CMS v Argentina CMS GAS TRANSMISSION COMPANY USA

CMS v. Argentina CMS GAS TRANSMISSION COMPANY (USA) V. THE ARGENTINE REPUBLIC ICSID CASE NO. ARB/01/8 IULIIA DRAGUNOVA

Content 1. Facts of the Case. 2. Breaches Alleged. 3. Breaches Found/Holdings. 4. Annulment Proceedings. 5. Interesting Facts.

Facts of the Case

Breaches Alleged by Claimant • Indirect expropriation • Fair and equitable treatment (FET) • Umbrella Clause • Arbitrary, unreasonable and/or discriminatory measures

Indirect expropriation The Metalclad tribunal (ICSID): if the result of the measure is to deprive the owner “…in whole or in significant part, of the use or reasonably-to-expect economic benefit of property even if not necessarily to the obvious benefit of the host State. ”

Fair and Equitable Treatment Genin v. Estonia (NAFTA): violation of FET “would include acts showing a willful neglect of duty, an insufficiency of action falling far below international standards, or even subjective bad faith. ” CME v. Czech Republic (UNCITRAL): “[The Government] breached its obligation of fair and equitable treatment by evisceration of the arrangements in reliance upon [which] the foreign investor was induced to invest. ” MTD v. Chile (ICSID): “…FET should be understood to be treatment in even-handed and just manner, conducive to fostering the promotion of foreign investment. ”

Umbrella Clause An umbrella clause protects investments by bringing obligations or commitments that the host state entered into in connection with a foreign investment under the protective "umbrella" of the BIT. Investors often rely on an umbrella clause as a catch-all provision to pursue claims when a host state's actions do not otherwise breach the BIT. An umbrella clause can elevate a contract claim to the level of a treaty claim.

Breaches Found • Indirect expropriation • Fair and equitable treatment (FET) • Umbrella Clause • Arbitrary, unreasonable and/or discriminatory measures

Annulment Proceedings • The Tribunal’s findings relating to the umbrella clause were annulled. • Other findings were upheld. • The award of damages was not affected.

Interesting Facts • State of Necessity claimed by the Respondent. Argentina relied on Article 25 of the ILC Articles on State Responsibility in arguing that its measures were adopted to safeguard essential economic interests. • Possible Conflict of Interests. Certain loans were granted to TGN by International Fifance Corporation, an affiliate of the World Bank.