On 24 August 2020, following the First Session held on 7 August 2020 and further communications with the Parties thereafter, the Tribunal issued its Procedural Order No. 1 (PO1) and the Procedural Timetable as Annex A thereto.
Second, the Respondent asserts that the Tribunal lacks jurisdiction in these proceedings as the Claimant failed to fulfil the conditions in Article 10 of the BIT and first submit the dispute to Argentine national courts. According to the Respondent, such prior submission forms part of the essential terms under which the Respondent offered its consent to submit disputes to arbitration under the BIT. It says that the Claimant cannot now resort to a broadened interpretation of the MFN Clause in order to evade that obligation by importing norms from other investment treaties. Rather, the Respondent says that Spain and Argentina's conduct subsequent to their entry into the BIT evidences that the dispute resolution mechanisms therein were not meant to be modified by application of the MFN Clause.3
Third, the Respondent asserts that the Tribunal has no jurisdiction over the present dispute, as the Claimant has not established itself as a protected investor under the BIT, nor one that made any investment in Argentina. Rather, the Respondent says that it was US-based Duke Energy – not the Claimant – that owned the allegedly impaired participations in Argentina when the Respondent first enacted the challenged measures in 2003. It says further that the measures were then all adopted by the time Duke Energy sold its Argentinian interests to the investment fund I Squared Capital in December 2016 without itself ever having commenced proceedings under the BIT. The Respondent otherwise argues that the claimant entity, Orazul International España Holdings S.L., has at all times operated as nothing more than a Spanish-incorporated shell company with no actual activity in Spain; one used by Duke Energy as an intermediary to seek access to the protections under the Argentina-Spain BIT. According to the Respondent, the Claimant has in this regard effected a "clear abuse of process"4 and that, in view of principles of good faith, the Tribunal should consider its claims inadmissible.5
The Claimant says that the Respondent's assertion that it failed to first fulfil the conditions in Article 10 of the BIT is also groundless and cannot justify bifurcation. According to the Claimant, it is entitled to invoke the MFN Clause to import a more favourable dispute resolution clause from another BIT, resulting in it no longer needing to comply with the 18-month waiting period. In any case, such waiting periods are not "essential" policies of either Argentina or Spain, while the Claimant's compliance with Article 10 would in any case be futile and unduly expensive.20 Further, Claimant says the objection cannot easily be disentangled from the merits of the case. To this end, it argues that local litigation conditions exist to offer States an opportunity to address matters before turning to arbitration.21 Therefore, to ascertain whether the Respondent had a prior opportunity to resolve the Claimant's grievances, the Tribunal would have to determine the nature of the measures, the scope of the local submissions, and whether the Claimant's administrative petitions against the measures gave the Respondent an opportunity to revert them and compensate the Claimant.22
Any objection by a party to the dispute that that dispute is not within the jurisdiction of the Centre, or for other reasons is not within the competence of the Tribunal, shall be considered by the Tribunal which shall determine whether to deal with it as a preliminary question or to join it to the merits of the dispute.
(2) The Tribunal may on its own initiative consider, at any stage of the proceeding, whether the dispute or any ancillary claim before it is within the jurisdiction of the Centre and within its own competence. […].
(4) The Tribunal […] may deal with the objection [that a dispute or any ancillary claim is not within the jurisdiction of the Centre or, for other reasons, is not within the competence of the Tribunal] as a preliminary question or join it to the merits of the dispute.
a. Whether the preliminary objection is prima facie serious and substantial (in other words: does the objection have a reasonable chance of success and is not otherwise frivolous, vexatious or clearly without merit);35
b. Whether the jurisdictional objection is too intertwined with the merits, insofar as the Tribunal would have to already "delve into the substance of the alleged breaches"36 or that a duplication of evidence would result, meaning any savings in time or cost from a bifurcation would be unlikely; and
c. Whether the objection, if granted, will ultimately result in a material reduction of the merits phase of the proceedings, or even dispose of all or substantially all of the claims.
the Government continued adopting harmful measures affecting Cerros Colorados, while constantly "moving the goal post" to achieve the promised normalization of the market and reinstate the rules in force prior to the 2003 measures.
With respect to the Respondent's objection regarding the Claimant's failure to first adhere to the 18-month national courts condition in Article 10 of the BIT, the Tribunal also finds that, on balance, it is not in the interest of efficiency to bifurcate the proceedings.
The Tribunal considers that the Respondent's objection is not vexatious or without any merit. While the Parties do not dispute that the Claimant did not comply with Article 10 of the BIT before commencing these arbitration proceedings, they disagree on the mandatory nature of such provisions and whether the Claimant may invoke the MFN Clause to effectively remove and replace the obligation in substance. To this end, the Tribunal is cognisant that whether particular aspects of a BIT may be transposed to another treaty through application of a most favoured nation clause remains controversial. It thus considers that the issue warrants further elaboration by the Parties in these proceedings.
While the Government made it look as if participation in FONINVEMEM was optional, in reality doing so was a condition for Cerros Colorados to secure collection of the unpaid receivables from CAMMESA originated between 2004 and 2006 that were not "invested" in FONINVEMEM.
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