A US Court of Appeals upholds a district court’s decision to enforce a US$21 million UNCITRAL award against Argentina.
In 1993, Argentina awarded a contract to a consortium of seven companies, including AWG Group which provided for investment in and operation of Argentina’s water services. In response to the 2001 economic crisis, Argentina froze the tariffs that the consortium could charge customers. The arbitral tribunal rejected Argentina’s defense that its conduct was necessary to protect its economy and water supply. It concluded that Argentina had breached the contract by treating the consortium unfairly.
On appeal, Argentina argued that the arbitrator appointed by the consortium, had shown “evident partiality” by failing to disclose a position as a non-executive member of the board of UBS in 2006, which owned a 2% stake in two members of the consortium. The alleged conflict had already been the basis for an unsuccessful attempt to disqualify her during the arbitration.
The Court of Appeals finds that there is no basis for vacating the award because UBS’s interests were trivial, which makes, in turn, the concerned arbitrator’s interests insignificant such that they could not have created evident partiality.