Republic of Argentina v. AWG Group Ltd.
211 F. Supp. 3d 335
D.D.C.2016Background
- Argentina awarded a 30-year concession (1993) for Buenos Aires water/sewage to a consortium including AWG (AASA); investors borrowed in USD while tariffs were in pesos tied to the USD peg.
- Argentina’s 2002 Emergency Law unpegged the peso, froze tariff adjustments, and authorized contract renegotiations; claimants alleged these measures and later termination (2006) breached BIT protections (fair and equitable treatment, full protection and security, and against indirect expropriation).
- AWG (a UK company) submitted claims under the UK–Argentina BIT; the parties agreed ICSID would administer arbitration under UNCITRAL rules; the tribunal sat in Washington, D.C.
- The three-member tribunal issued a liability decision (2010) finding treaty violations and a Final Award (2015) awarding AWG $20,957,809 (part of a larger award). Argentina did not pay and sought vacatur in D.D.C.
- Argentina moved to vacate under FAA § 10(a)(2) (evident partiality of arbitrator Kaufmann-Kohler due to UBS board membership) and § 10(a)(4) (tribunal exceeded powers in damages calculation and rejection of necessity defense); AWG moved to confirm under the New York Convention/FAA.
- The Court applied the narrow, deferential review standard for arbitral awards and denied vacatur, granting AWG’s petition to confirm.
Issues
| Issue | Argentina's Argument | AWG's Argument | Held |
|---|---|---|---|
| Evident partiality under FAA §10(a)(2) based on arbitrator’s UBS board membership | Kaufmann-Kohler’s UBS directorship (and alleged nondisclosure) created a direct conflict and justifiable doubts about impartiality | UBS’s holdings in consortium members were trivial, Kaufmann-Kohler conducted a conflicts check, the two unchallenged arbitrators rejected disqualification, and she later resigned from UBS | Court held no evident partiality: UBS interests were remote/trivial, arbitrator’s role was non‑executive and uninvolved in investment decisions, and deference is due to the disqualification decision of co-arbitrators |
| Excess of powers under FAA §10(a)(4) — damages for post-termination profits | Tribunal lacked authority to award damages for projected profits after 2006 termination and improperly assumed Argentina would be required to keep AASA viable | Damages were tied to treaty breaches beginning in 2002; tribunal properly calculated full compensation under customary international law and used expert valuation models | Court held tribunal acted within its powers; awarding future lost profits was within scope and based on legally recognized principles and expert valuation |
| Excess of powers — failure to apply necessity (customary international law defense) | Tribunal insufficiently analyzed Article 25 (necessity) and ignored contemporaneous ICSID annulment guidance, so it exceeded its mandate applying international law | Tribunal addressed Article 25’s elements, applied customary international law, and reasonably rejected necessity on the facts | Court held tribunal did not exceed its powers; its treatment of necessity constituted arguable application of applicable international law and is not reviewable for substantive error |
| Confirmation under New York Convention/FAA chapter 2 | Argentina asserted Article V defenses (partiality, excess of authority) | AWG produced authenticated award and arbitration agreement; argued none of Article V or FAA §10 grounds were met | Court confirmed the award: Argentina failed to show any New York Convention/FAA ground for refusal of recognition or enforcement |
Key Cases Cited
- BG Grp. PLC v. Republic of Argentina, 134 S. Ct. 1198 (2014) (treaties as contracts and limits on vacatur review)
- Argentine Republic v. Nat’l Grid PLC, 637 F.3d 365 (D.C. Cir. 2011) (affirming confirmation of investor-state arbitral award)
- Kurke v. Oscar Gruss & Son, Inc., 454 F.3d 350 (D.C. Cir. 2006) (arbitral review is extremely limited)
- Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145 (1968) (evident partiality standard for arbitrators)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987) (courts do not sit to review arbitrators’ factual or legal errors)
- Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013) (enforcement of arbitration agreements and limited judicial review)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (limits on courts substituting their judgment for arbitrators’)
- Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576 (2008) (statutory FAA vacatur grounds are exclusive)