 106
Annulment Memorial, ¶¶ 103-104; citing Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, ¶¶ 67, 69.
Moreover, in two of these cases, Dr. Alexandrov was working with Brattle at the same time that the Underlying Arbitration was taking place. In Pluspetrol and Bear Creek, Dr. Alexandrov and/or his client appointed Mr. Lapuerta and the Brattle Group as the experts, and worked together while the Underlying Arbitration was still pending.25
Annulment Memorial, ¶¶ 99-100; Annulment Reply, ¶¶ 25, 28, 81-82; citing Ex. RL-0130, Pluspetrol Peru Corporation S.A. and others v. Perupetro S.A., ICSID Case No. ARB/12/28, Award dated May 21, 2015 ("Pluspetrol v. Perupetro, Award"), ¶¶ 29, 204; Ex. RL-0131, Bear Creek Mining Corporation v. Republic of Peru, ICSID Case No. ARB/14/21, Award dated November 30, 2017 ("Bear Creek v. Peru, Award"), ¶ 30, fn. 815; Second Expert Report of The Brattle Group – Rebuttal Report: Changes to the Regulation of Concentrated Solar Power Installations in Spain, dated September 17, 2015 ("Second Brattle Regulatory Report"); Second Expert Report of The Brattle Group – Rebuttal Report: Financial Damages to EISER, dated September 17, 2015 ("Second Brattle Quantum Report").
Although a failure to disclose does not automatically demonstrate the arbitrator's lack of impartiality and independence, it does so, according to the Applicant, when it is a "part of a pattern of circumstances raising doubts as to impartiality."37 For the Applicant, Dr. Alexandrov's failure to disclose his relationship with Brattle Group is not an isolated occurrence and has also occurred in the Raiffeisen Bank, SolEs Badajoz, and Tethyan Copper cases.38 A reasonable third party would therefore conclude that Dr. Alexandrov was unable to objectively and impartially assess the opinions of Brattle and that the Award should be annulled.39
Annulment Reply, ¶ 60; citing Ex. RL-0114, Alpha Projektholding v. Ukraine, Decision on Disqualification, ¶ 64; Ex. RL-0126, Suez v. Argentina, Disqualification Decision II, ¶ 44. See also Annulment Reply, ¶¶ 61-63.
Annulment Memorial, ¶¶ 95, 113; Annulment Reply, ¶¶ 109-111.
Annulment Reply, ¶ 112.
If the Committee were to accept a more expansive interpretation of Article 52(1)(a) of the ICSID Convention and allowed the application of Article 57 of the ICSID Convention "under the guise of annulment",43 a view which the Eiser Parties do not support, the Committee would have to do so "with the safeguards imposed by the Convention on the standards of review for annulment",44 especially because the challenged arbitrator cannot furnish any explanations.45
Annulment Counter-Memorial, ¶ 39.
Annulment Counter-Memorial, ¶ 39.
Annulment Counter-Memorial, ¶¶ 39-40; Annulment Rejoinder, ¶¶ 43-45; citing Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 83.
Annulment Rejoinder, ¶¶ 85-86, 96-97; citing Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶¶ 131, 136(a) and (c).
First, the Eiser Parties argue that even though an arbitrator may be considered to bear the identity of his law firm, the IBA Guidelines make it clear that the activities of an arbitrator's law firm should not automatically create a conflict of interest, and this should be assessed on a case by case basis. According to the Eiser Parties, Spain has failed to explain how Sidley Austin's activities create a conflict in the present case.57
Second, the cases in which experts from Brattle, other than Mr. Lapuerta, worked together with lawyers from Sidley Austin do not support Dr. Alexandrov's close personal relationship with Mr. Lapuerta. These include:58
- Five ICSID cases where Mr. Lapuerta was not involved and that were handled by Sidley Austin's arbitration team in Washington D.C.;59
- Four commercial arbitration cases handled in whole or in part by Sidley Austin's arbitration team in Washington D.C.;60 and
- One investment arbitration case at the initial stages.61
Annulment Counter-Memorial, ¶ 80.
Annulment Counter-Memorial, ¶ 79; citing Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, p. 3.
Annulment Counter-Memorial, ¶ 79; citing Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, p. 3.
Annulment Counter-Memorial, ¶ 79; citing Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, p. 4.
Out of these four cases, there is only one in which Dr. Alexandrov worked with Mr. Lapuerta while the Underlying Arbitration was taking place, namely Pluspetrol v. Perupetro. As recognized by the Secretary-General of the PCA, "concurrent service as an arbitrator and as counsel in an unrelated matter in which the same expert has been engaged does not automatically result in a conflict of interest warranting disqualification under the ICSID Convention."64
Annulment Rejoinder, ¶ 118; citing Ex. CL-0289, Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan, ICSID Case No. ARB/12/01, Opinion Pursuant to the Request by ICSID dated July 28, 2017 on the Respondent's Proposal for the Disqualification of Dr. Stanimir Alexandrov dated July 7, 2017 dated August 31, 2017 ("Tethyan Copper v. Pakistan, PCA Opinion"), ¶ 120; Annulment Counter-Memorial, ¶ 68.
For the Eiser Parties, the SolEs Badajoz and Tethyan Copper cases are irrelevant for establishing the basis of any conflict because, in these cases, Dr. Alexandrov was acting as an arbitrator and not as counsel.65 Further, the Eiser Parties argue that the Applicant's description of the SolEs Badajoz case is misleading. While the unchallenged co-arbitrators were equally divided on the matter, the Applicant cannot know without being privy to the deliberations that one of the co-arbitrators believed that there were justifiable doubts regarding Dr. Alexandrov's impartiality.66
Annulment Counter-Memorial, ¶ 69.
Annulment Counter-Memorial, ¶ 88; Annulment Rejoinder, ¶¶ 26(b), 107; citing Ex. C-0319, Letter from J. Donoghue and A. Joubin-Bret to ICSID in SolEs Badajoz v. Spain dated October 19, 2017.
In any event, even if the Committee concludes that Dr. Alexandrov's engagements with Mr. Lapuerta constituted a close professional relationship, such relationship does not necessarily create a conflict.67 Dr. Alexandrov has further confirmed that his relationship with the Brattle Group did not go beyond engaging them as experts and that he has not had any other joint activities with Mr. Lapuerta or any other expert from Brattle.68
Annulment Counter-Memorial, ¶¶ 84-85, 90; citing Ex. RL-0126, Suez v. Argentina, Disqualification Decision II, ¶ 32; Ex. CL-0295, Schreuer et al., THE ICSID CONVENTION, Art. 40, p. 513, ¶¶ 22-23.
Annulment Counter-Memorial, ¶ 82; citing Ex. C-0316, Letter from ICSID to the parties in SolEs Badajoz v. Spain dated July 26, 2017, p. 2; Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, p. 4.
Fourth, the Eiser Parties draw the Committee's attention to the fact that in three different instances, it has already been decided that Dr. Alexandrov's relationship with Brattle does not constitute a ground for disqualification. In fact, the very same issue that the Applicant is presenting to the Committee was already decided in Tethyan Copper v. Pakistan. In that case, it was decided that there was no manifest lack of impartiality on the part of Dr. Alexandrov.69
Annulment Counter-Memorial, ¶¶ 55-56, 91-103; Annulment Rejoinder, ¶¶ 21, 108-110; citing Ex. CL-0290, Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan, ICSID Case No. ARB/12/1, Decision on Respondent's Request for Disqualification of Dr. Stanimir Alexandrov dated September 5, 2017 ("Tethyan Copper v. Pakistan, Decision of Co-Arbitrators"); Ex. CL-0289, Tethyan Copper v. Pakistan, PCA Opinion; Ex. CL-0291, Tethyan Copper v. Pakistan, Decision of ICSID Administrative Council Chairman.
For the Eiser Parties, a lack of disclosure does not automatically imply the existence of a lack of independence and impartiality.72 The obligation to disclose under ICSID Arbitration Rule 6(2)(b) is a subjective standard. As such, it is for the arbitrator to exercise his or her discretion whether to disclose a fact or circumstance. An arbitrator cannot be criticized for honestly exercising that discretion.73
Annulment Counter-Memorial, ¶¶ 58, 111.
Annulment Counter-Memorial, ¶¶ 113-115; citing Ex. CL-0294, C. A. Rogers, Ethics in International Arbitration (Oxford Univeristy Press: 2014) (Excerpt), ¶ 2,112; Ex. RL-0126, Suez v. Argentina, Disqualification Decision II, ¶ 46.
According to the Eiser Parties, even if the Committee decides to review de novo the request to disqualify Dr. Alexandrov, it must reject Spain's case because there is no manifest appearance of bias or dependence. Spain has the burden to point to specific facts that demonstrate bias, which it fails to do because its arguments are based on inferences and speculation and not on objective evidence.76
Annulment Rejoinder, ¶¶ 85, 101-105; citing Ex. CL-0315, SGS Société Générale SA v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision on Claimant's Proposal to Disqualify Arbitrator dated December 19, 2002 ("SGS v. Pakistan, Decision on Disqualification"), ¶ 20; Ex. CL-0286, Saint-Gobain Performance Plastics Europe v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/12/13, Decision on Claimant's Proposal to Disqualify Mr. Gabriel Bottini from the Tribunal under Article 57 of the ICSID Convention dated February 27, 2013 ("Saint-Gobain v. Venezuela, Decision on Disqualification"), ¶ 60.
Annulment Counter-Memorial, ¶¶ 130, 133; Annulment Rejoinder, ¶¶ 120-123, 125-126; citing Ex. CL-0286, Saint-Gobain v. Venezuela, Decision on Disqualification, ¶¶ 77, 80-81; Ex. CL-0313, Nations Energy Corporation, Electric Machinery Enterprises Inc., and Jaime Jurado v. Republic of Panama, ICSID Case No. ARB/06/19, Decision on the Proposal to Disqualify Dr. Stanimir A. Alexandrov dated September 7, 2011, ¶¶ 22-23, 64, 66-68; Ex. CL-0289, Tethyan Copper v. Pakistan, PCA Opinion, ¶ 120.
According to the Applicant, under Article 52(1)(d) of the ICSID Convention, an award may be annulled if "there has been a serious departure from a fundamental rule of procedure." This requires that the departure be: (a) "serious"; and, (b) from a "fundamental" rule of procedure.123 For the Applicant, this test is the same as the "three-limb test" proposed by the Eiser Parties since the additional requirement the existence of a departure is implied in this two-tier test.124
Annulment Memorial, ¶ 118; citing Ex. C-0299, Updated Background Paper on Annulment, ¶ 99; Ex. RL-0106, Schreuer et al., THE ICSID CONVENTION, Art. 52, p. 980, ¶ 280; Ex. RL-0136, Total S.A. v. Argentine Republic, ICSID Case No. ARB/04/01, Decision on Annulment dated February 1, 2016 ("Total v. Argentina, Decision on Annulment"), ¶ 310; Annulment Reply, ¶ 113.
Application for Annulment, ¶ 51; Annulment Reply, ¶ 113, fn. 196.
On the one hand, for a departure to be "serious", it must have had or may have had a material effect on the tribunal's decision.125 According to the Applicant, contrary to the Eiser Parties' contention, evidence of an "actual material prejudice" and the showing that the violation created a substantially different result are not required.126 On the other hand, the term "fundamental rule of procedure" refers to a set of minimal standards of procedure that must be respected and includes the right to an independent and impartial tribunal, and the right for the parties to be heard and to be treated equally.127
Annulment Memorial, ¶ 119; Annulment Reply, ¶¶ 114, 116, 121; citing, inter alia, Ex. RL-0136, Total v. Argentina, Decision on Annulment, ¶ 310; Ex. RL-0137, Daimler Financial Services AG v. Argentine Republic, ICSID Case No. ARB/05/1, Decision on Annulment dated January 7, 2015 ("Daimler v. Argentina, Decision on Annulment"), ¶ 263; Ex. RL-0138, Maritime International Nominees Establishment (MINE) v. Government of Guinea, ICSID Case No. ARB/84/4, Decision on the Application by Guinea for Partial Annulment of the Arbitral Award dated December 14, 1989 ("MINE v. Guinea, Decision on Application for Partial Annulment"), ¶ 5.05; Ex. RL-0139, CDC v. Seychelles, Decision on Annulment, ¶ 49; Ex. RL-0061, Caratube International Oil Company LLP v. Republic of Kazakhstan, ICSID Case No. ARB/08/12, Decision on the Annulment Application of Caratube International Oil Company LLP dated February 21, 2014 ("Caratube v. Kazakhstan, Decision on Annulment"), ¶ 99 (emphasis added) (quoting Ex. CL-0065, Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on the Application by the Arab Republic of Egypt for Annulment dated February 5, 2002 ("Wena Hotels v. Egypt, Decision on Annulment"), ¶ 61).
Annulment Reply, ¶¶ 115-120; citing Ex. RL-0151, Víctor Pey Casado and Foundation "Presidente Allende" v. Republic of Chile, ICSID Case No. ARB/98/2, Decision on the Application for Annulment of the Republic of Chile dated December 18, 2012 ("Pey Casado v. Chile, Decision on Annulment"), ¶¶ 78, 80; Ex. RL-0147, Tulip Real Estate and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Decision on Annulment dated December 30, 2015 ("Tulip v. Turkey, Decision on Annulment"), ¶ 78.
Application for Annulment, ¶ 52; Annulment Memorial, ¶¶ 120-121, 282, 285; Annulment Reply, ¶¶ 114, 121, 251; citing, inter alia, Ex. CL-0065, Wena Hotels v. Egypt, Decision on Annulment, ¶ 57; Ex. RL-0140, Duke Energy International Peru Investments No. 1, Ltd. v. Republic of Peru, ICSID Case No. ARB/03/28, Decision of the ad hoc Committee dated March 1, 2011, ¶ 168; Ex. RL-0141, Iberdrola Energía, S.A. v. República de Guatemala, ICSID Case No. ARB/09/5, Decision on the Application by Iberdrola Energía S.A. for Annulment of the Award dated January 13, 2015 ("Iberdrola Energía v. Guatemala, Decision on Annulment"), ¶ 105; Ex. CL-0255, MTD Equity Sdn Bhd. & MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Decision on Annulment dated March 21, 2007, ¶ 49; Ex. RL-0139, CDC v. Seychelles, Decision on Annulment, ¶ 49 (approvingly citing Wena Hotels).
According to the Applicant, the right to be heard encompasses different protections including: (i) the right to submit arguments and evidence that it deems relevant to support its case, and to do so with a comparatively equal opportunity to that given to the other party;131(ii) the right to respond to the arguments and evidence submitted by the other party, including the right to make submissions when new evidence is received and considered by the tribunal;132 and (iii) not being unjustifiably denied a request for document production, especially when the tribunal, after denying such request, concludes that there was an absence of evidence on the matter.133
Annulment Memorial, ¶¶ 283-284; citing, inter alia, Ex. CL-0065, Wena Hotels v. Egypt, Decision on Annulment, ¶ 57; Ex. RL-0147, Tulip v. Turkey, Decision on Annulment, ¶ 80, 82, 145; RL-0141, Iberdrola Energía v. Guatemala, Decision on Annulment, ¶ 105; Ex. RL-0151, Pey Casado v. Chile, Decision on Annulment, ¶ 184; Ex. RL-0146, Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Republic of Ecuador, ICSID Case No. ARB/06/11, Decision on Annulment of the Award dated November 2, 2015 ("Occidental v. Ecuador, Decision on Annulment"), ¶ 60; Ex. RL-0148, Fraport AG Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/03/25, Decision on the Application for Annulment of Fraport AG Frankfurt Airport Services Worldwide dated December 23, 2010 ("Fraport v. Philippines, Decision on Annulment"), ¶ 202; Ex. RL-0138, MINE v. Guinea, Decision on Application for Partial Annulment, ¶ 5.06; Ex. CL-0144, Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Decision on the Application for Annulment of the Argentine Republic dated September 1, 2009 ("Azurix v. Argentina, Decision on Annulment), ¶¶ 213-214.
Annulment Memorial, ¶¶ 286-287, 289, 310; Annulment Reply, ¶ 252; citing Ex. RL-0147, Tulip v. Turkey, Decision on Annulment, ¶¶ 80, 82 ;Ex. RL-0148, Fraport v. Philippines, Decision on Annulment, ¶ 200.
Annulment Memorial, ¶¶ 291-292; Annulment Reply, ¶ 252; citing, inter alia, Ex. RL-0160, Gabrielle Kaufmann-Kohler, Globalization of Arbitral Procedure, 36 VANDERBILT JOURNAL OF TRANSNATIONAL LAW 1313 (October 2003), pp. 1327-1328, fn. 66; Ex. RL-0106, Schreuer et al., THE ICSID CONVENTION, Art. 43, p. 642, ¶ 4.
The Tribunal allowed the Eiser Parties, during the Hearing, to submit new documents into the record, one of which was used by Brattle as a basis for its new damages calculations presented for the first time at the Hearing. Despite the Applicant's objections, the Tribunal allowed this, failed to give a reasonable opportunity to the Applicant to rebut this new material, and relied on such calculations in its determination of damages in the Award.135
Annulment Memorial, ¶¶ 294-310; Annulment Reply, ¶¶ 254-259; citing Ex. BQR-0105, Brattle Quantum Hearing Presentation dated February 2016, Slide 3 (providing revised calculations for the Eiser Parties' past and future lost cash flows, which had been "updated for free-tax [sic] depreciation"; Ex. BQR-0104, Spreadsheet Showing the Amount for Free Depreciation Available for ASTE and DIOXIPE).
The Eiser Parties do not contest that the right to be heard has been recognized as a fundamental rule of procedure. However, for the annulment to proceed, it must be unequivocally and objectively established that a tribunal has violated this right. As such, this right is not violated when a party does not avail itself of the opportunity to be heard that was granted to it and does not preclude the Tribunal's discretion to admit and evaluate evidence. Similarly, the right to be treated equally is not violated when a request for document production is denied and does not require the parties to have been granted an equal number of requests.146
Annulment Counter-Memorial, ¶¶ 315-316, 319-320; citing Ex. RL-0147, Tulip v. Turkey, Decision on Annulment, ¶¶ 71, 84; Ex. CL-0253, Libananco Holdings Co. Limited v. Republic of Turkey, ICSID Case No. ARB/06/8, Excerpts of Decision on Annulment dated May 22, 2013, ¶ 85; Ex. CL-0144, Azurix v. Argentina, Decision on Annulment, ¶ 233; Annulment Rejoinder, ¶¶ 324-326, 329.
In Spain's view, this is confirmed by: (a) the Updated Background Paper on Annulment, which explains that under this provision "[t]he parties may raise an objection concerning compliance with [the provisions of Chapter I of the ICSID Arbitration Rules, entitled 'Establishment of the Tribunal']";185 and (b) the committee in EDF v. Argentina, which stated that Article 52(1)(a) must be understood as referring to the requirements of Chapter IV, Section 2 of the ICSID Convention ("Constitution of the Tribunal"). These provisions regarding the "constitution of tribunal", in turn, include all those qualities that an arbitrator must possess.186
Annulment Memorial, ¶ 73; quoting Ex. C-0299, Updated Background Paper on Annulment, ¶ 78.
Annulment Memorial, ¶¶ 73-74; relying on Ex. C-0299, Updated Background Paper on Annulment, ¶ 78; Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 126; Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 77.
Article 40 of the ICSID Convention, which is also part of Chapter IV, Section 2 of the same instrument, establishes that arbitrators "shall possess the qualities stated in paragraph (1) of Article 14." According to the Applicant, it is well stablished that Article 14 of the ICSID Convention includes the qualities of impartiality and independence.187 Therefore, if an arbitrator did not possess the qualities of Article 14, including those of independence and impartiality, the tribunal was not properly constituted and, therefore, the award might be annulled under Article 52(1)(a) of the ICSID Convention.188
Annulment Memorial, ¶ 74; Annulment Reply, ¶¶ 34-35; citing Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, ¶ 58 and fn. 37; Ex. RL-0105, Burlington Resources v. Ecuador, Decision on Disqualification, ¶ 65 and fn. 77; Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 108; Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 77.
Annulment Memorial, ¶ 75; Annulment Reply, ¶¶ 37, 48; citing, inter alia, Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 126; Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 77.
For the Eiser Parties, when the facts on which a challenge is based became known after the award was rendered, the appropriate remedy is the revision of the award in accordance with Article 51 of the ICSID Convention. Thus, the Applicant should seek the revision of the Award and not its annulment, which will also allow Dr. Alexandrov to furnish explanations.199
Annulment Rejoinder, ¶¶ 35-37; citing Ex. CL-0144, Azurix v. Argentina, Decision on Annulment, ¶ 281; Ex. CL-0299, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the settlement of Investment Disputes between States and Nationals of Other States, Vol. II-2 (ICSID: 2006), p. 872.
The Eiser Parties criticize the decision of the EDF committee, relied upon by Spain, for erring in the interpretation of Article 52(1)(a) of the ICSID Convention. According to them, the EDF decision failed to address the drafting history of the ICSID Convention.200 It is also inconsistent since, one the one hand, it concluded that challenges to the independence and impartiality of an arbitrator should be heard by the remaining members of the tribunal and, on the other hand, still rejected that the revision is the appropriate remedy.201 In addition, the EDF decision is inconsistent with the object and purpose of the Convention and with the role of the annulment committee, which should not undertake a de novo review as if it were an arbitral tribunal assessing the merits of a disqualification proposal.202
Annulment Rejoinder, ¶ 39; citing Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 130.
Annulment Rejoinder, ¶ 41; citing Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 139.
Annulment Rejoinder, ¶¶ 42-45; citing Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 83.
The Parties are in disagreement as to the correct interpretation of Article 52(1)(a) of the ICSID Convention. The Committee will interpret this provision in accordance with the customary rules of interpretation, as reflected in Article 31 of the Vienna Convention. Accordingly, the Committee will interpret Article 52(1)(a) in light of its (1) text; (2) context; (3) object and purpose; and, (4) in light of any relevant rules of international law applicable in the relations between the Parties.203
Under Article 31(1) of the Vienna Convention, the general rule requires a treaty to be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their "context" and in the light of the treaty's "object" and "purpose". See Ex. CL-0047, Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award dated August 24, 2008, ¶ 117.
(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;
[…]
(1) Persons designated to serve on the Panels shall be persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment. Competence in the field of law shall be of particular importance in the case of persons on the Panel of Arbitrators.
The Committee notes the difference between the Spanish and English texts of paragraph (1) of Article 14. Whilst the English text reads, "may be relied upon to exercise independent judgment", the Spanish version uses the words "inspirar plena confianza en su imparcialidad de juicio" which may be translated into English as "to inspire full confidence in their impartiality of judgment."210 Earlier, other committees have observed that this requirement encompasses two qualities: independence and impartiality. This Committee cites with approval the observations of the EDF committee:211
[…] the general practice has been to require that arbitrators may be relied upon to exercise independent judgment and inspire full confidence in their impartiality.212
The French version is very similar to the English text: "offrir toute garantie d'indépendance dans l'exercice de leurs fonctions."
See Ex. CL-0288, Suez, Sociedad General de Aguas de Barcelona S.A. and others v. Argentine Republic, ICSID Case Nos. ARB/03/19 and ARB/03/17, Decision on the Proposal for the Disqualification of a Member of the Arbitral Tribunal dated October 22, 2007 ("Suez v. Argentina, Disqualification Decision I"), ¶ 28; Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, note 97, above, ¶ 58; and Ex. RL-0105, Burlington Resources v. Ecuador, Decision on Disqualification, ¶ 65.
Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 108.
Art. 14(1) describes the qualifications of individuals who may be designated to serve on the Panel of Arbitrators […] the individuals must be persons of high moral character who may be relied upon to exercise their independent judgment. Under Art. 40(2) even arbitrators appointed from outside the Panel of Arbitrators must possess these qualities. Appointment of an arbitrator who manifestly does not possess these qualities may be put forward as a ground for annulment […].213
With respect to object and purpose of the text, features such as the finality of awards, exclusion of appeals, and the exceptional nature of the annulment remedy may be among those that inform the role of annulment committees.220 As other committees have observed, the role of an annulment committee relates to "procedural legitimacy",221 "the legitimacy of the award,"222 and "safeguard[ing] the integrity" of the proceedings and the award.223 Thus, while agreeing with the Eiser Parties about the "limited scope" of the annulment procedure,224 this Committee holds that there can be no greater threat to the legitimacy and integrity of the proceedings or of the award than the lack of impartiality or independence of one or more of the arbitrators. As the Suez committee stated:
In this regard, the Committee agrees with Respondent that the parties' confidence in the independence and impartiality of the arbitrators deciding their case is essential for ensuring the integrity of the proceedings and the dispute resolution mechanism as such; thus, in principle, a lack of the qualities in Article 14(1) may serve as ground for annulment under Article 52(1)(a).225
See e.g., Ex. C-0299, Updated Background Paper on Annulment, ¶¶ 7-9, 71-74 (see the different quotes under para. 74, section 2); Ex. CL-0295/Ex. RL-0106, Schreuer et al., THE ICSID CONVENTION, p. 899, ¶ 3; p. 903, ¶ 15.
Ex. RL-0139, CDC v. Seychelles, Decision on Annulment, ¶ 34.
RL-0066, Hussein Nuaman Soufraki v. United Arab Emirates, ICSID Case No. ARB/02/7, Decision of the ad hoc Committee on the Application for Annulment of Mr. Soufraki dated June 5, 2007, ¶ 20. See also Ex. CL-0244, Alapli Elektrik B.V. v. Republic of Turkey, ICSID Case No. ARB/08/13, Decision on Annulment dated July 10, 2014 ("Alapli Elektrik v. Turkey, Decision on Annulment"), ¶ 32; Ex. RL-0147, Tulip v. Turkey, Decision on Annulment, ¶ 41.
Annulment Rejoinder, ¶¶ 42-43.
Ex. RL-0103, Suez v. Argentina, Decision on Annulment, ¶ 77.
a) was the right to raise this matter waived because the party concerned had not raised it sufficiently promptly?
b) if not, has the party seeking annulment established that a third party would find an evident or obvious appearance of lack of impartiality or independence on the part of an arbitrator on a reasonable evaluation of the facts of the case (the Blue Bank standard)? and
c) if so, could the manifestly apparent lack of impartiality or independence on the part of that arbitrator have had a material effect on the award?
According to the Applicant, as a general rule, a party challenging an arbitrator for lack of independence and impartiality is required to do so promptly and, in any event, before the proceeding is closed. However, it has been recognized that this general rule cannot prevent a party from challenging that arbitrator for the first time in the annulment phase if the relevant facts only became known after the arbitration proceedings were closed.230 In this case, the Applicant argues that it became aware of the facts on which it bases its challenge to Dr. Alexandrov only after the Eiser Award was rendered. According to the Applicant, in these circumstances, it must be allowed to raise the issue in this annulment proceeding.
Annulment Memorial, ¶¶ 76-77; Annulment Reply, ¶ 41; citing Ex. RL-0106, Schreuer et al., THE ICSID CONVENTION, p. 937; Ex. RL-0102, EDF v. Argentina, Decision on Annulment, ¶ 130.
The Applicant argues that the relationship between Dr. Alexandrov and the Brattle Group, in particular Mr. Lapuerta, came to the Applicant's attention after the Eiser Award was issued in May 2017. It is only in July 2017 that public reports of this relationship emerged, in the context of a disqualification proposal filed in an unrelated arbitration involving Pakistan.231 As a consequence, Spain was deprived of the opportunity to challenge Dr. Alexandrov in the course of the Underlying Arbitration proceeding.232
Annulment Memorial, ¶¶ 70-71; citing Ex. R-0280, T. Jones, Pakistan challenges arbitrator over valuation method, GLOBAL ARBITRATION REVIEW, July 12, 2017; Ex. R-0281, L. Peterson, As damages phase unfolds in Pakistan mining case, a challenge is lodged against Stanimir Alexandrov – citing his client's alleged interest in a rarely-used valuation method under scrutiny, INVESTMENT ARBITRATION REPORTER, July 11, 2017; Annulment Reply, ¶ 25.
Annulment Memorial, ¶¶ 72, 77.
The Eiser Parties note that Spain relies on a series of press reports published in GAR and Investment Arbitration Reporter in July 2017, which refer to a challenge filed in the Tethyan Copper v. Pakistan case.235 However, in their view, the fact that Dr. Alexandrov had previously worked on the same cases alongside Mr. Lapuerta was public knowledge years before the Award was issued.236 The Eiser Parties point to the following factors:
a) The decision and awards in PSEG v. Turkey and Pluspetrol v. Perupetro, cases in which Dr. Alexandrov and Mr. Lapuerta worked together, were issued in June 2004,237 January 2007,238 and May 2015,239 years before the Eiser Award was issued in May 2017;240
b) GAR published an article in May 2015 where it was stated that both Dr. Alexandrov and Mr. Lapuerta were retained by the respondent in Pluspetrol v. Perupetro ;241
c) Spain itself relies on information that was publicly available, including awards issued and made public in November 2007 and August 2009, and in a GAR article of September 2016;242
d) Dr. Alexandrov's curriculum vitae, which was provided to the Parties when he was appointed as arbitrator in the Eiser case, listed his representations of Bulgaria, Costa Rica, Peru and Turkey. For the Eiser Parties, this covers the cases of PSEG v. Turkey, Pluspetrol v. Perupetro, and Bear Creek v. Peru.243
Annulment Rejoinder, ¶ 87.
Annulment Rejoinder, ¶ 89.
Ex. CL-0314, PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Şirketi v. Republic of Turkey, ICSID Case No. ARB/02/5, Decision on Jurisdiction dated June 4, 2004 ("PSEG v. Turkey, Decision on Jurisdiction").
Ex. CL-0049, PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Şirketi v. Republic of Turkey, ICSID Case No. ARB/02/5, Award dated January 19, 2007 ("PSEG v. Turkey, Award").
Ex. RL-0130, Pluspetrol v. Perupetro, Award.
Annulment Rejoinder, ¶ 90.
Annulment Rejoinder, ¶ 91; citing Ex. C-0335, S. Perry, Peru Prevails In Gas Exports Dispute, GLOBAL ARBITRATION REVIEW, May 26, 2015, available at: https://globalarbitrationreview.com/article/1034480/peru-prevails-in-gas-exports-dispute.
Annulment Rejoinder, ¶ 93.
Annulment Rejoinder, ¶ 94.
For the Applicant, the standards for the disqualification of arbitrators under Article 57 of the ICSID Convention are directly applicable to the annulment under Article 52(1)(a). Accordingly, pursuant to the decision in Blue Bank and many others that have followed it, there has to be an objective "appearance of dependence or bias" and the Applicant is not required to demonstrate "proof of actual dependence or bias."247 Thus, the standard is "whether, based on a reasonable evaluation of the facts […] a third party would find" an "evident or obvious appearance of lack of impartiality."248
Annulment Memorial, ¶¶ 79-81; Annulment Reply, ¶¶ 49-52; citing, inter alia, Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, ¶¶ 59-60.
Annulment Reply, ¶ 54; citing Ex. RL-0108, Caratube v. Kazakhstan, Decision on Disqualification, ¶ 77.
First, the Applicant argues that proof of the relationship between Dr. Alexandrov and the Brattle Group, in particular with Mr. Lapuerta, is based on the following facts:252
a) During his time at Sidley Austin, where he was a partner and co-head of international arbitration, Dr. Alexandrov and his team appointed Brattle in numerous cases, four of which involved Mr. Lapuerta as the testifying expert.253 According to Spain, this is particularly relevant because the arbitrator bears the identity of his firm, which is reinforced by his role as co-head of the firm's worldwide international arbitration practice;254
b) At the same time he was serving as arbitrator in Eiser, Dr. Alexandrov was working with the Brattle Group in Pluspetrol and Bear Creek. In Pluspetrol, the testifying expert was Mr. Lapuerta;255
c) In four cases, Blusun v. Italy, Ioan Micula v. Romania, Tethyan v. Pakistan, and SolEs Badajoz v. Spain, Dr. Alexandrov was appointed as an arbitrator by the same party that engaged the Brattle Group as its expert. In Blusun and SolEs Badajoz, the testifying expert was Mr. Lapuerta.256
Annulment Memorial, ¶¶ 69-70, 101-102, 105.
Annulment Memorial, ¶¶ 98, 101; Annulment Rejoinder, ¶¶ 25, 75, 79; citing Ex. R-0282, Embattled over Brattle – Spain's challenge to Alexandrov divides co-arbitrators, GLOBAL ARBITRATION REVIEW, October 24, 2017; Ex. R-0283, T. Jones, Pakistan challenges entire tribunal over Alexandrov expert ties, GLOBAL ARBITRATION REVIEW, November 29, 2017.
Annulment Memorial, ¶¶ 90, 102-104; Annulment Reply, ¶¶ 72-74; citing Ex. RL-0104, Blue Bank v. Venezuela, Decision on Disqualification, ¶ 66; Ex. RL-0117, Background Information on the IBA Guidelines on Conflicts of Interest in International Arbitration, 5(3) BUSINESS LAW INTERNATIONAL (September 2004), p. 445.
Annulment Memorial, ¶¶ 99-100; Annulment Reply, ¶¶ 25, 28, 81-82; citing Ex. RL-0130, Pluspetrol v. Perupetro, Award, ¶¶ 29, 204; Ex. RL-0131, Bear Creek v. Peru, Award, ¶ 30, fn. 815; Second Brattle Regulatory Report; Second Brattle Quantum Report.
Annulment Memorial, ¶ 71.
In the eyes of the Eiser Parties, Spain's case is based on speculations. Spain has resorted to misrepresenting the facts in an attempt to amplify the magnitude of the professional relationship between Dr. Alexandrov and Mr. Lapuerta.269 Specifically, the Eiser Parties argue that:
a) In the 15-year period at issue, there are only three ICSID cases in which Dr. Alexandrov and Mr. Lapuerta were respectively engaged by the same party as counsel and expert; these are PSEG v. Turkey, Alapli v. Turkey, and Pluspetrol v. Perupetro ;270
b) Pluspetrol is the only case in which Mr. Lapuerta and Dr. Alexandrov were engaged by the same party at the same time Dr. Alexandrov was sitting as arbitrator in the Underlying Arbitration;271
c) Mr. Lapuerta was not the testifying expert in Bear Creek ;272
d) There is an undisclosed commercial arbitration in which the same party engaged Sidley Austin and Mr. Lapuerta; as of October 12, 2017, this arbitration was suspended and Dr. Alexandrov was asked by the party to remain involved only if the proceeding resumed;273
e) The SolEs Badajoz and Tethyan Copper cases are irrelevant for the purpose of establishing the basis of any conflict because Dr. Alexandrov was acting as arbitrator and not counsel;274 and
f) Overall, there are only four cases in which Dr. Alexandrov and Mr. Lapuerta worked, respectively, as counsel and expert witness for the same party (PSEG v. Turkey, Alapli v. Turkey, Pluspetrol v. Perupetro, and a commercial arbitration, which was in abeyance).275
Annulment Rejoinder, ¶ 104.
Annulment Counter-Memorial, ¶ 77; citing Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017, p. 3; Annulment Rejoinder, ¶ 116.
Annulment Counter-Memorial, ¶ 68; Annulment Rejoinder, ¶ 118.
Annulment Counter-Memorial, ¶ 68; Annulment Rejoinder, ¶ 117.
Annulment Memorial, fn. 176; Annulment Reply, fns. 35, 139, and ¶ 79; citing Ex. R-0321, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated October 12, 2017; Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017.
Annulment Counter-Memorial, ¶ 69.
Annulment Counter-Memorial, ¶¶ 77, 78.
The Eiser Parties conclude that Spain has offered no evidence of any "'close relationship'" between Dr. Alexandrov and Mr. Lapuerta or any "'unique reliance'" by the former upon the latter.276 On the contrary, his relationship with any of the experts from the Brattle Group did not go beyond engaging them as experts, which is common practice in international arbitration.277 In any case, even if the Committee were to conclude that Dr. Alexandrov's engagements with Mr. Lapuerta constitute a close professional relationship, the Eiser Parties contend that such a relationship does not create a conflict.278
Annulment Counter-Memorial, ¶ 81; quoting Annulment Memorial, ¶ 107.
Annulment Counter-Memorial, ¶¶ 81-82, 110.
Annulment Counter-Memorial, ¶¶ 84-85; citing Ex. RL-0126, Suez v. Argentina, Disqualification Decision II, ¶ 32.
Based on the submissions of the Parties, the Committee has identified the following relevant uncontested facts:
a) Dr. Alexandrov was appointed as an arbitrator by the Eiser Parties in the Underlying Arbitration;280
b) Mr. Lapuerta, together with other experts from the Brattle Group, was selected as the damages expert by the Claimants in the Underlying Arbitration;281
c) Between May 2002 and August 2017, Dr. Alexandrov worked at Sidley Austin. He served as partner and co-chair of Sidley Austin's international arbitration practice;282
d) The Tribunal in the Underlying Arbitration was constituted in July 2014 and the Award was rendered in May 2017;283
e) There are four cases in which Dr. Alexandrov was appointed as arbitrator and the Brattle Group was engaged by the party that appointed him as arbitrator; these cases are Blusun v. Italy, Ioan Micula v. Romania, Tethyan Copper v. Pakistan, and SolEs Badajoz v. Spain ;284
i. In two of these four cases, the testifying expert was Mr. Lapuerta: Blusun v. Italy and SolEs Badajoz v. Spain ; and
ii. Three of these cases ran in parallel with the Underlying Arbitration: Blusun v. Italy, Tethyan Copper v. Pakistan, and SolEs Badajoz v. Spain.
f) There are at least eight other cases in which Dr. Alexandrov was engaged as counsel by the party that engaged the Brattle Group as its expert;285
i. These eight cases are Bayindir v. Pakistan, PSEG v. Turkey, Archer Daniels v. Mexico, Alapli v. Turkey, Pluspetrol v. Perupetro, LSF-KEB Holdings v. Korea, Bear Creek v. Peru, and Veolia v. Lithuania ;286
ii. At least two of these cases - Pluspetrol v. Perupetro, Bear Creek v. Peru -overlapped with the Underlying Arbitration;
iii. In three of these cases - Pluspetrol v. Perupetro, PSEG v. Turkey, and Alapli v. Turkey - the testifying expert was Mr. Lapuerta; and
iv. In Bear Creek v. Peru, Mr. Lapuerta was not the testifying expert.
g) In addition to the above-mentioned eight cases, there is at least one undisclosed investor-state arbitration and one undisclosed commercial arbitration in which Sidley Austin was engaged as counsel by the party that engaged the Brattle Group as experts;287
i. Both cases overlapped with the Underlying Arbitration; however, as of October 12, 2017, the tribunal in the investor-state arbitration was yet to be constituted;288 and
ii. Mr. Lapuerta was engaged as the testifying expert only in the commercial arbitration.289
Award, ¶ 9.
Award, ¶ 73. See also Annex 9 to the Application for Annulment "Financial Damages to Eiser", prepared by Mr. Carlos Lapuerta and Mr. Richard Caldwell, The Brattle Group dated October 2014 submitted in the Underlying Arbitration.
Annulment Memorial, ¶ 98. See also Ex. R-0284, Curriculum Vitae of Stanimir Alexandrov submitted in the Underlying Arbitration, p. 1; Ex. R-0285, Douglas Thomson, Alexandrov quits Sidley Austin to go solo, GLOBAL ARBITRATION REVIEW, August 2, 2017. In a letter dated October 12, 2017, Dr. Alexandrov states that at that time he continued working in two arbitrations with Sidley Austin as co-counsel. See Ex. R-0321, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated October 12, 2017.
Award, ¶ 10.
Annulment Memorial, fn. 131, referring to Ex. CL-0326, Blusun S.A. and others v. Italian Republic, ICSID Case No. ARB/14/3; Ex. CL-0031, Ioan Micula and others v. Romania, ICSID Case No. ARB/5/20; Ex. RL-0181, Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan, ICSID Case No. ARB/12/1; Ex. R-0323, SolEs Badajoz GmbH v. Kingdom of Spain, ICSID Case No. ARB/15/38; Annulment Counter-Memorial, ¶ 69.
Annulment Memorial, ¶¶ 99-100 and fn. 176; Annulment Counter-Memorial, ¶¶ 68, 77; Annulment Reply, fns. 35, 139, and ¶¶ 79, 81-82.
Ex. RL-0180, Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of Pakistan, ICSID Case No. ARB/03/29 (Stanimir Alexandrov as counsel for the claimant, Brattle as the claimant's damages expert); Ex. CL-0049, PSEG Global Inc. and Konya Ilgin Elektrik Üretim ve Ticaret Limited Şirketi v. Republic of Turkey, ICSID Case No. ARB/02/5 (Stanimir Alexandrov as counsel for the respondent, Brattle (Carlos Lapuerta) as the respondent's damages expert); Ex. RL-0179, Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/04/5 (Stanimir Alexandrov as counsel for the claimants, Brattle as the claimants' damages expert); Ex. CL-0244, Alapli Elektrik B.V. v. Republic of Turkey, ICSID Case No. ARB/08/13 (Stanimir Alexandrov as counsel for the respondent, Brattle (Carlos Lapuerta) as the respondent's damages expert); Ex. RL-0130, Pluspetrol Peru Corporation and others v. Perupetro S.A., ICSID Case No. ARB/12/28 (Stanimir Alexandrov as counsel for the respondent, Brattle (Carlos Lapuerta) as the respondent's damages expert); Ex. CL-0333, LSF-KEB Holdings SCA and others v. Republic of Korea, ICSID Case No. ARB/12/37 (Stanimir Alexandrov as counsel for the claimants, Brattle as the claimants' damages expert); Ex. RL-0131, Bear Creek Mining Corporation v. Republic of Peru, ICSID Case No. ARB/14/21 (Stanimir Alexandrov as counsel for the respondent, Brattle as the respondent's damages expert); and Ex. R-0325, Veolia Environnement and others v. Republic of Lithuania, ICSID Case No. ARB/16/3 (Stanimir Alexandrov as counsel for the claimants, Brattle as the claimants' damages expert).
Annulment Memorial, fn. 176; Annulment Reply, fns. 35, 139, and ¶ 79; citing Ex. R-0321, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated October 12, 2017; Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017.
Ex. R-0321, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated October 12, 2017; Ex. C-0317, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated August 18, 2017.
Ex. R-0321, Letter from Dr. Alexandrov to ICSID in SolEs Badajoz v. Spain dated October 12, 2017.
Impartiality refers to the absence of bias or predisposition towards a party. Independence is characterized by the absence of external control. Independence and impartiality both "protect parties against arbitrators being influenced by factors other than those related to the merits of the case." Articles 57 and 14(1) of the ICSID Convention do not require proof of actual dependence or bias; rather it is sufficient to establish the appearance of dependence or bias.
The applicable legal standard is an "objective standard based on a reasonable evaluation of the evidence by a third party." As a consequence, the subjective belief of the party requesting the disqualification is not enough to satisfy the requirements of the Convention.
Finally, regarding the meaning of the word "manifest" in Article 57 of the Convention, a number of decisions have concluded that it means "evident" or "obvious," and that it relates to the ease with which the alleged lack of the qualities can be perceived.292
[…] the Chairman concludes that it has been demonstrated that a third party would find an evident or obvious appearance of lack of impartiality on a reasonable evaluation of the facts in this case.293