Argentina to seek annulment of arbitration court ruling in favour of CMS Energy
BUENOS AIRES (AFX) - The Argentine government said it will try to annul a ruling by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in favour of US company CMS Energy Corp.
CMS Energy Corp, like many other foreign companies, is seeking compensation for the losses incurred as a consequence of the financial and economic crisis that hit Argentina in 2002, after the 1-for-1 peg of the peso with the US dollar was dropped and utility tariffs were frozen at a time when inflation was running high.
CMS is seeking about 300 mln usd in compensation.
Government officials said that Argentina will ask the ICSID to declare the award null and void because CMS is a minority holder of TGN, the company affected by the government measures taken in 2002.
The Argentine authorities allege that the US government is able to overturn rulings by NAFTA’s arbitration tribunal on these grounds.
NAFTA is the North American Free Trade Agreement, which includes Mexico and Canada, along with the US.
ICSID’s ruling cannot be formally appealed.
According to CSFB analysts, ’annulments or revisions can be requested only in specific circumstances, for example, if a party can show that the ICSID’s tribunal exceeded its powers, was not properly constituted or that there was corruption on the part of the tribunal’s members’.
CSFB analysts Lacey Gallagher and Carola Sandy noted that should the Argentine government ’be perceived as breaching the bilateral investment treaty with the US, this could strain the bilateral relations between the US and Argentina’.
They added that this ICSID ruling should create an incentive for the government to speed up negotiations with the utilities and, perhaps, to agree to more realistic rate increases.