International Investment Law Essay Example | Topics and Well Written Essays - 3500 words

International Investment Law - Essay Example Relevant facts of the dispute This case arises from the privatization program implemented by the Argentine Republic in the early 1990s, including the guarantees they offered to investors buying assets in the electricity sector and the decisions by the respondent in reducing the impact of the Argentine economic crisis in 2001-20021. Prior to the privatization, the electricity assets of the respondent were operated by three companies which were later restructured for privatization based on Decree 634/91 and Law 26,065. Based on these laws, the electricity generation and related matters belonging to the three companies were to be divided into individual units2. The Claimant in this case argued that the impact of the Reform Law destroyed the investments in Transener and declared that the company has already incurred losses due to this law. National Grid later agreed to sell its shares to Dolphin Management in order to mitigate its losses3. Claimant National Grid notified respondent in 20 02 of the investment dispute and sought for the application of Article 3 of the Treaty; they also claimed the benefit of the application of Article 7(2) of the Treaty between the US and Argentina for the protection of their investment and for international arbitration without referral to the Argentina courts. Respondent proposed the suspension of negotiations as their public service contracts were being processed. The claimant declined the proposal to suspend negotiations; the claimant however agreed to meet with authorities for negotiations4. The claimant again expressed its willingness to explore a settlement of the issue; without any response from the respondent, the claimant submitted the case for arbitration. The parties consented. The respondent agreed to the arbitration and claimed its case under the terms of the Treaty which allows the option to settle disputes which may arise with investors who may be nationals of the other State party5. The Claimant submitted to arbitratio n through its notice of arbitration. Based on Article 3.2 of the UNCITRAL Rules, the arbitration started on the date when the Notice of Arbitration was received by the respondent. Findings The tribunal decided that there was no direct or indirect expropriation as National Grid has not been deprived of title to its property and the methods of Argentina in handling the crisis were not equivalent to expropriation6. However, the tribunal ruled that the practice of fair and equitable treatment was violated by Argentina when it did the following: it changed the legal framework which was used as basis by National Grid in its investment; it did not negotiate with National Grid in the implementation of its measures and disposal of its investments; and when it requested for National Grid to abandon its legal remedies in relation to the renegotiation of its investment7. The tribunal also decided that economic difficulties which Argentina found itself in had to be considered. The tribunal then decided that the violation of the fair and equitable standard only happened from the time National Grid asked to renounce its rights, and not from the time the emergency measures were implemented by Argentina8. This made Argentina accountable for the losses of National Grid during the first six months of the crisis. Analysis of the Arbitral Award First of all, the jurisdiction of the Tribunal is based on the instruments of the parties submitting to