Professor Eduardo Zuleta President
Professor Rolf Knieper Member
Professor Mónica Pinto Member
ICSID Secretariat :
Ms. Veronica Lavista - Secretary of the Committee
For Perenco Ecuador Limited :
Mr. Mark W. Friedman - Debevoise & Plimpton
Ms. Ina C. Popova - Debevoise & Plimpton
Ms. Laura Sinisterra - Debevoise & Plimpton
Mr. Gregory A. Senn - Debevoise & Plimpton
Mr. Jonathan Parr - Perenco Group General Counsel
Ms. Josselyn Briceño de Luise - Perenco Latin America Legal Advisor
Mr. James Haase - Immersion Legal
For the Republic of Ecuador :
Mr. Eduardo Silva Romero - Dechert (Paris) LLP
Mr. José Manuel García Represa - Dechert (Paris) LLP
Ms. Gabriela González Giráldez - Dechert (Paris) LLP
Ms. Ruxandra Esanu - Dechert (Paris) LLP
Mr. Amir Farhadi - Dechert (Paris) LLP
Dr. Íñigo Salvador Crespo - Procurador General del Estado de la República del Ecuador
Dr. Claudia Salgado Levy - Directora Nacional de Asuntos Internacionales – Procuraduría General del Estado de la República del Ecuador
Court Reporter :
Ms. Dawn Larson Worldwide Reporting, LLP
Ms. Silvia Colla
Ms. Estela Zaffaroni
Mr. Charles Roberts
Turning first to the Republic's Request that the stay of enforcement of the Award should be continued pending its decision on the Application, the Committee notes that, although Article 52(5) of the Convention uses the verb "may", thereby conveying an element of discretion to the Committee, a review of the many decisions by ad hoc annulment committees since the MINE decision in 1988 leads the Committee to the conclusion that, absent unusual circumstances, the granting of a stay of enforcement pending the outcome of the annulment proceedings has now become almost automatic.
In the present case, the Committee is satisfied that the Republic has discharged its burden of proving that there are no unusual circumstances and that all the factors which the Republic has referred to support the continuation of the stay of enforcement of the Award pending the Committee's decision and it so rules.62
to a fundamental conclusion, set forth at the outset, that the continuation of the stay of enforcement in the ICSID system is far from automatic. ICSID Convention Article 52(5) provides that the stay shall continue if an ad hoc committee considers that "the circumstances so require." Said article does not use other less categorical verbs, such as "recommend," "deserve," "justify" or similar words, but resorts to the imperative verb "require." And the expression "if it considers" leaves wide discretion to an ad hoc committee to evaluate, case by case, if those circumstances are present or not, in order to continue a stay of enforcement, notwithstanding the binding and final nature of the awards.64
After having considered the following circumstances as part of its discretional exercise: the risk of non-compliance, the risk of non-recovery, the quality of the annulment application, the possibility of irreparable harm, and the obligation to pay interest as compensation for the time-value of money, the committee ruled to lift the stay.
The use of the phrase: "if it [the committee] considers that the circumstances so require," rather than the formulation "so permit," indicates the necessity for the committee to positively establish circumstances prone to justify the requested stay on enforcement. The use of the word "may" indicates that it is a matter within the discretion of the committee whether or not to stay enforcement of the award pending its decision on an application for annulment. […]
In consideration of the previous, it is the view of the Committee that it is empowered to exercise its discretion as to whether or not to continue the stay on the enforcement of the Award pending its decision on the Application.65
In exercising its discretion by continuing the stay, the committee referred to the legitimacy of the annulment application:
TANESCO has exercised its right to apply for annulment contemplated under the ICSID Convention, and as such it has a legitimate right to request that the stay is continued, until the final decision is rendered by the Committee. There is no reason to consider that in this particular case the institution of the annulment proceedings was purely dilatory in nature.66
The exercise of the discretion of the Committee depends on the circumstances surrounding the Stay Request and, therefore, the granting of a stay of enforcement or its continuation should in no way be regarded as automatic. The Committee is aware that some ad hoc annulment committees have considered that, "absent unusual circumstances, the granting of a stay of enforcement pending the outcome of the annulment proceedings has now become almost automatic." However, this does not follow from the ICSID Convention or the Arbitration Rules, and the Committee considers that its decision should be based on an assessment of all relevant circumstances.67
The committee accepted the respondent's argument that the claimant bore no risk of compliance in case of an annulment in light of the respondent's record of fulfilment of its international obligations, that, conversely, the claimant itself was bankrupt exposing a high risk of recovery in case of the maintenance of the award, and it rejected the argument of other committees that the delay in enforcement is compensated by the accrued post-award interest. After this exercise of weighing and weighting, it stated that "[t]o conclude, on balance, the Committee is of the view that Applicant's interest in a continued stay of enforcement pending the outcome of the annulment proceeding should be given more weight than Respondent's interest in immediate enforcement,"68 and decided to continue the stay.
The terms of Article 52(5) of the ICSID Convention must be interpreted in the context of the annulment mechanism. The Committee has no doubt that the provision does not intend to empower ad hoc committees to reject the request for a stay when the applicant pursues its legitimate right to have the award examined for fundamental institutional and procedural propriety in good faith and absent dilatory intentions. Therefore, the Committee subscribes to the mainstream jurisdiction of committees that exercise their discretion and grant stays when annulment of an award has been requested in good faith and neither with the abusive intention to escape the obligation to abide by its terms nor as a demonstration of its refusal to accept the obligation under the ICSID Convention to comply with the award. The Committee does not share the view that a context-free interpretation of the ordinary meaning of the term "require" in Article 54(5) [sic] of the ICSID Convention, should lead to a restriction of this general practice.77
According to Article 52(5), the Committee has to appreciate first whether circumstances are present that make it necessary to stay enforcement or continue the provisional stay of enforcement. Once the Committee has concluded that such circumstances exist, then it may decide in favor or against the continuation of the stay. The Committee emphasizes the term "may" because even when the required circumstances are present, a committee may decide against the continuation of the stay of enforcement. This wide discretion of the Committee in making its decision is compounded by the unspecified nature of the circumstances that may lead an annulment committee to conclude that they require that enforcement be stayed.78
By this argument, the committee limited its power of exercising discretion doubly. First, the power of exercising discretion only sets in after circumstances are established that require a continuation of the stay; second, the discretion can only be exercised in the sense to deny a stay although circumstances requiring a stay exist. The committee found that budgetary allocations are inherent in international pecuniary obligations, that the periodicity of budgetary planning cannot be a relevant circumstance except for extreme and exceptional situations, "that Ecuador has failed to prove that the termination of the stay would lead to severe consequences for its ability to conduct its affairs." Since budgetary hardship had been the only circumstance asserted by the applicant, and this assertion had not been proven, "this should be the end of the matter", and the stay was lifted without necessitating the exercise of discretion.79
a. Respondent is ordered to provide the ad hoc Committee, within 60 days following this decision, with a letter signed by Ecuador's Minister of Finance or the official having full authority to bind Ecuador, committing to pay the Award unconditionally, voluntarily and in full, within 60 days after the Committee decides on the Application for Annulment, if the Application for Annulment were not to be upheld in full or in part, and attesting that such payment shall not be subject to any enforcement proceedings or to the intervention of Ecuador's courts.
b. If Ecuador were not to provide the letter under ¶ 80(a) with a text in form and substance satisfactory to the Committee within 60 days following the issuance of this decision, the stay shall be lifted if by such date, or at any time thereafter, Claimant has provided or provides the Committee with a letter signed by an officer having full authority to bind Perenco S.A. committing to unconditionally, voluntarily and in full reimburse Ecuador for any payments received under the Award, within 60 days after the Committee decides on the Application for Annulment, if the Application for Annulment were to be upheld in full or in part and attesting that such payment shall not be subject to any enforcement proceedings or court intervention.
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