Court Watch
disqualifying a panelist is considerably more diffi- cult. Article 57’s “manifest lack” of independence is at the heart of the decisions in OPIC Karimun and Universal Compression.
Earlier this year, in the cases of Universal Compres- sion International Holdings, S.L.U. v. Bolivarian Re- public of Venezuela and OPIC Karimun v. Bolivarian Republic of Venezuela, the appointments of certain arbitrators to the ICSID panel were challenged by claimants during their disputes with the Venezu- elan government of President Hugo Chavez. The Chavez regime has undertaken a widespread, unabashed campaign of expropriation in recent years, assuming control of multiple industries, from retail and glass manufacturing to local ship- ping and petroleum. As a party to the Convention, Venezuela routinely appears before ICSID panels and, consequently, has gained experience in the arbitration process.
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In each dispute, the claimants alleged that Venezu- ela’s nominees were barred because they had al- ready been named by Venezuela in prior disputes. Ultimately, the appointments were upheld, due to the extraordinarily high bar which must be met by objecting parties in matters of disqualification. The claimants simply could not demonstrate the “mani- fest lack” of independence required by Article 57.
Universal Compression International Holdings, S.L.U. v. The Bolivarian Republic of Venezuela
Universal Compression objected to the appoint- ment of Professor Brigitte Stern, on the grounds that Venezuela and its counsel had repeatedly ap- pointed Stern in prior proceedings. Coincidentally, Stern’s appointment by Venezuela had been up- held several months prior in a complaint lodged by Tidewater Inc., et al., on similar grounds. There, the panel denied disqualification as well.
Venezuela countered by proposing the disquali- fication of Professor Guido Santiago Tawil, argu- ing—without significant evidence—that Tawil had served as co-counsel with Universal Compres- sion’s lawyers.
Chairman Robert Zoellick strongly rejected both claims, first dismissing Universal Compression’s assertion that IBA Guidelines were dispositive, holding that “IBA Guidelines are indicative only”. Zoellick based his refusal to disqualify Stern on the absence of any obvious lack of independence on her part which could be supported by objective facts. He then refused to disqualify Tawil because Tawil had not represented the same client as Uni- versal Compression’s counsel—he merely repre- sented a co-party in the same dispute.
OPIC Karimun Corp. v. Bolivarian Republic of Venezuela
OPIC Karimun, a subsidiary of the Chinese state oil conglomerate made similar objections to Ven- ezuela’s nomination of Professor Philippe Sands. Karimun argued that the mere appearance of bias was sufficient justification for disqualification, and that Sands’ extensive participation in disputes in- volving Venezuela’s counsel gave rise to just such an appearance. In a twist of irony, Professor Tawil, to whom Venezuela so vehemently objected in Universal Compression, joined with panel presi- dent Doug Jones to reject Karimun’s contention.
Jones and Tawil specifically rejected the line of reasoning in the Tidewater decision, which consid- ered multiple, unrelated appointments merely a neutral factor. They viewed multiple appointments as a significant basis for “manifest lack of indepen- dence”, but held nonetheless that Sands’ appoint- ments did not rise to a sufficient level of doubt, and confirmed his appointment.
Jones and Tawil articulate the entire point of party nominations to ICSID panels: a party’s choice of arbitrator is clearly related to its prospects of suc- cess in a dispute, and they select panelists specifi- cally because they hope the selection will lead to a successful outcome. Venezuela clearly has the right to select any arbitrator it sees fit, and expect- edly chooses panelists whose philosophies are most likely to decide in its favor.
At first glance, this certainly may indicate a pro- ILSA Quarterly » volume 20 » issue 1 » October 2011
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