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Comes now an arbitral panel in the International Centre for
Settlement of Investment Disputes, or ICSID, and in a 282 page
preliminary decision on jurisdiction and admissibility finds that
roughly 60,000 Italian bondholders can join together to bring
claims against the Republic of Argentina, Abaclat and Others v. Argentina,
ICSID Case No. ARB/07/5. The default by Argentina is the same
default that has occupied so much time of the U.S. courts (see our
postings, for example, reflecting the
District Court's and Second Circuit's treatment of the
Argentine bond default).
The claimants did not institute individual arbitral proceedings.
Rather, they eight of the major Italian banks formed what in
English the Panel calls Task Force Argentina, which was formed as
an association under Italian law. The TFA then contracted with
individual bondholders. TFA was given authority to negotiate and
then sue.
The award is noteworthy from an international practice
perspective for the following reasons:
First, the decision addresses the question of whether
"mass" claim liability was consented to by the relevant
persons. Unlike most class action litigation in the U.S., the ISDIS
panel drew a distinction between who was objecting, the
claimants/plaintiffs or the respondents/defendants. Here it was not
the claimants but the respondents who were objecting, and the panel
therefore imposed a different standard of analysis. The panel
addressed the ICSID rules concerning the eligibility of a person to
participate in an ICSID arbitration and rules concerning the
conduct of such arbitration. Finding that the "Tribunal must
verify the existence of a consent, as an objective condition to its
jurisdiction", it found that there were no formal requirements
imposed by the bilateral treaty under which the mass claims were
made and ultimately determined that the manner of expressing
consent to sue here was valid.
Second, the decision address what it calls the question of
"admissibility". The use of the term by the Panel appears
different from the way a US court would use the term. The Panel
means something akin to whether the ICSID framework could legally,
structurally, practically accommodate the "mass" aspect
of the claim. The Panel rejected Argentina's arguments that the
ICSID framework "does not provide [for] and does not allow
mass claims"; rejected as well the argument that because a
mass claim "resembles more a type of class action" that
it was therefore not cognizable under the ICSID rules; and rejected
finally a welter of practical objections (e.g.,
unmanageability).
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Arbitration in Brazil is regulated by Law No. 8,307, of September 23, 1996 (the Brazilian Arbitration Act), which applies to all arbitral proceedings with their seat in the Brazilian territory, and it is based on the UNCITRAL Model Law and on the Spanish Arbitration Law of 1988.
The Brazilian Superior Court of Justice (STJ) recently took another step towards the consolidation of arbitration as an alternative means of dispute resolution.
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