By Elizabeth Whitsitt
January 13, 2010
Later this month UK-based firm, Inspection and Control Services Limited (ICS), is expected to appoint another arbitrator in its dispute against the Argentine Republic which began earlier this summer.
On July 28, 2009 in accordance with the Arbitration Rules, ICS appointed Mr. Stanimir A. Alexandrov as its nominee to the three-member arbitral tribunal that would decide the outcome of its dispute with Argentina under the UK-Argentina .
Subsequently, Mr. Alexandrov, a partner with Sidley Austin LLP, informed the parties that his law firm had previously represented PWC Logistics, a company with potential connections to ICS. In addition, Mr. Alexandrov notified the parties that he and his law firm were currently counsel to Compañίa de Aguas del Aconquija S.A. and Vivendi S.A., claimants in a long-standing dispute against the Argentine Republic over the provision of water and sewer services (the Vivendi case).*
Less than a week later, Argentina challenged Mr. Alexandrov’s appointment relying on Article 10(1) of the UNCITRAL Rules which provides that, “[a]ny arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence.”
On December 17, 2009 Mr. Jernej Sekolec, the appointing authority designated by the Secretary-General of the Permanent Court of Arbitration to hear the challenge, sided with Argentina.
In reaching this conclusion, Mr. Sekolec rejected arguments raised in opposition to the challenge that the Vivendi case was coming to a conclusion and unrelated to the dispute between ICS and Argentina.
With respect to the former argument, Mr. Sekolec acknowledged that no more action may be required of Mr. Alexandrov given the status of annulment proceedings in the Vivendi case. However, he determined that this reality did not negate Mr. Alexandrov’s conflict as there was still some possibility that the case may continue and “engage Mr. Alexandrov’s firm’s continued representation.”
Regarding the latter argument, Mr. Sekolec noted that the Vivendi case and dispute between ICS and Argentina were “not entirely dissimilar” as “[b]oth matters are investment protection actions of considerable magnitude which raise broadly similar concerns against the same State party…” In addition, he noted that justifiable doubts as to an arbitrator’s impartiality and independence may arise even in circumstances where an arbitrator has represented one of the parties “in an unrelated matter.”
In sustaining Argentina’s challenge, Mr. Sekolec acknowledged that there was “…no reason to doubt Mr. Alexandrov’s personal intention to act impartially and independently…” However, he determined that Mr. Alexandrov and his law firm were “…in a situation of adversity toward Argentina…” and such situations should “be avoided, except where circumstances exist that eliminate any justifiable doubts as to the arbitrator’s impartiality or independence.”
As support for his decision, Mr. Sekolec also referenced the IBA Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines) and noted that there were two examples of potential conflicts of interest on the “Orange List” of the IBA Guidelines that were relevant to this case. First, justifiable doubts as to an arbitrator’s impartiality or independence may arise where “an arbitrator’s law firm is currently acting adverse to one of the parties…” or second, where “[an] arbitrator has within the past three years served as counsel against one of the parties…”
Having found that the facts underlying Mr. Alexandrov’s August 7th disclosure to the parties were reflected in those two scenarios, Mr. Sekolec held that the situation “…[gave] rise to objectively justifiable doubts as to Mr. Alexandrov’s impartiality and independence.” Accordingly, Mr. Sekolec gave ICS 30 days from December 17, 2009 to find a replacement arbitrator.
* Previous reporting on the Vivendi case can be found here:
“Vivendi Will Resubmit Argentine Water Claim, Following Recent Decision,” By Luke Peterson, Investment Law and Policy Weekly News Bulletin, 1 August 2003, available here:
“Argentina liable for $100+ Million after expropriating Vivendi water concession,” By Luke Eric Peterson, Investment Treaty News, 30 August 2007, available here:
Decision on the Challenge to Mr. Stanimir A. Alexandrov in ICS Inspection and Control Services Limited (United Kingdom) v. Republic of Argentina, UNCITRAL is available here: