Global law firm White & Case LLP achieved success for tens of thousands of Italian bondholders who are claimants in a landmark arbitration against the Argentine Republic before the International Centre for Settlement of Investment Disputes (ICSID) at the World Bank.
The World Bank Tribunal hearing the case issued a highly anticipated Decision on Jurisdiction and Admissibility on August 4, 2011. The decision establishes jurisdiction over claims for compensation in excess of US$1 billion brought by the Italian bondholders under the Argentina-Italy bilateral investment treaty in connection with Argentina's issuance of sovereign bonds and sovereign debt restructuring.
White & Case Partner Carolyn Lamm said, "This is a victory for tens of thousands of individual Italian bondholders and demonstrates that Argentina must confront its violations of fundamental investment protections."
In its 283-page decision, the Tribunal found for the bondholders on a series of critical issues of jurisdiction and admissibility. The decision has significant implications for sovereign finance and for procedures involving multiple claimants and mass claims. The Tribunal ruled, among other things, on the following issues:
(1) Sovereign Finance – The Tribunal discusses sovereign bonds and sovereign debt restructuring, and concludes that the "dispute does not derive from the mere fact that Argentina failed to perform its payment obligations under the bonds but from the fact that it intervened as a sovereign by virtue of its State power to modify its payment obligations towards its creditors."
(2) Mass Claims – The "mass aspect of Claimants' claims" present no barrier to the arbitration and the "claims are admissible."
(3) Scope of Investments – "The bonds in question, and in particular the security entitlements held by Claimants in these bonds, qualify as 'Investment' . . . made 'in the territory of Argentina' and 'in compliance with the laws and regulations of Argentina.'"
(4) Consent of Claimants – The consent forms submitted by Claimants contain "a clear and unambiguous expression of irrevocable consent" to the jurisdiction of the Centre.
(5) Consent of the State – Argentina's "consent to ... jurisdiction includes claims presented by multiple Claimants in a single proceeding."
The Tribunal reached its decision in a majority vote and ordered that the case move to a phase regarding the merits of the claims brought by the bondholders. The Tribunal also dismissed, in a separate letter, a request for provisional measures filed by Argentina. The bondholder Claimants previously secured a critical confidentiality and procedural order pursuant to which the decision on jurisdiction will be made public.
Jonathan C. Hamilton, partner of White & Case, said: "The bondholders' case resonates in Latin America and beyond because it addresses sovereign finance and debt restructuring in the context of investment protections."
The formal name of the case is Abaclat and others (Case formerly known as Giovanna a Beccara and Others) v. Argentine Republic (ICSID Case No. ARB/07/5).
The White & Case team was led by partners Carolyn B. Lamm, Jonathan C. Hamilton, Andrea J. Menaker, Francis A. Vasquez Jr., Owen Pell and Abby Cohen Smutny, together with counsel Frank Panopoulos and Lee A. Steven. Grimaldi e Associate in Rome, and Pérez, Alati, Grondona, Benites, Arntsen & Martínez de Hoz (Jr.) in Buenos Aires also advise on the matter.
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