The Committee notes that in no event would it be minded to lift the stay of enforcement of the award or to make security a condition of a continuation of the stay without arrangements being put in place to ensure that any amounts recovered by, or any security provided to, the Claimants would be recoverable by Argentina in the event that the Award is annulled.
The Chairman stated that the Committee had concluded that this necessary part of the application for the stay to be lifted had not yet been satisfied. The Chairman announced that in the circumstances the Committee had decided, without taking any view on the other issues that had been raised, to adjourn the matter of the lifting of the stay to give the Claimants an opportunity to bring forward a proposal, on notice to Argentina, which would make provision to ensure that any amounts recovered by or any security provided to the Claimants would be recoverable by Argentina in the event that the Award is annulled. The Chairman went on to state that such provision should:
... eliminate the risk of third party execution or garnishee so that Argentina would not in fact recover the monies. The Committee takes the view that it is no function of establishing an account for escrow to give some third party a windfall fund to execute against..., and... the possibility of third party benefit is to be eliminated.
(a) There is additional support for Argentina’s position that an ICSID award creditor may be required to follow the enforcement procedures under Argentine law to which Article 54 of the ICSID Convention refers.17
(b) The only thing that the award creditor has to do is complete the formalities applicable to compliance with final judgments of local courts, if any apply in the State in question, which in the case of Argentina are essentially before administrative authorities, in this case the Ministry of Economy, within the context of an enforcement judicial proceeding, in which the judge restrains himself to checking compliance with the award.
(c) Article 27 of the ICSID Convention constitutes the best proof of Argentina’s position on recognition and enforcement.
(d) In other cases, compliance by States with ICSID awards has taken six months or a year, and lawyers for claimants have accepted that there are procedures that States must go through to execute payments.
(e) For purposes of execution of the Award, the issue of Enron’s bankruptcy status is not a mere formality. Creditors may attach assets that were attached or obtained by Enron during the annulment proceeding, which assets may never be recouped by Argentina even if it prevailed in the annulment.
(f) Serious doubts remain as to the ability of the Claimants’ counsel, under the arrangements within Enron’s bankruptcy proceedings regarding this ICSID claim, to cause Enron to renounce certain rights it may have as to the execution of the Award.
(g) The costs of setting up the escrow arrangement or letter of credit in the Claimants’ first two proposals would be so high as to render them impracticable.
(h) BNA is an Argentine commercial banking institution created by the Argentine legislature, which operates independently from and is not controlled by Argentina. Under Article 25 of its charter, it is prohibited from lending to the Federal Government, except when a special guarantee is constituted that allows for the automatic reimbursement of the money, which in this case would mean that Argentina would have to constitute an escrow account for the total amount of the award.
(i) Each of Proposals 1 and 2 creates unacceptable risks of attachment. In the event that Argentina prevails in the annulment proceeding, Argentina will have the right to receive back the property in the escrow account, or collateral funds returnable to it. Judgment creditors of Argentina will accordingly argue that they have a right to attach Argentina’s right to receive the property in the event that Argentina prevails in the annulment proceeding.
(j) Requiring Argentina to incur such exorbitant costs in order to run the risk of losing probably millions of dollars even if it prevailed in the annulment is not justified. Even if Argentina’s position is not shared, at the end of the day all that Argentina is requiring is that ICSID award creditors follow a formal procedure almost exclusively before administrative authorities, something that has been successfully required by other States.
(1) In the Vivendi case, the ad hoc committee stated that:
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.20
The ad hoc committee went on in that decision to note that "Argentina’s legal position in this respect... does not conform entirely with the Committee’s understanding of the interrelationship between Articles 53 and 54".21
(2) Subsequently, in the Sempra case, the ad hoc committee concluded that:
... a State Party against which an award has been made must (like a foreign investor party) abide by and comply with an ICSID award without the award creditor having to submit to any agency of the State Party to enforce the award as envisaged by Article 54 of the ICSID Convention.... The very fact that the Committee has found that Argentina is under a duty, unconditionally and in good faith, to "abide by and comply with’’ the Award according to Article 53, together with Argentina’s repeated and uncompromising affirmation that it has no such obligation in the absence of the award creditor submitting the award to a procedure within the State party’s domestic judicial system under Article 54, must necessarily lead to the conclusion that Argentina is not willing to comply with its obligations under Article 53 unless Sempra first seeks enforcement under Article 54.22
... in the absence of any indication by Argentina that it has changed its position to accord with that which the Committee has found as to the extent of the obligations under the BIT and the ICSID Convention, the Committee would be minded, again absent contrary arguments and evidence, to consider that there is a risk of non-compliance by Argentina with its obligations under Article 53 of the ICSID Convention if the Award is not annulled.24
What we state is that, again, Article 53 establishes an obligation to comply with ICSID awards. And we say that they are voluntary in the sense that the debtor does not have to be forced to comply with an ICSID award. What we state is that the ICSID creditor as [sic] to follow the formalities applicable under domestic law for compliance with final judgments of local courts. This is what Article 54 requires.26
In the letter of April 7, 2009, Argentina’s legal representatives appear to have maintained this position, stating that:
Even if Argentina’s position regarding the way in which ICSID awards are to be complied with were not shared, which is the case of this ad hoc Committee, at the end of the day all that Argentina is requiring is that ICSID creditors follow a formal procedure almost exclusively before administrative authorities...
On the basis of the material before it, the Committee is satisfied that Argentina has not changed its position that if the Award in this case is not annulled, Argentina will not comply with the Award without requiring the Claimants to bring proceedings for the enforcement of the Award under the provisions of Argentine law that give effect to Article 54 of the ICSID Convention.
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