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Published online by Cambridge University Press: 27 February 2017
* This text was reproduced and reformatted from the text available at the text appearing at the Arbitration Database website: (visited October 1, 2009) <http://arbitration.fr/resources/ICSID-ARB-05-7.pdf=.
1 Saipem S.p.A. v. The People’s Republic of Bangladesh, ICSID Case No. ARB/05/7 (June 30, 2009) [hereinafter Saipem].
2 Agreement Between the Government of the Republic of Italy and the Government of the People’s Republic of Bangladesh on the Promotion and Protection of Investments, Mar. 20, 1990.
3 Injunction issued by the Supreme Court of Bangladesh (Nov. 24, 1997) and the High Court Division of the Supreme Court of Bangladesh (May 27, 2001) (restraining Saipem from proceeding with the ICC arbitration).
4 Decision of the First Court of the Subordinate Judge of Dhaka (Apr. 5, 2000).
5 ICC Case No. 7934/CK/AER/ACS/MS, May 9, 2009.
6 Decision of the High Court Division of the Supreme Court of Bangladesh (Apr. 21, 2004).
7 Article 9(1) of the Agreement Between the Government of the Republic of Italy and the Government of the People’s Republic of Bangladesh on the Promotion and Protection of Investments provides for recourse to ICSID for ‘‘[a]ny dispute arising between a Contracting Party and the investors of the other, relating to compensation for expropriation, nationalization, requisition or similar measures including disputes relating to the amount of the relevant payments . . . .’’
8 Although Saipem considered that the actions of the domestic courts amounted to a denial of justice and to an unfair and inequitable treatment, it was not able to bring these claims before the ICSID tribunal. Indeed, similarly to other bilateral investment treaties in existence, the bilateral investment treaty between Italy and Bangladesh restricts the jurisdiction of the ICSID tribunal to the determination of claims for expropriation.
9 International Law Commission, State Responsibility: Titles and Texts of the Draft Articles on Responsibility of States for Internationally Wrongful Acts Adopted by the Drafting Committee on Second Reading, U.N. Doc. A/CN.4/L.602/Revs.1,20 (2001) [hereinafter Draft Articles].
10 Plama Consortium v. Republic of Bulgaria, ICSID Case No. ARB/03/24 (Aug. 27, 2008).
11 Id. ¶ 193.
12 Nigel Blackaby et al., Redfern and Hunter on International Arbitration 497 (5th ed. 2009).
13 Draft Articles, Commentary to Article 4, § 6.
14 Saipem, ¶¶ 128-129.
15 Id. ¶ 133.
16 Id. ¶¶ 149-161.
17 Id. ¶¶ 163-170.
18 Id. ¶ 181.
19 Id. ¶ 182.
1 Under a credit agreement between IDA and Bangladesh and a project agreement between IDA and Petrobangla both dated 2 May 1985. There was also a subsidiary loan agreement dated 3 October 1985 between Bangladesh and Petrobangla. It is Bangladesh’s assertion that the Contract arises out of the agreements with IDA, without which the Contract would not have come into existence (Rejoinder, p. 4 at ¶ 11).
2 This injunction was confirmed on 19 July 1993 and subsequently affirmed by the Court of Appeal of Milan on 12 August 1993. The action on the merits, which was initiated to maintain the injunction was still pending at the time of the hearing on jurisdiction in this arbitration (Transcripts of the Hearing on Jurisdiction, 22 September 2006, Day II, 63:22-64:3).
3 See Transcripts of the Hearing on Jurisdiction, 22 September 2006, Day I, 57:14-21.
4 Petrobangla’s jurisdictional objection in relation to the additional compensation for time extension was that such claim ‘‘is outside the scope of the Arbitration Clause and beyond the jurisdiction of the Tribunal since it does not relate to rights or obligations under the Agreement as therein no clause in the Agreement which provides for such additional compensation for time extension’’ (Petrobangla’s submissions in the ICC Arbitration as quoted in the ICC Terms of reference [Exh. R-70, p. 8] and the ICC Award [Exh. C-6, p. 6]). Petrobangla also opposed the admissibility of Saipem’s claim on the ground that they were premature as they ‘‘[we]re not matters which ‘cannot be settled amicably’ [as provided for by the arbitration agreement]’’ (Exh. R-70, p. 8 and Exh C-6, pp. 6-7).
5 On 23 June 1999, Saipem filed an application for ‘‘rejection of the application’’ on the merits (Exh. R-85), which was refused by an order dated 5 September 1999 (Exh. R-87). Saipem did not appeal from this order in the High Court Division of the Supreme Court.
6 Petrobangla also sought an interim injunction pending the hearing of its application, which was dismissed by the Court by an order dated 16 November 1997 (Exh. C-10.1). On 17 November 1997, Petrobangla filed an appeal from this order (Exh. C-10.2). By a judgment dated 2 May 1999, the High Court allowed Petrobangla’s appeal, set aside the order dated 16 November 1997 of the lower court, and granted the interim injunction in respect of the proceedings of the ICC Tribunal (Exh. C-10.5). On 30 June 1999, Saipem appealed from this judgment in the Appellate Division of the Supreme Court and requested a stay of the operation of the Judgment of the High Court Division. The Appellate Division granted the stay and extended it by two separate orders dated 4 and 18 July 1999 until 22 July 1999. After having heard both parties, on 25 July 1999 the Appellate Division rendered a judgment upholding the High Court decision of 2 May 1999.
7 Saipem appealed from the judicial stay of the arbitration on the ground that the Bangladeshi courts had no jurisdiction to decide on Petrobangla’s petition regarding the alleged misconduct of the proceedings by the arbitrators. Specifically, Saipem submitted that the ICC Arbitration Rules elected by the parties provided for an exclusive mechanism for disqualification of the arbitrators and that such an election had to be taken into consideration according to Section V of the Bangladeshi Arbitration Act of 1940. Pursuant to this provision, ‘‘the authority of an appointed arbitrator is irrevocable except with the leave of the court, unless a contrary intention is expressed in the arbitration agreement.’’
8 According to Mr. Nassuato, ‘‘Saipem, considered the risky conditions in the country very seriously when the question arose of whether we were to appear before the Bangladeshi courts to contest the decisions interfering with the arbitration’’ (Nassuato WS, p. 6).
9 In the cover letter, Bangladesh announced that a Supplemental WS by Mr. Razzaq would be filed ‘‘over the week-end.’’
10 See e.g., AES Corporation v. the Argentine Republic, ICSID Case No. ARB/02/17, Decision on jurisdiction of 13 July 2005, ¶¶ 30-32; available at http://www.investmentclaims.com/decisions/AES-Argentina_Jurisdiction.pdf.
11 On the precedential value of ICSID decisions, see Gabrielle Kaufmann-Kohler, Arbitral Precedent: Dream, Necessity or Excuse?, Freshfields lecture 2006, Arbitration International 2007, pp. 368 et seq.
12 Tradex Hellas SA v. Albania, ICSID No. ARB/94/2 Award of 29 April 1999, at ¶¶ 75, 91, 112 and 197.
13 Feldman v. Mexico, ICSID Case No. ARB(AF)/99/1, Award, 16 December 2002, ¶ 177; Soufraki v. UAE, ICSID Case No. ARB/02/7, Award, 7 July 2004, ¶¶ 58, 81; Thunderbird v. Mexico (UNCITRAL), Award, 26 January 2006, ¶ 95; Saipem v. Bangladesh, ICSID Case No. ARB/05/7, Decision on Jurisdiction, 21 March 2007, ¶ 83. See also the ICJ in: Case concerning Avena and other Mexican Nationals, (Mexico v. United States of America), Judgment, 31 March 2004, ICJ Reports 2004, p. 41, ¶¶ 55-57; Military and Paramilitary Activities in and Against Nicaragua, (Nicaragua v. United States of America), Judgment, 26 November 1984, ICJ Reports 1984, p. 437, ¶ 101, See also Article 24(1) of the 1976 UNCITRAL Arbitration Rules.
14 See for instance Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No. ARB/00/6, Award, 22 December 2003, available at http://ita.law.uvic.ca/documents/ConsortiumRFCCAward_000.pdf.; SGS Société Générale de Surveillance S.A. v. Republic of the Philippines ICSID Case No. ARB/02/6, Decision on Jurisdiction, 29 January 2004, 8 ICSID Reports 518, ¶ 161; Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Award, 30 April 2004, 43 ILM (2004) 967, ¶¶ 174-175; Impregilo S.p.A. v. Pakistan, ICSID Case No. ARB/03/3, Decision on Jurisdiction, 22 April 2005, 12 ICSID Reports 245, ¶ 281.
15 See for instance Compañía del Desarrollo de Santa Elena, S.A. v. Republic of Costa Rica ICSID Case No. ARB/96/1, Award of 17 February 2000, 5 ICSID Reports 153, at 77-78.
16 See also Reply, p. 12, ¶¶ 41-42: the ‘‘scandalous decision of 5 April 2000 which revoked the ICC Tribunal’s authority’’ is ‘‘plainly illegal under the principles of international arbitration, the agreement of the parties and Bangladeshi law itself’’ (emphasis added).
17 See also SoC., p. 30, ¶ 123.
18 See for instance Bhuwalaka v. Fathebobant, attached to Mr. Razzaq’s supplementary statement, in particular the passage at. p. 294, also restated in Reply, ¶ 72, p. 20).
19 Nor did Mr. Ahmad under cross-examination depart from his statement that there is an ‘‘option’’ to bring the question of the arbitrators’ revocation either before the ICC or before the local courts (Tr. I 252:25-254:5).
20 At the beginning of the Hearing, Saipem stated that it had “several proofs, or at least strong indications [of collusion and conspiracy between Petrobangla and the courts].” In addition to the “chronology and timing” discussed in this paragraph, Saipem evoked “the absolute innocence of the Tribunal, [...] the lack of jurisdiction of the local judiciary [and] the[ir] biased conduct” (Tr. I 43:20-44:5 ). It is unclear how these allegations can establish more than the mere fact that the courts were wrong.
21 Including in particular S. M. Schwebel, Anti-Suit Injunctions in International Arbitration: An Overview, in Anti-Suit Injunctions in International Arbitration (E. Gaillard, editor), IAI (International Arbitration Institute) Series on International Arbitration, no. 2, Juris Publishing, 2004; also E. Gaillard, L’interférence des juridictions du siège dans le déroulement de l’arbitrage, in Liber Amicorum Claude Raymond, Paris 2004, p. 91; Salini Costruttori Sp.A v. The Federal Republic of Ethiopia (ICC Case No. 10623/AER/ACS), Award regarding the suspension of the proceedings and jurisdiction of 7 December 2001, 42 ILM 609 (2003) and 21 ASA Bulletin 82 (2003), ¶¶ 130-131.
22 See for instance Alexandre Kiss, “Abuse of Rights,” in Berhadt (Ed), Encyclopedia of Public International Law, Vol 1. at 5.
23 Poudret/Besson, op. cit. at ¶ 80, p. 117 [Exhibit C-116], emphasis added.
24 Id.
25 Along the same lines, one should point out that the Award in Salini v. Ethiopia [cited above Fn. 21] relied upon by Saipem relates to a different situation as it concerned an injunction by the local court to stay the arbitration itself (and not a revocation of the arbitrators) and relied only marginally on Article II of the New York Convention.
26 S. M. Schwebel, Anti-Suit Injunctions in International Arbitration: An Overview, [cited above Fn. 21], pp. 3-4.
27 In support of its position that the requirement does not apply, Saipem contends that the requirement of exhaustion of local remedies should be disregarded in the present proceedings ‘‘because the highest court of Bangladesh had several opportunities to deal with this case, and to set right the wrongs which were committed by the lower courts, in particular in the decision of April 21, 2004’’ (Tr. II 113:4-14). The Tribunal disagrees for the already indicated reasons that one fails to see how the Supreme court could act on its own motion failing any appeal/submission by Saipem (see above ¶ 172).
28 Referring to McLachlan/Shore/Weiniger, International Investment Arbitration, Oxford University Press, 2007, pp. 232-233, submitted as Exh. C-128.
29 Duke Energy Electroquil Partners and Electroquil S.A. v. Republic of Ecuador, ICSID Case No. ARB/04/19, Award of 18 August 2008, ¶¶ 399-400 quoting Jan Paulsson, Denial of Justice in International Law, Cambridge, 2006, p.153-154.
30 See in particular Antoine Biloune and Marine Drive Complex v. Ghana Investments Centre and Ghana Government, Award on Damages, Interests and Costs of 30 June 1990, Yearbook of Commercial Arbitration, Vol. XIX (1994), pp. 11-32 and the quoted references.
31 MidAmerican Energy Holdings Company (formerly CalEnergy Company. Inc) v. Indonesia. Decision of 1 November 1999, reported in Investment Claims – IIC 168 (1999). The Tribunal asked the Parties to comment on, and handed out copies of this case at the hearing.
32 Saipem claims that the date of the ICC Award, i.e. 9 May 2003, is relevant for the calculation according to Article 5(3) of the BIT: ‘‘Prior to this date the amount of the investor’s credit had not yet been quantified. At the date of the Award the arbitration had already been frustrated by Bangladesh and the Award had been rendered unenforceable by previous judicial decisions even before it was handed down. It is at this moment on that the State measure having the effect of expropriating the investment produced its effects’’ (SoC, p. 68, p. 256).
33 In its last written submission, Saipem stated that it ‘‘will provide the Tribunal with a detailed and updated calculation of interest and costs soon after the March 2008 hearing’’ (Reply, p. 41, ¶ 150), which it did not do.
34 Chórzow Factory case (Merits), Germany v. Poland, Judgment of the PCIJ of 13 September 1928, PCIJ Series A. Vol 17 at 47 (Exh. C-69).
