The ICSID Tribunal ordered Argentina to pay more than 320 million dollars to the Claimants, members of the Spanish travel group Marsans, represented by King & Spalding, for the breach of fair and equitable treatment (“FET”) and unlawful expropriation of their investment in two Argentinian airlines. Respondent’s appointed arbitrator submitted a dissenting opinion stating that the tribunal does not have any jurisdiction on the case.
In 2001, Claimants acquired by means of intermediate companies, including Interinvest, majority interests in two Argentine airlines. The dispute arose out of the regulatory framework applied to their investment, particularly in relation to airfare increases. Moreover, according to a subsequent agreement (“July 2008 Agreement”), Argentina was purported to find a buyer for the two airlines. After Claimants rejected the purchase offer, the Argentine Congress passed two laws authorizing a re-nationalization of the airlines and the expropriation of the Interinvest’s shares in the Argentine airlines by Argentina. In 2008, Claimants brought arbitral proceedings against Argentina under the ICSID Convention and Argentina-Spain bilateral investment treaty (“BIT”).
Among others, the case deals with a set of interesting issues discussed below.
– All three Claimants initiated voluntary insolvency proceedings after the arbitration had started. Respondent has asserted that Claimants’ bankruptcy terminated King & Spalding’s power of attorney to represent Claimants in this case under Spanish law. The Tribunal rejects such objection as highly formal because the arbitration was commenced by properly authorized legal representatives, the objection was raised almost five years after the start of the arbitration and reorganization administrators were aware of the actions taken by the law firm in this arbitration.
– The FET is not synonymous to the minimum standard of treatment in international law, as the latter term is not used in the BIT. Thus, the Tribunal finds that Respondent breached the obligation of FET in its conduct relating to the July 2008 Agreement.
– The FET logically encompasses the respect of reasonable expectations. However, this does not entail the expectation of stabilizing of all relevant laws and regulations. Thus, Respondent’s conduct in the setting of airfares and denying the airlines’ requests for increases does not breach the FET. The most favoured nation clause does not permit Claimants to invoke the umbrella
clause from the US-Argentina BIT as it would result in the incorporation of a new right or standard of treatment not provided for by the applicable BIT.