ICSID Decision on Jurisdiction and Admissibility, Abaclat and Others vs. The Argentine Republic, ICSID Case No. ARB/07/5

ICSID CASE NO. ARB/07/5


1
Representing Giovanna a Beccara and others
Ms. Carolyn B. Lamm
Mr. Jonathan C. Hamilton
Ms. Abby Cohen Smutny
Ms. Andrea J. Menaker
Mr. Francis A. Vasquez, Jr.
WHITE & CASE LLP
701 Thirteen Street, N.W.
Washington, D.C. 20005
U.S.A.

and

Avv. Vittorio Grimaldi
Avv. Paolo Marzano
GRIMALDI E ASSOCIATI
Via Pinciana, 25
00198 Rome
Italy

and

Dr. José Martínez de Hoz, Jr.
Dra. Valeria Macchia
PEREZ ALATI, GRONDONA, BENITZ, ARNTSEN & MARTINES DE HOZ (JR.)
Suipacha 1111 – Piso 18
C1008AAW Buenos Aires
Argentina

Representing The Argentine Republic
Dra. Angélina María Esther Abbona Procuradora del Tesoro de la Nación Argentina
Procuración del Tesoro de la Nación Argentina
Posadas 1641
Buenos Aires (C.P. 1112)
Argentina

and

Mr. Jonathan I. Blackman
Mr. Matthew D. Slater
Mr. Carmine D. Boccuzzi
Ms. Inna Rozenberg
Mr. Ezequiel Sánchez Herrera
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, NY 10006
U.S.A.

* For the change of name, see § 641 below.

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[...]

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Abbreviations

In this Decision, the Tribunal adopts the following abbreviations:



8

With regard to the witness and expert statements,:


9



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I. PARTIES

A. CLAIMANTS

1. Claimants, as presented by Claimants, are those described in the Annexes A, B and C to the Request for Arbitration, as substituted, the total number of whom at the time of initiation of the arbitration exceeded 180,0001 (hereinafter referred to as "Claimants"). Annexes A and B to the Request for Arbitration contain a list of natural persons; Annex C to the Request for Arbitration contains a list of juridical entities.

2. Annex D to the Request for Arbitration contains a power of attorney and delegation of authority for each Claimant being a natural person to White & Case LLP (see page 1 above). Annex E to the Request for Arbitration contains a power of attorney and delegation of authority for each Claimant being a juridical person to White & Case LLP (see page 1 above).

3. According to Claimants, Claimants are mostly natural persons of Italian nationality or juridical persons incorporated and existing under the laws of Italy.

4. Claimants are represented in these proceedings by "l’Associazione per la Tutela degli Investitori in Titoli Argentini" (hereinafter "Task Force Argentina" or "TFA"). The nature of TFA‘s representation, its specific role and position in, and its impact on the present proceedings are disputed between the Parties and will be dealt with by the Tribunal in the relevant part of this Decision.


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B. RESPONDENT

5. Respondent is the Argentine Republic (hereinafter referred to as "Respondent" or "Argentina").

6. Respondent is represented in this arbitration by its duly authorised attorneys mentioned at page 2 above.

7. Claimants and Respondent are hereinafter collectively referred to as the "Parties."

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II. FACTS

A. INTRODUCTION

8. This Decision concerns the jurisdictional phase of a dispute relating to Claimants‘ claims for compensatory damages due to Respondent‘s alleged breach of its obligations under the Agreement between the Argentine Republic and the Republic of Italy on the Promotion and Protection of Investments, signed in Buenos Aires on 22 May 1990, in two original copies, in the Italian and the Spanish language, both texts being equally authentic (hereinafter "Argentina-Italy BIT" or "BIT" or "Treaty") in relation to bonds issued by Respondent, allegedly held by Claimants, on which payment Respondent defaulted.

9. Considering the matter of Argentina‘s sovereign debt restructuring on which Claimants‘ claims are based, the Tribunal finds it necessary and appropriate to set out in this Section II the factual background to Argentina‘s default and its debt restructuring, to the extent it is not disputed between the Parties, by describing the financial market in relation to bonds, followed by a general overview on sovereign debt restructuring, and subsequently setting forth Argentina‘s restructuring of its economy and of its debt in relation to bonds in order to eventually address the evolution/development of the dispute.

10. The following summary of the factual background is not meant to be exhaustive, and simply aims to lay down the general context of the dispute, while focusing on aspects relevant to this jurisdictional phase.

(1) General Concepts relating to Financial Market and Bonds

11.

 (i) Bonds.

Generally, "bonds" are defined as a debt, in which an interested party loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at certain interest rates. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.

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12. Bonds, generally, have a pre-set final date of repayment, the ―maturity‖ date, and pay interest, "coupon", on pre-set dates until the maturity date, usually on an annual or semi-annual basis. Bonds are uniquely identified by a 12-character alpha-numerical International Securities Identifying Number or "ISIN". The ISIN allows electronic trade and settlement in the particular security in markets across the globe.

13. A set of bonds issued at the same time but having different maturity dates is referred to as "serial bonds". A single bond issue offered to the public on multiple dates is referred to as "series bonds".

14. ―Sovereign bonds‖ have the same characteristics as the normal bonds described above, with the specificity that they are issued by governments and are usually denominated in a foreign currency. "International sovereign bonds" are bonds issued by governments denominated in a foreign currency in foreign markets (i.e., outside the country of the issuer). Bonds issued by governments in the country‘s own currency are referred to as "government bonds".

15. A popular example of sovereign debt security is the instrument of "Brady Bonds", first proposed in 1989. They are named after former U.S. Treasury Secretary Nicholas Brady, who supported the effort to restructure emerging market debt instruments, following the 1980s debt crisis. Brady Bonds were issued by governments in developing countries as a conversion of bank debts into loans. The key innovation behind the introduction of Brady Bonds was to allow commercial banks to exchange their claims vis-à-vis developing countries into tradable instruments, allowing them to get the debt off their balance sheets. Due to their classification as bonds, rather than bank loans, Brady Bonds were much easier to trade to a broader range of financial market actors. Given that Brady Bonds were in many cases very large by the standards of the bond markets at the time, they were seen as one of the most liquid emerging market securities. Brady Bonds were collateralized, i.e., the repayment of principal and, in some cases, part of the interest payments, was backed by U.S. government bonds ("Treasuries"), which the

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debtor country purchased, using a combination of International Monetary Fund, World Bank, and the country‘s own foreign currency reserves. The collateral involved made Brady Bonds considerably more attractive to potential investors than ordinary, uncollateralized bonds of the issuing country. The two main types of Brady Bonds are (i) "par bonds", issued at the same value as the original loan, with the coupon on the bonds being below market rate and principal and interest payments are usually guaranteed; and (ii) "discount bonds", issued at a discount to the original value of the loan, with the coupon on the bonds being at market rate and principal and interest payments usually guaranteed.

16. Brady Bonds are the origin of the emerging sovereign bond market in its current form. The Brady Bond process ended during the 1990s.

17.

(ii) Process of Issuing Bonds.

The process of issuing new bonds involves a chain of sales in order to achieve distribution of the issued bonds to the final investor.

18. The bond issuer enters into an agreement with a group of banks, which undertake to subscribe to and purchase a bond. These banks, commonly referred to as the "Subscribers" or "Lead Managers", then organize together with other banks, the so-called "Underwriters" or "Co-Managers", a syndicate. The members of this syndicate, jointly referred to as the "Participants", each underwrite differing parts of this bond, depending on their status in the syndicate. These Participants then distribute their specific part of the bond to further "Intermediaries", such as commercial banks, pension funds and other financial institutions, which in turn may or may not distribute their own part to their clients, including individual investors. Thus, the purpose of the subscribers, underwriters and intermediaries is to act as a distribution conduit.

19. Originally, bonds were traded in the form of negotiable bearer instruments, imposing significant handling costs and security risks. As trading volume grew, systems were developed to ―dematerialize‖ tradable securities, i.e., to eliminate


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both the need for certificates and maintenance of a complete security register by the issuer. Therefore, centralized depository systems were established allowing electronic trading of the securities through electronic accounts (so-called "non-certified securities").2 On a global scale, a system has developed whereby issuers deposit a single ―global certificate‖ representing all the outstanding securities of a class or series with a "universal depository", such as The Depository Trust Company ("DTC"), Depository Trust & Clearing Corporation ("DTCC"), Euroclear or Clearstream. All securities traded through a universal depository are registered in electronic form, on the books of various Intermediaries (so-called "book-entry form") between the ultimate investor, e.g., a retail investor, and the banks participating in the universal depository, i.e., the Participants. The securities, e.g., bonds, are then traded and settled on the basis of changes in the registration of the accounts opened with the Participants for Intermediaries (i.e., Sub-Participants) and the sub-accounts opened with the Intermediaries for their clients.

20. Each global certificate is identified by a special number (CUSIP for DTC, ISIN for Euroclear) and each Participant‘s account is also identified. The system uses the global certificate‘s identification number to keep track of transfers and ownership of the relevant securities. The universal depository issues computer-generated position listing reports indicating the position of the relevant Participant in the global certificate and the amount thereof. Final investors‘ position on their securities is usually evidenced by account statements issued by one of the Participants or intermediaries. It is disputed between the Parties whether the use of such central depository systems creates different categories of holders or owners of the relevant categories (see §§ 374, 411, 415 below).


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21. The final investor can be anyone and anything from hedge funds, pension funds, central banks, to individuals. With respect to the investor, a distinction is made between "institutional" and "retail" investors.

22. "Institutional investors" are those that are themselves institutions.

23. "Retail investors" are those who are individuals, investing on their own behalf. A bond issued sold to "retail" means, thus, the bond issued is sold to an individual investor. Retail investors who are less-wealthy individuals prefer the certainty of investing in fixed-income bonds to the greater volatility of the stock market. Such retail investors tend to be "buy and hold" investors who buy the bond and hold it until maturity. Consequently, "buy and hold" investors trade little.

24. A "retail bank" is referred to when a bank purchases bonds from the larger banks which typically serves as underwriters and sells bonds to individual investors, usually through its branch networks.

25.

(iii) The Bond Market.

The bond market can be divided into a "primary market" and a "secondary market".

26. Thus, the distinguishing difference between the two markets is that in the "primary market", the money for the bonds is received by the issuer of the bonds from an investor, in principle the Underwriters, whereas in the "secondary market", the securities are simply assets held by one investor selling them to another investor.

27.

(iv) Rating of Bonds.

Usually, bonds issues are rated by agencies expressing an opinion as to the creditworthiness of bonds. One of the most important rating agencies is Moody‘s Investor Services (hereinafter "Moody‘s") assigning a rating

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on a scale from AAA to C. Another important rating agency is Standard & Poor‘s, using a rating scale from AAA to D. The rating scales are based on the probability of default by the issuer in question.

(2) General Overview on Sovereign Debt Restructuring

28.

(i) Sovereign Default.

The reason for a State to engage in sovereign debt restructuring is the default of the State on its sovereign debt. In this connection, the Tribunal refers to the description of sovereign default as defined by Standard & Poor‘s:3

Standard & Poor‘s generally defines default as the failure to meet a principal or interest payment on the due date (or within the specified grace period) contained in the original terms of a debt issue.

Question can arise, however, when applying this definition in different situations and to different types of sovereign obligations. Standard & Poor‘s considers a sovereign to be in default under any of the following circumstances:

For local and foreign currency bonds, notes, and bills issued by the central government and held outside the public sector of the country, a sovereign default occurs when the central government either fails to pay scheduled debt service on the due date or tenders an exchange offer of new debt with less-favorable terms than the original issue. While a central government‘s failure to service debt owed to public sector entities, to meet a lease or other nondebt obligation, or to pay on a guarantee may be indicative of significant political/economic stress and imminent default, such an event in and of itself does not constitute a sovereign default. If a debt issue is rated on the basis of payment of one of these nondebt financial obligations and the sovereign‘s failure to pay results in a default on the rated issue, the rating of that specific issue will fall to "D".

For local currency issued by the central bank, a sovereign default takes place when notes are converted into a new currency of less than equivalent face value.
For private sector bank loans incurred by the central government, a sovereign default occurs when the central government either fails to pay scheduled debt service on the due date, or negotiates with the bank creditors a rescheduling of

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principal and/or interest at less-favorable terms than in the original loan. Such rescheduling agreements covering short- and long-term bank debt are considered defaults even where, for legal or regulatory reasons, creditors deem the rescheduling to be voluntary.

In some cases, rescheduled sovereign bank loans are ultimately extinguished at a discount from their original face value. Typically, such episodes involve exchange offers (such as those linked to the issuance of Brady bonds), debt/equity swaps related to government privatization programs, and/or buybacks for cash. Standard & Poor‘s considers such transactions as defaults when they feature less-favorable terms than the original obligation.

[...]

29.

(ii) Sovereign Debt Restructuring.

Sovereign debt restructuring has the aim of preserving the functioning of the defaulting State as well as the international financial system while equitably protecting the interests of the creditors.

30. The modern sovereign debt restructuring is rooted in the establishment of the International Monetary Fund (hereinafter "IMF") at the Bretton Woods Conference in July 1944. According to its Articles of Agreement, the IMF is to "[t]o promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation".4 Thus, the IMF‘s purpose is, inter alia, to prevent sovereign defaults through monitoring and lending, including providing emergency loans intended to assist sovereigns to avoid default in a time of potential crisis.

31. Considering that the size of defaulting government debt has increased exceptionally while the IMF resources have expanded only slightly, it became clear that negotiating an agreement with the IMF is not a central part of modern sovereign debt restructuring anymore.


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32. Rather, from the 1950s through the 1970s, the bigger part of lending to sovereigns was provided by other States or their agencies. The outcome was the establishment of the Paris Club in 1956, when Argentina agreed to meet its public creditors in Paris.

33. The Paris Club consists of a group of sovereign lenders "whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries".5 The Paris Club considers itself as a "non institution", remaining strictly informal. However, its work is based on a number of rules and principles agreed by the creditor States in order to facilitate the decision making process and the conclusion of agreements between the member States of the Paris Club and the debtor State.6

34. The principles of the Paris Club are summarized as follows: (i) decision making on a case-by-case basis; (ii) consensus among the participating creditor States; (iii) conditionality upon the debtor State providing a precise description of its economic and financial situation, that it has implemented and is committed to implement reforms to restore its economic and financial situation, and that it has demonstrated track record of implementing reforms under an IMF program; (iv) solidarity among the creditor States of the Paris Club to agree to act as a group in their dealings with a given debtor State; and (v) comparability of treatment, i.e., that a debtor State in agreement with its Paris Club creditor States should not accept from its non-Paris Club creditors terms of treatment of its debt less favorable to the debtor than those agreed with the Paris Club.7


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35. In the late 1980s and early 1990s, the nature of sovereign borrowing changed to "emerging market debt", and ultimately led to the establishment of the London Club, given that the effectiveness of the Paris Club was limited in this market sector. The emerging debt market was rooted in flows of private capital from larger banks in developed, high-income States, which sought to take advantage of the higher interest rates available through loans to sovereigns in the developing world. Introduced by the Baker Plan, named after U.S. Treasury Secretary James Baker, both debtors and creditors understood that funding from international financial institutions depended on a rescheduling agreement with private creditors, i.e., commercial bank lending.

36. Generally, a debtor initiates a process in which a London Club "Advisory Committee" is formed, which is chaired by a leading financial firm and includes representatives from other exposed firms. Upon signing of a restructuring agreement, the Advisory Committee is dissolved.8 Such restructuring agreement is based on three principles: (i) case-by-case approach, (ii) voluntary participation of the borrowing banks, and (iii) restructuring designed based on the market situation.9

37. In the mid-1990s, caused by the substantial issuing of Brady Bonds, mentioned in ¶ 15 above, the vast majority of sovereign borrowing from private sources came from bond issues by sovereign States. In the light of the ever growing number of holders of interests in or under a sovereign bond, the closed negotiating framework of the Paris and London Clubs showed its limits.10 Thus, a new mechanism was developed in the form of an "exchange offer".

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38. While many elements of an exchange offer are disputed between the Parties, they do seem to agree on the main object of an exchange offer, which may be summarized as follows: In an exchange offer, the sovereign facing default develops a new issue of bonds that are within the sovereign‘s ability to pay and acceptable to most bond holders and offers such new bonds in exchange for the old bonds in the hope of securing the acceptance of a supermajority of the bondholders.

39. Although the Parties agree that the terms and conditions of an exchange offer should ideally aim to ensure an equitable balance between the interests of the sovereign in restructuring its debt according to its payment abilities and the interests of the creditors, they disagree on how and when such aim is best achieved.

40. Currently, there exists no formal legal framework establishing precise steps to be followed by the defaulting sovereign or the creditors. Nevertheless, an informal regime has developed consisting of the following principles: (i) sovereign to signal the need of debt restructure; (ii) communication between the sovereign and the creditors; (iii) consensus and consent on the terms of the restructure; and (iv) equitable burden sharing.11

41. Remaining inefficiencies in the sovereign restructuring practices, in particular with regard to the risk created by holdout creditors, continue to trigger a series of proposals for improvements. Existing proposals include the creation of an international bankruptcy mechanism modelled on U.S. domestic bankruptcy law, or the development of contractual "collective action clausel" to be included in bonds in

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order to bind a holdout minority to new payment terms agreed upon by a supermajority of bondholders.12

(3) Argentina’s Restructuring of Its Economy and Its Debt in relation to Bonds

 

42. After having laid down the basic concepts necessary to understand the general context of the dispute, the present section focuses on the economic context prevailing in Argentina preceding, during and following the issuance of the bonds at stake in the present dispute.

(a) Argentina’s Restructuring of Its Economy in the 1990s

43. In the 1990s, following the 1980s debt crisis, Argentina embarked on an ambitious effort to restructure its economy in order to encourage growth and reduce debt and inflation by deregulating its economy and privatizing certain industries. Argentina‘s Convertibility Plan of 1991 was part of the strategy aimed at addressing inflation, by pegging the Argentine peso to the U.S. dollar and limiting the printing of additional currency to an amount necessary to purchase surpluses of U.S. dollars in the foreign exchange market.

44.

(i) Issuing of Sovereign Bonds.

Issuing sovereign bonds was one of the pillars of restructuring Argentina‘s economy in the early 1990s. Thus, on 29 October 1992, Law No. 24,156, the Law on Financial Administration and Control Systems (hereinafter "LFA") was enacted,13 being the legal foundation for Argentina to issue bonds. It contains several requirements as described below:14

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45. In addition to enacting a series of laws and decrees, Argentina also implemented various programs facilitating issuing sovereign bonds.

46. In particular, in order to raise capital, Argentina implemented the Brady Bond program and started issuing Brady Bonds in early 1993.

47. Argentina intended to develop a diversified market by issuing bonds in the international financial markets.

48. The process of Argentina issuing bonds in Europe was by relying on large investment banks as its lead managers, which studied the markets and competed with each other for Argentina‘s business. Argentina‘s choice of its lead managers were investment banks such as BNP Paribas, CS First Boston, Deutsche Bank, J.P. Morgan, and Morgan Stanley. Thereafter, banking syndicates were established to underwrite and distribute differing volumes of bonds, depending on the underwriters‘ status in the syndicate.

49. The lead managers would design, together with Argentina, a general bond issuance strategy. Based thereon, they would then suggest to Argentina which commercial banks would participate as co-managers, based, namely, on their ability to reach

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investors with a profile fitting the bond issuance strategy. In this respect, while it is not disputed that Argentina participated in marketing efforts to banks and large institutional purchasers, the Parties disagree whether Argentina‘s bond issuance strategy targeted the Italian retail market, as submitted by Claimants.

50. In total, from 1991 through 2001, Argentina placed over US$ 186.7 billion in sovereign bonds across both domestic and international capital markets18. This included 179 bonds issued in the international capital markets that raised a total of approximately US$ 139.4 billion, of which 37% were denominated in US$, 22% were denominated in Euros, 11% were denominated in Yen, 11% were denominated in Deutsche Mark, 7% were denominated in Italian Lira, 3% in Argentine Pesos and 9% in other currencies19. Out of the 179 bonds issued by Argentina, 173 were denominated in foreign currencies; six were denominated in Argentine Pesos. Claimants allegedly purchased 83 of the 173 foreign currency bonds20.

51. The 83 bonds allegedly purchased by Claimants are governed by the laws of different jurisdictions, were issued in different currencies, and listed on various international exchanges, such as Buenos Aires, Frankfurt, Hong Kong, Luxembourg, Milan, Munich, and Vienna. These bonds generally paid a fixed coupon with the final maturity varying from three to thirty years21.

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(b) Argentina’s Financial Crisis and Default of 2001

52. By the late 1990s, Argentina began to suffer a severe economic recession and consequent reduction of fiscal revenues, leading Argentina to incur additional debt22.22

53. The Parties disagree on the specific causes of this recession. Respondent emphasizes external factors such as the Asian, Russian and Brazilian financial crises in 1997, 1998 and 1999 respectively; the raising of interest rates in the US; the appreciation of the US dollar from 1995 to 1999 affecting export prices; etc23.23 In contrast, Claimants invoke failures on Argentina‘s side as important factors leading to the recession24.24

54. These adverse economic developments reflected mainly in two ways on the Argentine economy:

(i) Substantial "capital flight": Many businesses and individuals fearing a devaluation of the peso started to withdraw money from the Argentine banking system. By the end of 2001, those withdrawals allegedly amounted to approximately US$ 15 billion25,25 endangering the entire banking system and forcing Argentina‘s central bank to expend substantial parts of its international reserve to defend the value of the peso, and forcing the Government to introduce restrictions on the withdrawal of bank deposits.

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(ii) Decrease of capital inflow: As a result of a loss of confidence in the Argentine economy, capital inflows from foreign direct investment declined significantly26.

55. As the need for debt relief became clear, Argentina took in 2001 various measures in an attempt to restructure its economy and lighten its debt. Such measures included cutting both federal and provincial government spending, adopting a zero-deficit law, improving its tax administration system, and supporting competition with tax cuts for exporters, as well as global exchange offers in February, June and November 200127.

56. These efforts apparently did not suffice to redress the situation. By December 2001, Argentina had allegedly come to a point where it was unable to avoid deferring interest and principal payments on all of its external bond debt owed to both foreign and Argentine creditors28.

57. These economic difficulties were accompanied by considerable political and social unrests, leading eventually to the resignation of the then President Fernando de la Rúa and his entire cabinet on 19 December 2001.

58. On 23 December 2001, Argentina defaulted by publicly announcing the deferral of over US$100 billion of external bond debt owed to both non-Argentine and Argentine creditors29.


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(c) The Events following Argentina’s Default of 2001

59. After President de la Rúa‘s resignation of 19 December 2001, various difficult attempts to appoint a new president were made. On 1 January 2002, Congress eventually elected Mr. Eduardo Duhalde as President.

60. In January 2002, Congress declared a public emergency in social, economic, administrative, financial and exchange matters with the passage of the Public Emergency and Reform Law of 2002 (the "Emergency Law")30. The Emergency Law, among other things, terminated the parity between the peso and the dollar. This "pesification" was followed by a substantial devaluation of the peso.

61. The effects of the economic crisis on ordinary Argentine citizens were devastating. According to Argentina, by May 2002, unemployment had reached 21.5%, an 8% increase over 1998, the year the crisis began. Another 19% of the population was underemployed. The poverty level increased to 54.3% of the Argentine urban population and the indigence level reached 22.7%31

(d) Argentina’s Restructuring of Its Debt in relation to Bonds and Relevant Creditors’ Reactions

62. The substantial devaluation of the peso further accentuated the weight of debt in foreign currencies, which constituted an important part of Argentina‘s total debt. This led Argentina to envisage the restructuring of its foreign debt.

63. Based on figures produced by Respondent, by the end of 2002, Argentina‘s total public debt burden was approximately US$ 137 billion, representing approximately

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130% of its GDP in 2002, and among which approximately US$ 76 billion was owed to resident and non-resident public bondholders32.

64. In relation to the restructuring of its foreign debt, according to figures brought forward by Respondent in 2003 and relied upon by Claimants, more than US$ 27.5 billion worth of bonds were held by European bondholders, of which approximately US$ 22.2 billion were held by retail bondholders, including US$ 13.5 billion owned by Italian bondholders (approximately 600,000 persons)33.

65. On 18 September 2002, pursuant to a resolution of the Executive Committee of the Italian Banking Association (hereinafter "ABI"), eight major Italian banks (Banca Antonveneta, Banca Intesa, Banca Sella, BNL, Iccrea Banca, Monte dei Paschi di Siena, San Paolo, and UniCredito) established l’Associazione per la Tutela degli Investitori in Titoli Argentini or "Task Force Argentina" or "TFA" in Rome (see § 4 above). TFA is organized under Italian law as an associazione non riconosciuta, funded by its members‘ contributions and headed by Dr. Nicola Stock as its president34.

66. The aim of TFA is to "represent the interests of the Italian bondholders in pursuing a negotiated settlement with Argentina"35. Bondholders wishing to make use of this possibility and to be represented by TFA were requested to sign a "Mandate for the

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Protection of the Interests Connected with the Bonds involved in the ‘Argentinean Crisis‘" (so called "TFA Negotiating Mandate")36. The specific role and the legitimacy of TFA‘s actions under this mandate is disputed between the Parties and will be subject to further examination (see §§ 449 et seq. below).

67. The TFA Negotiating Mandate provides – inter alia – as follows:

The undersigned [...]

HAVING ACKNOWLEDGED THAT:

banks and financial intermediaries have created the Association for the Protection of Interests of the Investors in the Argentinean Bonds ("Associazione per la Tutela degli Interessi degli Investiotori in Titoli Argentini”), which has the following purposes:

to represent, free of charge and on the basis of a mandate, the interests of the subscribers of Argentinean bonds in the frame of the restructuring of the debt, which will be subject to the negotiation with the Argentinean Authorities or with other Argentinean issuers;

to make available its own consulting and assistance activity, to the above purposes;

to handle the relationships with the Argentinean diplomatic and consular Authorities, with the central and local Authorities of such country, with the International Monetary Fund, with the European Central Bank and with the various National Central Banks, with the Italian Government and Parliament as well as, more in general, with each other economic and political, private and public, national and international authority, organisation and institution, with which the Association will deem necessary or appropriate to consult or co-operate;

to attend the negotiations for the restructuring of the debt with the Argentinean Authorities or with other Argentinean issuers at any national or international seat, in accordance with the Bylaws of the Association and with the decisions taken by the management bodies of the Association;

to make the requests and proposals which as might deem appropriate in the interests of the holders of the bonds represented by it and to obtain the necessary consent of such holders (the way and the timing thereof will be decided).

DELEGATES

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The aforementioned Association to represent himself during any stage of the negotiations in connection with the receivables of the bonds indicated in the exhibit hereof.

The undersigned hereby undertakes to communicate promptly in writing to the bank any amendments which may occur in the holding the bonds indicated in the exhibit hereof.

The undersigned may terminate this proxy, in writing, with a notice of 15 days, provided that the same proxy will be considere[d] terminated in the case of sale of all the bonds indicated in the same exhibit.

(Emphasis in the original)

68. Allegedly, over 450,000 Italian persons and entities claimed to have held Argentine bonds for an aggregated nominal amount of US$ 12 billion and submitted their mandates to TFA37.

69. While the Parties are in agreement that discussions took place between TFA and Respondent in order to reach a solution for the outstanding debt, they disagree whether these discussions can be considered to constitute proper negotiations between TFA, on behalf of Claimants, and Respondent. The Tribunal will analyze the exchanges between TFA and Respondent in its findings where appropriate and necessary38.

70. In September 2003, Argentina reached an agreement with the IMF concerning a three-year credit package of approximately US$ 12.5 billion39.

71. On 22 September 2003, Argentina presented an initial debt restructuring strategy known as the "Dubai Proposal", focusing on the objective of obtaining a reduction in the face value of the unrestructured debt:40

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"[...]

We also have to ensure liquidity with a new maturity profile in line with Argentina‘s real repayment capacity.

Finally, although our decision is not to increase Argentina‘s debt, but to reduce it, we have to facilitate a responsible return to the capital markets to ensure compliance with the commitments assumed under the restructuring.

[...]

The debt to be restructured i[s] defined as ―eligible debt‖. It includes all the bonds issued before the cutoff date, December 31, 2001. To have an idea of the size and complexity of Argentina‘s debt, the eligible debt encompasses 152 different bonds, issued originally in 14 different currencies, which have been reduced to seven thanks to the Euro, and subject to eight different legislations.

[...]

Undoubtedly, our proposal must be based on Argentina‘s repayment capacity in the medium and long term.
The bond swap and the amendment of the issuance conditions, in the cases in which such amendment is possible, will take place simultaneously. The menu will include comparable bonds, equivalent in terms of present value.

[...]

We would like to make clear again that there will be no discrimination among bondholders.

[...]

Summing up, we want to have a smaller number of bonds, a smaller number of currencies and jurisdictions so that the resulting bonds may have a higher liquidity.

[...]

The new bonds will be: Discount bonds, whose value evidences the haircut in the face value; Par bonds, which suffer no face value reduction or a small face value reduction, but that offer coupons and longer payment terms; and last of all Capitalized Bonds. Our offer will also include different alternatives for such bonds, with coupons including a lower fixed interest rate coupled with a variable rate indexed on the basis of the growth of Argentina‘s GDP. These indexed bonds reflect our intention to share the benefits of increased growth in the medium term and to pay a lower interest rate flow in the case of possible slowdowns of or drops in Argentina‘s GDP. It seems to be a reasonable

 

 

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option since nobody knows which Argentina‘s economy growth rate will be in, let‘s say, five or ten years.

[...]"

72. On 12 January 2004, the Global Committee of Argentina Bondholders (hereinafter "GCAB") was founded in Rome. Its founding members were three major bondholder groups, the Argentine Bond Restructuring Agency, the Argentine Bondholders Committee (hereinafter "ABC"), and TFA as well as two banks, Bank of Tokyo-Mitsubishi and Shinsei Bank. At the time of GCAB‘s founding, the members represented more than half a million retail investors and more than 100 institutions, including banks, funds, partnerships, and committees, with total holding of US$ 37 billion in nominal value41. Nicola Stock, chairman of TFA, and a representative of ABC were appointed as chairmen of GCAB.

73. The aim of GCAB was to allow a better coordination of the various members‘ efforts to negotiate with Argentina "in order to achieve an efficient and fair restructuring of the debt of Argentina"42. To achieve this purpose, the Steering Committee of GCAB was to "establish a plan of action and guidelines for a single, global strategy"43. 

74. Following the publication of the Dubai Proposal, discussions were held between creditor groups, such as GCAB and TFA, and Respondent, whereby the Parties disagree on whether these discussions can be considered "good faith" negotiations or consultations, each of them accusing the other of a lack of good faith44. The

34

Tribunal will analyze any exchanges between such creditor groups and Respondent in its findings where appropriate and necessary45.

75. On 27 April 2004, Argentina issued a press release announcing its intention to file Form 18-K/A with the U.S. Securities and Exchange Commission in "early June 2004" concerning a proposal of a debt restructuring exchange offer46.

76. On 10 June 2004, Argentina filed Form 18-K/A with the U.S. Securities and Exchange Commission, describing the basic terms of its exchange offer47. In Autumn 2004, the Argentine Government filed further documents with the U.S. Securities and Exchange Commission and other relevant national securities regulators laying out details of the exchange offer (hereinafter "Exchange Offer 2005")48. The Exchange Offer 2005 opened on 14 January 2005 and closed on 25 February 2005.

77. On 14 January 2005, Argentina launched the Exchange Offer 2005, pursuant to which bondholders could exchange 152 different series of bonds, on which Argentina had suspended payment in 2001, for new debt that Argentina would issue. The Exchange Offer 2005 provided to the beneficial owners of the roughly US$ 81.8 billion in eligible outstanding debt a choice of options from which to choose the form of their new debt. The bondholders could choose par bonds with the same principal but a lower interest rate than the non-performing debt, discount bonds with reduced principal but a higher interest rate, or quasi-par bonds with a principal and interest rate falling between the two other bond options. Each bond offered was accompanied by securities with payment conditioned upon Argentina‘s

35

gross domestic product ("GDP-Linked Securities"). The first page of the Prospectus Supplement to the Prospectus of 27 December 2004 states49:

"The Republic of Argentina

Offers to Owners of

Each Series of Bonds listed in Annex A to this Prospectus Supplement

(collectively, the "Eligible Securities")

To exchange Eligible Securities for its

Par Bonds due December 2038 ("Pars"),

Discount Bonds due December 2033 ("Discount"),

Quasi-Par Bonds due December 2045 ("Quasi-pars") and

GDP-linked Securities that expire in December 2035 ("GDP-linked Securities")

collectively, the "New Securities", on the terms and conditions described in this prospectus supplement.

The GDP-linked Securities will initially be attached to the Pars, Discounts and Quasi-pars.

The aggregate Eligible Amount (as defined below) of all Eligible Securities currently outstanding is U.S.$81.8 billion, comprising U.S.$79.7 billion of principal and U.S.$21 billion of accrued but unpaid interest as of December 31, 2001, based on exchange rates in effect on December 31, 2003.

[...]"

78. On 9 February 2005, Law 26,017 was enacted, referred to by Claimants as the ―Cram Down Law,‖ and hereafter referred to as "Emergency Law" or "Law 26,017". It was promulgated on 10 February 2005 and published in the Official Gazette on 11 February 2005. The Emergency Law provides, inter alia, that with regard to those bonds which were eligible for but were not exchanged in the Exchange Offer 2005 (i) the Executive Branch of the government shall not reopen


36

the exchange process; and (ii) the national government is prohibited from entering into any juridical, extra-juridical or private transaction:

"ARTICULO 1º -- Sin perjuicio de la vigencia de las normas que resulten aplicables, los bonos del Estado nacional que resultan elegibles para el canje establecido en el Decreto N° 1735 del 9 de diciembre de 2004, que no hubiesen sido presentados al canje según lo establecido en dicho decreto, quedaran sujetos adicionalmente a las disposiciones de la presente ley.

ARTICULO 2º -- El Poder Ejecutivo nacional no podrá, respecto de los bonos a que se refiere el artículo 1º de la presente, reabrir el proceso de canje establecido en el Decreto N° 1735/04 mencionado.

ARTICULO 3º -- Prohíbese al Estado nacional efectuar cualquier tipo de transacción judicial, extrajudicial o privada, respecto de los bonos a que refiere el artículo 1º de la presente ley.

ARTICULO 4º -- El poder Ejecutivo nacional deberá, dentro del marco de las condiciones de emisión de los respectivos bonos, y de las normas aplicables en las jurisdicciones correspondientes, dictar los actos administrativos pertinentes y cumplimentar las gestiones necesarias para retirar de cotización en todas las bolsas y mercados de valores, nacionales o extranjeros, los bonos a que se refiere el artículo anterior.

ARTICULO 5º -- El Poder Ejecutivo nacional remitirá al Honorable Congreso de la Nación un informe que refleje los efectos del canje y los nuevos niveles de deuda y reducción de la misma.

ARTICULO 6º -- Sin perjuicio de lo establecido precedentemente, los bonos del Estado nacional elegibles de acuerdo a lo dispuesto por el Decreto N° 1735/04, depositados por cualquier causa o titulo a la orden de tribunales de cualquier instancia, competencia y jurisdicción, cuyos titulares no hubieran adherido al canje dispuesto por el decreto antes citado o no hubieran manifestado, en forma expresa, en las respectivas actuaciones judiciales, su voluntad de no adherir al mencionado canje antes de la fecha de cierre del mismo, según el cronograma establecido por el referido decreto N° 1735/04, quedarán reemplazados, de pleno derecho, por los ―BONOS DE LA REPÚBLICA ARGENTINA A LA PAR EN PESOS STEP UP 2038‖, en las condiciones establecidas para la asignación, liquidación y emisión de tales bonos por el Decreto N° 1735/04 y sus normas complementarias.

[...]"

37

79. In the non-official English translation provided by Respondent, these articles provide as follows50:

"Article 1 - Notwithstanding the validity of applicable rules, the national Government‘s bonds eligible for the exchange established in Decree No. 1735 of December 9th, 2004, which were not exchanged as established in said decree, shall be subject additionally to the provisions of the present law.

Article 2 - The national Executive Branch shall not, with respect to the bonds to which Article 1 of the present law refers, reopen the exchange process established in said Decree No. 1735/04.

Article 3 - The national Government is precluded from entering into any type of judicial, extra-judicial or private settlement with respect to the bonds to which Article 1 of the present law refers.

Article 4 - The national Executive Branch shall, within the framework of the issuing conditions of the respective bonds and the applicable rules in the relevant jurisdictions, issue appropriate administrative acts and effect necessary steps to delist the bonds to which the previous article refers from all exchanges and markets, domestic and foreign.

Article 5 – [not translated]

Article 6 - Notwithstanding the above established, the bonds of the national Government eligible under the terms of Decree No. 1735/04, deposited pursuant to any cause or title on the order of any court of any venue, competence, and jurisdiction, whose depositary has not participated in the exchange provided for in the above-mentioned decree or who has not indicated, in express form, in their respective court proceedings, their desire not to participate in said exchange before its expiration date, according to the timeline established by said decree No. 1735/04, shall be replaced, by operation of law, with the ‗BONDS OF THE ARGENTINE REPUBLIC AT PAR IN PESOS STEP UP 2038,‘ according to the terms established for the assignment, liquidation and issue of such bonds by Decree No. 1735/04 and its complementary norms."

80. On 25 February 2005, the period for submitting tenders pursuant to the Exchange Offer 2005 expired, 76.15% of all holdings having participated in the Exchange Offer 200551, following which Argentina issued approximately an aggregate

38

principal amount of US$ 15 billion in par bonds, US$ 11.9 billion in discount bonds, ARG$ 24.3 billion (US$ 8.3 billion) in quasi-par bonds and US$ 62.3 billion in GDP-Linked Securities52. Forty-four percent of the new debt was denominated in indexed pesos53. The Exchange Offer 2005 settled on 2 June 2005.

81. The Claimants did not participate in the Exchange Offer 2005.

82. The announcement and filing of the Exchange Offer 2005 was followed by a series of court litigations initiated by creditors unsatisfied with the terms and conditions of the Exchange Offer 2005. According to Respondent, these series of court cases included the following lawsuits:


39


83. Except for the US litigations referred to below (see § 193), the Arbitral Tribunal has not been informed of the specific developments and status of these various litigations.

(4) Evolution of the Dispute following Argentina’s Exchange Offer 2005

84. On 28 February 2006, TFA wrote a letter to the Argentine Ministry of Economy and Production, Minister Lic. Felisa Miceli60 :60

"Dear Minister Miceli:

As you are well aware, Associazione per la Tutela degli Investitori in Titoli Argentini – Task Force Argentina ("TFA"), is a member and co-founder of the Global Committee of Argentina Bondholders ("GCAB") and a member of the International Group of Rome for Argentina Bondholders ("IGOR"). Together with and as a member of the GCAB group, and separately, on its own, TFA has contacted repeatedly the Government of the Argentine Republic ("Argentina") in an effort to resolve amicably the dispute arising out of Argentina‘s default on and expropriation of TFA bondholders‘ investments, and lack of fair and equitable treatment of the TFA bondholders in violation of the Agreement between the Republic of Italy and the Argentine Republic on the Promotion and Protection of Investments signed in Buenos Aires on May 22, 1990 ("Bilateral Investment Agreement"), and Italian law.

In furtherance of our efforts on behalf of hundreds of thousands of Italian bondholders/creditors to recover on defaulted Argentine debt we have engaged in several years of unceasing efforts to initiate meaningful negotiations with Argentina. We write to remind you that beginning around

40

November of 2002, we have continuously attempted, directly and through IGOR and GCAB, to recover the debt owed by Argentina to our constituents through negotiations and in this regard have notified Argentina of the bondholders‘ dispute on numerous occasions, including, inter alia, specifically that (1) we disapproved of the unilateral Argentine exchange offer and Argentina‘s obstructionist tactics with external creditors; and (2) we expected Argentina to engage in good faith negotiations with us to arrive at an acceptable debt restructuring plan. As you may recall, we have communicated often and repetitively in an attempt to resolve the bondholders‘ dispute amicably including, inter alia:

41


42

In addition to such meetings and correspondence, GCAB delivered presentations at several meetings with creditors of Argentina, at which representatives of Argentina were present, setting forth our position concerning a strategy for resolving the dispute between Argentina and the bondholders/creditors. Additionally, GCAB notified representatives of Argentina that we did not ―endorse Argentina‘s current unilateral offer, and [were] evaluating all other options, not excluding litigation, to protect investors‘ rights.‖ Despite our clear warnings, our communicated disapproval of Argentina‘s strategy of avoidance and our repeated efforts to negotiate

43

illustrated by the communications listed above, Argentina continues to refuse to negotiate with us in good faith.

Given that Argentina has steadfastly failed to negotiate with us, and has defaulted on and expropriated the bonds of our constituents, we are left with little choice. Accordingly, we hereby provide you final notice that:

we and TFA bondholders remain unsatisfied with Argentina‘s refusal to negotiate in good faith as we fully contemplated you would under Article 8 of the Bilateral Investment Agreement; and

Argentina has sixty (60) days from receipt of this correspondence to pay the monies it owes to the hundreds of thousands of Italian bondholders/creditors TFA represents.

If Argentina fails to resolve the dispute amicably and pay within sixty (60) days, the TFA bondholders will have no choice but to commence legal proceedings against Argentina in one or more appropriate for a ([sic]) to recover the amounts due. On behalf of the TFA bondholders, who are Italian nationals not domiciled in Argentina, and who acquired their bonds prior to Argentina‘s default, we hereby accept the offer of consent, expressed by Argentina in Article 8 of the Bilateral Investment Agreement, to submit the dispute to the International Centre for Settlement of Investment Disputes for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

If Argentina refuses to resolve the dispute amicably, we invite you to contact me and/or counsel for the anticipated litigation, Carolyn Lamm of White & Case LLP, to negotiate a memorandum of understanding on an agreed procedure that would facilitate the resolution of the hundreds of thousands of TFA bondholder claims in the most expeditious way for all parties.

Sincerely,

Associazione TASK FORCE ARGENTINA (TFA)

(signed)

Nicola Stock"

85. Unsatisfied with the situation, TFA seriously considered the initiation of an ICSID arbitration against Argentina. For this purpose and in order to be able to represent the concerned Italian bondholders, a new mandate (so-called "TFA Mandate Package") was designed by TFA in and consisting of the following documents:

44


86. In the TFA Instruction Letter, in addition to the specific instructions on how to participate in the ICSID proceedings, TFA set forth some basic rules of conduct for the bondholders. In particular it provided that:

"8. SOME RULES OF THE LEGAL ACTION PLANNED BY TFA THAT SHOULD BE KEPT IN MIND

In keeping with the transparency that has always been a hallmark of TFA‘s activities to protect Italian bondholders, we wish to highlight some basic rules that the conduct of the ICSID arbitration on behalf of numerous Italian Investors makes it necessary to impose on all of you.

First of all, the ICSID arbitration is available only to persons who qualify as "investors", that is, to persons who can demonstrate that they purchased and have title to Argentine bonds. Failure to meet this requirement would not only jeopardize the position of the individual participant in the initiative, but could endanger the success of the legal proceeding for the other bondholders as well. It is therefore evident that, for anyone who intends to initiate the ICSID arbitration, it will not be possible to bring a legal action in Italy against the credit institution that sold the bonds to them and at the same time demand the right to continue the proceedings before ICSID; likewise, those who have already filed a claim against their banks may not participate in the ICSID arbitration. Indeed, a final judgment issued by an Italian court of last resort declaring null and void or voiding the agreement for the purchase of the

45

security would cause your status as an investor to cease to exist, whereas such status is indispensable to bring an ICSID arbitration.

Does this mean that participating in the ICSID arbitration will prevent you from suing the credit institutions at a later day ? Not at all! Anyone who wants to change his/her mind and abandon the ICSID arbitration can do so freely: it will be sufficient to withdraw from the ICSID proceeding, revoke White & Case‘s power of attorney ad litem and TFA‘s mandate in order to initiate whatever legal proceedings is deemed most appropriate. It is not possible, however, to conduct at the same time two different legal proceedings that are incoherent with one another.

Finally, we note that the proceedings before ICSID will not toll the running of the statute of limitations to bring your claims, if any, against the banks.

[…]

The peculiarity and complexity of the case to be presented before ICSID on behalf of TFA make it necessary, for reasons of coherence and uniformity of the representation of all Italian bondholders, to have a single attorney in the proceedings (White & Case) and that the latter have a single interlocutor (TFA). This also requires compliance with certain rules that make it possible for the representation of bondholders, taken as a group, to remain logical and coherent.

Accordingly:

(a) it will not be possible to give instructions directly to the attorneys at "White & Case" (or the Italian lawyers at "Grimaldi e Associati", who will act solely as TFA‘s out of court advisors): they will coordinate directly with TFA, which, as mentioned before, will act as your sole agent;

(b) in lum [sic!], TFA, acting in the collective interest of all bondholders, will operate autonomously, taking into consideration their general interest without being able to adopt different conducts for each or only some of the various bondholders at their request;

(c) nor will it be possible to conduct autonomously the proceeding initiated jointly with all the bondholders; accordingly, any revocation of TFA‘s mandate or of the power of attorney ad litem of the American lawyers must necessarily be preceded by withdrawal from the ICSID proceeding; in other words, it will not be possible to revoke TFA‘s mandate so as to deal individually with your American lawyer or to appoint other agents. Revoking the mandate or the power of attorney without having previously withdrawn from the proceeding will result in renunciation of the mandates received by TFA and "White & Case", respectively.

[...]"

(Emphasis in the original)

87. In the Power of Attorney, the signatory makes the following declarations and statements:

46

"Each of the Undersigned […]

hereby […]

Delegates to the law firm of White & Case LLP […], in particular Carolyn B. Lamm, Esq. and any other attorney of White & Case LLP outside of Italy that she designates, the authority and confers the power of attorney to represent the Undersigned, jointly with other similarly situated bondholders, in the furtherance of their interests with respect to their above-described bondholdings. Such delegation of authority and power of attorney includes without limitation the authority and power:

[…]

 

Further instructions regarding this delegation may be made from time to time by any duly appointed agent of the Undersigned.

47

88. In the TFA Mandate, the object of TFA‘s mandate is described as follows66:

“OBJECT

Subject to all legal requirements that may from time to time be applicable, the Agent is hereby entrusted with the assignment of providing for the coordination of any arbitral and judicial proceedings of the kind described in the premises hereto that may be undertaken in the name and on behalf of the holders of Bonds pursuant to the Power of Attorney and this Mandate, for the recovery of their investment in the Bonds. In particular, and solely by way of examples, it shall be the Agent‘s responsibility:

48

 

89. The TFA Mandate further provides for following terms and conditions of revocation:

“EXCLUSIVITY, REVOCATION AND RENUNCIATION

Principal also grants this Mandate in the interest of all of the other bondholders who have granted an identical power of attorney ad litem and an identical mandate; such interest arises out of the need to coordinate the arbitral and judicial proceedings mentioned in the premises hereto. Accordingly:

49

In any event, the Agent shall have the right to renounce this Madate at any time, by giving at least fifteen (15) business days written notice to the Principal(s).

[…]"

(Emphasis in the original)

90. TFA‘s member banks arranged for the distribution and collection of the Mandate Package among their clients during March and April 2006, which was – according to Claimants‘ figures – accepted by over 180,000 Italian bondholders67.

91. On 14 September 2006, White & Case filed the Request for Arbitration with ICSID on behalf of these Italian bondholders, Claimants to the present arbitration.


50

(5) New Exchange Offer 2010

92. In April 2010, Respondent announced the launching of a new Exchange Offer (hereinafter the "Exchange Offer 2010").

93. This offer was launched on 3 May 2010 and aimed to "restructure and cancel defaulted debt obligations of Argentina represented by Pre-2005 Eligible Securities, to release Argentina from any related claims, including any administrative, litigation or arbitral claims and to terminate legal proceedings against Argentina in respect of the tendered Eligible Securities in consideration for the issuance of New Securities and, in certain cases, a cash payment."68

94. In this offer, Respondent invited "the Owners of each Series of Bonds listed in Annexes A-1 and A-2 and related claims (collectively, the "Eligible Securities") to submit offers to exchange Eligible Securities for New Securities and, in certain cases, cash, on the terms and conditions described [t]herein."69  The bonds listed in Annexes A-1 and A-2 are bonds in which Claimants hold security entitlements, and Claimants were thus eligible to tender into this Exchange Offer 2010.

95. The launching of this Exchange Offer 2010 required the temporary suspension of certain effects of the Emergency Law until the earlier of two dates – 31 December 2010 or the date on which the Executive Branch, through the Ministry of Economy and Public Finance, announces the conclusion of the second restructuring process of Argentina‘s nonperforming debt securities70. In addition, Argentina further took administrative and legislative steps in connection with the Exchange Offer 2010, approving the budget providing the amount of debt that Argentina may issue,



51

namely through the Exchange Offer 2010, and authorizing the necessary administrative registrations and issuance of new securities, etc71.

96. Whilst in Claimants‘ view this Exchange Offer 2010 was just another punitive offer imposing harsh exchange terms72, even less favorable than the Exchange Offer 2005, Respondent contends that it merely reflected the result of adequate consultations with creditors‘ groups73.

97. A considerable number of Claimants eventually tendered into this Exchange Offer 2010, which led to their withdrawal from the present proceedings (see §§ 216 et seq. below).

B. PROCEDURAL HISTORY

(1) Request for Arbitration and its Registration by ICSID

98. On 14 September 2006, Claimants filed their Request for Arbitration, accompanied by Annexes A through E.

99. On 26 September 2006, ICSID transmitted to Respondent the Request for Arbitration.

100. On 20 October 2006, Respondent sent a letter to ICSID requesting the latter not to register the case arguing that Claimants lack standing to sue and that the nature of this "group claim" entail Respondent‘s defense right. Respondent therefore concluded that ICSID has no jurisdiction over the dispute.

101. On 20 November 2006, Claimants responded to Respondent‘s letter dated 20 October 2006 arguing that ICSID must register the case according to Article 36(3)

52

ICSID Convention. It based its position on two legal opinions rendered by Prof. Christoph Schreuer and Prof. Rudolf Dolzer dated 2 and 16 November 2006, respectively74.

102. On 18 December 2006, Respondent responded to Claimants‘ letter of 20 November 2006. Respondent again requested ICSID not to register the case alleging that ICSID lacks jurisdiction and that Respondent never consented to an arbitration concerning such kind of claims initiated by "groups of people" or "class action".

103. On 19 and 22 December 2006, Claimants submitted supplemental Annexes in relation to information contained in Annexes A through E, and submitted Annexes K and L. The substitute annexes reflect: (i) an addition of certain Claimants (separately listed in Annex K), (ii) the withdrawal of certain Claimants (separately listed in Annex L), (iii) limited corrections and substitutions to the information on Claimants (Annexes A-E), (iv) the revision of the aggregate amounts (Annex I), and (v) the addition of one new bond series (Annex J).

104. On 6 January 2007, Claimants responded to Respondent‘s letter of 18 December 2006 insisting that ICISD register the case and arguing (i) that it is up to the Tribunal to decide on the jurisdiction, and (ii) that the claim at stake is not a "class action" but a joint claim in which each Claimant initiates arbitration on its own behalf, and therefore covered by ICSID‘s jurisdiction.

105. On 24 January 2007, Respondent responded to Claimants‘ submissions of 19 and 22 December 2006 opposing the incorporation of new Claimants in the arbitration. According to Respondent, the changes made to the Request for Arbitration


53

regarding the identity and number of Claimants is inadmissible. Further, Respondent reiterated its request that the case be refused registration.

106. On 1 February 2007, Claimants responded to Respondent‘s letter of 24 January 2007 insisting that the case be registered "as soon as possible".

107. On 5 February 2007, Claimants submitted "substituted versions" of Annexes A through E, K, L, I and J. The substitute annexes reflect: (i) the withdrawal of certain Claimants (listed separately in Annex L), (ii) certain corrections and substitutions to the documentation for other Claimants, and (iii) the revision of certain aggregate amounts based on the foregoing adjustments (Annexes I and J).

108. On 7 February 2007, concluding that the dispute is not manifestly outside the jurisdiction of ICSID, the Secretary-General of the ICSID registered Claimants‘ Request for Arbitration with accompanying Annexes A through L, and issued the Notice of Registration.

(2) Constitution of the Arbitral Tribunal

109. On 7 February 2007, the Secretary-General of ICSID invited the Parties to communicate any provisions agreed by them regarding the number of arbitrators and the method of their appointment.

110. On 9 March 2007, Claimants suggested that the arbitral tribunal be composed of three arbitrators, one arbitrator to be appointed by each Party and the third, who shall be the President of the Tribunal, to be appointed by agreement of the Parties, and appointed Prof. Albert Jan van den Berg, a national of The Netherlands, as arbitrator.

111. On 12 March 2007, ICSID confirmed receipt of Claimants‘ letter of 9 March 2007 and further stated that no further steps regarding the appointment of Prof. van den Berg could be taken until the Parties inform the Centre of their agreement regarding the method for the constitution of the arbitral tribunal. It therefore invited


54
Respondent to accept Claimants‘ proposals or make other proposals regarding the constitution of the arbitral tribunal.

112. On 27 April 2007, Claimants sent a letter to the ICSID informing that the Parties have not reached agreement on the method of constituting the Tribunal, and therefore requested that the Tribunal be constituted according to Article 37(2)(b) ICSID Convention, given that more than 60 days had passed since the registration of the Request for Arbitration. Claimants then confirmed the appointment of Prof. van den Berg and suggested the name of a person to serve as President of the Tribunal.

113. On 7 May 2007, Respondent opposed Claimant‘s suggestion for President and suggested instead another candidate. Respondent further appointed Prof. Georges Abi-Saab, a national of the Arab Republic of Egypt, as arbitrator.

114. On 14 May 2007, ICSID informed the Parties that Prof. van den Berg and Prof. Abi-Saab accepted their appointments as arbitrators and enclosed copies of their signed declarations according to Rule 6(2) ICSID Arbitration Rules.

115. On 25 August 2007, Claimants informed ICSID that the Parties have not been able to reach an agreement regarding the appointment of the third, presiding arbitrator and therefore requested ICSID to make the appointment in accordance with Article 38 ICSID Convention and Rule 4 ICSID Arbitration Rules.

116. On 28 August 2007, ICSID confirmed receipt of Claimants‘ letter of 25 August 2007 and announced that it would proceed with the appointment after consultation with both Parties in accordance with Rule 4(4) ICSID Arbitration Rules.

117. On 8 November 2007, the Secretary-General of the ICSID proposed a candidate to serve as President of the Tribunal and invited the Parties to comment before 19 November 2007.

55

118. On 16 and 19 November 2007 respectively, Respondent and Claimants both objected to the appointment of the person proposed by the Secretary-General of the ICSID. On 29 November 2007, the Secretary-General informed the Parties of its intention to propose to the Chairman of ICSID‘s Administrative Council the appointment of Dr. Robert Briner, of Switzerland, as the President of the Tribunal.

119. On 6 February 2008, the Secretary-General of the ICSID informed the Parties and the arbitrators that the Tribunal is deemed to be constituted by (i) Professor Albert Jan van den Berg (appointed by Claimants), (ii) Professor Georges Abi-Saab (appointed by Respondent) and (iii) Dr. Robert Briner (appointed by ICSID pursuant to Article 38 ICSID Convention). Further, the Tribunal was informed that Mr. Gonzalo Flores, Senior Counsel at ICSID, would serve as the Secretary to the Tribunal.

120. On 26 February 2008, Respondent requested further information from Dr. Briner on his past experience and his positions in companies and financial institutions.

121. On 28 February 2008, Dr. Briner provided further information on his past experience and current positions. On the same day, Respondent acknowledged and thanked Dr. Briner for his response.

122. On 27 July 2009 Dr. Robert Briner resigned as President of the Tribunal due to health reasons. On 2 September 2009 Prof. Pierre Tercier, a Swiss national, was appointed, by agreement of the parties, as the new President of the Tribunal.

(3) Arbitral Procedure

123. On 10 March 2008, ICSID sent a letter to the Parties and the Tribunal with organisational details concerning the First Session to be held on 10 April 2008 at the seat of the Centre in Washington D.C. The Parties were invited to comment on the proposed draft provisional agenda before 3 April 2008.

56

124. During March 2008, various exchanges of correspondence took place concerning Respondent‘s request that the information contained in Claimants‘ Annexes be provided to it in an appropriate form. On 31 March 2008, the ICSID informed the Parties that the Tribunal had taken note of the Parties‘ correspondences and had decided to defer its ruling on the matter until the First Session of 10 April 2008.

125. On 3 April 2008, both Parties sent their comments on the provisional agenda for the First Session (see § 123 above). Whilst Respondent had "no comment to make", Claimants made several comments and suggestions regarding the various items of the agenda.

126. On 9 April 2008, Claimants sent a letter expressing their concerns about Respondent‘s statement that it "has no comments to make" on the provisional agenda for the First Session. Claimants feared to be prejudiced if Respondent was to raise any such comments during the First Session.

127. On 10 April 2008, the First Session was held at the seat of the Centre in Washington, D.C. at which a procedural calendar for the further conduct of the proceedings was established. During the First Session it was agreed that the arbitration will be bifurcated in a jurisdictional and a merits phase. With regard to the jurisdictional phase, the Tribunal invited the Parties to agree on a joint list of preliminary issues to be submitted before 2 May 2008. The Tribunal stated that it would then decide over any remaining divergence and communicate its decision on 9 May 2008.

128. On 2 May 2008, both Parties sent letters announcing that they could reach an agreement on only very limited issues and laid down their respective position concerning the remaining divergences on the scope of the jurisdictional phase. Respondent further requested that Claimants submit the list of the members of Task Force Argentina, and that that the schedule discussed at the First Session be amended to account for document discovery.

57

129. On 5 and 8 May 2008 respectively, each Party commented on the other Party‘s submission of 2 May 2008.

130. On 9 May 2008, after receiving and considering the Parties‘ submissions on the scope of the jurisdictional phase and in the light of the Parties‘ disagreement, the Tribunal submitted a "List of issues to be addressed during the jurisdictional first phase of the proceedings" (hereafter "List of 11 Issues of 9 May 2008"), listing the following 11 issues covering Claimants and Respondent‘s main positions and objections:

"

58


131. An amended procedural calendar was further agreed upon. Also, the Tribunal invited Claimants to submit by 23 May 2008 a complete list of all present members of Task Force Argentina.

132. On 23 May 2008, Claimants submitted the list of current members of Task Force Argentina, according to the Tribunal‘s request of 9 May 2008, but nevertheless raised certain concerns, in particular regarding the submission of documents on behalf of a third party.

133. On 8 August 2008, Respondent filed its First Memorial on Jurisdiction and Admissibility, accompanied by exhibits and expert reports by Prof. Barry J. Eichengreen, Prof. Anne-Marie Slaughter and Prof. William Burke-White.

134. On 8 October 2008, after discussions concerning a possible rescheduling of the hearing and after having heard and taken into account both Parties‘ positions as well as the availability of all participants, the Tribunal decided that the hearing date would not be changed and still take place on the week of 22 June 2009, as agreed upon on 9 May 2008.

59

135. On 7 November 2008, Claimants filed their Counter-Memorial on Jurisdiction, accompanied by substitute versions of Annexes A through E, K and L; exhibits; witness statements by Mr. Stefano De Grandi, Mr. Mario Flagella, Mr. Richard Liebars, Mr. Raffaele Martino, Mr. Ajata Mediratta, Mr. Fabrizio Modoni, and Mr. Roberto Ranieri; and expert reports by Dr. Alberto B. Bianchi, Ms. Elizabeth J. Cabraser, Dr. William R. Cline, Dr. Joaquín A. Cottani, Prof. Rudolf Dolzer, Dr. Pablo E. Guidotti, Prof. Geoffrey C. Hazard, Prof. Natalino Irti, Mr. Brent Kaczmarek, Prof. Salvatore Maccarone and Prof. Fabrizio Maimeri, Dr. Héctor A. Mairal, Prof. Annibale Marini, Mr. Rex Pingle, Prof. W. Michael Reisman, Mr. Stephen Schaefer, Prof. Christoph Schreuer, Dr. Francisco G. Susmel, and Dr. Guillermo O. Teijeiro.

136. On 17 November 2008, the Parties exchanged their requests for document production pursuant to the schedule set forth in the letter of 9 May 2008.

137. On 18 November 2008, Respondent sent a letter stating that Claimants had not complied with the deadline for submission of their Counter-Memorial on Jurisdiction. It argued that the transmittal letter sent to ICSID was received on 8 November 2008, 12:02 am and that subsequent emails were received at 02:31 am. It further complained that it received the Spanish version of the Counter-Memorial on Jurisdiction only on 11 November 2008, i.e., four days after the deadline set forth in the Tribunal‘s letter of 9 May 2008 (see § 130 above). Respondent therefore requested that the deadline for submission of its Reply Memorial on Jurisdiction scheduled for 20 February 2009 be extended to 24 February 2009. It further expressed its wish that the Tribunal would not allow further failures to comply with the established deadlines, absent special circumstances under the terms of Rule 26 ICSID Arbitration Rules.

138. On 18 November 2008, the Tribunal advised the Parties that the hearing would take place from Friday, 19 June 2009, through Wednesday, 24 June 2009.

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139. On 24 November 2008, Claimants responded to Respondent‘s letter of 18 November 2008 asking the Tribunal to reject Respondent‘s request for extension of time and giving further explanations on why its Counter-Memorial on Jurisdiction and related documents were sent out late. Claimants further stressed that while Respondent had 15 weeks to prepare its Reply Memorial on Jurisdiction, Claimants were only given 10.5 weeks to prepare their Rejoinder Memorial on Jurisdiction.

140. On 5 December 2008, the Parties submitted their respective ―Redfern Schedules‖ listing their specific requests for document production by the other Party and their objections to the other Party‘s requests.

141. On 10 December 2008, the Tribunal granted Respondent‘s request for extension of the deadline for submission of its Reply Memorial on Jurisdiction to 23 February 2009.

142. On 12 December 2008, the Tribunal issued Procedural Order No. 1 ruling on the Parties‘ production for document requests.

143. Subsequently, correspondence was exchanged between the Parties with regard to (i) Respondent‘s compliance with Order No. 1, referred to in § 142 above; and (ii) the progress on reaching a conclusion on a confidentiality agreement. None of the issues could be solved among the Parties who requested the Tribunal‘s directions.

144. On 22 December 2008, the Parties exchanged documents in accordance with Annex A of the Tribunal‘s Procedural Order No.1. Respondent‘s submission of documents appeared to be incomplete.

145. On 9 February 2009, Respondent completed its document production as ordered in Procedural Order No. 1 (see § 142 above).

146. On 12 February 2009, the Tribunal directed Respondent to provide an accompanying table to the produced documents which contained references to each

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s
pecific request that the Tribunal had ordered Respondent to comply with in Procedural Order No. 1, referred to in § 142 above. Further, the Tribunal invited the Parties to continue their discussions in order to arrive at a Confidentiality Agreement and stated that if the Parties cannot come to such an agreement and if so requested by a Party, the Tribunal will hear the Parties on this matter at the occasion of the June 2009 Hearing and then take the necessary steps.

147. On 23 February 2009, Respondent filed its Reply Memorial on Jurisdiction and Admissibility, accompanied by exhibits; witness statements by Mr. Enrique H. Boilini, Avv. Gianluca Fontanella, Dr. Sergio Mario Illuminato, Ms. Noemi C. La Greca, Mr. Federico Carlos Molina, Ambassador Guillermo Nielsen, and Hon. Luigi Olivieri; and expert reports by Prof. Avv. Guido Alpa, Prof. Avv. Antonio Briguglio, Dr. Pierre-Yves Cremieux, Avv. Remo Danovi, Prof. Barry J. Eichengreen, The Forensic Document Examination Division of the Argentine Federal Police, Ms. Rachel Hines, Prof. Jorge Kielmanovich, Prof. Daniel Marx, Abog. Ismael Mata, Prof. Arthur R. Miller, Prof. Richard A. Nagareda, Prof. Nouriel Roubini, Prof. Alessandro Penati, Prof. Avv. Andrea Perrone, Mr. Héctor Jorge Petersen and Mr. Héctor Jorge Petersen (h), Prof. Anne-Marie Slaughter and William Burke-White, and Prof. Charles W. Wolfram.

148. On 9 March 2009, Respondent submitted the table of documents referencing each specific document according to the Tribunal‘s directions of 12 February 2009 (see § 146 above).

149. On 22 April 2009, Claimants requested that Respondent be ordered to submit documents complementing its previous production, i.e., charts and proposals and other pages accompanying the Analysis Memoranda relating to the bonds issued by Respondent.

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150. On 6 May 2009, Respondent responded to Claimants letter of 22 April 2009 and requested that Claimants‘ request for further document production be rejected.

151. On 6 May 2009, Claimants filed their (English) Rejoinder Memorial on Jurisdiction, accompanied by exhibits; witness statements by Mr. Massimo Cerniglia, Mario Flagella, Richard Liebars, Ajata Mediratta, and Fabrizio Modoni; and expert reports by Alberto B. Bianchi, Elizabeth J. Cabrazer, Dr. William R. Cline (second expert opinion), Joaquín A. Cottani, Professor Dr. Dr. Rudolf Dolzer (supplemental expert opinion), Mrs. Cristiana Franco, Mr. Mario Franco, Mr. Alberto Bravo, Pablo E. Guidotti (supplemental expert report), Mr. Iain Hardie (supplemental expert report), Geoffrey C. Hazard JR (supplemental legal opinion), Prof. Natalino Irti (supplemental pro veritate legal opinion), Salvatore Maccarone and Fabrizio Maimeri (supplemental legal opinion), Héctor A. Mairal (supplemental legal opinion), Prof. Annibale Marini (supplemental pro veritate legal opinion), Mr. Brent C. Kaczmarek (supplemental expert report), Prof. Nicola Picardi, Rex E. Pingle (supplemental expert opinion), and Prof. W. Michael Reisman (second opinion).

152. Subsequently, correspondence was exchanged between the Parties with regard to Respondent‘s requests to amend the schedule of 9 May 2008 with regard to the designation of witnesses and experts and the submission of documents relating to direct and cross-examination of such witnesses and experts for the forthcoming hearing and to hold a pre-hearing conference.

153. On 11 May 2009, the Tribunal announced that it would, for the time being, not make any decision with respect to the designation of witnesses and experts for the forthcoming hearing and invited the Parties to confer and try to reach an agreement, reverting to the Tribunal by 15 May 2009. It further stated that it would be prepared to hold a pre-hearing conference call during the first week of June 2009.

154 On 14 May 2009, Respondent reiterated its concerns already raised in its letter of 8 May 2009 concerning Claimants‘ late submission of their Rejoinder Memorial on

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Jurisdiction and related documents. Whilst electronic copies of the documents were received by ICSID only after the midnight deadline of 6 May 2009, Respondent received the Spanish version of the Rejoinder Memorial on Jurisdiction only on 9 May 2009. Respondent consequently requested the Tribunal to disregard Claimants‘ late submissions in application of Rule 26(3) ICSID Arbitration Rules.

155. On 15 May 2009, in accordance with the deadline set in the Tribunal‘s letter of 11 May 2009 (see § 153 above), the Parties submitted to the Tribunal their respective positions concerning the various pre-hearing and hearing matters. Respondent further requested that an additional hearing of 10 days be set.

156. On 18 May 2009, Claimants provided certain explanations on the delay in submitting their Rejoinder Memorial on Jurisdiction and requested that Respondent‘s request to disregard such Rejoinder Memorial on Jurisdiction be rejected.

157. On 20 May 2009, the Parties exchanged further correspondence concerning the various pre-hearing and hearing matters. While Respondent insisted that each Party be given the right to cross-examine every witness and expert presented by the other Party and that additional hearing time be arranged, Claimants requested that Respondent‘s requests be denied.

158. On 20 May 2009, Claimants requested the Tribunal to order Respondent to immediately produce the complementary documents requested in their letter of 22 April 2009 (see § 149).

159. On 21 May 2009, the Tribunal ruled that it accepted Claimants‘ Rejoinder Memorial on Jurisdiction despite its delayed submission. It further set forth certain principles for conduct of the forthcoming Hearing on Jurisdiction confirming, among others, that the hearing would last 5.5 days, defining the scope of direct examination of witnesses and experts and setting new deadlines for the designation

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of witnesses and experts and submission of documents for direct and cross-examination.

160. On 26 May 2009, the Tribunal requested Respondent to produce the documents requested by Claimants in their letter of 20 May 2009 or to otherwise give specific reasons for not producing such documents before 5 June 2009.

161. On 28 May 2009, in accordance with the deadline set in the Tribunal‘s letter of 21 May 2009 (see § 159 above), the Parties submitted their designation of witnesses and experts relevant to the jurisdictional phase. Whilst Claimants did not directly designate witnesses or experts from Respondent for cross-examination, it reserved the right to do so in case Respondent would designate any such witnesses or experts for direct examination and to expand the scope of redirect examination of Claimants‘ witnesses or experts accordingly. Respondent submitted a list of witnesses and experts from Claimants for cross-examination and a list of its own witnesses and experts for direct examination.

162. On 29 May 2009, Respondent objected to Claimants position in its letter of 28 May 2009 contending that Claimants had not complied with the Tribunal‘s request to designate the witnesses and experts for direct and cross examination and that Claimants should not have the right to further designate such witnesses or experts or to expand the scope of their re-direct examination.

163. On 31 May 2009, Claimants objected to Respondent‘s position in its letters of 28 and 29 May 2009. With regard to Respondent‘s designation of witnesses and experts for direct examination, Claimants objected to the examination of Respondent‘s handwriting experts and experts on US and Italian tax law. With regard to Respondent‘s designation of witnesses and experts for cross-examination, Claimants objected to the examination of Mr. Stock and of their own handwriting experts. Claimants further objected to Respondent‘s request to extend the daily hearing schedule.

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164. On 2 June 2009, the Tribunal ruled that (i) the Parties‘ handwriting experts shall not be examined at the hearing because the issue of authenticity of the Claimants‘ signatures related to circumstances concerning individual Claimants and were thus not covered by this jurisdictional phase and (ii) Mr. Stock shall not be called as a witness because he has not submitted any statement, opinion or report (i.e., he is not a witness or expert). Regarding the daily hearing schedule, the Tribunal decided not to change it but remained open to discuss the issue during the Hearing. This decision was taken by majority, as communicated to the Parties on 3 June 2009.

165. On 3 June 2009, the deadline set in the Tribunal‘s letter of 21 May 2009 (see § 159 above), Respondent submitted its documents for direct and cross-examination accompanied by an index, and requested disclosure of documents regarding the direct testimony by Prof. Briguglio and Prof. Nagareda.

166. On 5 June 2009, the deadline set in the Tribunal‘s letter of 26 May 2009 (see § 160 above), Respondent explained why it deemed that it should be relieved from any obligation to produce any documents called by Claimants in their letter of 20 May 2009 (see § 158 above).

167. On 7 June 2009, Claimants insisted that Respondent be ordered to produce the documents as requested in their letter of 20 May 2009 (see § 158 above).

168. On 7 June 2009, Claimants also responded to Respondent‘s submission of 3 June 2009 and raised the following two main objections: (i) Claimants consider Respondent‘s submission of its ―Supplemental Exhibits‖ as untimely, abusive and partly in disregard of confidentiality obligations, and (ii) Claimants objected to Respondent‘s designation of Prof. Nagareda and Prof. Briguglio for direct examination because such direct examination would exceed the scope of examination set forth in the Tribunal‘s letter of 21 May 2009 (see § 159 above).

169. On 8 June 2009, the Tribunal communicated the organizational details of the Hearing on Jurisdiction to be held from 19 June 2009 through 24 June 2009.

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170. On 8 June 2009, Respondent reacted to the Tribunal‘s decision of 2 June 2009 (see § 164) expressing concerns that "two of the members of the Tribunal have simply taken an incomprehensible decision" by not admitting to call the handwriting experts as experts during the Hearing on Jurisdiction and requested that the Tribunal reconsider its decision of 2 June 2009.

171. On 9 June 2009, Claimants responded to Respondent‘s letter of 8 June 2009 and requested that the Tribunal reject Respondent‘s requests.

172. On 9 June 2009, the President of the Tribunal informed the Parties that in light of certain recent health problems, he would not be allowed to travel to Washington, D.C. for the Hearing on Jurisdiction.

173. On 9 June 2009, Claimants acknowledged that the Hearing on Jurisdiction was postponed and understood that related deadlines were presently suspended, including with respect to the submission of examination documents, etc.

174. On 17 June 2009, the Tribunal decided on several issues regarding the Hearing: (i) with respect to the issues raised by the Parties in relation to the Hearing, in particular to the testimony of fact and expert witness, the Tribunal reserved its decision for a later stage during the proceedings, once the new dates for the Hearing have been established; (ii) with respect to Claimants‘ request for the production of documents as contained in their letter of 20 May 2009, it was denied; (iii) with regard to Claimants‘ objection of 7 June 2009 regarding Respondent‘s submission of 3 June 2009, the Tribunal invited Respondent to state its position, especially with regard to Claimants‘ objection relating to confidential material, before 24 June 2009.

175. On 24 June 2009, Respondent responded to Claimants‘ letters of 7 and 9 June 2009 (see §§ 168 and 171 above) in accordance with the Tribunal‘s instructions (see § 174 above). Respondent insisted on the relevance of the question of the authenticity of some of the Claimants‘ signatures for this jurisdictional phase. With regard to


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the confidentiality issue, Respondent stressed that it had not submitted any document filed in sealed proceedings and that there was no general rule of confidentiality governing ICSID arbitration proceedings. It therefore requested that Claimants‘ objections be rejected. Respondent further complained about Claimants‘ position, as reflected in their letter of 9 June 2009 (see § 173 above), to suspend the deadline for submission of documents for cross-examination and requested that the Tribunal order Claimants to immediately present such documents.

176. On 6 July 2009, Claimants responded to Respondent‘s letter of 24 June 2009 requesting once again that the Tribunal (i) exclude the use of confidential documents and (ii) refuse to undo its decision of 2 June 2009 concerning the handwriting experts. Claimants further requested that the Tribunal issue a confidentiality order protecting the confidentiality of the current proceedings. Claimants also stressed that the suspension of the deadline for submission of documents for witnesses‘ and experts‘ examination was in accordance with the Tribunal‘s communication of 9 June 2009.

177. On 8 and 16 September 2009, Claimants suggested new dates concerning pre-hearing issues and the Hearing on Jurisdiction. It further requested anew that the Tribunal reject Respondent‘s request to reconsider the Tribunal‘s decision of 2 June 2009 and asked the Tribunal to strike Respondent‘s supplemental exhibits and confidential material as submitted by Respondent on 3 June 2009. It also insisted on its request for a confidentiality order.

178. On 16 September 2009, Respondent requested the Tribunal to set an entirely new calendar, including dates for witnesses and experts hearings, and considering an additional two weeks for the Hearing on Jurisdiction. It further insisted on the examination of the handwriting experts during the Hearing and on the admission of its documents submitted on 3 June 2009.

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179. On 17 and 23 September 2009, Claimants responded to Respondent‘s letter of 16 September 2009 and formulated the following requests: (i) with regard to the Hearing, that Respondent‘s requests to overturn previous decisions on hearing days be denied; (ii) with regard to witnesses and experts, that Respondent‘s requests to re-open the designation of witnesses, to overturn the Tribunal‘s decision on handwriting experts, and to refuse the direct examination of Prof. Briguglio and Prof. Nagareda be denied; (iii) with regard to the documents for the Hearing, that the admission of Respondent‘s "Supplemental Exhibits" be limited to those relating expressly to the scope of direct testimony of Claimants‘ experts and witnesses; and (iv) that Claimants‘ request for a confidentiality order be granted.

180. On 14 October 2009, after the procedure had been staying still due to the unfortunate circumstances affecting Dr. Briner and eventually leading to his resignation, the procedure was actively resumed through a joint telephone conference between the Tribunal (with Prof. Pierre Tercier as new President of the Tribunal (see § 122 above)), the Secretary and the Parties. During the conference call, new pre-hearing deadlines and hearing dates, as well as other organisational aspects were discussed. At the conclusion of the telephone conference, four procedural matters were left open for decision by the Tribunal: (i) whether or not to allow direct and cross-examination of the handwriting experts, (ii) whether or not to allow direct examination of Professors Richard A. Nagareda and Antonio Briguglio, (iii) dates for the hearing on jurisdiction and admissibility and thereto related, pre-hearing dates, as well as (iv) the standard of confidentiality to be applied in the present proceeding.

181. On 1 December 2009, the Tribunal issued its Procedural Order No. 2, in which (i) it admitted – under certain restrictions – the direct and cross-examination of the handwriting experts; (ii) it admitted the direct examination by Respondent of Professors Richard A. Nagareda and Antonio Briguglio, and by Claimant of Professor Nicola Picardi; and (iii) it set the dates for the Hearing on Jurisdiction to 7 April 2010 to 13 April 2010.

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182. On 11 December 2009, Claimants requested some further clarifications concerning Procedural Order No. 2 with regard to the procedure for examination of the handwriting experts and the scope of examination in general.

183. On 28 December 2009, the Tribunal provided the Parties with further clarifications on Procedural Order No. 2 and enclosed a draft hearing agenda inviting the Parties to comment thereon by 22 January 2010. It further invited Claimants to submit by 22 January 2010 the documents to be used for its direct, cross and re-direct examination and not yet in the record while Respondent was given a deadline until 19 February 2010 to comment thereon.

184. On 19 January 2009, Claimants requested clarifications regarding its duty to submit any supplemental exhibits not yet in the record for use during direct, cross and re-direct examination, alleging that the outstanding decision of the Tribunal concerning the admissibility of part of Respondent‘s Supplemental Exhibits played a role on the scope of Claimants‘ submission.

185. On 21 January 2010, the Tribunal decided on Claimants‘ enquiry of 19 January 2010, postponing (i) Claimants‘ deadline for submitting any additional exhibits for witness and expert examination until the issuance of the imminent Procedural Order No. 3 and (ii) Respondent‘s deadline for commenting on Claimants‘ submission.

186. On 22 January 2010, the Parties submitted their comments on the draft Agenda for the Hearing on Jurisdiction:


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187. On 27 January 2010, the Tribunal issued its Procedural Order No. 3 ruling on the standard of confidentiality to be followed in the present proceeding and rejecting the admissibility of Respondent‘s Exhibits RE-427, RE-428, RE-429, RE-435, RE-440, RE-452, RE-462, RE-488, RE-489, RE-490, RE-491, RE-492, RE-493, RE-494, RE-495, RE-496, RE-497, RE-498, RE-499, RE-504 and RE-528, as well as of any other exhibit relating to an expert report or to a transcript of expert examination issued in another arbitration.

188. On the same day, according to the Tribunal‘s directions of 21 January 2010 (see § 185 above), the Tribunal invited Claimants to submit any additional exhibits not yet in the record for use during direct, cross- and re-direct examination by 1 February 2010. Respondent was invited to comment on Claimants‘ submission by 22 February 2010. This latter deadline was subsequently corrected by the Tribunal to 1 March 2010.

189. On 1 February 2010, Claimants filed their supplemental exhibits not yet in the record for use during direct, cross- and re-direct examination, as requested by the Tribunal in its letters of 28 December 2009 and 27 January 2010.

190. On 2 February 2010, Respondent informed the Tribunal that on 26 January 2010, Dr. Osvaldo César Gugliemino had resigned from his position as Attorney General of Argentina and that the President of the Argentine Republic had appointed Dr. Joaquín Pedro da Rocha as his successor. On 27 December 2010 Dr. Joaquín Pedro da Rocha was replaced by Dr. Angelina María Esther Abbbona as Argentina‘s Attorney General .

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191. On 1 March 2010, Respondent filed its comments on Claimants‘ submission of 1 February 2010, including a series of additional documents (see § 189 above).

192. On 2 March 2010, Claimants reacted to Respondent‘s submission of 1 March 2010 raising various objections against the submission of additional documents by Respondent. Claimants requested that the Tribunal issue an immediate order directing that the documents submitted by Respondent not be admitted to the record and announced that they would respond in full to Respondent‘s submission within one week.

193. On 8 March 2010, Respondent sent a letter to the Tribunal concerning a new claim that Claimants would allegedly have initiated before the Federal Court of the Southern District of New York, including as Plaintiffs some of the Claimants, as well as two other litigation procedures initiated in the US. Respondent consequently asked the Tribunal to invite Claimants (i) to inform whether or not these three proceedings "are the only one initiated in New York or in any other jurisdiction relating to security entitlements in Argentine bonds that comprise individuals or companies that are also Claimants in this arbitration" and (ii) to confirm whether or not all the Claimants in any of these proceedings are also Claimants in this arbitration.

194. On 9 March 2010, ICSID forwarded directions from the Tribunal to the Parties dated 5 March 2010 and 9 March 2010 regarding (i) an updated hearing agenda and (ii) the question of the submission of documents for expert and witness examination.

195. On 9 March 2010, Claimants submitted a letter in which they substantiated their previously raised objections (see § 192 above) against Respondent‘s submission of documents of 1 March 2010.

196. On the same day, Respondent submitted a second expert report from Hector Jorge Petersen and Hector Jorge Petersen (h) concerning the authenticity of signatures

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attributed to Claimants and appearing in the powers of attorneys, together with an accompanying note.

197. On the same day, Claimants objected strongly to the submission by Respondent of such report and accompanying note.

198. On 10 March 2010, ICSID sent out a letter to the Parties conveying a message from the Tribunal stating as follows:

"Counsel shall not send any further documents until the Arbitral Tribunal has issued its upcoming Procedural Order on the admissibility of all documents relating to the expert and witness examination, including the latest submission by Respondent. In this respect, the Tribunal has taken due note of the Claimants‘ objection thereto. However, in order to prevent a further escalation of this issue preventing the Tribunal to focus on the substantial issues of the hearing, the Tribunal invites the Parties to refrain from any further comments until reception of the upcoming Procedural Order."

199. On 11 March 2010, notwithstanding the Tribunal‘s directions of 10 March 2010, Respondent submitted a letter insisting that Messrs. Petersens‘ report submitted on 9 March 2010 (see § 196 above) be admitted. On the same day, Claimants stressed that this submission was in violation of the Tribunal‘s directions of 10 March 2010 and reserved the right to respond in due course.

200. On 18 March 2010, the Tribunal issued its Procedural Order No. 4 in which it set forth certain principles on the admissibility and use of the documents submitted for witness and expert examination and invited the Parties to submit certain documents and information in view of the upcoming Hearing on Jurisdiction.

201. On 22 March 2010, the Tribunal held a pre-hearing joint telephone conference together with the Parties and ICSID concerning the organization and agenda of the Hearing on Jurisdiction scheduled on 7-13 April 2010. At the conclusion of the telephone conference, the following procedural matters were left open: (i) the specific order of examination of experts and witnesses, (ii) the presence of experts

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and witnesses during the hearing, and (iii) the specific role and presence of TFA during the Hearing on Jurisdiction.

202. Between 25 March 2010 and 1 April 2010, correspondence was exchanged between the Parties and the Tribunal concerning various issues relating to the Hearing on Jurisdiction, such as the admissibility of documents to be used for expert and witness examination, Respondent‘s request for immediate access to Claimants‘ online database, information on the existence of parallel proceedings relating to Claimants‘ security entitlements and the role and presence of TFA during the Hearing on Jurisdiction.

203. On 29 March 2010, the Tribunal advised the Parties of its decision on the matters left open during the telephone conference of 22 March 2010 (see § 201 above). The Tribunal therein (i) confirmed the order of examination of experts as witnesses as set forth in the draft agenda circulated to the Parties on 5 March 2010, (ii) gave further specification as to the use of the time allocated to each Party, and (iii) set forth rules as to the presence of experts and witnesses during the Hearing on Jurisdiction.

204. On 2 April 2010, the Tribunal issued its Procedural Order No. 5, in which it ruled over the admissibility of the documents designated by the Parties for expert and witness examination and admitted TFA to attend the Hearing on Jurisdiction "as Claimants 'agent‘, without prejudice to the pending issue of the validity of its mandate". This Procedural Order was then complemented on 6 April 2010 by Procedural Order No. 6, in which the Tribunal ruled on the admissibility of further documents designated by Respondent for witness and expert examination.

205. From 7 April 2010 to 13 April 2010, the Hearing on Jurisdiction took place at the seat of the Centre in Washington D.C. After hearing the Opening Statements of Counsel to both Parties, the Parties proceeded with the examination of the following witnesses and experts: Prof. Richard A. Nagareda, Prof. Avv. Antonio

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Briguglio, Subinspector Lucio Pereyra, Mr. Héctor Jorge Petersen, Mr. Massimo Cerniglia, Mr. Mario Franco, Mr. Brent C. Kaczmarek, Prof. W. Michael Reisman, Mr. Stefano De Grandi, Mr. Joaquín A. Cottani, Prof. Christoph Schreuer, Prof. Nicola Picardi, Mr. Héctor A. Mairal and Professor Dr. Dr. Rudolf Dolzer. The last two days were dedicated to the Parties‘ Closing Statements.

206. On 22 April 2010, the Tribunal sent a letter to the Parties with instructions concerning the submission of the Post-Hearing Briefs to be submitted by both Parties by 14 June 2010.

207. On 20 May 2010, the Tribunal issued its Procedural Order No. 7, in which it ruled on the admissibility of new documents not yet in the record and which both Parties wished to submit in order to use them in their upcoming Post-Hearing Briefs.

208. On the same day, the Tribunal sent a letter to the Parties listing nine questions that the Tribunal wished the Parties to address in the Post-Hearing Briefs.

209. On 25 May 2010, both Parties filed new documents admitted into the procedure under Procedural Order No. 7. These documents were submitted by the Parties as C-998 to C-1003 with regard to Claimants, and RD-484 and RF-92 with regard to Respondent.

210. On 9 June 2010, the Tribunal granted an extension of the deadline for the submission of the Post-Hearing Briefs to 22 June 2010.

211. On 22, 23 and 25 June 2010, the Parties submitted their Post-Hearing Briefs, together with their response to the Tribunal‘s nine questions raised in its letter of 20 May 2010 (see § 209 above).

212. On 25 June 2010, Respondent complained about the delay of the submission of some parts of Claimants‘ Post-Hearing Brief, which was received during the night of 22-23 June 2010 and requested that the Tribunal disregard such submission.

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213. On 7 July 2010, after having given Claimants the opportunity to comment on Respondent‘s letter of 25 June 2010 and after considering both Parties‘ respective positions, the Tribunal accepted both Parties‘ Post-Hearing Briefs.

214. On 22 July 2010, Claimants requested the postponement of the deadline for the submission of the Parties‘ Statements of Cost due on 22 July 2010. After having invited Claimants to elaborate on the reasons for their request and after having given Respondent the opportunity to comment thereon, the Tribunal decided by Procedural Order No. 8 dated 3 August 2010, to reject Claimants‘ request for postponement of the deadline for the submission of the Parties‘ Statements of Cost and invited both Parties to submit their Statements of Cost within 24 hours upon receipt of Procedural Order No. 8

215. On 4 August 2010, the Parties filed their Statements of Cost.

216. On 5 October 2010, Claimants filed a letter submitting that certain Claimants, who tendered into the Exchange Offer 2010, would no longer participate in the present arbitration, thereby reducing the number of remaining Claimants to approximately 60,000. Claimants attached to their letter updated versions of Annexes A, B, C and L to the Request for Arbitration, the latter containing a list of all Claimants who have withdrawn from the arbitration since 14 September 2006.

217. On 22 October 2010, Respondent responded to Claimants‘ letter of 5 October 2010 and requested the Tribunal (i) to require Claimants to promptly inform which Claimants have tendered their security entitlements into the Exchange Offer 2010 and (ii) to order that the Argentine Republic and those Claimants with respect to which proceedings will be discontinued under the terms set forth in its letter, equally bear the arbitration costs, and each of them bear their own cost, and that such order of discontinuance be rendered in due course.

218. On 27 October 2010, Claimants requested that Respondent‘s requests raised in its letter of 22 October 2010 be denied based on the following main arguments:

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(i) with regard to Respondent‘s request for information on the identity of Claimants having tendered into the Exchange Offer 2010, this request has been rendered moot because Respondent is already in possession of such information as Claimants already have submitted a complete list of all Claimants having withdrawn from the arbitration since 14 September 2006 and (ii) with regard to Respondent‘s request regarding costs issues as to withdrawn Claimants, this request constitutes an attempt to raise new issues regarding costs and should therefore be rejected and stricken from the record, or alternatively, Claimants should be given the opportunity to brief the Tribunal in full as to this issue.

219. On 2 November 2010, Respondent responded, contending that (i) Claimants‘ objections to its requests was based on old arguments; (ii) that the information as to the identity of Claimants having tendered into the Exchange Offer 2010 is necessary, since these Claimants would have accepted to abandon, dismiss, withdraw and/or discontinue any proceedings pending against Argentina whilst Claimants who have withdrawn irrespective of the Exchange Offer 2010 have not made such undertaking; (iii) that Claimants are in a better position than Respondent to provide such information; and (iv) that Respondent‘s request regarding costs was to be understood as a modality of the request for an order of discontinuance, which the Tribunal shall be free to issue when considered appropriate.

220. On 26 November 2010, the Tribunal issued its Procedural Order No. 9 in which it rejected Respondent‘s request for further specific information on the identity of the Claimants having tendered into the Exchange Offer 2010 and announced that the question of the allocation of the arbitration costs concerning the Claimants who withdrew would be dealt with in the Tribunal‘s upcoming determination on jurisdiction together with the question of the withdrawal of certain Claimants.

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III. LAW

A. INTRODUCTORY REMARKS

(1) The Arbitral Procedure

221. The present procedure is subject to the ICSID legal framework, including the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (hereinafter "ICSID Convention"), the Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings (hereinafter the "Institution Rules"), the Rules for Procedure for Arbitration Proceedings (hereinafter the "ICSID Arbitration Rules") and the Administrative and Financial Regulations, in their versions as amended in 2006.

222. The Arbitral Tribunal has been duly constituted on 6 February 2008 pursuant to Articles 37 and 38 ICSID Convention and Rule 4 ICSID Arbitration Rules (see § 119 above). Following the sudden and unfortunate death of the President of the Arbitral Tribunal, Dr. Robert Briner, Prof. Pierre Tercier was appointed by agreement of the Parties on 2 September 2009 as the new President of the Arbitral Tribunal according to Rule 11 ICSID Arbitration Rules. The Parties have not raised objections to the nomination and appointment of any of the present members of the Arbitral Tribunal.

223. Through the various rounds of exchange of written submissions and through the Hearing on Jurisdiction held in Washington D.C. from 7 to 13 April 2010, both Parties have been given wide and equal opportunity to present their case with regard to the jurisdictional and admissibility issues of the present case75 .

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224. Having read the Parties‘ written submissions, having listened to the Parties, the testimony of their witnesses and experts during the Hearing on Jurisdiction, and based on the deliberations held among the members of the Tribunal, the Arbitral Tribunal considers itself in a position to render the present Decision on Jurisdiction.

(2) Object of the Present Decision

225. The main object and aim of the present decision is to examine the Centre‘s jurisdiction and the Tribunal‘s competence over the Claimants‘ claims against Argentina and, to the extent that there is competence and jurisdiction, to determine whether or not such claims are admissible. In what follows, the Tribunal will use for convenience the terms jurisdiction and competence interchangeably, without however ignoring the difference between the two concepts (see § 245 below).

226. During the First Session of 10 April 200876 (see § 127 above) and as further set forth in the Tribunal‘s letter of 21 May 2009 (see § 159 above), it was agreed that the present jurisdictional phase is limited to general issues and shall not include ―issues touching specifically upon each individual claimant,‖ except where the presentation of the general issue (of jurisdiction or admissibility) cannot be done without reference to a particular situation.

227. As such, the present decision does not aim at determining whether or not the Tribunal has jurisdiction with regard to each specific Claimant. Instead, it will set forth the general requirements for the Tribunal‘s jurisdiction regarding the present case and the admissibility of Claimants‘ claims, and will examine to what extent these requirements can be considered fulfilled without entering into issues touching specifically upon each individual Claimant. To the extent that the Tribunal considers that the general requirements for its jurisdiction and for the admissibility

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of Claimants‘ claims are fulfilled, it will determine how to address relevant jurisdictional issues touching specifically upon individual Claimants. These issues will then be dealt with in a later decision according to a procedure to be further determined.

228. With regard to relevant general issues of jurisdiction and admissibility, the Tribunal, in its letter of 9 May 2008, provided the Parties with a "List of issues to be addressed during the jurisdictional first phase of the proceedings" identifying 11 issues which are listed above (see § 130 above).

229. These 11 issues cover Claimants‘ and Respondent‘s main positions and objections with regard to the Tribunal‘s hearing and handling of the case, and address various issues including jurisdictional, admissibility and other procedural issues.

230. Whilst this decision will address the 11 issues listed above, it will not follow the order of such 11 issues.

231. After a brief summary of the Parties‘ positions (see section (3) below), the Tribunal will make a short presentation of the legal basis for the Tribunal‘s jurisdiction (section B below). The Tribunal will then set forth the requirements for ICSID‘s jurisdiction and determine to what extent these requirements can be deemed fulfilled without entering into issues specifically touching upon individual Claimants (section C below) and, to the extent these requirements are fulfilled, address relevant issues relating to the admissibility of the claims (section D below) and other procedural issues related thereto (section E below).

(3) Summary of the Parties’ Positions and Relief Sought

232. The Parties hold opposing views with regard to the jurisdiction of the Arbitral Tribunal and the admissibility of the present proceedings. The Parties‘ respective positions and the requests for relief they seek from the Tribunal can be summarized as follows:

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(a) Respondent’s Position and Requests for Relief

233. In general, Respondent rejects Claimants‘ claims in their entirety and contends that Claimants have not asserted a plausible or prima facie case for violation of any of the protections of the Argentina-Italy BIT. According to Respondent, Respondent could not and consequently did not pay its external debts according to their terms, but offered Claimants, on a non-discriminatory basis, a voluntary exchange offer for new debt on other terms, which Claimants were free to reject with all their rights intact77 .

234. With respect to the jurisdiction, Respondent objects to the ICSID‘s jurisdiction and the Tribunal‘s competence over Claimants‘ claims based mainly on the following arguments:




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235. Based on these considerations, Respondent requests that the Tribunal issue an award:89

"(a) Determining that it lacks competence and that ICSID lacks jurisdiction over this case;

(b) In the alternative, determining that it lacks competence and ICSID lacks jurisdiction because both Argentina and Claimants have not provided valid consent to this proceeding, and, further, TFA‘s abuse of right in bringing the claims in this proceeding renders invalid such consent as Claimants may have offered and inadmissible these proceedings;

(c) In the alternative, determining that it lacks jurisdiction ratione materiae;

(d) In the alternative, determining that it lacks jurisdiction ratione personae or that Claimants lack standing;

(e) In the alternative, determining that Claimants have not satisfied the necessary prerequisites for bringing a claim under the Argentina-Italy BIT;

(f) In the alternative, determining that Claimants listed in Claimants‘ Annex L have defaulted and ordering them to pay a pro rata share of Argentina‘s costs;

(g) Ordering Claimants to pay all of Argentina‘s costs, expenses, and attorneys‘ fees; and

(h) Granting any further relief requested against Claimants that the Tribunal deems fit and proper."

236. The above Requests for Relief as contained in the Respondent‘s Post-Hearing Brief of 22 June 2010 (§ 501) and its Reply Memorial on Jurisdiction and Admissibility of 23 February 2009 (§ 730) are slightly different from the Requests for Relief it


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formulated in its First Memorial on Jurisdiction and Admissibility of 8 August 2008 and providing as follows:90

"(a) Determining that it lacks competence and that ICSID lacks jurisdiction to entertain this collective action;

(b) In the alternative, determining that it lacks competence and ICSID lacks jurisdiction because Claimants have not provided valid consent, and, further, TFA‘s abuse of right in bringing the claims in this proceeding renders invalid such consent as Claimants may have offered;

(c) In the alternative, determining that it lacks jurisdiction ratione materiae;

(d) In the alternative, determining that it lacks jurisdiction ratione personae or that Claimants lack standing;

(e) In the alternative, determining that Claimants have not satisfied necessary prerequisites to bringing a claim under the Argentina-Italy BIT;

(f) Ordering Claimants to pay all of Argentina‘s costs, expenses, and attorneys‘ fees; and

(g) Granting any further relief requested against Claimants that the Tribunal deems fit and proper."

237. In addition, in its letters of 22 October 2010 and 2 November 2010 (see §§ 217 and 219 above), Respondent requested the Tribunal to issue an order for discontinuance concerning the Claimants who had withdrawn from the proceedings.

(b) Claimants’ Position and Requests for Relief

238. Claimants submit that throughout the 1990s, Respondent proceeded to issue over 170 sovereign bonds, intentionally targeting retail investors, including in particular Italian retail investors like Claimants. By virtue of Argentina‘s subsequent acts surrounding its default in late 2001 and directed at all Claimants collectively, Claimants were deprived of the value of their investments. In particular, Claimants raise the following allegations:

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239. In their Request for Arbitration of 14 September 2006, Claimants formulated the following Requests for Relief:

"212. Claimants hereby request that the Arbitral Tribunal to be constituted in this case issue a final award:

1. Declaring that the Argentine Republic has breached its obligations under the Argentina-Italy BIT, and is liable to Claimants therefor;

2. Awarding Claimants compensatory damages in an amount to be specified at a later stage;

3. Awarding Claimants costs associated with these proceedings, including all professional fees and disbursements;

4. Awarding Claimants pre-award and post-award interest at a rate to be fixed; and

5. Awarding Claimants such further or other relief as the Tribunal may deem appropriate.

213. Claimants reserve the right to amend this Request for Arbitration and assert additional claims as permitted by the ICSID Convention and the ICSID Arbitration Rules."

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240. After the initiation of these proceedings, the Tribunal decided to deal first with issues of jurisdiction and admissibility and to deal with the merits of the case in a second phase (see §§ 127-130 above).

241. Within such context and with regard to the jurisdictional phase of the present proceedings as limited in scope to the extent described above (§§ 127-130), Claimants contend that ICSID and the Tribunal have full jurisdiction over Claimants‘ claims, which meet all relevant requirements set forth in the ICSID Convention, Arbitration Rules and the Argentina-Italy BIT.93

242. Consequently, Claimants request that the Tribunal decide as follows with respect to the 11 issues presented in this jurisdictional phase (see § 130 above):94

"(1) Argentina consented to arbitrate claims by multiple Claimants, and those claims are admissible.

(2) Claimants‘ consent to arbitrate pursuant to a valid declaration of consent, and the role of Task Force Argentina or any other alleged conflict does not vitiate such consent.

(3) Claimants‘ submission of substitute annexes to the Request for Arbitration was permissible.

(4) Claimants were entitled to commence arbitration and the 18-month domestic litigation clause in Article 8(2) of the Argentina-Italy BIT was not a barrier.

(5) The MFN clause allows Claimants to bypass any requirement to resort to domestic court before commencing arbitration.

(6) By operation of the MFN clause, Claimants can benefit from the protection of the umbrella clause in the Argentina-Chile BIT.

(7) The Tribunal has jurisdiction over Claimants‘ prima facie treaty claims under the Argentina-Italy BIT.

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