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.
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
II. The extent of the review
A. ICSID annulment
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
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
Convention on the settlement of investment disputes between states and nationals of other states, 18 March 1965, entered into force on 14 October 1966, Art. 53; Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Annulment Proceeding, 5 February 2002, para. 18; AES Summit Generation Limited and AES-Tisza Erömü Kft. v. Republic of Hungary, ICSID Case No. ARB/07/22, Decision of the ad hoc Committee on the Application for Annulment, 29 June 2012, para. 15; TECO Guatemala Holdings, LLC v. Republic of Guatemala, ICSID Case No. ARB/10/23, Decision on Annulment, 5 April 2016, para. 73; Klöckner Industrie-Anlagen GmbH and others v. United Republic of Cameroon and Société Camerounaise des Engrais, ICSID Case No. ARB/81/2, Excerpts of Ad hoc Committee Decision on Annulment, 3 May 1985, paras. 3, 83; Compañía de Aguas del Aconquija S.A. and Vivendi Universal (formerly Compagnie Générale des Eaux) v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, 3 July 2002, para. 62; Patrick Mitchell v. The Democratic Republic of Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, 1 November 2006, para. 19; CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8, Decision of the Ad Hoc Committee on the Application for Annulment of the Argentine Republic, 25 September 2007, para. 43.
Klöckner Industrie-Anlagen GmbH and others v. United Republic of Cameroon and Société Camerounaise des Engrais, ICSID Case No. ARB/81/2, Decision of the ad hoc Committee (English unofficial translation from the French original), 3 May 1985, para. 61; Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16, Decision on the Argentine Republic's Application for Annulment of the Award, 29 June 2010, para. 164.
Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Decision on Application for Annulment, 28 January 2002, paras. 25, 53; Maritime International Nominees Establishment v. Republic of Guinea, ICSID Case No. ARB/84/4, Decision for Partial Annulment of the Arbitral Award, 22 December 1989, paras. 4.04, 5.08-5.09.
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, 21 February 2014, para. 72; Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No. ARB/00/6, Excerpts of Decision on Annulment, 18 January 2006 [French], para. 225.
B. Non-ICSID annulment
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.
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
Swiss Federal Tribunal, Judgment of 17 January 2013, DFT 4A_538/2012; Paris Court of Appeal, Judgment of 30 September 1993, Société European Gas Turbines SA v. Société Westman International Ltd; Quebec Court of Appeal, Compare Transp. de cargaison (Cargo Carriers) v. Indus. Bulk Carriers, 15 June 1990, R.D.J. 418; STET International S.p.A. v. Corporacion Transnacional de Inversiones, S.A. de C.V. et al., Judgment of the Supreme Court of Justice of Ontario, 22 Sep 1999; Bayview Irrigation District and others v. United Mexican States, ICSID Case No. ARB(AF)/05/1, Ontario Superior Court of Justice, Reasons for Judgment (Application for Set-Aside), 5 May 2008; Madrid Audiencia Provincial, Judgment of 22 March 2006, Uniprex SA v. Grupo Radio Blanca, SAP M 2572/2006, Legal Ground No. 2.