Author

Mr William Brillat-Capello

Associate - Betto Perben Pradel Filhol

Editors
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Annulment tribunal

I. Definition

1.

An annulment tribunal is in charge of reviewing an international investment arbitration award. The annulment tribunal will differ depending on whether the arbitration was brought under the regime of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) or not.

2.

With a view to preserving the finality of the ICSID Convention, the drafters included exclusive remedy mechanisms1 available to the parties, who are prevented from challenging the award through any other domestic mechanism. Annulment, which consists of a self-contained, delocalized Annulment review of the award by an Ad-hoc Committee, is the most significant mechanism.2

3.

When investment arbitration is brought under arbitration rules other than the ICSID Convention, annulment is subject to a domestic court regime, similar to the ones applicable to a commercial arbitration award.3

II. The extent of the review

4.

None of the arbitration regimes include an appellate review mechanism.4

A. ICSID annulment

5.

Review by the ICSID Ad-hoc Committee is not, unlike in domestic litigation, an actual appeal of the tribunal’s decision.5 On the contrary, annulment under the ICSID Convention is simply designed to protect the parties against “procedural errors in the decisions process”.6 It is limited to specific exhaustively listed grounds which include (a) the improper constitution of the tribunal, (b) a manifest excess of powers by the tribunal, (c) the corruption on part of one of the members of the tribunal, (d) a serious departure from a fundamental rule of procedure or (e) the failure by the tribunal to state the reasons on which the award is based.7

6.

Some Ad-hoc Committees have deviated from the limited scope of review, and addressed issues of error in law or fact.8 Fearing that this could undermine the finality of the ICSID regime, a vast majority have adopted a stricter approach.9 Accordingly, annulment committees only review factual findings and weighing of evidence if the errors of fact or of law committed by the tribunal are so egregious as to be tantamount to the breach of the grounds listed in Article 52(1) of the Convention.10

B. Non-ICSID annulment

7.

Domestic review mechanisms vary according to the seat of the arbitration, which should be carefully reviewed by the investor before initiating an arbitration against a State under a procedure other than ICSID.11 It also depends on whether the State ratified the New-York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as State parties may refuse enforcement if the award has been set aside.12 Such a review usually aims at ensuring that the tribunal did not exceed its powers and respected due process.

8.

The common shared practice of domestic courts could be defined as less inclined towards finality as, for instance, a majority of courts review de novo the arbitral tribunal’s jurisdiction.13 Some others would not only ensure that the tribunal applied the correct applicable law, but also review whether it applied it properly.14 Contrary to ICSID Arbitration, domestic courts usually review awards on the basis of public policy.15

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